The Vanguard LifeStrategy® Conservative Fund seeks to track the weighted average return of the various indices of the Underlying Funds in which it invests, in proportion to the Strategic Asset Allocation (SAA), before taking into account fees, expenses and tax

Benefits of investing in the Vanguard LifeStrategy Conservative Fund

The significant features and benefits of investing in the Fund include:

• Competitive long-term performance - Vanguard's investment approach provides investors with an efficient way to capture long-term market performance.

• Diversification - The Fund provides exposure to a diversified portfolio of securities, which means the Fund is less exposed to the performance fluctuations of individual securities. This moderates the volatility of the portfolio and smooths out' investment returns over time. The Fund provides exposure to a wide selection of available securities in the relevant index, generally holding significantly more securities than most active funds with the same benchmark. From time to time, however, the number of securities in a given index may reduce due to factors such as index rebalancing.

• Tax efficiency - Vanguard's buy and hold strategy means that securities are generally held within a portfolio over a long period of time. If certain securities are held for more than 12 months, any capital gain (if applicable) on the disposal of those securities may be reduced under the capital gains tax discount rules - a tax efficient outcome for eligible investors.

• Low cost investing - The Fund has low ongoing fees as we strive to minimise the costs of managing and operating the Fund. The Fund typically has low portfolio turnover resulting in low trading costs such as brokerage and other transaction costs.

The significant features and benefits of investing with Vanguard include:

• Stability and experience - The Vanguard Group, Inc. 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. In Australia, Vanguard leverages the scale, experience and resources of our established global business. Investing in the Fund allows you to access the knowledge and skill of Vanguard as a specialist investment manager.

• Client focus - The Vanguard Group, Inc. was founded on a simple but revolutionary idea - that an investment company should manage the funds it offers in the sole interest of its clients. From rigorous risk management to transparent pricing to plain talk communications, we put our clients' interest first.

• Low costs - 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. Vanguard's scale also helps to keep costs low.

Risk level

Low

Investor suitability

Investors with a short to medium term investment horizon, seeking a steady source of income with some capital growth potential.

Investors with a short to medium term investment horizon, seeking a steady source of income with some capital growth potential.

About the Fund

The Fund provides low-cost access to a range of sector funds, offering broad diversification across multiple asset classes. The Conservative Fund is designed for investors seeking a balance between income and capital growth. The Fund targets a 70% allocation to income asset classes and a 30% allocation to growth asset classes.

Investment objective

Vanguard LifeStrategy Conservative Fund seeks to track the weighted average return of the various indices of the underlying funds in which it invests, in proportion to the Strategic Asset Allocation, before taking into account fees, expenses and tax.

What is an index?

An index measures the performance or change in value of a particular group of securities, such as shares, bonds or other investments, over a period of time. Today, there are indices measuring investment results of all major markets and asset classes.

What are index funds?

Investors can invest in securities indirectly through managed funds, in which a professional manager chooses and monitors a portfolio of securities.

Index funds are managed funds that are structured to deliver investment returns that closely match the return of selected indices. An index fund aims to generate a return as similar as possible to that of a particular index: it achieves this by effectively replicating the index, either by holding all of the securities included in the index or a representative sample of these securities.

The value or return of an index fund typically goes up or down in line with the market. Because indices change very infrequently, index funds by their nature are buy-and-hold' investments, a strategy that generally results in low portfolio turnover.

Unlike indices - which are theoretical measures - index funds will incur actual costs in assembling portfolios, for instance, brokerage. While index funds seek to minimise these costs, they usually result in the returns of index funds being less than the returns of the relevant indices.

How we invest your money

The Vanguard LifeStrategy® Conservative Fund seeks to track the weighted average return of the various indices of the Underlying Funds in which it invests, in proportion to the Strategic Asset Allocation (SAA), before taking into account fees, expenses and tax.

• Vanguard Australian Fixed Interest Index Fund
• Vanguard Global Aggregate Bond Index Fund (Hedged)
• Vanguard Australian Shares Index Fund
• Vanguard International Shares Index Fund
• Vanguard International Shares Index Fund (Hedged)
• Vanguard International Small Companies Index Fund
• Vanguard Emerging Markets Shares Index Fund

Vanguard may, at its discretion, commence investing directly in the securities that are, have been or are expected to be in the indices of the Underlying Funds or in different or other Funds. For more information about the Underlying Funds, visit the Vanguard website.

Strategic asset allocation

(Asset type: SAA / Range)

• Cash: 8% / 10-12%

• Australian fixed interest: 18% / 16-20%

• International fixed interest (hedged): 42% / 40-44%

Total income assets: 70%

• Australian shares: 12% / 10-14%

• International shares: 8.5% / 6.5-10.5%

• International shares (hedged): 5.5% / 3.5-7.5%

• International small companies: 2% / 0-4%

• Emerging markets shares: 2% / 0-4%

Total growth assets: 30%