The index excludes companies with significant business activities involving fossil fuels, alcohol, tobacco, gambling, military weapons and civilian firearms, nuclear power, adult entertainment and conduct related screens based on severe controversies.  Details on the benchmark methodology can be accessed by visiting Bloomberg Barclays at www.bloomberg.com/professional/product/indices/bloomberg-barclays-indices-fact-sheets-publications/.

The fund aims to hold an appropriate number of securities so as to produce a portfolio risk exposure profile consistent with that of the index.  This is achieved by holding a representative sample of securities included in the index or securities that provide similar characteristics to those securities in the index.  Security weightings in the Fund may vary from the index weightings.  The Fund may gain exposure to securities directly or through interests in other funds, such as exchange traded funds.

The Fund may utilise derivative instruments including futures traded on a licensed exchange and over the counter derivative financial instruments.  Derivative instruments are used to manage the overall interest rate and credit risk exposure of the Fund where it is either unable to invest directly in physical securities or is in the Fund’s best interest to do so.  Derivative financial instruments will not be used to leverage the assets of the Fund.  Vanguard will seek to hedge the Fund’s currency exposure back to the New Zealand dollar using forward foreign exchange contracts.

Exclusion notes:

Fossil fuels
Companies with any industry tie to fossil fuels (thermal coal, oil and gas), in particular reserve ownership, related revenues and power generation.

Alcohol
All issuers classified as a “Producer” that earn more than 5% in revenue, or more than $500 million in revenue from alcohol-related products.

Tobacco
All issuers classified as a “Producer”;
All issuers classified as “Distributor”, “Retailer” and “Supplier” that earn 15% or more of their revenue from tobacco-related products.

Gambling
All issuers classified as involved in “Operations” or “Support” that earn 5% or more in revenue, or more than $500 million in revenue, from gambling-related activities.
Civilian Firearms.
All issuers classified as a “Producer”. All issuers classified as a “Retailer” that earn 5% or more in revenue, or more than $20 million in revenue from civilian firearms-related products.

Military Weapons
All issuers classified as involved in manufacturing of Nuclear Weapons, Nuclear Weapons Components, Chemical and Biological Weapons Components, or Depleted 
Uranium Weapons. 
All issuers that earn 5% or more in revenue, or more than $500 million in revenue, from manufacturing of Conventional Weapons, Conventional Weapons Components, or Conventional Weapons Support Systems and Services.

Nuclear Power
All issuers classified as a nuclear “Utility”
All issuers classified as involved in uranium mining, designing nuclear reactors or enrichment of fuel for nuclear reactors All issuers that earn 15% or more revenues as a supplier to the nuclear power industry.

Adult entertainment
All issuers classified as a “Producer” that earn more than 5% in revenue, or more than $500 million in revenue, from adult entertainment materials.

Controversies
A controversy case is defined as an instance or ongoing situation in which company operations and/or products allegedly have a negative environmental, social, and/or governance impact. Cases include alleged company violations of existing laws and/or regulations to which they are subject; or an alleged company action or event that violates commonly accepted international norms, including but not limited to norms represented by global conventions such as the UN Global Compact.