Vanguard ETF strategic model portfolios

Vanguard ETF? strategic model portfolios

June 30, 2019

Broadly diversified, low-cost index portfolios from a company you know and trust

Vanguard exchange-traded fund (ETF) strategic model portfolios offer:

? Broad-market stock and investment-grade1 bond exposure, encompassing more than 19,000 global stocks and bonds.

? D iversified index investments that can help alleviate active manager risk in portfolios through lower return variability and low turnover.

? E TFs for transparency and potential tax efficiency. ? L ow costs, with weighted average expense ratios ranging from 0.05%

to 0.13%2, enabling investors to keep more of their returns.

? Vanguard's 40+ years of experience in portfolio construction and indexing.

Vanguard models: A great foundation

Take advantage of the experience of an industry leader

Vanguard ETF strategic model portfolios are created and maintained by our Investment Strategy Group, which is responsible for overseeing Vanguard's investment methodology, including portfolio construction and asset allocation modeling.

The group draws from Vanguard's more than 40 years of indexing experience to ensure that our model portfolios reflect our investment philosophy. We believe that investors maximize their chance of success when they select and stick with asset allocations--or mixes of stock, bond, and money market funds--that reflect their goals, tolerance for risk, and time horizons; diversify broadly within each asset class; and limit the costs of investing.

A firm belief in a top-down approach

Asset allocation

Mutual fund (active)

ETF (passive)

Vanguard ETF models

Strategic

Tactical

Features ?Broad-market exposure ? Low return variability ? High potential level of

tax efficiency ?M ultiple options that span

the risk-reward spectrum

1 A bond whose credit quality is considered to be among the highest by independent bond-rating agencies. 2 As of June 30, 2019.

Sub-asset allocation

Investment selection

To help investors and their advisors address diverse needs, we offer our ETF strategic model portfolios in a range of stock/bond allocations. All our balanced model portfolios provide exposure to U.S. and international stocks and global investment-grade bonds, except for our Tax-Efficient Series, whose fixed income allocation focuses on U.S. municipal bonds.

To ensure broad diversification in each asset class, all the ETFs underlying our model portfolios track broad-market or market-segment indexes. Each index is capitalization-weighted, meaning that its components reflect the makeup of the market or market segment it tracks. Employing an index approach also helps to keep costs low relative to the average actively managed investment strategy.

Core Series

Our most straightforward portfolios include broadly diversified domestic and international equity and fixed income Vanguard ETFs?. In addition, each portfolio features low costs and the potential for few capital gains.

Strategic asset allocation by product

As of March 31, 2018 Vanguard ETF

Ticker

Expense ratio2

Domestic equity

Total Stock Market

VTI

0.03%

International equity

Total International Stock

VXUS

0.09%

Domestic fixed income

Total Bond Market

BND

0.035%

International fixed income

Total International Bond

BNDX

0.09%

Money market fund

Weighted average expense ratio

Asset allocation (%)1

n Equity / n Fixed income

0/100

10/90

20/80

30/70

40/60

50/50

60/40

70/30

80/20

90/10

100/0

0.0%

5.9% 11.8% 17.6% 23.5% 29.4% 35.3% 41.2% 47.0% 52.9% 58.8%

0.0%

3.9%

7.8% 11.8% 15.7% 19.6% 23.5% 27.4% 31.4% 35.3% 39.2%

68.6% 61.7% 54.9% 48.0% 41.2% 34.3% 27.4% 20.6% 13.7%

6.9%

0.0%

29.4% 2.0% 0.05%

26.5% 2.0% 0.05%

23.5% 2.0% 0.05%

20.6% 2.0% 0.05%

17.6% 2.0% 0.05%

14.7% 2.0% 0.05%

11.8% 2.0% 0.05%

8.8% 2.0% 0.05%

5.9% 2.0% 0.05%

2.9% 2.0% 0.05%

0.0% 2.0% 0.05%

Model portfolio performance

Quarter Year-to-date 1 year 3 year (annualized) 5 year (annualized) Since inception (annualized) Inception date

2.95% 3.05%

6.01

7.06

7.78

7.70

2.55

3.51

3.24

3.69

2.94

4.13

1/1/2012 1/1/2014

3.14% 8.11 7.60 4.47 4.13 4.68 1/1/2012

3.22% 9.14 7.46 5.41 4.56 5.02 1/1/2014

3.29% 3.35%

10.17

11.20

7.29

7.10

6.35

7.29

4.97

5.37

6.39

5.86

1/1/2012 1/1/2014

3.40% 12.22 6.87 8.22 5.76 8.07 1/1/2012

3.44% 3.47%

13.23 14.23

6.61

6.31

9.14

10.05

6.14

6.49

6.65

9.72

1/1/2014 1/1/2012

3.49% 15.22

5.98 10.96

6.84 7.38 1/1/2014

3.50% 16.21

5.63 11.85

7.17 11.33 1/1/2012

1 A cross asset groups, portfolio weights reflect a combination of market characteristics, Vanguard portfolio construction philosophy, and the availability of the ETFs in the Vanguard lineup. Within each asset group, the allocations reflect the market capitalizations of the ETFs' benchmarks. Because of rounding, weights may not add up to 100%. Note that some of the investable universe may be lost when moving from a broad ETF to a group of narrower ETFs.

2 As reported in each ETF's most recent prospectus as of June 30, 2019. The current expense ratio may be higher or lower than the figure shown.

Source: Vanguard calculations using data from FactSet.

The performance data shown represent past performance, which is not a guarantee of future results, and reflects the performance of the underlying products that comprise our strategies and our investment allocation methodology. Investment returns and principal value will fluctuate, so an investor's ETF shares, when sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data cited. Performance of the model ETF components are based on net asset value (NAV) return and assumes a semiannual rebalance from January 2010 through December 2012, a quarterly rebalance from January 2013 through December 2013, and a monthly rebalance thereafter. Performance figures assume the reinvestment of dividends and capital gains distributions; the figures are pre-tax and net of expenses. All figures are for periods ended June 30, 2019, except where noted. Performance figures for periods of less than one year are cumulative returns.

CRSP Series

The CRSP series of Vanguard ETF strategic model portfolios offers highly diversified, balanced investment options, distinguished by their tracking of broad-market domestic stock indexes from the University of Chicago's Center for Research in Security Prices (CRSP).

Strategic asset allocation by product

As of June 30, 2019 Vanguard ETF

Ticker

Expense ratio2

Domestic equity

Growth

VUG

0.04%

Value

VTV

0.04

Small-Cap

VB

0.05

International equity

FTSE Developed Markets

VEA

0.05%

FTSE Emerging Markets

VWO

0.12

Domestic fixed income

Short-Term Bond

BSV

0.07%

Inter-Term Bond

BIV

0.07

Long-Term Bond

BLV

0.07

Mortgage-Backed Sec

VMBS

0.07

International fixed income

Total International Bond

BNDX

0.09%

Money market fund

Weighted average expense ratio

Asset allocation (%)1

n Equity / n Fixed income

0/100

10/90

20/80

30/70

40/60

50/50

60/40

70/30

80/20

90/10

100/0

0.0% 0.0 0.0

2.6% 2.6 0.7

5.2% 5.1 1.5

7.7% 7.7 2.2

10.3% 10.3

2.9

12.9% 12.8 3.7

15.5% 15.4

4.4

18.0% 18.0

5.2

20.6% 20.5

5.9

23.2% 23.1

6.6

25.8% 25.7

7.3

0.0% 0.0

3.0% 0.9

6.0% 1.8

9.0% 2.8

12.1% 3.6

15.1% 4.5

18.1% 5.4

21.1% 6.3

24.1% 7.3

27.1% 8.2

30.1% 9.1

26.7% 13.8 12.9 15.2

24.0% 12.4 11.6 13.7

21.3% 11.0 10.4 12.2

18.7% 9.6 9.1

10.6

16.0% 8.3 7.8 9.1

13.3% 6.9 6.5 7.6

10.7% 5.5 5.1 6.1

8.0% 4.1 3.9 4.6

5.3% 2.8 2.6 3.0

2.7% 1.4 1.3 1.5

0.0% 0.0 0.0 0.0

29.4% 2.0% 0.07%

26.5% 2.0% 0.07%

23.5% 2.0% 0.07%

20.6% 2.0% 0.07%

17.6% 2.0% 0.06%

14.7% 2.0% 0.06%

11.8% 2.0% 0.06%

8.8% 2.0% 0.06%

5.9% 2.0% 0.06%

2.9% 2.0% 0.05%

0.0% 2.0% 0.05%

Model portfolio performance

Quarter Year-to-date 1 year 3 year (annualized) 5 year (annualized) Since inception (annualized) Inception date

2.95% 6.01 7.75 2.54 3.23 3.75 1/1/2010

3.05% 7.07 7.70 3.50 3.69 4.13 1/1/2014

3.13% 8.12 7.61 4.45 4.14 5.15 1/1/2010

3.21% 9.15 7.50 5.40 4.57 5.03 1/1/2014

3.28% 10.20

7.36 6.34 4.99 6.50 1/1/2010

3.34% 11.23

7.18 7.27 5.40 5.88 1/1/2014

3.39% 12.25 6.96 8.21 5.79

7.77 1/1/2010

3.43% 13.28

6.73 9.13 6.17 8.91 1/1/2012

3.46% 14.27

6.46 10.03

6.53 8.98 1/1/2010

3.48% 15.28

6.15 10.94

6.88 7.41 1/1/2014

3.49% 16.27

5.81 11.84

7.23 10.13 1/1/2010

1 A cross asset groups, portfolio weights reflect a combination of market characteristics, Vanguard portfolio construction philosophy, and the availability of the ETFs in the Vanguard lineup. Within each asset group, the allocations reflect the market capitalizations of the ETFs' benchmarks. Because of rounding, weights may not add up to 100%. Note that some of the investable universe may be lost when moving from a broad ETF to a group of narrower ETFs.

2 As reported in each ETF's most recent prospectus as of June 30, 2019. The current expense ratio may be higher or lower than the figure shown.

Source: Vanguard calculations using data from FactSet.

The performance data shown represent past performance, which is not a guarantee of future results, and reflects the performance of the underlying products that comprise our strategies and our investment allocation methodology. Investment returns and principal value will fluctuate, so an investor's ETF shares, when sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data cited. Performance of the model ETF components are based on net asset value (NAV) return and assumes a semiannual rebalance from January 2010 through December 2012, a quarterly rebalance from January 2013 through December 2013, and a monthly rebalance thereafter. Performance figures assume the reinvestment of dividends and capital gains distributions; the figures are pre-tax and net of expenses. All figures are for periods ended June 30, 2019, except where noted. Performance figures for periods of less than one year are cumulative returns.

S&P Series

The S&P series of Vanguard ETF strategic model portfolios offers highly diversified, balanced investment options, distinguished by their tracking of broad-market domestic stock indexes from Standard & Poor's (S&P).

Strategic asset allocation by product

As of June 30, 2019 Vanguard ETF

Ticker

Expense ratio2

Domestic equity

S&P 500

VOO

0.03%

Extended Market

VXF

0.07

International equity

FTSE Developed Markets

VEA

0.05%

FTSE Emerging Markets

VWO

0.12

Domestic fixed income

Short-Term Bond

BSV

0.07%

Inter-Term Bond

BIV

0.07

Long-Term Bond

BLV

0.07

Mortgage-Backed Sec

VMBS

0.07

International fixed income

Total International Bond

BNDX

0.09%

Money market fund

Weighted average expense ratio

Asset allocation (%)1

n Equity / n Fixed income

0/100

10/90

20/80

30/70

40/60

50/50

60/40

70/30

80/20

90/10

100/0

0.0% 0.0

4.9% 1.0

9.8% 2.0

14.6% 3.0

19.5% 4.0

24.4% 5.0

29.3% 6.0

34.2% 7.0

39.0% 8.0

43.9% 9.0

48.8% 10.0

0.0% 0.0

3.0% 0.9

6.0% 1.8

9.0% 2.8

12.1% 3.6

15.1% 4.5

18.1% 5.4

21.1% 6.3

24.1% 7.3

27.1% 8.2

30.1% 9.1

26.7% 13.8 12.9 15.2

24.0% 12.4 11.6 13.7

21.3% 11.0 10.4 12.2

18.7% 9.6 9.1

10.6

16.0% 8.3 7.8 9.1

13.3% 6.9 6.5 7.6

10.7% 5.5 5.1 6.1

8.0% 4.1 3.9 4.6

5.3% 2.8 2.6 3.0

2.7% 1.4 1.3 1.5

0.0% 0.0 0.0 0.0

29.4% 2.0% 0.07%

26.5% 2.0% 0.07%

23.5% 2.0% 0.07%

20.6% 2.0% 0.07%

17.6% 2.0% 0.06%

14.7% 2.0% 0.06%

11.8% 2.0% 0.06%

8.8% 2.0% 0.06%

5.9% 2.0% 0.05%

2.9% 2.0% 0.05%

0.0% 2.0% 0.05%

Model portfolio performance

Quarter Year-to-date 1 year 3 year (annualized) 5 year (annualized) Since inception (annualized) Inception date

2.95% 6.01 7.75 2.54 3.23 2.94 1/1/2012

3.05% 7.07 7.68 3.50 3.69 4.13 1/1/2014

3.13% 8.11 7.57 4.45 4.13 4.68 1/1/2012

3.21% 9.15 7.43 5.39 4.56 5.01 1/1/2014

3.28% 10.20

7.27 6.33 4.98 6.40 1/1/2012

3.34% 11.22

7.07 7.26 5.38 5.85 1/1/2014

3.38% 12.24 6.83 8.19 5.77 8.09 1/1/2012

3.43% 13.27

6.58 9.11 6.15 6.64 1/1/2014

3.45% 14.26

6.28 10.01

6.50 9.74 1/1/2012

3.48% 15.27

5.95 10.91

6.85 7.37 1/1/2014

3.48% 16.26

5.59 11.81

7.19 11.37 1/1/2012

1 A cross asset groups, portfolio weights reflect a combination of market characteristics, Vanguard portfolio construction philosophy, and the availability of the ETFs in the Vanguard lineup. Within each asset group, the allocations reflect the market capitalizations of the ETFs' benchmarks. Because of rounding, weights may not add up to 100%. Note that some of the investable universe may be lost when moving from a broad ETF to a group of narrower ETFs.

2 As reported in each ETF's most recent prospectus as of June 30, 2019. The current expense ratio may be higher or lower than the figure shown.

Source: Vanguard calculations using data from FactSet.

The performance data shown represent past performance, which is not a guarantee of future results, and reflects the performance of the underlying products that comprise our strategies and our investment allocation methodology. Investment returns and principal value will fluctuate, so an investor's ETF shares, when sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data cited. Performance of the model ETF components are based on net asset value (NAV) return and assumes a semiannual rebalance from January 2010 through December 2012, a quarterly rebalance from January 2013 through December 2013, and a monthly rebalance thereafter. Performance figures assume the reinvestment of dividends and capital gains distributions; the figures are pre-tax and net of expenses. All figures are for periods ended June 30, 2019, except where noted. Performance figures for periods of less than one year are cumulative returns.

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