The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Vanguard Asset Management, Limited only gives information on products and services and does not give investment advice based on individual circumstances. If you have any questions related to your investment decision or the suitability or appropriateness for you of the product[s] described in this document, please contact your financial adviser.

– Stability and experience – Low-cost investing – Client focus

What makes Vanguard different?

The Vanguard Group, Inc.’s unique mutual structure aligns our interests with those of our investors and drives the culture, philosophy and policies throughout the Vanguard organisation worldwide. As a result, UK investors benefit from Vanguard’s stability and experience, low costs and client focus.

What makes Vanguard different? 3

Why Vanguard?

What makes us different?

What sets Vanguard apart – and lets Vanguard put investors first around the world – is the ownership structure of The Vanguard Group, Inc., in the United States.

Rather than being publicly traded or owned by a small group of individuals, The Vanguard Group is owned by Vanguard’s US-domiciled funds and ETFs. Those funds, in turn, are owned by their investors.

This unique mutual structure aligns our interests with those of our investors and drives the culture, philosophy and policies throughout the Vanguard organisation worldwide. As a result, UK investors benefit from Vanguard’s stability and experience, low-cost investing and client focus.

Stability and experience

In the UK, Vanguard leverages the scale, experience and resources of our established global business. Vanguard’s ownership structure means that our clients don’t have to worry that we’ll be acquired. The company they invest with today will continue to serve them in the future.

The Vanguard Group established the world’s first index mutual fund for individual investors in 1976 and has been a leader in low-cost index investing ever since. The Vanguard Group also launched the first funds based on bond and international indices, and over the last decade has extended its index management expertise to exchange-traded funds.

Low-cost investing

Investors can’t control the markets, but they can control the costs of investing. Providing low-cost investments isn’t a pricing strategy for us. It’s how we do business.

We can keep costs low because of our unique ownership structure in the United States, which allows us to return profits to investors through lower costs.

Vanguard’s scale also helps to keep costs low. As our assets under management increase globally, we can reduce expense ratios for the investors in our funds.

Client focus

The ownership structure of The Vanguard Group aligns our interests with those of our clients. Because Vanguard is not publicly traded, we can extend the benefits of that structure to our clients in the UK.

From rigorous risk management to transparent pricing to plain talk communications, we put our clients’ interests first.

Everything we do at Vanguard is designed to give our clients the best chance for investment success.

Our core purpose

To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success.

What makes Vanguard different? 5

The Vanguard story

Vanguard was founded in the United States in 1975 on a simple but revolutionary idea: that an investment company should manage the funds it offers in the sole interest of its clients. Over the decades, Vanguard has grown to become one of the world’s largest investment management companies, with a presence in Australia, Europe, Asia and the Americas.

1975 The Vanguard Group, Inc. began operations

1976 Opened Vanguard 500 Index Fund, the first index mutual fund available to individual investors in the United States

1986 Launched the first bond index fund, Vanguard Total Bond Market Index Fund, which has become one of the world’s biggest bond funds

1990 Introduced the first international stock index funds in the United States

1998 European business launched with offices in three European countries

2000 Established office in Tokyo

2001 Offered Exchange Traded Fund (ETF) share class for many Vanguard funds in the United States

2002 Began serving institutional clients in Canada and Central and South America

2002 Launched Financial Advisor Services team in the United States

2003 Vanguard Investments Singapore, Pte. Limited established

2006 Surpassed US$1 trillion in global assets under management

2009 Opened Vanguard Investments UK, Ltd., in London and launched UK-domiciled funds

2011 Began managing assets in London

2012 Launched a series of European ETFs

2012 Surpassed US$2 trillion in global assets under management, including $205 billion in ETF assets

2013 Expanded the European ETF range and cross-listed several ETFs on exchanges across Europe

The Vanguard Group, Inc. launched the first equity index mutual fund for individual investors in 1976.

What makes Vanguard different? 7

Experience and expertise you can count on

When you invest with Vanguard, you have more than 35 years of index investing experience behind you. We select benchmarks that objectively reflect broad markets or market segments, minimising investment costs through their consistent approach. Many index providers use benchmark construction best practices that Vanguard has promoted for years.

Index funds and Exchange Traded Funds

In the UK, we currently offer a range of index tracking funds and ETFs. These funds offer investors a wide spread of risk through broadly diversified exposure to equity and fixed income markets at a very low cost. With ongoing charges ranging from 0.09% to 0.40%, our funds deliver exceptional value.

Vanguard LifeStrategy™ Funds

Vanguard LifeStrategy™ Funds combine Vanguard’s 35 plus years of index investing experience with all our expertise on how to construct portfolios combining different investments.

In other words, they’re investment expertise in a box, delivered at the low cost level that investors have come to expect from Vanguard. Your financial adviser can help you pick the fund that is right for your circumstances and we’ll take care of the rest, leaving you to focus on the things that matter to you.

We develop and manage investments that follow a set of core investment principles and designed to help you achieve investment success.

What makes Vanguard different? 9

Principles for investment success

Successful investment management companies base their business on a core investment philosophy and Vanguard is no different. Although we offer many specific strategies, an overarching theme runs through the investments we provide: focus on those things within your control.

These principles have been intrinsic to our company since its inception and they are embedded in its culture. For Vanguard, they represent both the past and the future – enduring principles that guide the investment decisions we make.

Create clear, appropriate investment goals.

Investors should set measurable and attainable investment goals and develop plans for reaching those goals. Investors with multiple goals (e.g., retirement planning and school fees) should have a separate plan for each. Finally, they should evaluate their plans on a regular, ongoing basis.

Develop a suitable asset allocation using broadly diversified funds.A successful investment strategy starts with an asset allocation suitable for its objective. Investors should establish an asset allocation using reasonable expectations for risk and returns. The use of diversified investments helps to ensure against exposure to unnecessary risks.

Minimise cost.Every pound that investors pay in management fees or trading commissions is a pound less of potential return. Research also suggests that lower-cost investments have tended to outperform higher-cost alternatives. Investors can’t control the markets, but they can control the effects of costs.

Maintain perspective and long-term discipline.Investing evokes emotion that can disrupt the plans of even the most sophisticated investors. Some investors may make rash decisions based on market volatility. Discipline and perspective can counter that emotion if the investor adopts a systematic approach to investing that applies the principles of asset allocation and diversification – and then sticks to it.

10 What makes Vanguard different?

Plain Talk™ about costs and charges

We believe investors deserve to know exactly what every investment offers and exactly what charges they will and won’t pay. When you invest with any fund manager, you pay a number of charges, starting with the Annual Management Charge (AMC) which covers the fund manager’s costs of managing the fund.

With most managers you will also typically pay ongoing running costs, including administration fees, audit fees (where an independent auditor checks that all accounts are fair and honest), custody fees (the cost of holding securities in a secure legal manner) and other operational expenses. Together, all these costs make up the fund’s total ‘ongoing charges’.

In the interests of transparency, we pay all running costs out of the AMC. We believe this gives you a better understanding of the cost of your investment. It also means that we expect our funds’ AMCs to equal their total ongoing cost.

Protecting your investment from ‘dilution’

Trading within a fund incurs transaction costs, such as broker fees and taxes when securities are bought and sold. Throughout much of the industry, investment funds – in other words existing investors – subsidise the costs of investors trading in or out of the fund. This effect is called ‘dilution’ and, over the long term, it can erode investment performance because investment returns are reduced pound-for-pound by the costs incurred. By minimising dilution, investors improve their odds of meeting their investment objectives.

To protect long-term fund investors from dilution, we ask new investors to pay as much of their own dilution effect as is practical by paying a pre-set dilution levy on funds with particularly high transaction costs. These charges go directly back into the fund for the benefit of the fund’s investors. They do not benefit Vanguard in any way. Once an investor is in the fund, they too are protected from dilution by the levy.

Playing fair with Stamp Duty Reserve Tax (SDRT)

SDRT represents another type of transaction cost that dilutes existing investors’ holdings. SDRT is payable when UK stocks are bought, or when shares of a fund investing in UK stocks are redeemed (that is, when investors wish to sell their holding) and are subsequently re-issued to new investors. SDRT is charged at a flat rate of 0.5% of the value of the transaction. We ask investors to pay their own SDRT upfront on any fund that invests in UK stocks. We think our system is fair because it means long-term investors don’t subsidise those who invest for a shorter time.

Championing investor interests

We champion investors’ interests in everything we do. We think every investor deserves clear, straightforward communications.

It starts with how we communicate – Plain Talk™ – straightforward language that’s easy to understand and explanations that leave nothing out.

No ‘ifs’, no ‘buts’, no jargon. Just plenty of facts, clearly presented and right upfront where investors can see them.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

© 2014 Vanguard Asset Management, Limited. All rights reserved.

VAM-2014-01-24-1456

Connect with Vanguard™

vanguard.co.uk

Please be aware that Vanguard Asset Management, Limited only gives information on our products. We cannot give advice based on individual circumstances. This is where the advice of a qualified financial adviser can be crucial.

If you have any questions related to your investment decision or the suitability or appropriateness for you of the products or services described in this brochure, please contact your financial adviser.

Important informationThis document is designed only for use by, and is directed only at persons resident in the UK. The information on this document does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions.