Annual Report | 31 December 2020 Vanguard Investments II Common Contractual Fund Contents Tracking Error 1 Vanguard FTSE Developed World II Common Contractual Fund 2 Vanguard SRI FTSE Developed Europe II Common Contractual Fund 29 Vanguard SRI FTSE Developed World II Common Contractual Fund 39 Notes to the Financial Statements 63 Statement of Manager's Responsibilities 74 Additional Information from the Manager (unaudited) 75 Report of the Depositary to the Unitholders 76 Independent Auditors' Report to the Unitholders 77 Directory Inside Back Cover Tracking Error Each Sub-Fund listed in the table employs a “passive” investment strategy designed to replicate the performance of its benchmark index. Some Sub-Funds attempt to replicate the index by investing all, or substantially all, of their assets in the securities that make up the index, holding each in approximately the same proportion as its weighting in the index. Others attempt to select those securities that will create the representative sample that tracks the performance of the index as closely as possible. Optimisation or stratified sampling techniques, or both, are used to create the sample. Tracking error measures the volatility of the return difference between the Sub-Fund and the index. It is calculated as the standard deviation of the tracking difference between the Sub-Fund and the index (gross of fees for the trailing 36-month period, or since the Sub-Fund’s inception if it does not have 36 months of performance history). Realised tracking error may vary from the anticipated tracking error, depending on a range of circumstances. These include transaction costs, securities lending income, and withholding tax differences. The anticipated tracking error and realised tracking error are not expected to vary significantly under normal circumstances. For the Year Ended 31 December 2020 Anticipated Realised Sub-Fund Tracking Error Tracking Error Explanation for Divergence Vanguard FTSE Developed World II 0.500% 0.112% The Sub-Fund has tracked its benchmark within acceptable Common Contractual Fund1 tolerances of its anticipated tracking error. Vanguard FTSE Developed World II 0.500 0.125 The Sub-Fund has tracked its benchmark within acceptable Common Contractual Fund EUR-Hedged1 tolerances of its anticipated tracking error. Vanguard SRI FTSE Developed Europe II 0.500 0.825 The difference in tracking error is due to SRI restrictions for the Common Contractual Fund2 Sub-Fund whereas the index tracks a standard non-screened benchmark; furthermore, the Sub-Fund tracks a gross benchmark and is not evaluated on a net return basis. Vanguard SRI FTSE Developed World II 0.500 0.350 The Sub-Fund has tracked its benchmark within acceptable Common Contractual Fund2 tolerances of its anticipated tracking error. 1 The Sub-Fund seeks to replicate the index by investing all, or substantially all, of its assets in the securities that make up the index, holding each in approximately the same proportion as its weighting in the index. 2 The Sub-Fund attempts to select those securities that will create the representative sample that tracks the performance of the index as closely as possible. 1 Vanguard FTSE Developed World II Common Contractual Fund Investment Objective The Sub-Fund seeks to track the performance of the FTSE Developed Index, a widely recognised benchmark composed of stocks of large- and mid-capitalisation companies in global developed markets. Performance Summary (unaudited) The Performance Summary does not form part of the financial statements. • The year 2020 was defined by the COVID-19 pandemic. In addition to its devastating human toll, the virus produced the most pronounced economic shock in living memory. Travel restrictions, supply-chain disruptions, business closures and a spike in unemployment led swiftly to deep recessions around the world. • Central banks in the developed world responded rapidly – cutting interest rates, restarting or expanding asset purchases and providing additional liquidity, all in an effort to blunt the economic impact of the virus – and pledged to do more if needed. Many governments were quick to provide fiscal stimulus in the form of spending, loans, loan guarantees, job retention programmes and extended unemployment benefits. • Despite continuing case surges in some regions, investor sentiment improved in the second half of the year as vaccines were developed and the global economy appeared to regain its footing faster than many had expected. Bonds were relatively volatile worldwide but produced solid returns. Global stocks plummeted early in the year, but many rebounded as investors seemed to grow more optimistic. • In this environment, the Sub-Fund’s benchmark index returned 7.06% for the 12 months ended 31 December 2020. Technology, consumer discretionary and health care made the strongest contributions to return. Financials and energy detracted the most. • US stocks, which made up more than 60% of the index, on average, finished the fiscal year up nearly 11% and made the strongest contribution to return. The United Kingdom and France detracted the most. All returns in the commentary above are in euros. Benchmark: FTSE Developed Index Total Returns Periods Ended 31 December 2020 (Annualised for periods over one year) Ten Years or One Year Since Inception1 EUR Institutional Accumulation Units - NL FBI 6.48% 11.74% Benchmark 7. 0 6 1 2 . 3 7 Tracking Difference* -0.58 EUR-Hedged Institutional Accumulation Units - NL FBI 11.90% 11.65% Benchmark 12.48 12.30 Tracking Difference* -0.58 All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (For performance data current to the most recent month-end, which may be higher or lower than that cited, visit our website at http://global.vanguard.com.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s units, when sold, could be worth more or less than their original cost. * The tracking difference between the Sub-Fund return and the index return over a stated period of time can be attributed to a number of factors, including, without limitation, small differences in weightings, trading activity, swing pricing, transaction costs and differences in the valuation and withholding tax treatment between the Sub-Fund and the index vendor. 1 Since-inception returns: 25 February 2016 2 Vanguard FTSE Developed World II Common Contractual Fund Significant Portfolio Changes (unaudited) For the Year Ended 31 December 2020 Cost Proceeds Shares Euro (€) Shares Euro (€) Purchases Sales Apple Inc. 64,977 10,383,134 Apple Inc. 31,379 4,709,427 Microsoft Corp. 55,872 9,451,324 Microsoft Corp. 7,900 1,361,784 Amazon.com Inc. 3,555 8,422,850 Shopify Inc. 2,693 1,231,990 Facebook Inc. 18,372 3,849,782 Alphabet Inc. Class C 589 783,705 Alphabet Inc. Class A 2,347 3,014,921 Amazon.com Inc. 255 611,794 Alphabet Inc. Class C 2,151 2,840,431 WellCare Health Plans Inc. 1,795 559,792 Zoom Video Communications Inc. 7,143 2,647,765 Berkshire Hathaway Inc. Class A 2 552,360 Berkshire Hathaway Inc. Class B 14,351 2,565,330 Intel Corp. 12,283 539,134 Johnson & Johnson 19,044 2,397,815 Nestle SA 4,940 497,010 JPMorgan Chase & Co. 23,586 2,177,705 JPMorgan Chase & Co. 5,353 490,211 Visa Inc. 12,407 2,094,313 Facebook Inc. 2,018 434,854 Shopify Inc. 3,768 2,047,534 SoftBank Group Corp. 7,600 411,075 Tesla Inc. 3,614 2,030,714 Oracle Corp. 8,184 401,855 Nestle SA 19,951 1,934,860 China Mengniu Dairy Co. Ltd. 104,000 397,020 Procter & Gamble Co. 16,687 1,842,490 Home Depot Inc. 1,869 395,198 AbbVie Inc. 22,892 1,813,538 Visa Inc. 2,058 356,915 UnitedHealth Group Inc. 6,811 1,804,129 AT&T Inc. 11,320 305,169 Home Depot Inc. 8,331 1,795,695 Biogen Inc. 1,273 298,962 Mastercard Inc. 6,563 1,764,914 PG&E Corp. 35,923 294,041 Walt Disney Co. 15,825 1,723,851 Mylan NV 21,633 289,695 The Central Bank of Ireland requires a schedule of material changes in the composition of the portfolio during the year. These are defined as aggregate purchases of a security exceeding 1% of the total value of purchases for the year and aggregate disposals greater than 1% of the total value of sales. At a minimum, the largest 20 purchases and 20 sales must be shown; all purchases and sales must be shown if there are fewer than 20. A full listing of the portfolio changes for the year is available, upon request, at no extra cost from the Administrator, State Street Fund Services (Ireland) Limited. 3 Vanguard FTSE Developed World II Common Contractual Fund Financial Statements Statement of Investments 31 December 2020 Number of Fair Value %ofTotal Number of Fair Value %ofTotal Shares Euro (€) Net Assets Shares Euro (€) Net Assets Equities 96.82% (2019: 97.18%) Magellan Financial Group Ltd. 5,869 198,616 0.01% Australia 2.32% (2019: 2.37%) Computershare Ltd. 21,506 197,885 0.01% Commonwealth Bank of Coca-Cola Amatil Ltd. 23,878 194,713 0.01% Australia 73,522 3,807,257 0.21% REA Group Ltd. 2,046 192,080 0.01% CSL Ltd. 19,103 3,411,638 0.18% OZ Minerals Ltd. 16,038 190,964 0.01% BHP Group Ltd. 125,031 3,345,719 0.18% Boral Ltd. 57,559 179,687 0.01% National Australia Bank Ltd. 139,610 1,989,866 0.11% JB Hi-Fi Ltd. 5,595 171,559 0.01% Westpac Banking Corp.