Annual Report for the Vanguard® Exchange Traded Funds
PLEASE CROSS RELEASE TO ALL BELOW COMPANY CODES
6 September 2017 Vanguard Investments Australia Ltd announces the following:
ETF ASX CODE
ANNOUNCEMENT
Vanguard MSCI Index International Shares ETF VGS Annual Report
Vanguard International Fixed Interest Index (Hedged) ETF VIF Annual Report
Vanguard International Credit Securities Index (Hedged) ETF
VCF Annual Report
Vanguard has prepared an Annual Report for the Vanguard® Wholesale Funds, for the financial year ending 30 June 2017. The ETFs above are classes of units in the relevant funds. Units in the ETF class are those that are traded on the Australian Securities Exchange (ASX). The Annual Report provides financial information for each fund and where indicated, provides specific information for the ETF class. Further Information If you have any queries on Vanguard ETFs, please visit vanguard.com.au/etf © 2017 Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer, and is a wholly owned subsidiary of The Vanguard Group, Inc. based in the US. All rights reserved. The funds or securities referred to herein are not sponsored, endorsed or promoted by MSCI and MSCI bears no liability with respect to any such funds or securities. The Product Disclosure Statement contains a more detailed description of the limited relationship MSCI has with The Vanguard Group and any related funds. Vanguard Investments Australia Ltd, Level 34, Freshwater Place, 2 Southbank Boulevard, Southbank VIC 3006 vanguard.com.au 1300 655 888
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Vanguard® Wholesale Funds
Annual Report | 30 June 2017
Vanguard Investments Australia Ltd ABN 72 072 881 086 AFSL 227263
International Funds
(ASX Codes: VIF, VCF, VGS)
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Vanguard funds covered in this annual report
Vanguard International Fixed Interest Index Fund (Hedged) ARSN 090 940 337 ABN 59 108 266 812
Vanguard International Credit Securities Index Fund (Hedged) ARSN 095 366 055 ABN 15 118 646 737
Vanguard International Shares Index Fund ARSN 090 939 610 ABN 56 291 101 711
Vanguard International Shares Index Fund (Hedged) ARSN 093 254 909 ABN 97 123 270 094
Vanguard Emerging Markets Shares Index Fund ARSN 090 939 450 ABN 63 171 298 643
Vanguard International Property Securities Index Fund ARSN 115 001 002 ABN 97 674 886 440
Vanguard International Property Securities Index Fund (Hedged) ARSN 115 001 360 ABN 52 511 318 838
Vanguard International Small Companies Index Fund ARSN 127 015 472 ABN 20 372 713 731
Vanguard International Small Companies Index Fund (Hedged) ARSN 127 015 436 ABN 13 064 564 422
Vanguard Global Minimum Volatility Fund ARSN 165 787 708 ABN 80 259 391 198
Vanguard Global Infrastructure Index Fund ARSN 128 385 277 ABN 82 191 294 545
Vanguard Global Infrastructure Index Fund (Hedged) ARSN 128 385 197 ABN 92 392 829 821
Vanguard International Shares Select Exclusions Index Fund ARSN 163 045 739 ABN 45 215 187 041
Vanguard Global Value Equity Fund ARSN 613 053 062 ABN 71 928 129 734
Vanguard Global Quantitative Equity Fund ARSN 608 272 626 ABN 90 171 261 300
Responsible EntityVanguard Investments Australia Ltd ABN 72 072 881 086 AFSL 227263
Level 34 Freshwater Place 2 Southbank Boulevard Southbank Vic 3006
Telephone: (03) 8888 3888 Facsimile: 1300 765 712
vanguard.com.au
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ContentsAbout Vanguard 4
Directors’ Report 5
Auditor’s Independence Declaration 14
Statement of comprehensive income 15
Balance sheet 18
Statement of changes in equity 21
Statement of cash flows 22
Notes to the financial statements 25
Directors’ Declaration 123
Independent Auditor’s Report 124
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About Vanguard
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About VanguardSince our establishment in 1975, Vanguard has strived to be the world’s highest-value provider of investment products and services. We have an unwavering focus on our clients with a commitment to champion what’s best for investors by offering outstanding service, while keeping costs low.
Over the years Vanguard has built a reputation as a global leader in client advocacy and earned the trust of millions of investors along the way. Our sole purpose has been to align our interest with those of our investors to ensure they have the best chance for investment success.
With more than AUD $5.7 trillion in assets under management as of 30 June 2017, including more than AUD $1 trillion in exchange traded funds, Vanguard is one of the world’s largest global investment management companies.
In Australia, Vanguard has been helping investors meet their long-term financial goals with low-cost investment solutions for over 20 years.
Our unique structure – putting investors’ interests firstWhat 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 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, Australian investors benefit from Vanguard’s stability and experience, low costs and client focus.
Our investment expertiseWhen you invest with Vanguard, you have more than 40 years of investing experience behind you. So no matter which investment products suit your needs, you can feel confident that Vanguard investments are built on a rigorous investment philosophy that stands the test of time.
Low-cost investingWe know we can’t control the markets, but we can control the costs of investing. To that end, 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.
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Directors’ Report
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Directors’ Report The Responsible Entity of Vanguard Wholesale Funds (the “Funds”) for the year ended 30 June 2017 was Vanguard Investments Australia Ltd (the “Responsible Entity”).
The directors of Vanguard Investments Australia Ltd present their report together with the financial statements for the year ended 30 June 2017.
Principal activitiesThe Funds invest in accordance with the investment policy of the Funds as set out in their respective Product Disclosure Statements (PDSs) and in accordance with the Fund Constitutions.
The Vanguard International Shares Select Exclusions Index Fund inception date was 9 December 2016 and commenced trading on 13 December 2016.
The Vanguard Global Value Equity Fund inception date was 8 September 2016 and commenced trading on 8 September 2016.
The Vanguard International Fixed Interest Index Fund (Hedged) ETF Class (ASX code VIF), the Vanguard International Credit Securities Index Fund (Hedged) ETF Class (ASX code VCF) and the Vanguard International Shares Index Fund ETF Class (ASX code VGS) operate as Exchange Traded Funds (ETFs) listed on the Australian Stock Exchange (ASX).
The Funds did not have any employees during the year.
There were no significant changes in the nature of the activities of the Funds during the year.
DirectorsThe following persons held office as directors of the Responsible Entity during the year or since the end of the year and up to the date of this report:
• J M Norris• G W Reed (Resigned 31 July 2017)• C R Comegys (Resigned 31 August 2017)• C Kelton• M Lovett (Resigned 6 December 2016)• L Carr (Appointed 6 December 2016)• C Lui (Appointed 31 August 2017)
Review and results of operationsThe Funds invest in listed equity securities, listed unit trusts, listed property trusts, unlisted unit trusts, fixed interest securities, money market securities, derivatives and cash and cash equivalents. The investment policy of the Funds continues to be in accordance with the provisions of the Fund Constitutions.
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Directors’ Report (continued)
Review and results of operations (continued)
ResultsThe results of the operations of the Funds were as follows:
Vanguard International Fixed Interest Index
Fund (Hedged)
Vanguard International Credit Securities
Index Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund
(Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Operating profit/(loss) before finance costs attributable to unitholders ($’000) (33,721) 291,188 32,922 107,539 1,663,220 158,367 739,939 75,114 185,599 (134,356)
Distributions - Ordinary Class
Distribution paid and payable ($'000) 194,049 44,745 90,231 49,960 723,509 405,281 – – 44,159 58,096
Distribution (cents per unit) 8.5258 2.2174 7.9334 5.2422 12.8105 6.1873 – 2.2174 7.6663 9.0936
Distributions - ETF Class
Distribution paid and payable ($'000) 5,855 362 5,849 468 13,740 8,301 – – – –
Distribution (cents per unit) 354.6941 103.3802 332.7852 212.8053 185.4586 229.3959 – – – –
Distributions - B Class
Distribution paid and payable ($'000) – – – – 5,947 3,639 – – – –
Distribution (cents per unit) – – – – 184.3984 247.0117 – – – –
Distributions - AUD Class
Distribution paid and payable ($'000) – – – – – – 570,546 258,746 – –
Distribution (cents per unit) – – – – – – 15.6487 7.4172 – –
Distributions - NZD Class
Distribution paid and payable ($'000) – – – – – – 49,464 25,628 – –
Distribution (cents per unit) – – – – – – 18.2514 2.0318 – –
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies Index
Fund
Vanguard International Small Companies Index
Fund (Hedged)
Vanguard Global Minimum Volatility
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Operating profit/(loss) before finance costs attributable to unitholders ($’000) (97,653) 358,614 8,938 221,442 55,999 (5,157) 11,643 (8,386) 2,583 1,608
Distributions - Ordinary Class
Distribution paid and payable ($'000) 143,953 139,212 307,250 83,499 27,903 20,563 6,880 18,143 1,127 460
Distribution (cents per unit) 8.5077 8.3750 19.3199 6.4231 10.6498 8.9032 9.6244 42.9946 5.1684 2.3019
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Directors’ Report (continued)
Review and results of operations (continued)
Results (continued)The results of the operations of the Funds were as follows:
Vanguard Global Infrastructure Index
Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
Vanguard International Shares Select
Exclusions Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Operating profit/(loss) before finance costs attributable to unitholders ($’000) 12,821 18,069 6,071 3,102 53,242 – 2,107 – 2,815 (49)
Distributions - Ordinary Class
Distribution paid and payable ($'000) 17,128 6,521 7,110 885 – – 716 – 854 75
Distribution (cents per unit) 7.5819 4.1300 9.6155 2.2415 – – 4.7946 – 5.5684 0.5163
Distributions - AUD Unhedged Class
Distribution paid and payable ($'000) – – – – 3,220 – – – – –
Distribution (cents per unit) – – – – 1.3650 – – – – –
Distributions - NZD Hedged Class
Distribution paid and payable ($'000) – – – – – – – – – –
Distribution (cents per unit) – – – – – – – – – –
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Directors’ Report (continued)
Review and results of operations (continued)
PerformanceThe table below details the performance of the Funds as represented by the total return, net of fees, which is calculated as the aggregation of the percentage capital growth and percentage distribution of income. The total return is shown for the past five years to 30 June 2017 and assumes that all distributions were re-invested during that period. These are calculated in accordance with FSC Standard 6.0 Product Performance - calculation and presentation of returns. The directors assess the performance of the Funds by comparing each Fund’s total return with the corresponding Index (the Benchmark) gross of fees.
2017 2016 2015 2014 2013
% % % % %
Vanguard International Fixed Interest Index Fund (Hedged)
Capital growth (7.92) 8.60 4.11 6.83 (0.61)
Distribution of income 6.63 1.86 1.93 – 4.71
Total return (1.29) 10.46 6.04 6.83 4.10
Benchmark
Barclays Global Treasury Index (Hedged to AUD) (0.97) 10.84 6.31 7.18 4.40
Vanguard International Credit Securities Index Fund (Hedged)
Capital growth (4.04) 3.50 4.38 6.09 2.67
Distribution of income 6.52 4.41 – 2.31 2.18
Total return 2.48 7.91 4.38 8.40 4.85
Benchmark
Barclays Global Aggregate Government-Related and Corporate Index (Hedged to AUD) 2.83 8.21 4.70 8.94 5.40
Vanguard International Shares Index Fund
Capital growth 7.62 (2.76) 19.57 16.85 30.09
Distribution of income 7.19 3.34 5.72 3.65 3.17
Total return 14.81 0.58 25.29 20.50 33.26
Benchmark
MSCI World ex-Australia Index (with net dividends reinvested) in Australian dollars 14.73 0.40 25.18 20.41 33.10
Vanguard International Shares Index Fund (Hedged) - AUD Class
Capital growth 0.15 (9.91) 10.98 24.05 19.87
Distribution of income 20.40 8.64 – 0.60 4.76
Total return 20.55 (1.27) 10.98 24.65 24.63
Benchmark
MSCI World ex-Australia Index (with net dividends reinvested) hedged into Australian dollars 20.53 (1.43) 10.94 24.64 24.56
Vanguard International Shares Index Fund (Hedged) - NZD Class
Capital growth 5.43 (2.75) 11.38 14.27 12.58
Distribution of income 15.39 1.57 – 10.06 11.10
Total return 20.82 (1.18) 11.38 24.33 23.68
Benchmark
MSCI World ex-Australia Index (with net dividends reinvested) hedged into New Zealand dollars 20.99 1.14 11.66 24.51 23.69
Vanguard Emerging Markets Shares Index Fund
Capital growth 14.75 (14.28) 13.69 7.84 12.15
Distribution of income 4.77 4.67 2.46 2.86 2.57
Total return 19.52 (9.61) 16.15 10.70 14.72
Benchmark
MSCI Emerging Markets Index (with net dividends reinvested) in Australian dollars 20.12 (9.22) 16.51 10.86 15.19
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Directors’ Report (continued)
Review and results of operations (continued)
Performance (continued)
2017 2016 2015 2014 2013
% % % % %
Vanguard International Property Securities Index Fund
Capital growth (11.64) 12.65 17.21 8.06 20.33
Distribution of income 6.93 7.89 6.10 3.98 4.08
Total return (4.71) 20.54 23.31 12.04 24.41
Benchmark
FTSE EPRA/NAREIT Developed ex-Australia Index (with net dividends reinvested), in Australian dollars (4.83) 20.44 23.14 11.90 24.25
Vanguard International Property Securities Index Fund (Hedged)
Capital growth (19.85) 10.93 8.01 14.28 11.49
Distribution of income 19.71 7.24 – 1.99 3.91
Total return (0.14) 18.17 8.01 16.27 15.40
Benchmark
FTSE EPRA/NAREIT Developed ex-Australia Rental Index (with net dividends reinvested), Australian Dollar Hedged (0.12) 18.27 8.02 16.30 15.48
Vanguard International Small Companies Index Fund
Capital growth 9.59 (7.04) 15.95 19.12 34.97
Distribution of income 7.83 6.03 9.25 4.30 2.72
Total return 17.42 (1.01) 25.20 23.42 37.69
Benchmark
MSCI World ex-Australia Small Cap Index (with net dividends reinvested) in Australian dollars 17.52 (0.94) 25.44 23.74 37.89
Vanguard International Small Companies Index Fund (Hedged)
Capital growth 12.21 (36.33) 10.53 28.24 27.05
Distribution of income 11.54 32.51 – – 2.34
Total return 23.75 (3.82) 10.53 28.24 29.39
Benchmark
MSCI World ex-Australia Small Cap Index (with net dividends reinvested) hedged into Australian dollars 23.88 (3.52) 10.81 28.57 29.78
Vanguard Global Minimum Volatility Fund
Capital growth 7.28 6.01 – – –
Distribution of income 4.88 2.30 – – –
Total return 12.16 8.31 – – –
Benchmark
FTSE Global All Cap Index (AUD hedged) 20.53 (2.13) – – –
Vanguard Global Infrastructure Index Fund
Capital growth (1.43) 7.36 6.66 12.92 19.75
Distribution of income 7.02 4.21 9.65 4.57 4.12
Total return 5.59 11.57 16.31 17.49 23.87
Benchmark
FTSE Developed Core Infrastructure Index (with net dividends reinvested), in Australian dollars 5.52 11.69 16.38 15.75 24.62
Investors should be aware that past performance is not necessarily an indicator of future performance.
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Directors’ Report (continued)
Review and results of operations (continued)
Performance (continued)
2017 2016 2015 2014 2013
% % % % %
Vanguard Global Infrastructure Index Fund (Hedged)
Capital growth 0.14 6.32 (1.88) 17.04 8.81
Distribution of income 10.61 2.62 4.97 5.00 7.62
Total return 10.75 8.94 3.09 22.04 16.43
Benchmark
FTSE Developed Core Infrastructure Hedged into Australian Dollars Index (with net dividends reinvested) 10.69 9.34 3.47 19.88 17.43
Vanguard International Shares Select Exclusions Index Fund
Capital growth 5.31 – – – –
Distribution of income 1.38 – – – –
Total return 6.69 – – – –
Benchmark*
MSCI World ex Australia, ex Tobacco, ex Controversial Weapons, ex Nuclear Weapons (with net dividends reinvested) in Australian dollars Index 6.63 – – – –
Vanguard International Shares Select Exclusions Index Fund - NZD Hedged
Capital growth 8.30 – – – –
Distribution of income – – – – –
Total return 8.30 – – – –
Benchmark*
MSCI World ex Australia, ex Tobacco, ex Controversial Weapons, ex Nuclear Weapons (with net dividends reinvested) hedged into New Zealand dollars Index 8.37 – – – –
Vanguard Global Value Equity Fund
Capital growth 11.08 – – – –
Distribution of income 4.80 – – – –
Total return 15.88 – – – –
Benchmark**
FTSE Developed All-Cap in Australian Dollars Index 11.95 – – – –
Vanguard Global Quantitative Equity Fund
Capital growth 13.74 (0.69) – – –
Distribution of income 5.71 0.52
Total return 19.45 (0.17) – – –
Benchmark
MSCI World ex Australia (with net dividends reinvested) in AUD 14.73 2.87 – – –
* These results are from inception date 13 December 2016 to reporting date.
** These results are from inception date 8 September 2016 to reporting date.
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Directors’ Report (continued)
Review and results of operations (continued)
Unit redemption pricesUnit redemption prices (quoted including distribution) are shown as follows:
At 30 June Period high Period low
2017 2016 2017 2016 2017 2016
$ $ $ $ $ $
Vanguard International Fixed Interest Index Fund (Hedged) 1.2078 1.3166 1.3031 1.3167 1.1999 1.1878
Vanguard International Fixed Interest Index Fund (Hedged) (ETF Class) 49.3392 53.9358 53.2603 53.9419 49.0137 50.0000
Vanguard International Credit Securities Index Fund (Hedged) 1.2056 1.2787 1.2537 1.2787 1.1887 1.1820
Vanguard International Credit Securities Index Fund (Hedged) (ETF Class) 50.1514 53.1955 52.1022 53.1955 49.4432 49.8533
Vanguard International Shares Index Fund 2.0440 1.8439 2.1314 2.0009 1.7648 1.7127
Vanguard International Shares Index Fund (ETF Class) 61.8456 56.1684 64.4511 61.0054 53.3715 52.1722
Vanguard International Shares Index Fund (B Class) 61.4148 55.9576 64.0021 60.7824 53.0004 51.9805
Vanguard International Shares Index Fund (Hedged) - AUD Class 0.8888 0.8479 0.9086 0.8925 0.7697 0.7430
Vanguard International Shares Index Fund (Hedged) - NZD Class * 1.4846 1.2782 1.5066 1.3441 1.2515 1.1190
Vanguard Emerging Markets Shares Index Fund 1.9643 1.7334 2.0278 1.9742 1.6284 1.5232
Vanguard International Property Securities Index Fund 1.1420 1.2819 1.2608 1.2863 1.0698 1.1005
Vanguard International Property Securities Index Fund (Hedged) 0.9491 1.0461 1.0285 1.0461 0.8954 0.8582
Vanguard International Small Companies Index Fund 1.5956 1.4467 1.6496 1.5468 1.3457 1.2927
Vanguard International Small Companies Index Fund (Hedged) 1.0130 1.2692 1.0191 1.3426 0.8330 1.0773
Vanguard Global Minimum Volatility Fund 1.1872 1.0811 1.2080 1.0811 1.0331 0.9327
Vanguard Global Infrastructure Index Fund 1.1352 1.1163 1.2021 1.1163 1.0071 0.9855
Vanguard Global Infrastructure Index Fund (Hedged) 1.0009 0.9281 1.0275 0.9281 0.8653 0.7733
Vanguard International Shares Select Exclusions Index Fund 1.0620 – 1.1063 – 0.9867 –
Vanguard International Shares Select Exclusions Index Fund - NZD Hedged * 1.0819 – 1.0965 – 0.9923 –
Vanguard Global Value Equity Fund 1.1528 – 1.1811 – 0.9659 –
Vanguard Global Quantitative Equity Fund 1.1688 0.9973 1.2115 1.0659 0.9758 0.9400
* All information is expressed in New Zealand dollars.
Significant changes in state of affairsThe Vanguard International Shares Select Exclusions Index Fund inception date was 9 December 2016 and commenced trading on 13 December 2016.
The Vanguard Global Value Equity Fund inception date was 8 September 2016 and commenced trading on 8 September 2016.
In the opinion of the directors, there were no other significant changes in the state of affairs of the Funds that occurred during the financial year. F
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Directors’ Report (continued)
Matters subsequent to the end of the financial year• Glenn Reed resigned as a Director of Vanguard Investments Australia Ltd on 31 July 2017.• Rodney Comegys resigned as a Director of Vanguard Investments Australia Ltd on 31 August 2017.• Cynthia Lui was appointed as a Director of Vanguard Investments Australia Ltd on 31 August 2017.
No matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect:
(i) the operations of the Funds in future financial years; or(ii) the results of those operations in future financial years; or(iii) the state of affairs of the Funds in future financial years.
Likely developments and expected results of operationsThe Funds will continue to be managed in accordance with the investment objectives and guidelines as set out in the governing documents of the Funds and in accordance with the provisions of the Fund Constitutions.
The results of the Funds’ operations will be affected by a number of factors, including the performance of investment markets in which the Funds invest. Investment performance is not guaranteed and future returns may differ from past returns. As investment conditions change over time, past returns should not be used to predict future returns.
Indemnity and insurance of officers and auditorsNo insurance premiums are paid for out of the assets of the Funds in regards to insurance cover provided to either the officers of Vanguard Investments Australia Ltd or the auditors of the Funds. So long as the officers of Vanguard Investments Australia Ltd act in accordance with the Constitutions of the Funds and the Law, the officers remain indemnified out of the assets of the Funds against losses incurred while acting on behalf of the Funds.
Fees paid to and interests held in the Funds by the Responsible Entity or its associatesFees paid to the Responsible Entity and its associates out of the Funds’ property during the year are disclosed in note 14 of the financial statements.
No fees were paid out of the Funds’ property to the directors of the Responsible Entity during the year.
The number of interests in the Funds held by the Responsible Entity or its associates as at the end of the financial year are disclosed in note 14 of the financial statements.
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Directors’ Report (continued)
Interests in the FundsThe movement in units on issue in the Funds during the year is disclosed in note 9 of the financial statements.
The value of the Funds’ assets and liabilities are disclosed on the balance sheet and derived using the basis set out in note 2 of the financial statements.
Environmental regulationThe operations of the Funds are not subject to any particular or significant environmental regulations under either Commonwealth, State or Territory law.
Rounding of amounts to the nearest thousand dollarsAmounts in the directors’ report have been rounded to the nearest thousand dollars in accordance with ASIC Corporations (Rounding in Financial/Directors’ Report) Instrument 2016/191, unless otherwise indicated.
Auditor’s independence declarationA copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 14.
This report is made in accordance with a resolution of the directors.
C Kelton Managing Director Melbourne 31 August 2017
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Statement of comprehensive income
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Statement of comprehensive incomeFor the year ended 30 June 2017
Vanguard International Fixed Interest Index
Fund (Hedged)
Vanguard International Credit Securities
Index Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund
(Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Investment income
Interest income – – – – 203 301 1,503 2,305 21 40
Dividend income – – – – 265,918 285,006 – – 25,436 34,909
Distribution income – – – – 10,759 11,507 221,611 145,744 567 581
Net gains/(losses) on financial instruments held at fair value through profit or loss 5 (26,464) 298,980 37,266 112,473 1,404,837 (112,566) 519,098 (69,793) 165,546 (162,684)
Other operating income 87 33 337 87 4,986 3,896 – 6 54 91
Total net investment income/(loss) (26,377) 299,013 37,603 112,560 1,686,703 188,144 742,212 78,262 191,624 (127,063)
Expenses
Responsible Entity's fees 14 7,241 7,706 4,534 4,982 21,915 23,647 2,119 2,993 5,818 6,954
Custody fees 103 102 39 38 71 89 154 143 61 92
Transaction costs – – – – 203 133 – – 36 48
Other operating expenses – 17 108 1 1,294 5,908 – 12 110 199
Total operating expenses 7,344 7,825 4,681 5,021 23,483 29,777 2,273 3,148 6,025 7,293
Operating profit/(loss) (33,721) 291,188 32,922 107,539 1,663,220 158,367 739,939 75,114 185,599 (134,356)
Financing costs attributable to unitholders
Distributions to unitholders 10 (199,904) (45,107) (96,080) (50,428) (743,196) (417,221) (620,010) (284,374) (44,159) (58,096)
(Increase)/decrease in net assets attributable to unitholders 9 233,625 (246,081) 63,158 (57,111) (920,024) 258,854 (119,929) 209,260 (141,440) 192,452
Profit/(loss) for the year – – – – – – – – – –
Other comprehensive income – – – – – – – – – –
Total comprehensive income for the year – – – – – – – – – –
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
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Statement of comprehensive income
16
Statement of comprehensive income (continued)
For the year ended 30 June 2017
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies
Index Fund
Vanguard International Small Companies
Index Fund (Hedged)
Vanguard Global Minimum Volatility
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Investment income
Interest income 73 69 20 – 7 8 – – – –
Dividend income 4,182 2,974 – – 5,122 7,380 – – 502 557
Distribution income 62,089 67,926 105,386 90,451 1,552 1,780 4,619 2,827 81 97
Net gains/(losses) on financial instruments held at fair value through profit or loss 5 (155,743) 295,664 (95,997) 131,426 50,918 (12,705) 7,066 (11,148) 2,140 1,063
Other operating income 33 1,534 – 3 127 401 – – – 6
Total net investment income/(loss) (89,366) 368,167 9,409 221,880 57,726 (3,136) 11,685 (8,321) 2,723 1,723
Expenses
Responsible Entity's fees 14 7,882 8,163 454 406 1,392 1,760 20 33 95 87
Custody fees 51 43 17 25 35 50 22 27 40 20
Transaction costs 100 55 – – 15 10 – 5 2 6
Other operating expenses 254 1,292 – 7 285 201 – – 3 2
Total operating expenses 8,287 9,553 471 438 1,727 2,021 42 65 140 115
Operating profit/(loss) (97,653) 358,614 8,938 221,442 55,999 (5,157) 11,643 (8,386) 2,583 1,608
Financing costs attributable to unitholders
Distributions to unitholders 10 (143,953) (139,212) (307,250) (83,499) (27,903) (20,563) (6,880) (18,143) (1,127) (460)
(Increase)/decrease in net assets attributable to unitholders 9 241,606 (219,402) 298,312 (137,943) (28,096) 25,720 (4,763) 26,529 (1,456) (1,148)
Profit/(loss) for the year – – – – – – – – – –
Other comprehensive income – – – – – – – – – –
Total comprehensive income for the year – – – – – – – – – –
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
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Statement of comprehensive income
17
Statement of comprehensive income (continued)
For the year ended 30 June 2017
Vanguard Global Infrastructure Index
Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
Vanguard International Shares Select
Exclusions Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Investment income
Interest income 10 6 5 – 148 – 1 – – –
Dividend income 6,752 4,627 – – 9,534 – 289 – 366 188
Distribution income 561 386 4,685 1,341 344 – 14 – 5 4
Net gains/(losses) on financial instruments held at fair value through profit or loss 5 6,365 13,867 1,411 1,782 44,294 – 1,884 – 2,547 (202)
Other operating income 245 23 – – 59 – 1 – – –
Total net investment income/(loss) 13,933 18,909 6,101 3,123 54,379 – 2,189 – 2,918 (10)
Expenses
Responsible Entity's fees 14 1,071 797 19 10 947 – 54 – 66 28
Custody fees 24 18 11 11 62 – 23 – 34 9
Transaction costs 16 3 – – 31 – 5 – 2 2
Other operating expenses 1 22 – – 97 – – – 1 –
Total operating expenses 1,112 840 30 21 1,137 – 82 – 103 39
Operating profit/(loss) 12,821 18,069 6,071 3,102 53,242 – 2,107 – 2,815 (49)
Financing costs attributable to unitholders
Distributions to unitholders 10 (17,128) (6,521) (7,110) (885) (3,220) – (716) – (854) (75)
(Increase)/decrease in net assets attributable to unitholders 9 4,307 (11,548) 1,039 (2,217) (50,022) – (1,391) – (1,961) 124
Profit/(loss) for the year – – – – – – – – – –
Other comprehensive income – – – – – – – – – –
Total comprehensive income for the year – – – – – – – – – –
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
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Vanguard Annual Report
Balance sheet
18
Balance sheetFor the year ended 30 June 2017
Vanguard International Fixed Interest Index
Fund (Hedged)
Vanguard International Credit Securities
Index Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund
(Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Assets
Cash and cash equivalents 11 19,318 8,630 22,812 13,765 282,304 112,149 13,441 13,369 13,754 4,945
Margin accounts 779 1,301 753 873 8,542 16,311 3,163 10,335 763 1,825
Receivables 9,356 15,582 2,856 304 33,468 69,531 2,124 1,210 1,061 1,026
Accrued income – 15 43 68 13,545 14,963 164,580 85,042 4,578 6,372
Due from brokers – receivable for securities sold 31,533 11,700 7,484 5,006 – 51 30,714 9,437 41 10,145
Financial assets held at fair value through profit or loss 6 3,230,134 2,768,811 1,557,833 1,244,817 11,778,124 11,843,114 3,519,275 4,680,549 1,136,674 1,008,930
Total assets 3,291,120 2,806,039 1,591,781 1,264,833 12,115,983 12,056,119 3,733,297 4,799,942 1,156,871 1,033,243
Liabilities
Margin accounts 71,818 35,108 – – – – 82,898 91,980 – –
Distribution payable 10 40,580 45,107 36,673 50,428 563,256 237,920 453,028 284,374 29,545 38,998
Payables 1,308 1,495 419 12,076 35,838 2,703 1,110 933 550 482
Due to brokers – payables for securities purchased 108,989 52,060 36,300 13,785 846 – – 60,094 – –
Financial liabilities held at fair value through profit or loss 7 3,133 43,020 9,431 7,723 1,086 601 54,085 80,966 11 2
Total liabilities (excluding net assets attributable to unitholders) 225,828 176,790 82,823 84,012 601,026 241,224 591,121 518,347 30,106 39,482
Net assets attributable to unitholders (liability) 9 3,065,292 2,629,249 1,508,958 1,180,821 11,514,957 11,814,895 3,142,176 4,281,595 1,126,765 993,761
The above balance sheet should be read in conjunction with the accompanying notes.
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Balance sheet
19
Balance sheet (continued)
For the year ended 30 June 2017
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies
Index Fund
Vanguard International Small Companies
Index Fund (Hedged)
Vanguard Global Minimum Volatility
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Assets
Cash and cash equivalents 11 30,670 5,987 2,579 2,434 3,853 (445) 933 701 245 25
Margin accounts – – – – 299 860 55 200 54 29
Receivables 2,714 14,566 675 260 2,354 231 113 28 324 17
Accrued income 6,813 6,364 77,512 62,034 509 454 4,028 1,949 65 69
Due from brokers – receivable for securities sold 121,468 32 10,525 – 196 15,525 1,144 14,274 43 –
Financial assets held at fair value through profit or loss 6 1,888,358 2,056,004 1,397,671 1,315,646 418,994 311,070 68,894 37,087 25,590 21,588
Total assets 2,050,023 2,082,953 1,488,962 1,380,374 426,205 327,695 75,167 54,239 26,321 21,728
Liabilities
Distribution payable 10 104,083 96,654 253,663 83,499 24,304 16,633 5,073 18,143 1,127 460
Payables 129,296 848 242 207 1,278 14,381 59 3 7 8
Due to brokers – payables for securities purchased 502 – – 12,588 62 – – – 277 –
Financial liabilities held at fair value through profit or loss 7 154 – 2,197 7,268 29 5 433 654 127 87
Total liabilities (excluding net assets attributable to unitholders) 234,035 97,502 256,102 103,562 25,673 31,019 5,565 18,800 1,538 555
Net assets attributable to unitholders (liability) 9 1,815,988 1,985,451 1,232,860 1,276,812 400,532 296,676 69,602 35,439 24,783 21,173
The above balance sheet should be read in conjunction with the accompanying notes.
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Balance sheet
20
Balance sheet (continued)
For the year ended 30 June 2017
Vanguard Global Infrastructure
Index Fund
Vanguard Global Infrastructure Index Fund (Hedged)
Vanguard International Shares Select Exclusions
Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative
Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Assets
Cash and cash equivalents 11 2,241 463 139 38 21,845 – 247 – 572 15
Margin accounts – – – – 1,708 – 24 – 21 7
Receivables 1,105 545 96 1 3,282 – 10 – 19 10
Accrued income 750 558 3,697 750 892 – 19 – 20 22
Due from brokers – receivable for securities sold 7,284 – – – – – – – 80 85
Financial assets held at fair value through profit or loss 6 254,774 178,319 71,152 36,579 941,237 – 17,074 – 18,102 14,374
Total assets 266,154 179,885 75,084 37,368 968,964 17,374 18,814 14,513
Liabilities – –
Margin accounts – – – – 21,407 – – – – –
Distribution payable 10 13,489 3,707 6,958 885 2,425 – 645 – 626 75
Payables 144 73 3 1 202 – 5 – 5 5
Due to brokers – payables for securities purchased – 291 895 501 19,715 – – – 539 36
Financial liabilities held at fair value through profit or loss 7 – – 112 220 8,069 – 9 – 14 21
Total liabilities (excluding net assets attributable to unitholders) 13,633 4,071 7,968 1,607 51,818 659 1,184 137
Net assets attributable to unitholders (liability) 9 252,521 175,814 67,116 35,761 917,146 – 16,715 – 17,630 14,376
The above balance sheet should be read in conjunction with the accompanying notes.
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Statement of changes in equity
21
Statement of changes in equityFor the year ended 30 June 2017
Vanguard International Fixed Interest Index
Fund (Hedged)
Vanguard International Credit Securities
Index Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund
(Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Total equity at the beginning of the financial year
Profit/(loss) for the year – – – – – – – – – –
Other comprehensive income for the year – – – – – – – – – –
Total comprehensive income – – – – – – – – – –
Transactions with owners in their capacity as owners – – – – – – – – – –
Total equity at the end of the financial year – – – – – – – – – –
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies Index
Fund
Vanguard International Small Companies Index
Fund (Hedged)
Vanguard Global Minimum Volatility
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Total equity at the beginning of the financial year
Profit/(loss) for the year – – – – – – – – – –
Other comprehensive income for the year – – – – – – – – – –
Total comprehensive income – – – – – – – – – –
Transactions with owners in their capacity as owners – – – – – – – – – –
Total equity at the end of the financial year – – – – – – – – – –
Vanguard Global Infrastructure Index
Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
Vanguard International Shares Select
Exclusions Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Total equity at the beginning of the financial year
Profit/(loss) for the year – – – – – – – – – –
Other comprehensive income for the year – – – – – – – – – –
Total comprehensive income – – – – – – – – – –
Transactions with owners in their capacity as owners – – – – – – – – – –
Total equity at the end of the financial year – – – – – – – – – –
Under Australian Accounting Standards, net assets attributable to unitholders are classified as a liability rather than equity. As a result there was no equity at the start or end
of the year.
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Vanguard Annual Report
Statement of cash flows
22
Statement of cash flowsFor the year ended 30 June 2017
Vanguard International Fixed Interest Index
Fund (Hedged)
Vanguard International Credit Securities
Index Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund
(Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Cash flows from operating activities
Proceeds from sale of financial instruments held at fair value through profit or loss 801,241 1,740,112 844,663 1,186,846 3,982,216 5,498,187 2,578,226 3,662,579 141,869 499,185
Purchases of financial instruments held at fair value through profit or loss (1,255,235) (1,261,769) (1,098,507) (830,408) (2,490,201) (2,164,016) (866,463) (3,496,406) (88,726) (188,418)
Transaction costs on purchases of financial instruments held at fair value through profit or loss – – – – (203) (133) – – (36) (48)
Interest received – – – – 207 304 1,505 2,501 17 41
Dividends received – – – – 250,868 283,330 84 – 23,452 33,769
Distributions received – – – – 9,466 11,534 – 163,602 404 460
Other income received 195 144 408 131 4,988 4,074 – 6 62 155
Responsible Entity's fees paid (7,147) (7,757) (4,475) (5,053) (21,872) (24,188) (2,267) (2,954) (5,758) (7,174)
Operating expenses paid (5) (118) (145) (38) (1,365) (5,997) (130) (156) (171) (291)
Net cash inflow/(outflow) from operating activities 12(a) (460,951) 470,612 (258,056) 351,478 1,734,104 3,603,095 1,710,955 329,172 71,113 337,679
Cash flows from financing activities
Proceeds from applications by unitholders 1,011,492 679,318 547,740 328,613 3,507,467 3,319,686 882,176 1,280,048 127,447 191,985
Payments for redemptions by unitholders (480,782) (1,151,314) (254,662) (683,122) (4,986,107) (6,762,507) (2,421,911) (1,694,012) (165,592) (515,103)
Distributions paid from operating activities (59,719) (12,976) (25,934) – (85,391) (99,297) (171,667) – (23,980) (12,838)
Net cash inflow/(outflow) from financing activities 470,991 (484,972) 267,144 (354,509) (1,564,031) (3,542,118) (1,711,402) (413,964) (62,125) (335,956)
Net increase/(decrease) in cash and cash equivalents 10,040 (14,360) 9,088 (3,031) 170,073 60,977 (447) (84,792) 8,988 1,723
Cash and cash equivalents at the beginning of the year 8,630 20,494 13,765 16,441 112,149 50,050 13,369 94,910 4,945 3,217
Effects of foreign currency exchange rate changes on cash and cash equivalents 648 2,496 (41) 355 82 1,122 519 3,251 (179) 5
Cash and cash equivalents at the end of the year 11 19,318 8,630 22,812 13,765 282,304 112,149 13,441 13,369 13,754 4,945
Non-cash financing activities 12(b) 144,712 39,129 83,901 – 332,469 600,579 279,689 – 29,632 16,500
The above statement of cash flows should be read in conjunction with the accompanying notes.
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Statement of cash flows
23
Statement of cash flows (continued)
For the year ended 30 June 2017
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies
Index Fund
Vanguard International Small Companies
Index Fund (Hedged)
Vanguard Global Minimum Volatility
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Cash flows from operating activities
Proceeds from sale of financial instruments held at fair value through profit or loss 822,915 611,971 861,150 939,381 88,715 335,223 42,412 197,006 10,093 8,773
Purchases of financial instruments held at fair value through profit or loss (928,191) (553,951) (977,455) (818,621) (129,403) (95,854) (51,554) (79,890) (11,860) (29,047)
Transaction costs on purchases of financial instruments held at fair value through profit or loss (100) (55) – – (15) (10) – – (2) (6)
Interest received 70 74 27 – 6 9 – – – –
Dividends received 3,263 3,103 – – 4,914 7,122 – – 492 493
Distributions received 60,353 66,905 – – 1,534 1,889 – 12,812 78 77
Other income received 34 1,534 – 3 127 423 – 1 – 6
Responsible Entity's fees paid (7,863) (8,115) (445) (425) (1,366) (1,842) (20) (36) (96) (79)
Operating expenses paid (305) (1,345) (18) (15) (322) (251) (22) (32) (43) (25)
Net cash inflow/(outflow) from operating activities 12(a) (49,824) 120,121 (116,741) 120,323 (35,810) 246,709 (9,184) 129,861 (1,338) (19,808)
Cash flows from financing activities
Proceeds from applications by unitholders 990,069 581,537 756,182 287,741 105,731 73,847 36,991 19,682 2,260 20,025
Payments for redemptions by unitholders (885,052) (685,770) (610,456) (410,479) (64,622) (323,062) (9,435) (152,832) (866) –
Distributions paid from operating activities (28,331) (14,381) (28,840) – (814) (1,215) (18,136) – – –
Net cash inflow/(outflow) from financing activities 76,686 (118,614) 116,886 (122,738) 40,295 (250,430) 9,420 (133,150) 1,394 20,025
Net increase/(decrease) in cash and cash equivalents 26,862 1,507 145 (2,415) 4,485 (3,721) 236 (3,289) 56 217
Cash and cash equivalents at the beginning of the year 5,987 5,020 2,434 4,881 (445) 3,277 701 3,948 25 –
Effects of foreign currency exchange rate changes on cash and cash equivalents (2,179) (540) – (32) (187) (1) (4) 42 164 (192)
Cash and cash equivalents at the end of the year 11 30,670 5,987 2,579 2,434 3,853 (445) 933 701 245 25
Non cash financing activities 12(b) 108,193 87,187 108,246 – 19,418 41,147 1,815 – 460 –
The above statement of cash flows should be read in conjunction with the accompanying notes.
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Statement of cash flows
24
Statement of cash flows (continued)
For the year ended 30 June 2017
Vanguard Global Infrastructure Index
Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
Vanguard International Shares Select
Exclusions Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Cash flows from operating activities
Proceeds from sale of financial instruments held at fair value through profit or loss 92,629 24,299 86,318 20,032 53,293 – 5,770 – 9,936 3,060
Purchases of financial instruments held at fair value through profit or loss (169,546) (41,373) (117,457) (27,375) (902,300) – (20,699) – (10,610) (17,886)
Transaction costs on purchases of financial instruments held at fair value through profit or loss (16) (3) – – (31) – (5) – (2) (3)
Interest received 9 5 5 – 148 – 1 – – –
Dividends received 6,353 4,498 – – 7,864 – 249 – 334 159
Distributions received 499 373 – 570 288 – 12 – 6 4
Other income received 245 23 – – 59 – 1 – – –
Responsible Entity's fees paid (1,033) (788) (18) (10) (773) – (49) – (66) (23)
Operating expenses paid (34) (41) (11) (11) (183) – (23) – (35) (11)
Net cash inflow/(outflow) from operating activities 12(a) (70,894) (13,007) (31,163) (6,794) (841,635) – (14,743) – (437) (14,700)
Cash flows from financing activities
Proceeds from applications by unitholders 171,907 38,716 102,750 10,097 944,626 – 15,252 – 1,065 14,500
Payments for redemptions by unitholders (94,734) (22,986) (71,342) (3,344) (81,051) – – – – –
Distributions paid from operating activities (3,979) (3,594) (144) – (50) – – – (75) –
Net cash inflow/(outflow) from financing activities 73,194 12,136 31,264 6,753 863,525 – 15,252 – 990 14,500
Net increase/(decrease) in cash and cash equivalents 2,300 (871) 101 (41) 21,890 509 553 (200)
Cash and cash equivalents at the beginning of the year 463 1,333 38 79 – – – – 15 –
Effects of foreign currency exchange rate changes on cash and cash equivalents (522) 1 – – (45) – (262) – 4 215
Cash and cash equivalents at the end of the year 11 2,241 463 139 38 21,845 – 247 – 572 15
Non cash financing activities 12(b) 3,367 2,394 893 – 745 – 72 – 228 –
The above statement of cash flows should be read in conjunction with the accompanying notes.
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Notes to the financial statements
25
Notes to the financial statements For the year ended 30 June 2017
1. General informationThese financial statements cover the Vanguard Investor Funds (the “Funds”) as registered managed investment schemes. The respective constitution dates are as follows:
• Vanguard International Fixed Interest Index Fund (Hedged) 18 May 1999
• Vanguard International Credit Securities Index Fund (Hedged) 11 December 2000
• Vanguard International Shares Index Fund 6 December 1996
• Vanguard International Shares Index Fund (Hedged) 8 June 2000
• Vanguard Emerging Markets Shares Index Fund 24 November 1997
• Vanguard International Property Securities Index Fund 25 June 2005
• Vanguard International Property Securities Index Fund (Hedged) 30 June 2005
• Vanguard International Small Companies Index Fund 9 August 2007
• Vanguard International Small Companies Index Fund (Hedged) 9 August 2007
• Vanguard Global Minimum Volatility Fund 31 August 2016
• Vanguard Global Infrastructure Index Fund 26 October 2007
• Vanguard Global Infrastructure Index Fund (Hedged) 26 October 2007
• Vanguard International Shares Select Exclusions Index Fund 9 December 2016
• Vanguard Global Value Equity Fund 31 August 2016
• Vanguard Global Quantitative Equity Fund 23 November 2015
The Responsible Entity of the Vanguard Wholesale Funds is Vanguard Investments Australia Ltd (the “Responsible Entity”). The Responsible Entity’s registered office is Level 34, Freshwater Place, 2 Southbank Boulevard, Southbank Vic 3006.
The Funds invest in accordance with the investment policy of the Funds as set out in their respective Product Disclosure Statements (PDSs) and in accordance with the Fund Constitutions.
The financial statements were authorised for issue by the directors on 31 August 2017. The directors of the Responsible Entity have the power to amend and reissue the financial statements.
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Vanguard Annual Report
Notes to the financial statements
26
Notes to the financial statements (continued)
For the year ended 30 June 2017
2. Summary of significant accounting policiesThe principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated in the following text.
(a) Basis of preparationThese general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Accounting Standards Board and the Corporations Act 2001 in Australia. The Funds are for profit unit trusts for the purpose of preparing the financial statements.
The financial statements are prepared on the basis of fair value measurement of assets and liabilities except where otherwise stated.
The balance sheet is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and do not distinguish between current and non current. All material balances are expected to be recovered or settled within twelve months, except for investments in financial assets and net assets attributable to unitholders. The amount expected to be recovered or settled within twelve months after the end of each reporting period cannot be reliably determined.
The Funds manage financial assets at fair value through profit or loss based on the economic circumstances at any given point in time, as well as to meet any liquidity requirements. As such it is expected that a portion of the portfolio will be realised within 12 months, however, an estimate of that amount cannot be determined as at balance date.
In the case of net assets attributable to unitholders, the units are redeemed on demand at the unitholder’s option. However, holders of these instruments typically retain them for the medium to long term. As such, the amount expected to be settled within 12 months cannot be reliably determined.
(i) Compliance with International Financial Reporting StandardsThe financial statements of the Funds also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
(ii) New and amended standards adopted by the FundsThere are no standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 July 2016 that have a material impact on the Funds.
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Notes to the financial statements (continued)
For the year ended 30 June 2017
2. Summary of significant accounting policies (continued)
(b) Financial instruments
(i) ClassificationThe Funds’ investments are classified as at fair value through profit or loss. They comprise:
• Financial instruments held for trading Derivative financial instruments such as futures, forward foreign exchange contracts, options and swaps are included under this classification. The Funds do not designate any derivatives as hedges in a hedging relationship.
• Financial instruments designated at fair value through profit or loss upon initial recognition These include financial assets that are not held for trading purposes and which may be sold. These are investments in equity securities, listed unit trusts, unlisted trusts, fixed interest securities and money market securities.
Financial assets and financial liabilities designated at fair value through profit or loss upon initial recognition are those that are managed and their performance evaluated on a fair value basis in accordance with the Funds’ documented investment strategy. The Funds’ policy is for the Responsible Entity to evaluate the information about these financial instruments on a fair value basis together with other related financial information.
(ii) Recognition/derecognitionThese include financial assets that are not held for trading purposes and which may be sold. These are investments in equity securities, listed unit trusts, unlisted trusts, fixed interest securities and money market securities.
Financial assets and financial liabilities designated at fair value through profit or loss upon initial recognition are those that are managed and their performance evaluated on a fair value basis in accordance with the Funds’ documented investment strategy. The Funds’ policy is for the Responsible Entity to evaluate the information about these financial instruments on a fair value basis together with other related financial information.
(iii) MeasurementFinancial assets and liabilities held at fair value through profit or loss
At initial recognition, the Funds measure a financial asset at its fair value. Transaction costs of financial assets carried at fair value through profit and loss are expensed in the statement of comprehensive income.
Subsequent to initial recognition, all financial assets and financial liabilities at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the ‘financial assets or financial liabilities at fair value through profit or loss’ category are presented in the statement of comprehensive income within net gains/(losses) on financial instruments held at fair value through profit or loss in the period in which they arise. This also includes dividend expense on short sales of securities, which have been classified at fair value through profit or loss.
For further details on how the fair value of the financial instruments is determined are disclosed in note 4.
(iv) Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
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Notes to the financial statements (continued)
For the year ended 30 June 2017
2. Summary of significant accounting policies (continued)
(c) Net assets attributable to unitholdersUnits are redeemable at the unitholders’ option, however, applications and redemptions may be suspended by the Responsible Entity if it is in the best interests of the unitholders. The units are classified as financial liabilities as the Funds are required to distribute their distributable income, in accordance with the Fund Constitutions.
The units can be put back to the Funds at any time for cash based on the redemption price, which is equal to a proportionate share of the Funds’ net asset value attributable to the unitholders.
The units are carried at the redemption amount that is payable at balance sheet date if the holder exercises the right to put the unit back to the Funds.
(d) Cash and cash equivalentsFor the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less from the date of acquisition that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Payments and receipts relating to the purchase and sale of investment securities are classified as cash flows from operating activities, as movements in the fair value of these securities represent the Funds’ main income generating activity.
(e) Margin accountsDeposits held with brokers for margin, represent restricted margin deposits for derivative financial instruments.The reported balance for collateral margins represents the level of restricted cash required to be settled as at close of business at balance date.
(f) Investment incomeInterest income is recognised in profit or loss for all financial instruments that are held at fair value through profit or loss using the effective interest method. Interest income on assets held at fair value through profit or loss is included in the net gains/(losses) on financial instruments. Other changes in fair value for such instruments are recorded in accordance with the policies described in note 2(b).
The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the financial asset or liability. When calculating the effective interest rate, the Funds estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees paid or received between the parties to the contract that are an integral part of the effective interest rate, including transaction costs and all other premiums or discounts.
Dividend income is recognised on the ex dividend date with any related foreign withholding tax recorded as an expense. The Funds currently incur withholding tax imposed by certain countries on investment income.
Trust distributions are recognised on an entitlements basis.
(g) ExpensesAll expenses, including Responsible Entity’s fees, are recognised in the statement of comprehensive income on an accruals basis.
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Notes to the financial statements (continued)
For the year ended 30 June 2017
2. Summary of significant accounting policies (continued)
(h) Income taxUnder current legislation, the Funds are not subject to income tax as unitholders are presently entitled to the income of the Funds.
The benefits of imputation credits and foreign tax paid are passed on to unitholders.
(i) DistributionsIn accordance with the Fund Constitutions, the Funds distribute income adjusted for amounts determined by the Responsible Entity, to unitholders by cash or reinvestment. The distributions are recognised in the statement of comprehensive income as finance costs attributable to unitholders.
(j) Increase/decrease in net assets attributable to unitholdersIncome not distributed is included in net assets attributable to unitholders. Movements in net assets attributable to unitholders are recognised in the statement of comprehensive income as finance costs.
(k) Functional and presentation currency(i) Functional and presentation currencyItems included in the Funds’ financial statements are measured using the currency of the primary economic environment in which it operates (the ‘functional currency’). This is the Australian dollar, which reflects the currency of the economy in which the Funds compete for funds and is regulated. The Australian dollar is also the Funds’ presentation currency.
(ii) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Non monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value was determined. Translation differences on assets and liabilities carried at fair value are reported in the statement of comprehensive income on a net basis within net gains/ (losses) on financial instruments held at fair value through profit or loss.
(l) Due from/to brokersAmounts due from/to brokers represent payables for securities purchased and receivables for securities sold that have been contracted for but not yet delivered by the end of the year. A provision for impairment of amounts due from brokers is established when there is objective evidence that the Fund will not be able to collect all amounts due from the relevant broker. Significant financial difficulties of the broker, probability that the broker will enter bankruptcy or financial reorganisation, and default in payments are considered indicators that the amount due from brokers is impaired.
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Notes to the financial statements (continued)
For the year ended 30 June 2017
2. Summary of significant accounting policies (continued)
(m) Receivables and accrued incomeReceivables may include amounts for dividends, interest and trust distributions. Dividends and trust distributions are accrued when the right to receive payment is established. Interest is accrued at the end of each reporting period from the time of last payment in accordance with the policy set out in note 2(f) above. Amounts are generally received within 30 days of being recorded as receivables.
(n) PayablesPayables include liabilities and accrued expenses owing by the Funds which are unpaid as at the end of the reporting period.
As the Funds have a contractual obligation to distribute their distributable income, a separate distribution payable is recognised in the balance sheet as at the end of each reporting period where this amount remains unpaid as at the end of the reporting period
(o) Applications and redemptionsApplications received for units in the Funds are recorded net of any entry fees payable prior to the issue of units in the Funds. Redemptions from the Funds are recorded gross of any exit fees payable after the cancellation of units redeemed.
(p) Goods and Services Tax (GST)The GST incurred on the costs of various services provided to the Responsible Entity by third parties have been passed onto the Funds. The Funds qualify for Reduced Input Tax Credit recovery rate of between 55% and 100%, hence Responsible Entity’s fees, custodial fees and other expenses have been recognised in the statement of comprehensive income net of the amount of GST recoverable from the Australian Taxation Office (ATO). Accounts payable are inclusive of GST. The net amount of GST recoverable from the ATO is included in receivables in the balance sheet. Cash flows relating to GST are included in the statement of cash flows on a gross basis.
(q) Comparative revisionsComparative information has been revised where appropriate to enhance comparability. Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
(r) Use of estimatesThe Funds make estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
For the majority of the Funds’ financial instruments, quoted market prices are readily available. However, certain financial instruments, for example, over the counter derivatives or unquoted securities, are fair valued using valuation techniques. Where valuation techniques (for example, pricing models) are used to determine fair values, they are validated and periodically reviewed by experienced personnel of the Responsible Entity, independent of the area that created them.
Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
For certain other financial instruments, including amounts due from/to brokers and payables, the carrying amounts approximate fair value due to the immediate or short term nature of these financial instruments.
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Notes to the financial statements (continued)
For the year ended 30 June 2017
2. Summary of significant accounting policies (continued)
(s) New accounting standards and interpretationsCertain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2017 reporting period and have not been early adopted by the Funds. The directors’ assessment of the impact of these new standards (to the extent relevant to the Funds) and interpretations is set out below:
(i) AASB 9 Financial Instruments (and applicable amendments), (effective from 1 January 2018)AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. It has now also introduced revised rules around hedge accounting. The standard is not applicable until 1 January 2018 but is available for early adoption.
The directors do not expect this to have a significant impact on the recognition and measurement of the Funds’ financial instruments as they are carried at fair value through profit or loss.
The derecognition rules have not been changed from the previous requirements, and the Funds do not apply hedge accounting. AASB 9 introduces a new impairment model. However, as the Funds’ investments are all held at fair value through profit or loss, the change in impairment rules will not impact the Funds.
The Funds have not yet decided when to adopt AASB 9.
(ii) AASB 15 Revenue from Contracts with Customers (effective from 1 January 2018)The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers contracts for goods and services and AASB 111 which covers construction contracts.
The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer so the notion of control replaces the existing notion of risks and rewards.
The Funds’ main sources of income are interest, dividends and gains on financial instruments held at fair value. All of these are outside the scope of the new revenue standard. As a consequence, the directors do not expect the adoption of the new revenue recognition rules to have a significant impact on the Funds’ accounting policies or the amounts recognised in the financial statements.
(t) Rounding of amountsThe Funds are registered schemes of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, relating to the “rounding off” amounts in the financial statements. Amounts in the financial statements have been rounded off to the nearest thousand dollars unless otherwise indicated.
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Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk managementThe Funds’ activities expose them to a variety of financial risks: market risk (including price risk, foreign exchange risk and interest rate risk), credit risk and liquidity risk.
The Funds’ overall risk management programme focuses on ensuring compliance with the Funds’ Product Disclosure Statement and seeks to maximise the returns derived for the level of risk to which the Funds are exposed. The Funds use derivative financial instruments to moderate and create certain risk exposures. Financial risk management is carried out by the investment management department of the Responsible Entity under policies approved by the Board of Directors of the Responsible Entity (the “Board”).
The Funds use different methods to measure different types of risks to which they are exposed. These methods are explained below.
(a) Market risk(i) Price riskThe Funds are exposed to price risk whereby the future prices of the Funds’ securities are uncertain. Where non monetary financial instruments are denominated in currencies other than the Australian dollar, the price in the future will also fluctuate because of changes in foreign exchange rates. Paragraph (ii) ‘Foreign exchange risk’ below sets out how this component of price risk is managed and measured.
In any asset sector the returns of individual securities are a combination of the market returns and returns specific to each security.
At 30 June, the fair value of equities and related derivatives exposed to price risk were as follows:
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund (Hedged)
Vanguard Emerging Markets Shares
Index Fund
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Derivative assets held for trading – 1,246 8 1,038 – 83 – – – –
Equity securities designated at fair value through profit or loss 11,777,902 11,841,864 – – 1,136,673 1,008,846 – – – –
Listed unit trusts designated at fair value through profit or loss – – – – – – 1,887,438 2,056,004 – –
Unlisted unit trusts designated at fair value through profit or loss – – 3,360,184 4,406,645 – – – – 1,352,299 1,273,152
Derivative liabilities held for trading (781) (587) (181) (388) (11) – – – – –
Net total 11,777,121 11,842,523 3,360,011 4,407,295 1,136,662 1,008,929 1,887,438 2,056,004 1,352,299 1,273,152
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33
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(i) Price risk (continued)
Vanguard International Small Companies
Index Fund
Vanguard International Small Companies
Index Fund (Hedged)
Vanguard Global Minimum Volatility
Fund
Vanguard Global Infrastructure Index
Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Derivative assets held for trading 8 26 – 9 – 1 – – – –
Equity securities designated at fair value through profit or loss 418,986 310,978 – – 25,141 21,214 254,774 178,319 – –
Unlisted unit trusts designated at fair value through profit or loss – – 66,464 34,711 – – – – 69,167 35,523
Derivative liabilities held for trading (29) (1) – – (9) (4) – – – –
Net total 418,965 311,003 66,464 34,720 25,132 21,211 254,774 178,319 69,167 35,523
Vanguard International Shares Select
Exclusions Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000
Derivative assets held for trading 26 – – – – –
Equity securities designated at fair value through profit or loss 910,803 – 17,074 – 18,084 14,365
Unlisted unit trusts designated at fair value through profit or loss – – – – – –
Derivative liabilities held for trading (316) – (9) – – –
Net total 910,513 – 17,065 – 18,084 14,365
The table presented in note 3(b) summarises the impact on operating profit before finance costs attributable to unitholders and liabilities attributable to unitholders from possible changes in market prices that were reasonably based on the risk that the Funds were exposed to at reporting date.
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Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)(ii) Foreign exchange riskThe Funds have exposure to foreign assets and holds both monetary and non monetary assets denominated in currencies other than the Australian dollar. Foreign exchange risk arises as the value of monetary securities denominated in other currencies will fluctuate due to changes in exchange rates. The foreign exchange risk relating to non monetary assets and liabilities is a component of price risk not foreign exchange risk. The risk is measured using sensitivity analysis.
The Vanguard International Shares Index Fund, Vanguard Emerging Markets Shares Index Fund, Vanguard International Property Securities Index Fund, Vanguard International Small Companies Index Fund, Vanguard Global Infrastructure Index Fund, Vanguard Global Minimum Volatility Fund, Vanguard Global Value Equity Fund and Vanguard Global Quantitative Fund do not hedge any of their exposure to foreign currencies. Accordingly, these Funds are directly affected by currency fluctuations.
The foreign exchange risk disclosures have been prepared on the basis of the Funds’ direct investments and not on a look through basis to investments held via interposed investment funds. In addition, any currency hedging to minimise the impact of foreign exchange risk has not been incorporated into the disclosures unless the derivatives are held directly in these Funds.
In accordance with the Funds’ policy, the Investment Manager monitors the Funds’ foreign exchange exposure on a daily basis.
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Notes to the financial statements
35
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)The tables below summarise the Funds’ assets and liabilities that are denominated in a currency other than the Australian dollar.
Vanguard International Fixed Interest Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 740 624 1,933 2,432 7,795 526 430 66 2,403 7,127
Margin accounts 31 121 439 93 22 96 108 572 358 56
Receivables – – – – 52 – – – – 145
Due from brokers – receivable for securities sold 16,600 – 7,114 5,817 2,002 11,700 – – – –
Financial assets held at fair value through profit or loss 875,112 211,684 813,197 875,473 236,258 715,284 184,184 676,282 812,314 201,027
Total assets 892,483 212,429 822,683 883,815 246,129 727,606 184,722 676,920 815,075 208,355
Liabilities
Due to brokers – payables for securities purchased 45,666 6,896 34,460 15,936 1,945 24,661 3,352 12,696 11,351 –
Financial liabilities held at fair value through profit or loss 101 99 450 303 1,756 230 2 920 29,182 3,496
Total liabilities 45,767 6,995 34,910 16,239 3,701 24,891 3,354 13,616 40,533 3,496
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 1,428,186 216,809 828,942 893,467 240,085 1,217,624 180,505 667,906 810,463 215,149
- Sell foreign currency (2,304,710) (427,581) (1,630,285) (1,802,268) (488,423) (1,943,974) (384,235) (1,358,759) (1,589,678) (424,176)
Net exposure including foreign currency forward contracts (29,808) (5,338) (13,570) (41,225) (5,910) (23,635) (22,362) (27,549) (4,673) (4,168)
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Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard International Credit Securities Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 8,061 749 5,379 619 5,525 2,441 2,288 3,916 288 1,401
Margin accounts 339 167 128 28 20 577 44 99 30 67
Receivables – – – – 18 – – – – 64
Accrued income – – 39 – – – – 63 – –
Due from brokers – receivable for securities sold 5,590 – 1,894 – – 818 – 771 226 2,017
Financial assets held at fair value through profit or loss 846,067 71,590 401,471 60,579 104,314 682,584 54,158 301,566 59,473 88,084
Total assets 860,057 72,506 408,911 61,226 109,877 686,420 56,490 306,415 60,017 91,633
Liabilities
Due to brokers – payables for securities purchased 23,306 2,543 8,869 – 1,582 10,240 179 954 343 1,703
Financial liabilities held at fair value through profit or loss 195 384 5,088 16 3,667 916 3 47 4,592 936
Total liabilities 23,501 2,927 13,957 16 5,249 11,156 182 1,001 4,935 2,639
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 2,817,164 72,026 412,974 61,359 109,100 2,277,900 57,755 316,890 62,421 95,445
- Sell foreign currency (3,681,947) (144,115) (822,442) (125,804) (217,906) (2,968,200) (120,605) (632,688) (119,259) (186,512)
Net exposure including foreign currency forward contracts (28,227) (2,510) (14,514) (3,235) (4,178) (15,036) (6,542) (10,384) (1,756) (2,073)
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37
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard International Shares Index Fund
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 137,834 11,603 31,639 20,439 16,385 69,098 3,921 12,734 9,691 11,041
Margin accounts 4,949 644 2,005 598 346 8,435 1,407 3,949 1,809 711
Receivables 58 11 10,413 6 8,010 30 63 6,287 2 7,478
Accrued income 6,632 3,893 452 1,277 1,273 7,469 3,702 1,056 1,540 1,180
Due from brokers – receivable for securities sold – – – – – – 32 16 3 –
Financial assets held at fair value through profit or loss 7,221,718 793,147 1,435,701 1,053,294 1,274,264 7,314,230 873,547 1,303,677 1,036,106 1,315,554
Total assets 7,371,191 809,298 1,480,210 1,075,614 1,300,278 7,399,262 882,672 1,327,719 1,049,151 1,335,964
Liabilities
Due to brokers – payables for securities purchased – – 846 – – – – – – –
Financial liabilities held at fair value through profit or loss 444 111 406 47 78 8 – 296 291 –
Total liabilities 444 111 1,252 47 78 8 – 296 291 –
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 161,265 4,267 9,291 4,456 4,172 10,511 1,642 3,030 1,268 1,682
- Sell foreign currency (217,786) (10,554) (22,234) (13,781) (10,804) (7,622) – – (611) –
Net exposure including foreign currency forward contracts 7,314,226 802,900 1,466,015 1,066,242 1,293,568 7,402,143 884,314 1,330,453 1,049,517 1,337,646
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Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard International Shares Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 6,555 901 1,519 1,215 1,984 5,061 1,558 2,675 825 18,748
Margin accounts 1,615 292 790 264 196 5,599 696 2,152 1,375 513
Receivables – – – – – – – 1 – –
Financial assets held at fair value through profit or loss 4,582 1,958 1,450 8 42,952 40,107 1,308 1,677 1,555 107,144
Total assets 12,752 3,151 3,759 1,487 45,132 50,767 3,562 6,505 3,755 126,405
Liabilities
Margin accounts – – – – 13,028 – – – – –
Payables – – – – 1 – – – – –
Financial liabilities held at fair value through profit or loss 1,237 4,520 10,101 2 12,764 4,304 951 1,622 28,334 19,279
Total liabilities 1,237 4,520 10,101 2 25,793 4,304 951 1,622 28,334 19,279
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 6,880,430 283,323 513,346 342,571 1,209,226 8,528,628 339,240 597,255 477,699 3,753,361
- Sell foreign currency (9,034,623) (516,786) (934,492) (661,826) (1,219,977) (11,282,777) (698,837) (1,098,667) (852,115) (2,700,463)
Net exposure including foreign currency forward contracts (2,142,678) (234,832) (427,488) (317,770) 8,588 (2,707,686) (356,986) (496,529) (398,995) 1,160,024
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Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard Emerging Markets Shares Index Fund
As at 30 June 2017 As at 30 June 2016
US Dollars
Hong Kong
Dollars
Korean Won
Taiwan New
Dollars
Other* Currencies
US Dollars
Hong Kong
Dollars
Korean Won
Taiwan New
Dollars
Other* Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 10,083 296 53 64 1,548 1,794 1,276 54 62 1,412
Margin accounts 763 – – – – 1,825 – – – –
Receivables – – 424 (5) 150 – – 433 73 104
Accrued income 192 2,362 66 1,341 613 194 3,741 151 1,552 730
Due from brokers – receivable for securities sold – – – – 41 728 2,345 1,386 1,278 4,408
Financial assets held at fair value through profit or loss 122,272 236,478 177,573 141,891 458,460 96,141 207,690 147,475 121,613 436,011
Total assets 133,310 239,136 178,116 143,291 460,812 100,682 215,052 149,499 124,578 442,665
Liabilities
Financial liabilities held at fair value through profit or loss 11 – – – – 2 – – – –
Total liabilities 11 – – – – 2 – – – –
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 530 – – – – 4,767 – – – –
- Sell foreign currency (13,900) – – – – (16,900) (3,116) – – (1,651)
Net exposure including foreign currency forward contracts 119,929 239,136 178,116 143,291 460,812 88,547 211,936 149,499 124,578 441,014
* For 2017 and 2016, major currencies under this category include Brazil, India, South Africa, Mexico, Malaysia, Indonesia and Thailand. None of these currencies individually exceed
10% of the total exposure.
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Notes to the financial statements
40
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard International Property Securities Index Fund
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 5,359 6,948 13,000 6 5,243 2,590 95 375 37 546
Receivables 219 78 1,218 24 42 – 223 536 14 21
Accrued income 4,396 523 209 900 780 4,090 464 103 967 738
Due from brokers - receivable for securities sold 97,168 1,728 3,062 10,212 9,298 – – 16 16 –
Financial assets held at fair value through profit or loss 1,249,013 112,468 202,517 138,463 184,996 1,385,612 109,881 202,964 169,004 188,543
Total assets 1,356,155 121,745 220,006 149,605 200,359 1,392,292 110,663 203,994 170,038 189,848
Liabilities
Due to brokers – payables for securities purchased 382 – – 120 – – – – – –
Financial liabilities held at fair value through profit or loss 19 27 47 – 61 – – – – –
Total liabilities 401 27 47 120 61 – – – – –
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 50,668 305 – 231 8 – – – – –
- Sell foreign currency (153,544) (8,780) (16,383) (10,598) (14,907) (2,000) – – – –
Net exposure including foreign currency forward contracts 1,252,878 113,243 203,576 139,118 185,399 1,390,292 110,663 203,994 170,038 189,848
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Notes to the financial statements
41
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard International Property Securities Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Financial assets held at fair value through profit or loss 17 10 36 18 57 103 10 26 376 16
Total assets 17 10 36 18 57 103 10 26 376 16
Liabilities
Financial liabilities held at fair value through profit or loss 98 30 93 42 523 170 18 43 5,725 66
Total liabilities 98 30 93 42 523 170 18 43 5,725 66
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 1,105,776 104,676 190,112 133,151 170,477 862,012 95,483 135,116 121,861 116,744
- Sell foreign currency (2,085,805) (192,492) (346,904) (243,851) (312,935) (1,783,083) (175,737) (271,746) (227,992) (242,560)
Net exposure including foreign currency forward contracts (980,110) (87,836) (156,849) (110,724) (142,924) (921,138) (80,262) (136,647) (111,480) (125,866)
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Notes to the financial statements
42
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard International Small Companies Index Fund
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 1,863 198 474 315 670 4,414 80 242 744 88
Margin accounts 141 41 51 50 16 544 103 113 84 16
Receivables 2 10 141 2 54 – 12 117 – 65
Accrued income 284 71 35 65 53 239 92 26 59 38
Due from brokers – receivable for securities sold 189 – 3 – 4 9,673 793 1,084 2,021 1,954
Financial assets held at fair value through profit or loss 241,534 31,776 43,654 51,699 50,331 184,847 21,062 28,925 39,252 36,918
Total assets 244,013 32,096 44,358 52,131 51,128 199,717 22,142 30,507 42,160 39,079
Liabilities
Due to brokers – payables for securities purchased 54 – – 8 – – – – – –
Financial liabilities held at fair value through profit or loss 4 7 16 – 2 2 – – 2 1
Total liabilities 58 7 16 8 2 2 – – 2 1
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 214 – 52 – – 6,548 – – – –
- Sell foreign currency (618) – (74) – – (20,525) (808) (1,283) (2,790) (1,667)
Net exposure including foreign currency forward contracts 243,551 32,089 44,320 52,123 51,126 185,738 21,334 29,224 39,368 37,411
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Notes to the financial statements
43
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard International Small Companies Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 127 10 102 188 4 36 9 21 6 4
Margin accounts 36 – 8 11 – 129 24 26 21 –
Financial assets held at fair value through profit or loss – 14 1 – 22 13 – 1 6 4
Total assets 163 24 111 199 26 178 33 48 33 8
Liabilities
Financial liabilities held at fair value through profit or loss – 16 2 – 40 3 – – 239 10
Total liabilities – 16 2 – 40 3 – – 239 10
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 43,448 6,031 8,282 8,850 9,133 42,580 5,355 7,247 9,753 8,233
- Sell foreign currency (85,413) (11,521) (15,829) (18,219) (17,720) (65,220) (8,330) (10,896) (14,179) (12,826)
Net exposure including foreign currency forward contracts (41,802) (5,482) (7,438) (9,170) (8,601) (22,465) (2,942) (3,601) (4,632) (4,595)
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Notes to the financial statements
44
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard Global Minimum Volatility Fund
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 17 1 7 10 14 3 – 18 – 4
Margin accounts 12 – 42 – – 12 – 17 – –
Receivables 2 – 4 – 15 6 – 1 – 6
Accrued income 43 6 – 1 9 34 22 – – 8
Due from brokers – receivable for securities sold 29 – 14 – – – – – – –
Financial assets held at fair value through profit or loss 14,706 1,238 1,759 1,429 4,904 13,197 2,108 484 775 3,901
Total assets 14,809 1,245 1,826 1,440 4,942 13,252 2,130 520 775 3,919
Liabilities
Due to brokers – payables for securities purchased 196 45 – – 36 – – – – –
Financial liabilities held at fair value through profit or loss 1 29 37 – 58 10 – 4 31 35
Total liabilities 197 74 37 – 94 10 – 4 31 35
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 12,400 49 – – – 11,074 277 99 68 56
- Sell foreign currency (24,679) (1,250) (1,686) (1,742) (7,469) (21,769) (2,556) (710) (776) (6,117)
Net exposure including foreign currency forward contracts 2,333 (30) 103 (302) (2,621) 2,547 (149) (95) 36 (2,177)
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Notes to the financial statements
45
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard Global Infrastructure Index Fund
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 911 82 51 94 87 103 62 42 34 51
Receivables – – 52 – 12 – – 14 – 8
Accrued income 223 223 41 – 152 162 172 63 – 92
Due from brokers – receivable for securities sold 4,387 326 490 616 1,289 – – – – –
Financial assets held at fair value through profit or loss 153,017 10,878 16,728 20,943 46,590 112,870 9,787 10,580 15,985 23,984
Total assets 158,538 11,509 17,362 21,653 48,130 113,135 10,021 10,699 16,019 24,135
Liabilities
Due to brokers – payables for securities purchased – – – – – 291 – – – –
Total liabilities – – – – – 291 – – – –
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 2,725 – – – – 382 – – – 52
- Sell foreign currency (8,000) (330) (491) (615) (1,289) (2,032) – (82) – –
Net exposure including foreign currency forward contracts 153,263 11,179 16,871 21,038 46,841 111,194 10,021 10,617 16,019 24,187
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Notes to the financial statements
46
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard Global Infrastructure Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Financial assets held at fair value through profit or loss 1 1 2 1 3 3 – 1 6 –
Total assets 1 1 2 1 3 3 – 1 6 –
Liabilities
Financial liabilities held at fair value through profit or loss 4 1 2 2 86 5 – 1 170 3
Total liabilities 4 1 2 2 86 5 – 1 170 3
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 46,267 3,857 5,307 6,101 12,921 22,310 1,902 2,356 3,784 4,537
- Sell foreign currency (91,899) (7,103) (10,225) (12,412) (25,856) (45,943) (4,060) (4,570) (6,904) (9,228)
Net exposure including foreign currency forward contracts (45,635) (3,246) (4,918) (6,312) (13,018) (23,635) (2,158) (2,214) (3,284) (4,694)
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Notes to the financial statements
47
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard International Shares Select Exclusions Index Fund
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 9,427 937 2,755 1,746 4,471 – – – – –
Margin accounts 797 228 418 84 181 – – – – –
Receivables 43 1 231 3 148 – – – – –
Accrued income 413 269 32 80 98 – – – – –
Financial assets held at fair value through profit or loss 539,772 56,653 109,960 80,343 154,507 – – – – –
Total assets 550,452 58,088 113,396 82,256 159,405 – – – – –
Liabilities
Margin accounts – – – – 21,407 – – – – –
Due to brokers – payables for securities purchased 11,867 1,261 2,796 1,812 1,979 – – – – –
Financial liabilities held at fair value through profit or loss 372 799 1,874 – 4,992 – – – – –
Total liabilities 12,239 2,060 4,670 1,812 28,378 – – – – –
Net increase/(decrease) in exposure from foreign currency forward contracts – – – – –
- Buy foreign currency 1,215,481 46,186 90,445 62,867 1,429,749 – – – – –
- Sell foreign currency (1,609,157) (86,893) (169,174) (122,897) (850,049) – – – – –
Net exposure including foreign currency forward contracts 144,537 15,321 29,997 20,414 710,727 – – – – –
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Notes to the financial statements
48
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard Global Value Equity Fund
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 49 4 21 16 19 – – – – –
Margin accounts – – 24 – – – – – – –
Receivables – – 8 – 2 – – – – –
Accrued income 9 6 1 1 2 – – – – –
Financial assets held at fair value through profit or loss 9,895 1,154 2,276 1,571 2,063 – – – – –
Total assets 9,953 1,164 2,330 1,588 2,086 – – – – –
Liabilities
Financial liabilities held at fair value through profit or loss – – 9 – – – – – – –
Total liabilities – – 9 – – – – – – –
Net increase/(decrease) in exposure from foreign currency forward contracts – – – – –
- Buy foreign currency – – – – – – – – – –
- Sell foreign currency – – – – – – – – – –
Net exposure including foreign currency forward contracts 9,953 1,164 2,321 1,588 2,086 – – – – –
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Notes to the financial statements
49
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(ii) Foreign exchange risk (continued)
Vanguard Global Quantitative Equity Fund
As at 30 June 2017 As at 30 June 2016
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
US Dollars
British Pounds
Euros
Japanese Yen
Other Currencies
A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000
Assets
Cash and cash equivalents 298 2 18 14 24 5 2 – 1 2
Margin accounts 15 – 6 – – – – 7 – –
Receivables 1 – 13 – 3 1 – 5 – 2
Accrued income 7 7 1 1 4 8 9 1 – 3
Due from brokers – receivable for securities sold 69 – – 11 – 64 2 – 19 –
Financial assets held at fair value through profit or loss 8,339 1,365 3,337 2,881 2,180 7,413 846 1,913 1,788 2,414
Total assets 8,729 1,374 3,375 2,907 2,211 7,491 859 1,926 1,808 2,421
Liabilities
Due to brokers – payables for securities purchased 185 8 133 198 15 – – – 36 –
Financial liabilities held at fair value through profit or loss – – 14 – – – – – 21 –
Total liabilities 185 8 147 198 15 – – – 57 –
Net increase/(decrease) in exposure from foreign currency forward contracts
- Buy foreign currency 2,161 6 129 186 13 986 – – 17 (1)
- Sell foreign currency (148) – (759) (847) (325) (17) – (296) (528) (161)
Net exposure including foreign currency forward contracts 10,557 1,372 2,598 2,048 1,884 8,460 859 1,630 1,240 2,259
Note 3(b) summarises the impact of an increase/decrease of foreign exchange rates of each Funds’ operating profit and net assets attributable to unitholders through changes in fair value or changes in future cash flows.
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Notes to the financial statements
50
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)(iii) Cash flow and fair value interest rate riskInterest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Funds are exposed to cash flow interest rate risk on financial instruments with variable interest rates. Financial instruments with fixed rates expose the Funds to fair value interest rate risk.
The Funds’ interest bearing financial assets and financial liabilities expose it to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. The risk is measured using sensitivity analysis.
The interest rate risk disclosures have been prepared on the basis of the Funds’ direct investments and not on a look through basis for investments held indirectly through unit trusts. Consequently the disclosure of interest rate risk below may not represent the true interest rate risk profile of the Funds where the Funds have significant investments in unit trusts which also have exposure to the interest rate markets.
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Notes to the financial statements
51
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(iii) Cash flow and fair value interest rate risk (continued)The tables below summarise those Funds whose exposure to interest rate risk is significant:
Vanguard International Fixed Interest Index Fund (Hedged)
Vanguard International Credit Securities Index Fund (Hedged)
Floating Interest
Rate
Fixed Interest
Rate
Non - Interest Bearing Total
Floating Interest
Rate
Fixed Interest
Rate
Non - Interest Bearing Total
30 June 2017 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Assets
Cash and cash equivalents 19,318 – – 19,318 22,812 – – 22,812
Margin accounts 779 – – 779 753 – – 753
Receivables – – 9,356 9,356 – – 2,856 2,856
Accrued income – – – – – – 43 43
Due from brokers - receivable for securities sold – – 31,533 31,533 – – 7,484 7,484
Financial assets held at fair value through profit or loss 10,432 3,132,844 86,858 3,230,134 37,200 1,474,261 46,372 1,557,833
Total assets 30,529 3,132,844 127,747 3,291,120 60,765 1,474,261 56,755 1,591,781
Liabilities
Margin accounts 71,818 – – 71,818 – – – –
Distribution payable – – 40,580 40,580 – – 36,673 36,673
Payables – – 1,308 1,308 – – 419 419
Due to brokers-payables for securities purchased – – 108,989 108,989 – – 36,300 36,300
Financial liabilities held at fair value through profit or loss – – 3,133 3,133 – 66 9,365 9,431
Total liabilities (excluding net assets attributable to unit holders) 71,818 – 154,010 225,828 – 66 82,757 82,823
Net assets attributable to unitholders - liability (41,289) 3,132,844 (26,263) 3,065,292 60,765 1,474,195 (26,002) 1,508,958
Net increase/(decrease) in exposure from Australian fixed interest futures – – – – – 1,470 – 1,470
Net increase/(decrease) in exposure from international money market futures – (4,305) – (4,305) – 25,444 – 25,444
Net exposure (41,289) 3,128,539 (26,263) 3,060,987 60,765 1,501,109 (26,002) 1,535,872
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Notes to the financial statements
52
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(a) Market risk (continued)
(iii) Cash flow and fair value interest rate risk (continued)
Vanguard International Fixed Interest Index Fund (Hedged)
Vanguard International Credit Securities Index Fund (Hedged)
Floating Interest
Rate
Fixed Interest
Rate
Non - Interest Bearing Total
Floating Interest
Rate
Fixed Interest
Rate
Non - Interest Bearing Total
30 June 2016 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Assets
Cash and cash equivalents 8,630 – – 8,630 13,765 – – 13,765
Margin accounts 1,301 – – 1,301 873 – – 873
Receivables – – 15,582 15,582 – – 304 304
Accrued income – – 11,700 11,700 – – 68 68
Due from brokers - receivable for securities sold – – 15 15 – – 5,006 5,006
Financial assets held at fair value through profit or loss 14,986 2,663,838 89,987 2,768,811 21,383 1,182,188 41,246 1,244,817
Total assets 24,917 2,663,838 117,284 2,806,039 36,021 1,182,188 46,624 1,264,833
Liabilities
Margin accounts 35,108 – – 35,108 – – – –
Distribution payable – – 45,107 45,107 – – 50,428 50,428
Payables – – 1,495 1,495 – – 12,076 12,076
Due to brokers-payables for securities purchased – – 52,060 52,060 – – 13,785 13,785
Financial liabilities held at fair value through profit or loss – 355 42,665 43,020 – 459 7,264 7,723
Total liabilities (excluding net assets attributable to unit holders) 35,108 355 141,327 176,790 – 459 83,553 84,012
Net assets attributable to unitholders - liability (10,191) 2,663,483 (24,043) 2,629,249 36,021 1,181,729 (36,929) 1,180,821
Net increase/(decrease) in exposure from Australian fixed interest futures – (1,960) – (1,960) – 296 – 296
Net increase/(decrease) in exposure from international money market futures – 25,819 – 25,819 – 16,438 – 16,438
Net exposure (10,191) 2,687,342 (24,043) 2,653,108 36,021 1,198,463 (36,929) 1,197,555
The table presented in note 3(b) summarises the impact of an increase/decrease of interest rates on the Funds’ operating profit and net assets attributable to unitholders through
changes in fair value or changes in future cash flows.
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Notes to the financial statements
53
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(b) Summarised sensitivity analysisThe following table summarises the sensitivity of the Funds’ operating profit and net assets attributable to unitholders to interest rate risk, foreign exchange risk and price risk. The reasonably possible movements in the risk variables have been determined based on management’s best estimate, having regard to a number of factors, including historical levels of changes in interest rates and foreign exchange rates as well as the indices that the individual Funds are designed to track. However, actual movements in the risk variables may be greater or less than anticipated due to a number of factors, including unusually large market shocks resulting from changes in the performance of economies, markets and securities in which the Funds invest. As a result, historic variations in risk variables are no a definitive indicator of future variations in the risk variables.
Price risk movement represents the range of historical index returns from the average return minus one standard deviation to the average return plus one standard deviation. For a normal distribution approximately two thirds of the outcomes are expected to fall within plus or minus one standard deviation of the mean. Outcomes are expected to occur outside these ranges, approximately one third of the time.
Vanguard International Fixed Interest Index Fund (Hedged)
Impact on operating profit/(loss) and net assets attributable to unitholders
Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-25bps +25bps -6% 0% -5% 7% -2% +8% -13% +2% -4% +2%
30 June 2017 7,935 (7,935) 50,803 – 10,272 (14,380) 15,755 (63,022) 112,781 (17,351) 9,697 (4,849)
-25bps +25bps -8% +5% -18% 0% -8% +3% -1% +24% -5% +5%
30 June 2016 (6,684) 6,684 56,214 (35,134) 32,645 – 53,086 (19,907) 7,445 (185,891) 10,243 (10,243)
Vanguard International Credit Securities Index Fund (Hedged)
Impact on operating profit/(loss) and net assets attributable to unitholders
Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-25bps +25bps -6% 0% -5% +7% -2% +8% -13% +2% -4% +2%
30 June 2017 3,534 (3,534) 50,193 – 3,479 (4,871) 7,899 (31,596) 7,957 (1,224) 4,185 (2,093)
-25bps +25bps -8% +5% -18% 0% -8% +3% -1% +24% -5% +5%
30 June 2016 (2,864) 2,864 54,047 (33,779) 10,130 – 24,433 (9,162) 551 (13,220) 4,450 (4,450)
Vanguard International Shares Index Fund
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-3% +4% -25bps +25bps -6% 0% -5% +7% -2% +8% -13% +2% -4% +2%
30 June 2017 (353,314) 471,085 (727) 727 8,963 – 808 (1,131) 873 (3,493) 2,903 (447) 1,040 (520)
-3% +4% -25bps +25bps -8% +5% -18% 0% -8% +3% -1% +24% -5% +5%
30 June 2016 (355,276) 473,701 (321) 321 6,802 (4,521) 1,642 – 1,923 (721) 130 (3,131) 1,021 (1,021)
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Notes to the financial statements
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Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(b) Summarised sensitivity analysis (continued)
Vanguard International Shares Index Fund (Hedged)
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–4% +5% –25bps +25bps –6% 0% –5% +7% –2% +8% –13% +2% –4% +2%
30 June 2017 (134,400) 168,001 (205) 205 693 – (67) 94 (125) 500 192 (30) 774 (387)
–4% +5% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 (176,292) 220,365 (176) 176 3,680 (2,300) 401 – 384 (144) (242) 5,806 5,351 (5,351)
Vanguard Emerging Markets Shares Index Fund
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar Hong Kong Dollar Korean Won Taiwan New Dollar Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–4% +6% –25bps +25bps –6% 0% –7% 0% –6% +1% –5% +5% –4% +2%
30 June 2017 (45,466) 68,200 (36) 36 662 – 186 – 33 (5) 70 (70) 94 (47)
–4% +6% –25bps +25bps –8% +5% –5% +5% –5% +5% –5% +5% –5% +5%
30 June 2016 (40,357) 60,536 (17) 17 363 (227) 148 (148) 368 (368) 101 (101) 333 (333)
Vanguard International Property Securities Index Fund
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–4% +6% –25bps +25bps –6% 0% –5% +7% –2% +8% –13% +2% –4% +2%
30 June 2017 (75,498) 113,246 (77) 77 6,406 – 462 (647) 349 (1,395) 1,433 (220) 612 (306)
–4% +6% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 (82,240) 123,360 (15) 15 534 (334) 141 – 82 (31) 10 (248) 65 (65)
Vanguard International Property Securities Index Fund (Hedged)
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–5% +7% –25bps +25bps –6% 0% –5% +7% –2% +8% –13% +2% –4% +2%
30 June 2017 (67,615) 94,661 (6) 6 (5) – (1) 1 (1) 5 (3) – (19) 9
–5% +7% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 (63,658) 89,121 (6) 6 (5) 3 (1) – (1) 1 (53) 1,284 (3) 3
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Notes to the financial statements
55
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(b) Summarised sensitivity analysis (continued)
Vanguard International Small Companies Index Fund
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–3% +5% –25bps +25bps –6% 0% –5% 7% –2% +8% –13% +2% –4% +2%
30 June 2017 (12,569) 20,948 (10) 10 146 – 16 (22) 14 (57) 55 (8) 32 (16)
–3% +5% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 (9,330) 15,550 (1) 1 1,189 (743) 194 – 127 (47) 29 (697) 108 (108)
Vanguard International Small Companies Index Fund (Hedged)
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–4% +6% –25bps +25bps –6% 0% –5% +7% –2% +8% –13% +2% –4% +2%
30 June 2017 (2,659) 3,988 (2) 2 10 – – (1) 2 (9) 26 (4) (1) –
–5% +6% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 (1,736) 2,083 (2) 2 13 (8) 6 – 4 (1) (2) 49 – –
Vanguard Global Minimum Volatility Fund
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–2% +4% –25bps +25bps –6% 0% –5% +7% –2% +8% –13% +2% –4% +2%
30 June 2017 (503) 1,005 (1) 1 (2) – (3) 5 1 (3) 1 – (2) 1
–4% +4% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 (848) 848 – – 23 (14) 4 – 3 (1) – 7 (1) 1
Vanguard Global Infrastructure Index Fund
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–3% +4% –25bps +25bps –6% 0% –5% 7% –2% +8% –13% +2% –4% +2%
30 June 2017 (7,643) 10,191 (6) 6 331 – 32 (44) 13 (51) 92 (14) 62 (31)
–3% +4% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 (5,350) 7,133 (1) 1 (2) 1 42 – 9 (4) – (8) 8 (8)
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Notes to the financial statements
56
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(b) Summarised sensitivity analysis (continued)
Vanguard Global Infrastructure Index Fund (Hedged)
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–2% +3% –25bps +25bps –6% +0% –5% 7% –2% +8% –13% +2% –4% +2%
30 June 2017 (1,383) 2,075 – – – – – – – – – – (3) 2
–2% +4% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 (710) 1,421 – – – – – – – – (2) 39 – –
Vanguard International Shares Select Exclusions Index Fund
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–2% +3% –25bps +25bps –6% +0% –5% +7% –2% +8% –13% +2% –4% +2%
30 June 2017 (18,210) 27,315 57 (57) (31) – (11) 16 (18) 72 13 (2) (34,476) 17,238
–3% +4% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 – – – – – – – – – – – – – –
Vanguard Global Value Equity Fund
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–2% +4% –25bps +25bps –6% 0% –5% +7% –2% +8% –13% +2% –4% +2%
30 June 2017 (341) 683 (1) 1 3 – 1 (1) 1 (4) 2 – 1 –
–3% +4% –25bps +25bps –8% +5% -18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 – – – – – – – – – – – – – –
Vanguard Global Quantitative Equity Fund
Impact on operating profit/(loss) and net assets attributable to unitholders
Price risk Interest rate risk Foreign exchange risk
United States Dollar British Pound Euro Japanese Yen Other
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
–3% +4% –25bps +25bps –6% 0% –5% +7% –2% +8% –13% +2% –4% +2%
30 June 2017 (543) 723 1 (1) 13 – – – (2) 9 (22) 3 1 –
–4% +4% –25bps +25bps –8% +5% –18% 0% –8% +3% –1% +24% –5% +5%
30 June 2016 (575) 575 – – 7 (4) 2 – 1 – – 9 – –
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Vanguard Wholesale Funds
Notes to the financial statements
57
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(c) Credit riskThe Funds are exposed to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when they fall due.
The main concentration of credit risk, to which the Funds are exposed, arises from the Funds’ investments in debt securities. The Funds are also exposed to counterparty credit risk on derivative financial instruments, cash and cash equivalents, amounts due from brokers and other receivables. None of these assets are impaired nor past due but not impaired.
For Funds which invest in forward exchange contracts there is a risk associated with unrealised profits.
Credit risk is managed by ensuring that:
• counterparties with respective credit limits are approved by the Responsible Entity; and• transactions are undertaken with a number of counterparties.
The Funds invest in fixed interest securities and money market securities which have credit ratings as rated by well known rating agencies. For unrated fixed interest securities a rating is assigned by the investment manager using an approach that is consistent with the approach used by rating agencies.
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Notes to the financial statements
58
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(c) Credit risk (continued)
(i) Debt securities (continued)There is credit risk associated with debt securities. Vanguard seeks to reduce this risk by selecting only debt securities with a sufficiently high credit rating and by diversifying the Funds’ holding across issuers.
Vanguard will try to minimise the credit risk associated with holding bonds by primarily holding non domestic government and supranational (issued by government owned or government guaranteed entities) bonds or other investment grade entities. Investment grade issuers are defined as those rated BBB or higher by Standard & Poor’s or Baa3 or higher by Moody’s. An anaylsis of debt by rating is set out in the table below.
An analysis of directly held fixed interest securities by rating is set out in the table below:
Vanguard International Fixed Interest Index Fund (Hedged)
Vanguard International Credit Securities Index Fund (Hedged)
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000
International debt securities Rating
AAA 1,169,094 972,529 219,182 167,479Aa3 20,698 24,370 1,107 1,165Aa3e – – 967 –Aa2 210,440 179,196 20,539 20,037Aa2e – – 1,454 –Aa1 210,516 184,178 13,286 9,181Aa1e – – 653 –Aaae – – 1,236 –AA+ 50,096 41,288 69,329 64,557AA 32,221 51,403 75,074 68,299AA- 41,427 14,743 113,770 65,532A3 13,080 5,070 3,200 3,337A3e – – 589 –A2 – – 4,693 4,728A2e – – 576 –A1 812,563 805,345 17,099 13,745A1e – – 1,506 –A+ 30,067 21,400 116,253 114,813A+e – – 98 –Ae – – 292 –A 76,448 29,278 140,040 117,830A- 17,085 16,050 145,172 119,561BBB+ 116,462 96,781 223,909 172,548BBB – 7,713 146,809 112,048BBB- 15,797 – 110,956 82,090BB+ – – 8,557 9,705BB – – 2,981 2,127B+ – – – 5BB- – – 285 –Baa1 6,213 4,060 6,899 2,032Baa2 180,903 153,552 8,451 4,038Baa3 – – 6,569 13,501Not Rated 140,166 71,512 49,864 34,754
Total 3,143,276 2,678,468 1,511,395 1,203,112
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Notes to the financial statements
59
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(c) Credit risk (continued)(ii) DerivativesThe Responsible Entity has established counterparty limits such that, at any time, exposure to derivative financial instruments equivalent to less than 5% of the value of a Fund are with any individual counterparty, and all contracts are with counterparties included in the Board’s Approved Counterparties list.
The Funds also restrict their exposure to credit losses on derivative instruments they hold by entering into master netting arrangements with counterparts with whom they undertake a significant volume of transactions. Master netting arrangements do not result in an offset of balance sheet assets and liabilities, as transactions are usually settled on a gross basis. However, the credit risk associated with favourable contracts is reduced by master netting arrangements to the extent that if an event of default occurs, all amounts with the counterparty are closed and settled on a net basis. The Funds’ overall exposure to credit risk on derivative instruments subject to master netting arrangements can change substantially within a short period, as it is affected by each transaction subject to the arrangements. As at 30 June 2017, the Funds had no master netting arrangements outstanding (30 June 2016: $nil).
Vanguard International Fixed Interest Index Fund (Hedged), Vanguard International Shares Index Fund (Hedged) and Vanguard International Shares Select Exclusions Index Fund have entered into collateral arrangements for forward foreign exchange contracts, repurchase agreements and reverse repurchase agreements to assist in enhancing returns in a risk controlled environment for the cash flow management of the Funds.
(iii) Settlement of securities transactions All transactions in listed securities are settled/paid for upon delivery using approved brokers. The risk of default is considered low, as delivery of securities sold is only made once the broker has made payment. Payment is made on purchase once the securities have been received by the Fund. The trade will fail if either party fails to meet its obligations.
(iv) Cash and cash equivalents The exposure to credit risk for cash and cash equivalents is low as all counterparties have a rating of A1+ short term Standard & Poor’s credit ratings (or Moody’s equivalent).
In accordance with the Responsible Entity’s derivatives policy, the Responsible Entity monitors the Funds’ exposures on a daily basis, which the Board of Directors reviews quarterly. The derivatives policy is subject to annual review.
(v) Other The Funds are not materially exposed to credit risk on other financial assets. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of the financial assets.
The clearing and depository operations for the Funds’ security transactions are mainly concentrated with one counterparty, namely JP Morgan Chase & Co. JP Morgan Chase & Co is a member of a major securities exchange, and at 30 June 2017 had a credit rating of A 1 (30 June 2016: A 1). At 30 June 2017, substantially all cash and cash equivalents, balances due from brokers and investments are held in custody by JP Morgan Chase & Co.
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Notes to the financial statements
60
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity riskLiquidity risk is the risk that the Funds may not be able to generate sufficient cash resources to settle its obligations in full as they fall due or can only do so on terms that are materially disadvantageous.
The Funds are exposed to daily cash redemptions of redeemable units. The Funds primarily hold investments that are traded in active markets and can be readily disposed. The Funds’ financial instruments include investments in equity investments, fixed interest securities and derivative contracts traded over the counter and on an exchange. The Funds’ listed securities are considered to be readily realisable as they are all listed on major stock exchanges. The Funds may use futures to gain market exposure without investing directly in the securities. This allows the Funds to maintain liquidity without being under invested in their respective investment policies. The derivatives are not used to leverage the Funds’ portfolios.
The table below analyses the Funds’ financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period. The amounts in the table are contractual undiscounted cash flows.
Vanguard International Fixed Interest Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 2,095 1,038 – – 3,133 40,199 2,821 – – 43,020
Margin accounts 71,818 – – – 71,818 35,108 – – – 35,108
Distribution payable 40,580 – – – 40,580 45,107 – – – 45,107
Payables 1,308 – – – 1,308 1,495 – – – 1,495
Due to brokers - payables for securities purchased 108,989 – – – 108,989 52,060 – – – 52,060
Net assets attributable to unitholders 3,065,292 – – – 3,065,292 2,629,249 – – – 2,629,249
Total liabilities 3,290,082 1,038 – – 3,291,120 2,803,218 2,821 – – 2,806,039
Vanguard International Credit Securities Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 9,055 376 – – 9,431 7,005 718 – – 7,723
Distribution payable 36,673 – – – 36,673 50,428 – – – 50,428
Payables 419 – – – 419 12,076 – – – 12,076
Due to brokers - payables for securities purchased 36,300 – – – 36,300 13,785 – – – 13,785
Net assets attributable to unitholders 1,508,958 – – – 1,508,958 1,180,821 – – – 1,180,821
Total liabilities 1,591,405 376 – – 1,591,781 1,264,115 718 – – 1,264,833For
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Notes to the financial statements
61
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)
Vanguard International Shares Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 305 781 – – 1,086 14 587 – – 601
Distribution payable 563,256 – – – 563,256 237,920 – – – 237,920
Payables 35,838 – – – 35,838 2,703 – – – 2,703
Due to brokers - payables for securities purchased 846 – – – 846 – – – – –
Net assets attributable to unitholders 11,514,957 – – – 11,514,957 11,814,895 – – – 11,814,895
Total liabilities 12,115,202 781 – – 12,115,983 12,055,532 587 – – 12,056,119
Vanguard International Shares Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 48,506 5,579 – – 54,085 76,166 4,801 – – 80,967
Margin accounts 82,898 – – – 82,898 91,980 – – – 91,980
Distribution payable 453,028 – – – 453,028 284,374 – – – 284,374
Payables 1,110 – – – 1,110 932 – – – 932
Due to brokers - payables for securities purchased – – – – – 60,094 – – – 60,094
Net assets attributable to unitholders 3,142,176 – – – 3,142,176 4,281,595 – – – 4,281,595
Total liabilities 3,727,718 5,579 – – 3,733,297 4,795,141 4,801 – – 4,799,942
Vanguard Emerging Markets Shares Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives - 11 – – 11 2 - - - 2
Distribution payable 29,545 - – – 29,545 38,998 - - - 38,998
Payables 550 - – – 550 482 - - - 482
Due to brokers - payables for securities purchased - - – – - - - - - -
Net assets attributable to unitholders 1,126,765 - – – 1,126,765 993,761 - - - 993,761
Total liabilities 1,156,860 11 – – 1,156,871 1,033,243 - - - 1,033,243For
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Notes to the financial statements
62
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)
Vanguard International Property Securities Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 154 – – – 154 – – – – –
Distribution payable 104,083 – – – 104,083 96,654 – – – 96,654
Payables 129,296 – – – 129,296 848 – – – 848
Due to brokers - payables for securities purchased 502 – – – 502 – – – – –
Net assets attributable to unitholders 1,815,988 – – – 1,815,988 1,985,451 – – – 1,985,451
Total liabilities 2,050,023 – – – 2,050,023 2,082,953 – – – 2,082,953
Vanguard International Property Securities Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 1,150 1,047 – – 2,197 6,971 297 – – 7,268
Distribution payable 253,663 – – – 253,663 83,499 – – – 83,499
Payables 242 – – – 242 207 – – – 207
Due to brokers - payables for securities purchased – – – – – 12,588 – – – 12,588
Net assets attributable to unitholders 1,232,860 – – – 1,232,860 1,276,812 – – – 1,276,812
Total liabilities 1,487,915 1,047 – – 1,488,962 1,380,077 297 – – 1,380,374
Vanguard International Small Companies Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives – 29 – – 29 4 1 – – 5
Distribution payable 24,304 – – – 24,304 16,633 – – – 16,633
Payables 1,278 – – – 1,278 14,381 – – – 14,381
Due to brokers - payables for securities purchased 62 – – – 62 – – – – –
Net assets attributable to unitholders 400,532 – – – 400,532 296,676 – – – 296,676
Total liabilities 426,176 29 – – 426,205 327,694 1 – – 327,695For
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Notes to the financial statements
63
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)
Vanguard International Small Companies Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 396 37 – – 433 646 8 – – 654
Distribution payable 5,073 – – – 5,073 18,143 – – – 18,143
Payables 59 – – – 59 3 – – – 3
Net assets attributable to unitholders 69,602 – – – 69,602 35,439 – – – 35,439
Total liabilities 75,130 37 – – 75,167 54,231 8 – – 54,239
Vanguard Global Minimum Volatility Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 118 9 – – 127 83 4 – – 87
Distribution payable 1,127 – – – 1,127 460 – – – 460
Payables 7 – – – 7 8 – – – 8
Due to brokers - payables for securities purchased 277 – – – 277 – – – – –
Net assets attributable to unitholders 24,783 – – – 24,783 21,173 – – – 21,173
Total liabilities 26,312 9 – – 26,321 21,724 4 – – 21,728
Vanguard Global Infrastructure Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Distribution payable 13,489 – – – 13,489 3,707 – – – 3,707
Payables 144 – – – 144 73 – – – 73
Due to brokers - payables for securities purchased – – – – – 291 – – – 291
Net assets attributable to unitholders 252,521 – – – 252,521 175,814 – – – 175,814
Total liabilities 266,154 – – – 266,154 179,885 – – – 179,885
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Notes to the financial statements
64
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)
Vanguard Global Infrastructure Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 99 13 – – 112 213 7 – – 220
Distribution payable 6,958 – – – 6,958 885 – – – 885
Payables 3 – – – 3 1 – – – 1
Due to brokers - payables for securities purchased 895 – – – 895 501 – – – 501
Net assets attributable to unitholders 67,116 – – – 67,116 35,761 – – – 35,761
Total liabilities 75,071 13 – – 75,084 37,361 7 – – 37,368
Vanguard International Shares Select Exclusions Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 6,691 1,378 – – 8,069 – – – – –
Margin accounts 21,407 – – – 21,407 – – – – –
Distribution payable 2,425 – – – 2,425 – – – – –
Payables 202 – – – 202 – – – – –
Due to brokers - payables for securities purchased 19,715 – – – 19,715 – – – – –
Net assets attributable to unitholders 917,146 – – – 917,146 – – – – –
Total liabilities 967,586 1,378 – – 968,964 – – – – –
Vanguard Global Value Equity Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives – 9 – – 9 – – – – –
Distribution payable 645 – – – 645 – – – – –
Payables 5 – – – 5 – – – – –
Net assets attributable to unitholders 16,715 – – – 16,715 – – – – –
Total liabilities 17,365 9 – – 17,374 – – – – –For
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Notes to the financial statements
65
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)
Vanguard Global Quantitative Equity Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net settled derivatives 14 – – – 14 21 – – – 21
Distribution payable 626 – – – 626 75 – – – 75
Payables 5 – – – 5 5 – – – 5
Due to brokers - payables for securities purchased 539 – – – 539 36 – – – 36
Net assets attributable to unitholders 17,630 – – – 17,630 14,376 – – – 14,376
Total liabilities 18,814 – – – 18,814 14,513 – – – 14,513
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Notes to the financial statements
66
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)Maturities of gross settled derivative financial instruments The tables below analyses the Funds’ gross settled derivative financial instruments based on their contractual maturity. The Funds may at their discretion, settle financial instruments prior to their original contractual settlement date, in accordance with its investment strategy, where permitted by the terms and conditions of the relevant instruments.
Vanguard International Fixed Interest Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 6,487,812 3,225,751 – – 9,713,563 5,537,646 2,762,294 – – 8,299,940
(Outflows) (6,403,105) (3,226,733) – – (9,629,838) (5,494,999) (2,757,619) – – (8,252,618)
Net 84,707 (982) – – 83,725 42,647 4,675 – – 47,322
Vanguard International Credit Securities Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 4,323,897 2,162,884 – – 6,486,781 3,512,812 1,718,911 – – 5,231,723
(Outflows) (4,286,582) (2,163,192) – – (6,449,774) (3,478,573) (1,719,167) – – (5,197,740)
Net 37,315 (308) – – 37,007 34,239 (256) – – 33,983
Vanguard International Shares Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 379,272 – – – 379,272 18,118 – – – 18,118
(Outflows) (379,355) – – – (379,355) (18,128) – – – (18,128)
Net (83) – – – (83) (10) – – – (10)
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Notes to the financial statements
67
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)
Maturities of gross settled derivative financial instruments (continued)
Vanguard International Shares Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 10,865,503 5,047,707 – – 15,913,210 13,430,555 6,415,856 – – 19,846,411
(Outflows) (10,775,181) (5,032,850) – – (15,808,031) (13,265,523) (6,388,600) – – (19,654,123)
Net 90,322 14,857 – – 105,179 165,032 27,256 – – 192,288
Vanguard Emerging Markets Shares Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 14,431 – – – 14,431 21,667 – – – 21,667
(Outflows) (14,430) – – – (14,430) (21,669) – – – (21,669)
Net 1 – – – 1 (2) – – – (2)
Vanguard International Property Securities Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 203,900 – – – 203,900 2,000 – – – 2,000
(Outflows) (203,134) – – – (203,134) (2,000) – – – (2,000)
Net 766 – – – 766 – – – – –
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Notes to the financial statements
68
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)
Maturities of gross settled derivative financial instruments (continued)
Vanguard International Property Securities Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 3,194,856 1,690,052 – – 4,884,908 2,671,784 1,359,834 – – 4,031,618
(Outflows) (3,150,654) (1,691,079) – – (4,841,733) (2,636,365) (1,360,027) – – (3,996,392)
Net 44,202 (1,027) – – 43,175 35,419 (193) – – 35,226
Vanguard International Small Companies Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 833 – – – 833 27,062 – – – 27,062
(Outflows) (833) – – – (833) (27,000) – – – (27,000)
Net - – – – - 62 – – – 62
Vanguard International Small Companies Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 150,279 73,829 – – 224,108 114,320 69,912 – – 184,232
(Outflows) (148,561) (73,550) – – (222,111) (112,900) (69,619) – – (182,519)
Net 1,718 279 – – 1,997 1,420 293 – – 1,713
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Notes to the financial statements
69
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)
Maturities of gross settled derivative financial instruments (continued)
Vanguard Global Minimum Volatility Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 36,921 – – – 36,921 32,760 – – – 32,760
(Outflows) (36,590) – – – (36,590) (32,470) – – – (32,470)
Net 331 – – – 331 290 – – – 290
Vanguard Global Infrastructure Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 10,725 – – – 10,725 2,414 – – – 2,414
(Outflows) (10,725) – – – (10,725) (2,414) – – – (2,414)
Net – – – – – – – – – –
Vanguard Global Infrastructure Index Fund (Hedged)
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 148,818 73,122 – – 221,940 70,137 35,424 – – 105,561
(Outflows) (146,933) (73,134) – – (220,067) (69,294) (35,432) – – (104,726)
Net 1,885 (12) – – 1,873 843 (8) – – 835
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Notes to the financial statements
70
Notes to the financial statements (continued)
For the year ended 30 June 2017
3. Financial risk management (continued)
(d) Liquidity risk (continued)
Maturities of gross settled derivative financial instruments (continued)
Vanguard International Shares Select Exclusions Index Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 1,934,420 919,612 – – 2,854,032 – – – – –
(Outflows) (1,913,027) (918,350) – – (2,831,377) – – – – –
Net 21,393 1,262 – – 22,655 – – – – –
Vanguard Global Value Equity Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows – – – – – – – – – –
(Outflows) – – – – – – – – – –
Net – – – – – – – – – –
Vanguard Global Quantitative Equity Fund
As at 30 June 2017 As at 30 June 2016
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
Less than 1 month
1 to 6 months
6 to 12 months
1 to 2 years Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Foreign currency forward contracts
Inflows 2,462 – – – 2,462 996 – – – 996
(Outflows) (2,458) – – – (2,458) (1,008) – – – (1,008)
Net 4 – – – 4 (12) – – – (12)
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Notes to the financial statements
71
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurementThe Funds measure and recognise the following assets and liabilities at fair value on a recurring basis:
• Financial assets / liabilities designated at fair value through profit or loss (FVTPL) (see note 6 and 7)• Financial assets / liabilities held for trading (see note 6 and 7)• Derivative financial instruments (see note 8)
The Fund had no assets or liabilities at fair value on a non recurring basis in the current reporting period.
AASB 13 requires disclosure of fair value measurements by level of the following fair value hierarchy;
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)
(i) Fair value in an active market (level 1)The fair value of financial assets and liabilities traded in active markets is based on their quoted market prices at the end of the reporting period without any deduction for estimated future selling costs.
The Funds value their investments in accordance with the accounting policies set out in note 2(b) to the financial statements. For the majority of investments, the Funds rely on information provided by independent pricing services for the valuation of investments.
The quoted market price used for financial assets held by the Funds is the current bid price; the appropriate quoted market price for financial liabilities is the current asking price. When the Funds hold derivatives with offsetting market risks, they use mid market prices as a basis for establishing fair values for the offsetting risk positions and applies this bid or asking price to the net open position, as appropriate.
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
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Notes to the financial statements
72
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurement (continued)
(i) Fair value in an inactive or unquoted market (level 2 and level 3)The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. These include the use of recent arm’s length market transactions, reference to the current fair value of a substantially similar other instrument, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of prices obtained in actual market transactions.
Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and the discount rate used is a market rate at the end of the reporting period applicable for an instrument with similar terms and conditions.
For other pricing models, inputs are based on market data at the end of the reporting period. Fair values for unquoted equity investments are estimated, if possible, using applicable price/earnings ratios for similar listed companies adjusted to reflect the specific circumstances of the issuer.
The fair value of derivatives that are not exchange traded is estimated at the amount that the Funds would receive or pay to terminate the contract at the balance sheet date taking into account current market conditions (volatility and appropriate yield curve) and the current creditworthiness of the counterparties. The fair value of a forward contract is determined as a net present value of estimated future cash flows, discounted at appropriate market rates as at the valuation date. The fair value of an option contract is determined by applying the Black Scholes option valuation model.
Investments in other unlisted unit trusts are recorded at the redemption value per unit as reported by the investment managers of such funds.
Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.
The output of a model is always an estimate or approximation of a value that cannot be determined with certainty, and valuation techniques employed may not fully reflect all factors relevant to the positions the Funds hold. Valuations are therefore adjusted, where appropriate, to allow for additional factors including liquidity risk and counterparty risk.
The carrying value less impairment provision of other receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Fund for similar financial instruments.
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Notes to the financial statements
73
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurement (continued)
Recognised fair value measurements The following tables present the Fund’s financial assets and liabilities (by asset class) measured at fair value according to the fair value hierarchy at 30 June 2017 and 30 June 2016.
Vanguard International Fixed Interest Index Fund (Hedged)
Vanguard International Credit Securities Index Fund (Hedged)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2017 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives 30 86,858 – 86,888 23 46,372 – 46,395
Financial assets designated at fair value through profit or loss:
Equity securities – – – – – – – –
Fixed interest securities – 3,143,246 – 3,143,246 – 1,511,438 – 1,511,438
Total 30 3,230,104 – 3,230,134 23 1,557,810 – 1,557,833
Financial liabilities
Financial liabilities held for trading:
Derivatives – 3,133 – 3,133 66 9,365 – 9,431
Total – 3,133 – 3,133 66 9,365 – 9,431
Vanguard International Fixed Interest Index Fund (Hedged)
Vanguard International Credit Securities Index Fund (Hedged)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2016 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives 93 89,987 – 90,080 166 41,246 – 41,412
Financial assets designated at fair value through profit or loss:
Equity securities – – – – – – – –
Fixed interest securities – 2,678,731 – 2,678,731 – 1,203,405 – 1,203,405
Total 93 2,768,718 – 2,768,811 166 1,244,651 – 1,244,817
Financial liabilities
Financial liabilities held for trading:
Derivatives 355 42,665 – 43,020 459 7,264 – 7,723
Total 355 42,665 – 43,020 459 7,264 – 7,723
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Notes to the financial statements
74
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurement (continued)
Recognised fair value measurements The following tables present the Fund’s financial assets and liabilities measured at fair value according to the fair value hierarchy at 30 June 2017 and 30 June 2016.
Vanguard International Shares Index Fund
Vanguard International Shares Index Fund (Hedged)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2017 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives – 222 – 222 8 159,083 – 159,091
Financial assets designated at fair value through profit or loss:
Equity securities 11,777,030 872 – 11,777,902 – 3,360,184 – 3,360,184
Fixed interest securities – – – – – – – –
Total 11,777,030 1,094 – 11,778,124 8 3,519,267 – 3,519,275
Financial liabilities
Financial liabilities held for trading:
Derivatives 781 305 – 1,086 181 53,904 – 54,085
Total 781 305 – 1,086 181 53,904 – 54,085
Vanguard International Shares Index Fund
Vanguard International Shares Index Fund (Hedged)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2016 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives 1,246 4 – 1,250 1,038 272,866 – 273,904
Financial assets designated at fair value through profit or loss:
Equity securities 11,840,900 964 – 11,841,864 – 4,406,645 – 4,406,645
Fixed interest securities – – – – – – – –
Total 11,842,146 968 – 11,843,114 1,038 4,679,511 – 4,680,549
Financial liabilities
Financial liabilities held for trading:
Derivatives 587 14 – 601 388 80,578 – 80,966
Total 587 14 – 601 388 80,578 – 80,966
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Notes to the financial statements
75
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurement (continued)
Recognised fair value measurements (continued)
Vanguard Emerging Markets Shares Index Fund
Vanguard International Property Securities Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2017 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives – 1 – 1 – 920 – 920 – 45,372 – 45,372
Financial assets designated at fair value through profit or loss:
Equity securities 1,100,433 36,240 – 1,136,673 – – – – – – – –
Listed unit trusts – – – – 1,887,438 – – 1,887,438 – – – –
Unlisted unit trusts – – – – – – – – – 1,352,299 – 1,352,299
Total 1,100,433 36,241 – 1,136,674 1,887,438 920 – 1,888,358 – 1,397,671 – 1,397,671
Financial liabilities
Financial liabilities held for trading:
Derivatives 11 – – 11 – 154 – 154 – 2,197 – 2,197
Total 11 – – 11 – 154 – 154 – 2,197 – 2,197
Vanguard Emerging Markets Shares Index Fund
Vanguard International Property Securities Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2016 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives 40 44 – 84 – – – – – 42,494 – 42,494
Financial assets designated at fair value through profit or loss:
Equity securities 1,008,826 20 – 1,008,846 – – – – – – – –
Listed unit trusts – – – – 2,056,004 – – 2,056,004 – – – –
Unlisted unit trusts – – – – – – – – – 1,273,152 – 1,273,152
Total 1,008,866 64 – 1,008,930 2,056,004 – – 2,056,004 – 1,315,646 – 1,315,646
Financial liabilities
Financial liabilities held for trading:
Derivatives – 2 – 2 – – – – – 7,268 – 7,268
Total – 2 – 2 – – – – – 7,268 – 7,268For
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Notes to the financial statements
76
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurement (continued)
Recognised fair value measurements (continued)
Vanguard International Small Companies Index Fund
Vanguard International Small Companies Index Fund (Hedged)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2017 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives 3 5 – 8 – 2,430 – 2,430
Financial assets designated at fair value through profit or loss:
Equity securities 418,858 128 – 418,986 – – – –
Unlisted unit trusts – – – – – 66,464 – 66,464
Total 418,861 133 – 418,994 – 68,894 – 68,894
Financial liabilities
Financial liabilities held for trading:
Derivatives 29 – – 29 – 433 – 433
Total 29 – – 29 – 433 – 433
Vanguard International Small Companies Index Fund
Vanguard International Shares Index Fund (Hedged)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2016 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives 24 68 – 92 9 2,367 – 2,376
Financial assets designated at fair value through profit or loss:
Equity securities 310,840 138 – 310,978 – – – –
Unlisted unit trusts – – – – – 34,711 – 34,711
Total 310,864 206 – 311,070 9 37,078 – 37,087
Financial liabilities
Financial liabilities held for trading:
Derivatives 1 4 – 5 – 654 – 654
Total 1 4 – 5 – 654 – 654
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Notes to the financial statements
77
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurement (continued)
Recognised fair value measurements (continued)
Vanguard Global Minimum Volatility Fund
Vanguard Global Infrastructure Index Fund
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2017 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives – 449 – 449 – – – –
Financial assets designated at fair value through profit or loss:
Equity securities 25,141 – – 25,141 254,774 – – 254,774
Unlisted unit trusts – – – – – – – –
Total 25,141 449 – 25,590 254,774 – – 254,774
Financial liabilities
Financial liabilities held for trading:
Derivatives 9 118 – 127 – – – –
Total 9 118 – 127 – – – –
Vanguard Global Minimum Volatility Fund
Vanguard Global Infrastructure Index Fund
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2016 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives 1 373 – 374 – – – –
Financial assets designated at fair value through profit or loss:
Equity securities 21,214 – – 21,214 178,319 – – 178,319
Unlisted unit trusts – – – – – – – –
Total 21,215 373 – 21,588 178,319 – – 178,319
Financial liabilities
Financial liabilities held for trading:
Derivatives 4 83 – 87 – – – –
Total 4 83 – 87 – – – –
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Notes to the financial statements
78
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurement (continued)
Recognised fair value measurements (continued)
Vanguard Global Infrastructure Index Fund (Hedged)
Vanguard International Shares Select Exclusions Index Fund
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2017 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives – 1,985 – 1,985 26 30,408 – 30,434
Financial assets designated at fair value through profit or loss:
Equity securities – – – – 883,120 27,683 – 910,803
Unlisted unit trusts – 69,167 – 69,167 – – – –
Total – 71,152 – 71,152 883,146 58,091 – 941,237
Financial liabilities
Financial liabilities held for trading:
Derivatives – 112 – 112 316 7,753 – 8,069
Total – 112 – 112 316 7,753 – 8,069
Vanguard Global Infrastructure Index Fund (Hedged)
Vanguard International Shares Select Exclusions Index Fund
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2016 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives – 1,056 – 1,056 – – – –
Financial assets designated at fair value through profit or loss:
Equity securities – – – – – – – –
Unlisted unit trusts – 35,523 – 35,523 – – – –
Total – 36,579 – 36,579 – – – –
Financial liabilities
Financial liabilities held for trading:
Derivatives – 220 – 220 – – – –
Total – 220 – 220 – – – –
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Notes to the Financial Statements
79
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurement (continued)
Recognised fair value measurements (continued)
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2017 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives – – – – – 18 – 18
Financial assets designated at fair value through profit or loss:
Equity securities 17,074 – – 17,074 18,084 – – 18,084
Unlisted unit trusts – – – – – – – –
Total 17,074 – – 17,074 18,084 18 – 18,102
Financial liabilities
Financial liabilities held for trading:
Derivatives 9 – – 9 – 14 – 14
Total 9 – – 9 – 14 – 14
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2016 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Financial assets held for trading:
Derivatives – – – – – 9 – 9
Financial assets designated at fair value through profit or loss:
Equity securities – – – – 14,365 – – 14,365
Unlisted unit trusts – – – – – – – –
Total – – – – 14,365 9 – 14,374
Financial liabilities
Financial liabilities held for trading:
Derivatives – – – – – 21 – 21
Total – – – – – 21 – 21
The Funds’ policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. F
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Vanguard Annual Report
Notes to the Financial Statements
80
Notes to the financial statements (continued)
For the year ended 30 June 2017
4. Fair value measurement (continued)
Transfer between levels
The following tables present the transfers between levels during the year ended 30 June 2017:
Vanguard Emerging Markets Shares Index Fund
Vanguard International Small Companies Index Fund
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
30 June 2017 $'000 $'000 $'000 $'000 $'000 $'000
Transfers between level 1 and 2:
Equity securities (19,693) 19,693 – – – –
30 June 2016
Transfers between level 1 and 2:
Equity securities – – – (31) 31 –
The equity securities transferred into level 2 relates to the frequency of quoted price valuations. There were no transfers into and out of level 3 during the reporting period.
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Notes to the Financial Statements
81
Notes to the financial statements (continued)
For the year ended 30 June 2017
5. Net gains/(losses) on financial instruments held at fair value through profit or loss
Net gains/(losses) recognised in relation to financial assets and financial liabilities held at fair value through profit or loss:
Vanguard International Fixed Interest Index
(Hedged)
Vanguard International Credit Securities Index
Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund (Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net unrealised gain/(loss) on financial instruments held for trading 36,659 86,635 3,276 35,066 (1,513) 1,312 (87,932) 349,765 (49) 144
Net unrealised gain/(loss) on financial instruments designated at fair value through profit or loss (277,327) 174,924 (68,064) (23,492) 326,804 (1,920,177) (11,265) (588,099) 152,608 (213,961)
Net realised gain/(loss) on financial instruments held for trading 147,789 (197,955) 49,098 (42,067) 17,330 5,237 293,076 (342,983) 1,848 (2,258)
Net Realised gain/(loss) on financial instruments designated at fair value through profit or loss 66,415 235,376 52,956 142,966 1,062,216 1,801,062 325,219 511,524 11,139 53,391
Total net gains/(losses) on financial Instruments held at fair value through profit or loss (26,464) 298,980 37,266 112,473 1,404,837 (112,566) 519,098 (69,793) 165,546 (162,684)
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies Index
Fund
Vanguard International Small Companies Index
Fund (Hedged)
Vanguard Global Minimum Volatility
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net unrealised gain/(loss) on financial instruments held for trading 766 17 7,948 34,829 (107) 133 284 4,516 35 287
Net unrealised gain/(loss) on financial instruments designated at fair value through profit or loss (320,844) 150,215 (230,577) 36,095 31,519 (94,688) 3,348 (41,499) 1,326 1,359
Net realised gain/(loss) on financial instruments held for trading 1,151 259 56,538 (53,847) 794 (249) 2,394 (15,153) 511 152
Net Realised gain/(loss) on financial instruments designated at fair value through profit or loss 163,184 145,173 70,094 114,349 18,712 82,099 1,040 40,988 268 (735)
Total net gains/(losses) on financial Instruments held at fair value through profit or loss (155,743) 295,664 (95,997) 131,426 50,918 (12,705) 7,066 (11,148) 2,140 1,063F
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Notes to the Financial Statements
82
Notes to the financial statements (continued)
For the year ended 30 June 2017
5. Net gains/(losses) on financial instruments held at fair value through profit or loss (continued)
Vanguard Global Infrastructure Index
Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
Vanguard International Shares Select Exclusions
Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Net unrealised gain/(loss) on financial instruments held for trading – 1 1,038 812 22,365 – (9) – 16 –
Net unrealised gain/(loss) on financial instruments designated at fair value through profit or loss (2,231) 10,598 (1,877) 1,674 32,133 – 1,356 – 1,879 (82)
Net realised gain/(loss) on financial instruments held for trading 480 (30) 1,036 (1,404) (11,467) – 256 – 5 (276)
Net Realised gain/(loss) on financial instruments designated at fair value through profit or loss 8,116 3,298 1,214 700 1,263 – 281 – 647 156
Total net gains/(losses) on financial Instruments held at fair value through profit or loss 6,365 13,867 1,411 1,782 44,294 – 1,884 – 2,547 (202)
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Notes to the Financial Statements
83
Notes to the financial statements (continued)
For the year ended 30 June 2017
6. Financial assets held at fair value through profit or lossVanguard International
Fixed Interest Index Fund (Hedged)
Vanguard International Credit Securities Index
Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund (Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Held for trading
Derivatives 86,888 90,080 46,395 41,412 222 1,250 159,091 273,904 1 84
Total held for trading 86,888 90,080 46,395 41,412 222 1,250 159,091 273,904 1 84
Designated at fair value through profit or loss
Equity securities – – – – 11,777,902 11,841,864 – – 1,136,673 1,008,846
Fixed interest securities 3,143,246 2,678,731 1,511,438 1,203,405 – – – – – –
Unlisted unit trusts – – – – – – 3,360,184 4,406,645 – –
Total designated at fair value through profit or loss 3,143,246 2,678,731 1,511,438 1,203,405 11,777,902 11,841,864 3,360,184 4,406,645 1,136,673 1,008,846
Total financial assets held at fair value through profit or loss 3,230,134 2,768,811 1,557,833 1,244,817 11,778,124 11,843,114 3,519,275 4,680,549 1,136,674 1,008,930
Comprising:
Derivatives
Foreign currency forward contracts 86,858 89,987 46,372 41,246 222 4 159,083 272,866 1 1
Australian share price futures – – – – – – – – – –
International share price futures – – – – – 1,246 8 1,038 – 83
Australian interest rate futures – – – 1 – – – – – –
International interest rate futures 30 93 23 165 – – – – – –
Total derivatives 86,888 90,080 46,395 41,412 222 1,250 159,091 273,904 1 84
Equity securities
International equity securities – – – – 11,777,902 11,841,864 – – 1,136,673 1,008,846
Total equity securities – – – – 11,777,902 11,841,864 – – 1,136,673 1,008,846
Fixed interest securities
Australian fixed interest securities 133,328 92,971 28,643 25,354 – – – – – –
International fixed interest securities 3,009,918 2,585,760 1,482,795 1,178,051 – – – – – –
Total fixed interest securities 3,143,246 2,678,731 1,511,438 1,203,405 – – – – – –
Unlisted unit trusts
Units in International equity trusts – – – – – – 3,360,184 4,406,645 – –
Total unlisted unit trusts – – – – – – 3,360,184 4,406,645 – –
Total financial assets held at fair value through profit or loss 3,230,134 2,768,811 1,557,833 1,244,817 11,778,124 11,843,114 3,519,275 4,680,549 1,136,674 1,008,930
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Notes to the Financial Statements
84
Notes to the financial statements (continued)
For the year ended 30 June 2017
6. Financial assets held at fair value through profit or loss (continued)
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies Index
Fund
Vanguard International Small Companies Index
Fund (Hedged)
Vanguard Global Minimum Volatility
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Held for trading
Derivatives 920 - 45,372 42,494 8 92 2,430 2,376 449 374
Total held for trading 920 - 45,372 42,494 8 92 2,430 2,376 449 374
Designated at fair value through profit or loss
Equity securities – – – – 418,986 310,978 – – 25,141 21,214
Listed unit trusts 1,887,438 2,056,004 – – – – – – – –
Unlisted unit trusts – – 1,352,299 1,273,152 – – 66,464 34,711 – –
Total designated at fair value through profit or loss 1,887,438 2,056,004 1,352,299 1,273,152 418,986 310,978 66,464 34,711 25,141 21,214
Total financial assets held at fair value through profit or loss 1,888,358 2,056,004 1,397,671 1,315,646 418,994 311,070 68,894 37,087 25,590 21,588
Comprising:
Derivatives
Foreign currency forward contracts 920 – 45,372 42,494 – 66 2,430 2,367 449 373
International share price futures – – – – 8 26 – 9 – 1
Total derivatives 920 – 45,372 42,494 8 92 2,430 2,376 449 374
Equity securities
Australian equity securities – – – – – – – – 1,158 993
International equity securities – – – – 418,986 310,978 – – 23,983 20,221
Total equity securities – – – – 418,986 310,978 – – 25,141 21,214
Listed unit trusts
International listed trusts 1,887,438 2,056,004 – – – – – – – –
Total listed unit trusts 1,887,438 2,056,004 – – – – – – – –
Unlisted unit trusts
Units in International equity trusts – – 1,352,299 1,273,152 – – 66,464 34,711 – –
Total unlisted unit trusts – – 1,352,299 1,273,152 – – 66,464 34,711 – –
Total financial assets held at fair value through profit or loss 1,888,358 2,056,004 1,397,671 1,315,646 418,994 311,070 68,894 37,087 25,590 21,588
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Notes to the Financial Statements
85
Notes to the financial statements (continued)
For the year ended 30 June 2017
6. Financial assets held at fair value through profit or loss (continued)
Vanguard Global Infrastructure Index
Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
Vanguard International Shares Select Exclusions
Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Held for trading
Derivatives – – 1,985 1,056 30,434 – – – 18 9
Total held for trading – – 1,985 1,056 30,434 – – – 18 9
Designated at fair value through profit or loss
Equity securities 254,774 178,319 – – 910,803 – 17,074 – 18,084 14,365
Unlisted unit trusts – – 69,167 35,523 – – – – – –
Total designated at fair value through profit or loss 254,774 178,319 69,167 35,523 910,803 – 17,074 – 18,084 14,365
Total financial assets held at fair value through profit or loss 254,774 178,319 71,152 36,579 941,237 – 17,074 – 18,102 14,374
Comprising:
Derivatives
Foreign currency forward contracts – – 1,985 1,056 30,408 – – – 18 9
International share price futures – – – – 26 – – – – –
Total derivatives – – 1,985 1,056 30,434 – – – 18 9
Equity securities
Australian equity securities 6,618 5,113 – – – – 115 – – –
International equity securities 248,156 173,206 – – 910,803 – 16,959 – 18,084 14,365
Total equity securities 254,774 178,319 – – 910,803 – 17,074 – 18,084 14,365
Unlisted unit trusts
Units in International equity trusts – – 69,167 35,523 – – – – – –
Total unlisted unit trusts – – 69,167 35,523 – – – – – –
Total financial assets held at fair value through profit or loss 254,774 178,319 71,152 36,579 941,237 – 17,074 – 18,102 14,374
An overview of the risk exposures relating to financial assets at fair value through profit or loss is included in note 3.
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Notes to the Financial Statements
86
Notes to the financial statements (continued)
For the year ended 30 June 2017
7. Financial liabilities held at fair value through profit or lossVanguard International
Fixed Interest Index (Hedged)
Vanguard International Credit Securities Index
Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund (Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Held for trading
Derivatives 3,133 43,020 9,431 7,723 1,086 601 54,085 80,966 11 2
Total held for trading 3,133 43,020 9,431 7,723 1,086 601 54,085 80,966 11 2
Total financial liabilities held at fair value through profit or loss 3,133 43,020 9,431 7,723 1,086 601 54,085 80,966 11 2
Comprising:
Derivatives
Foreign currency forward contracts 3,133 42,665 9,365 7,264 305 14 53,904 80,578 – 2
International share price futures – – – – 781 587 181 388 11 –
Australian interest rate futures – 36 10 – – – – – – –
International interest rate futures – 319 56 459 – – – – – –
Total derivatives 3,133 43,020 9,431 7,723 1,086 601 54,085 80,966 11 2
Total financial liabilities held at fair value through profit or loss 3,133 43,020 9,431 7,723 1,086 601 54,085 80,966 11 2
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Notes to the Financial Statements
87
Notes to the financial statements (continued)
For the year ended 30 June 2017
7. Financial liabilities held at fair value through profit or loss (continued)
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies
Index Fund
Vanguard International Small Companies
Index Fund (Hedged)
Vanguard Global Minimum Volatility
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Held for trading
Derivatives 154 – 2,197 7,268 29 5 433 654 127 87
Total held for trading 154 – 2,197 7,268 29 5 433 654 127 87
Total financial liabilities held at fair value through profit or loss 154 – 2,197 7,268 29 5 433 654 127 87
Comprising:
Derivatives
Foreign currency forward contracts 154 – 2,197 7,268 – 4 433 654 118 83
International share price futures – – – – 29 1 – – 9 4
Total derivatives 154 – 2,197 7,268 29 5 433 654 127 87
Total financial liabilities held at fair value through profit or loss 154 – 2,197 7,268 29 5 433 654 127 87
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Notes to the Financial Statements
88
Notes to the financial statements (continued)
For the year ended 30 June 2017
7. Financial liabilities held at fair value through profit or loss (continued)
Vanguard Global Infrastructure Index
Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
Vanguard International Shares Select
Exclusions Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value Fair value
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Held for trading
Derivatives – – 112 220 8,069 – 9 – 14 21
Total held for trading – – 112 220 8,069 – 9 – 14 21
Total financial liabilities held at fair value through profit or loss – – 112 220 8,069 – 9 – 14 21
Comprising:
Derivatives
Foreign currency forward contracts – – 112 220 7,753 – – – 14 21
International share price futures – – – – 316 – 9 – – –
Total derivatives – – 112 220 8,069 – 9 – 14 21
Total financial liabilities held at fair value through profit or loss – – 112 220 8,069 – 9 – 14 21
An overview of the risk exposures relating to financial liabilities at fair value through profit or loss is included in note 3.
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Notes to the Financial Statements
89
Notes to the financial statements (continued)
For the year ended 30 June 2017
8. Derivative financial instrumentsIn the normal course of business the Funds enter into transactions in various derivative financial instruments with certain risks. A derivative is a financial instrument or other contract which is settled at a future date and whose value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable.
Derivative financial instruments require no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors.
Derivative transactions include a wide assortment of instruments, such as forwards, futures and options. Derivatives are considered to be part of the investment process. The use of derivatives is an essential part of the Funds’ portfolio management. Derivatives are not managed in isolation. Consequently, the use of derivatives is multifaceted and includes:
• hedging to protect an asset or liability of a Fund against a fluctuation in market values or to reduce volatility• a substitution for trading of physical securities• adjusting asset exposures within the parameters set in the investment strategy, and adjusting the duration of fixed
interest portfolios or the weighted average maturity of cash portfolios.
While derivatives are used for trading purposes, they are not used to gear (leverage) a portfolio. Gearing a portfolio would occur if the level of exposure to the markets exceeds the underlying value of the Funds.
The Funds hold the following derivative instruments:
Forward currency contractsForward currency contracts are primarily used by the Funds to manage against foreign currency risks on their investments. The Funds agrees to receive or deliver a fixed quantity of foreign currency for an agreed upon price on an agreed future date. Forward currency contracts are valued at the prevailing bid price at the end of each reporting period. The Funds recognise a gain or loss equal to the change in fair value at the end of each reporting period.
FuturesFutures are contractual obligations to buy or sell financial instruments on a future date at a specified price established in an organised market. The futures contracts are collateralised by cash or marketable securities. Changes in futures contracts’ values are usually settled net daily with the exchange. Interest rate futures are contractual obligations to receive or pay a net amount based on changes in interest rates at a future date at a specified price, established in an organised financial market.
The Funds’ derivative financial instruments at year end are detailed below:
Vanguard International Fixed Interest Index Fund (Hedged) Vanguard International Credit Securities Index Fund (Hedged)
2017 2016 2017 2016
Contract / Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair value
Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Australian fixed interest futures – – – (1,960) – 36 1,470 – 10 296 1 –
International fixed interest futures (4,305) 30 – 25,819 93 319 25,444 23 56 16,438 165 459
Forward currency contracts (3,045,778) 86,858 3,133 (2,609,175) 89,987 42,665 (1,519,591) 46,372 9,365 (1,216,853) 41,246 7,264
Total (3,050,083) 86,888 3,133 (2,585,316) 90,080 43,020 (1,492,677) 46,395 9,431 (1,200,119) 41,412 7,723
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Notes to the Financial Statements
90
Notes to the financial statements (continued)
For the year ended 30 June 2017
8. Derivative financial instruments (continued)
Vanguard International Shares Index Fund Vanguard International Shares Index Fund (Hedged)
2017 2016 2017 2016
Contract / Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair value
Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
International share price index futures 139,169 – 781 142,807 1,246 587 19,900 8 181 89,437 1,038 388
Forward currency contracts (91,708) 222 305 9,900 4 14 (3,138,808) 159,083 53,904 (3,097,835) 272,866 80,578
Total 47,461 222 1,086 152,707 1,250 601 (3,118,908) 159,091 54,085 (3,008,398) 273,904 80,966
Vanguard Emerging Markets Shares Index Fund Vanguard International Property Securities Index Fund
2017 2016 2017 2016
Contract / Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair value
Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
International share price index futures – – 11 2,695 83 – – – – – – –
Forward currency contracts (13,370) 1 – (16,905) 1 2 (153,000) 920 154 (2,000) – –
Total (13,370) 1 11 (14,210) 84 2 (153,000) 920 154 (2,000) – –
Vanguard International Property Securities Index Fund (Hedged) Vanguard International Small Companies Index Fund
2017 2016 2017 2016
Contract / Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair value
Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
International share price index futures – – – – – – 3,791 8 29 1,218 26 1
Forward currency contracts (1,477,795) 45,372 2,197 (1,384,437) 42,494 7,268 (426) – – (20,533) 66 4
Total (1,477,795) 45,372 2,197 (1,384,437) 42,494 7,268 3,365 8 29 (19,315) 92 5
Vanguard International Small Companies Index Fund (Hedged) Vanguard Global Minimum Volatility Fund
2017 2016 2017 2016
Contract / Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair value
Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
International share price index futures – – – 154 9 – 362 – 9 226 1 4
Forward currency contracts (72,958) 2,430 433 (39,590) 2,367 654 (24,377) 449 118 (20,520) 373 83
Total (72,958) 2,430 433 (39,436) 2,376 654 (24,015) 449 127 (20,294) 374 87
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Notes to the Financial Statements
91
Notes to the financial statements (continued)
For the year ended 30 June 2017
8. Derivative financial instruments (continued)
Vanguard Global Infrastructure Index Fund Vanguard Global Infrastructure Index Fund (Hedged)
2017 2016 2017 2016
Contract / Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair value
Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Forward currency contracts (8,000) – – (1,680) – – (73,042) 1,985 112 (36,257) 1,056 220
Total (8,000) – – (1,680) – – (73,042) 1,985 112 (36,257) 1,056 220
Vanguard International Shares Select Exclusions Index Fund Vanguard Global Value Equity Fund
2017 2016 2017 2016
Contract / Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair valueContract /
Notional
Fair value
Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
International share price index futures 32,481 26 316 – – – 255 – 9 – – –
Forward currency contracts 6,658 30,408 7,753 – – – – – – – – –
Total 39,139 30,434 8,069 – – – 255 – 9 – – –
Vanguard Global Quantitative Equity Fund
2017 2016
Contract / Notional
Fair valueContract /
Notional
Fair value
Assets Liabilities Assets Liabilities
$'000 $'000 $'000 $'000 $'000 $'000
International share price index futures 51 – – – – –
Forward currency contracts 416 18 14 (42) 9 21
Total 467 18 14 (42) 9 21
Risk exposures and fair value measurementsInformation about the Funds’ exposure to credit risk, foreign exchange risk, and interest rate risk and about the methods and assumptions used in determining fair values is provided in note 3 to the financial statements. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of derivative financial instruments disclosed above.
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Notes to the Financial Statements
92
Notes to the financial statements (continued)
For the year ended 30 June 2017
9. Net assets attributable to unitholdersVanguard International Fixed Interest Index Fund (Hedged)
Ordinary Class units
ETF Class units
Ordinary Class units
ETF Class units
Ordinary Class units
ETF Class units
Ordinary Class units
ETF Class units
30 June 2017 30 June 2016 30 June 2017 Total 30 June 2016 Total
No. ‘000 No. ‘000 No. ‘000 No. ‘000 $’000 $’000 $’000 $’000 $’000 $’000
Opening balance 2,017,890 350 2,352,758 – – – 2,629,249 – – 2,802,873
Applications 730,604 1,745 540,817 350 916,031 89,327 1,005,358 674,701 18,195 692,896
Redemptions (379,849) – (908,514) – (480,402) – (480,402) (1,151,730) – (1,151,730)
Units issued upon reinvestment of distributions 118,773 3 32,829 – 144,569 143 144,712 39,129 – 39,129
Increase/(decrease) in net assets attributable to unitholders – – – – – – (233,625) – – 246,081
Closing balance 2,487,418 2,098 2,017,890 350 – – 3,065,292 – – 2,629,249
Vanguard International Credit Securities Index Fund (Hedged)
Ordinary Class units
ETF Class units
Ordinary Class units
ETF Class units
Ordinary Class units
ETF Class units
Ordinary Class units
ETF Class units
30 June 2017 30 June 2016 30 June 2017 Total 30 June 2016 Total
No. ‘000 No. ‘000 No. ‘000 No. ‘000 $’000 $’000 $’000 $’000 $’000 $’000
Opening balance 953,031 220 1,256,129 – – – 1,180,821 – – 1,489,709
Applications 371,412 1,830 255,284 300 457,033 93,303 550,336 313,099 15,471 328,570
Redemptions (198,060) – (558,382) (80) (242,943) – (242,943) (690,354) (4,215) (694,569)
Units issued upon reinvestment of distributions 69,365 1 – – 83,850 52 83,902 – – –
Increase/(decrease) in net assets attributable to unitholders – – – – – – (63,158) – – 57,111
Closing balance 1,195,748 2,051 953,031 220 – – 1,508,958 – – 1,180,821
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Notes to the Financial Statements
93
Notes to the financial statements (continued)
For the year ended 30 June 2017
9. Net assets attributable to unitholders (continued)
Vanguard International Shares Index Fund
Ordinary Class units
ETF Class units
B Class units
R Class units
Ordinary Class units
ETF Class units
B Class units
R Class units
30 June 2017 30 June 2016
No. ‘000 No. ‘000 No. ‘000 No. ‘000 No. ‘000 No. ‘000 No. ‘000 No. ‘000
Opening balance 6,330,423 4,045 1,666 35,567 7,827,194 1,300 415 84,192
Applications 1,603,989 4,685 2,060 6,318 1,913,457 3,920 1,300 8,175
Redemptions (2,612,060) – (60) (10,469) (3,731,724) (1,180) (71) (58,688)
Units issued upon reinvestment of distributions 175,867 23 90 61 321,496 5 22 1,888
Closing balance 5,498,219 8,753 3,756 31,477 6,330,423 4,045 1,666 35,567
Vanguard International Shares Index Fund
Ordinary Class units
ETF Class units
B Class units
R Class units
Ordinary Class units
ETF Class units
B Class units
R Class units
30 June 2017 Total 30 June 2016 Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Opening balance 11,814,895 14,802,308
Applications 3,057,924 277,557 119,774 11,512 3,466,767 3,570,258 227,387 73,667 15,444 3,886,756
Redemptions (4,994,518) – (3,569) (21,111) (5,019,198) (7,034,683) (64,867) (4,077) (112,552) (7,216,179)
Units issued upon reinvestment of distributions 326,037 1,274 5,045 113 332,469 595,838 284 1,232 3,510 600,864
Increase/(decrease) in net assets attributable to unitholders – – – – 920,024 – – – – (258,854)
Closing balance – – – – 11,514,957 – – – – 11,814,895
* The Vanguard International Shares Index Fund (‘’VISIF’’) offers four classes of units, Ordinary Units, Class R Units, ETF Class Units and Class B Units . Until 21 December 2004,
Class R Units were issued on the basis that all distributions were compulsorily reinvested in further Class R Units (unless the Responsible Entity elects to pay a cash distribution). The
ETF Class Units commenced on 18 November 2014 and are traded on the Australian Stock Exchange. The Class B Units commenced on 18 November 2014 and represents Vanguard
Global Share Index Fund’s (Hedged) holdings in VISIF. All units in VISIF are denominated in AUD and are of equal value.
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Notes to the Financial Statements
94
Notes to the financial statements (continued)
For the year ended 30 June 2017
9. Net assets attributable to unitholders (continued)
Vanguard International Shares Index Fund (Hedged)
AUD Class units
NZD Class units
AUD Class units
NZD Class units
AUD Class units
NZD Class units
AUD Class units
NZD Class units
30 June 2017 30 June 2016 30 June 2017 Total 30 June 2016 Total
No. ‘000 No. ‘000 No. ‘000 No. ‘000 $’000 $’000 $’000 $’000 $’000 $’000
Opening balance 3,488,446 1,318,740 4,483,015 931,707 4,281,595 4,905,790
Applications 862,186 118,350 914,504 450,090 734,314 148,791 883,105 767,847 511,109 1,278,956
Redemptions (1,037,469) (1,196,152) (1,909,073) (63,057) (901,944) (1,520,198) (2,422,142) (1,620,029) (73,862) (1,693,891)
Units issued upon reinvestment of distributions 306,331 27,074 – – 246,410 33,279 279,689 – – –
Increase/(decrease) in net assets attributable to unitholders – – – – – – 119,929 (209,260)
Closing balance 3,619,494 268,012 3,488,446 1,318,740 – – 3,142,176 – – 4,281,595
Vanguard Emerging Markets Shares Index Fund
Vanguard International Property Securities Index Fund
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
No. ‘000 No. '000 $’000 $’000 No. ‘000 No. ‘000 $’000 $’000
Opening balance 595,045 766,481 993,761 1,492,504 1,623,075 1,628,274 1,985,451 1,767,538
Applications 70,188 113,646 127,532 192,221 852,814 495,306 977,412 594,802
Redemptions (95,129) (294,266) (165,600) (515,012) (884,407) (577,786) (1,013,462) (683,478)
Units issued upon reinvestment of distributions 17,471 9,184 29,632 16,500 89,664 77,281 108,193 87,187
Increase/(decrease) in net assets attributable to unitholders 141,440 (192,452) (241,606) 219,402
Closing balance 587,575 595,045 1,126,765 993,761 1,681,146 1,623,075 1,815,988 1,985,451
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies Index Fund
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
No. ‘000 No. '000 $’000 $’000 No. ‘000 No. ‘000 $’000 $’000
Opening balance 1,299,979 1,427,282 1,276,812 1,261,493 216,313 368,583 296,676 543,947
Applications 795,411 307,684 756,620 287,892 71,289 50,836 107,835 73,845
Redemptions (641,849) (434,987) (610,506) (410,516) (34,966) (231,037) (51,493) (336,543)
Units issued upon reinvestment of distributions 112,447 – 108,246 – 13,923 27,931 19,418 41,147
Increase/(decrease) in net assets attributable to unitholders (298,312) 137,943 28,096 (25,720)
Closing balance 1,565,988 1,299,979 1,232,860 1,276,812 266,559 216,313 400,532 296,676
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Notes to the Financial Statements
95
Notes to the financial statements (continued)
For the year ended 30 June 2017
9. Net assets attributable to unitholders (continued)
Vanguard International Small Companies Index Fund (Hedged)
Vanguard Global Minimum Volatility Fund
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
No. ‘000 No. '000 $’000 $’000 No. ‘000 No. ‘000 $’000 $’000
Opening balance 42,197 147,836 35,439 195,045 19,982 – 21,173 –
Applications 39,228 15,569 37,076 19,676 2,174 19,982 2,560 20,025
Redemptions (9,865) (121,208) (9,491) (152,753) (784) – (866) –
Units issued upon reinvestment of distributions 2,114 – 1,815 – 434 – 460 –
Increase/(decrease) in net assets attributable to unitholders 4,763 (26,529) 1,456 1,148
Closing balance 73,674 42,197 69,602 35,439 21,806 19,982 24,783 21,173
Vanguard Global Infrastructure Index Fund
Vanguard Global Infrastructure Index Fund (Hedged)
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
No. ‘000 No. '000 $’000 $’000 No. ‘000 No. ‘000 $’000 $’000
Opening balance 160,706 142,919 175,814 145,637 39,465 31,521 35,761 26,813
Applications 160,513 37,167 172,414 39,187 113,616 11,815 102,844 10,066
Redemptions (90,124) (21,712) (94,767) (22,952) (80,088) (3,871) (71,343) (3,335)
Units issued upon reinvestment of distributions 3,087 2,332 3,367 2,394 975 – 893 –
Increase/(decrease) in net assets attributable to unitholders (4,307) 11,548 (1,039) 2,217
Closing balance 234,182 160,706 252,521 175,814 73,968 39,465 67,116 35,761
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
No. ‘000 No. '000 $’000 $’000 No. ‘000 No. ‘000 $’000 $’000
Opening balance – – – – 14,484 – 14,376 –
Applications 14,996 – 15,252 – 924 14,484 1,065 14,500
Redemptions – – – – – – – –
Units issued upon reinvestment of distributions 63 – 72 – 207 – 228 –
Increase/(decrease) in net assets attributable to unitholders 1,391 – 1,961 (124)
Closing balance 15,059 – 16,715 – 15,615 14,484 17,630 14,376
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Notes to the Financial Statements
96
Notes to the financial statements (continued)
For the year ended 30 June 2017
9. Net assets attributable to unitholders (continued)
Vanguard International Shares Select Exclusions Index Fund
Ordinary Class units
NZD Hedged Class units
Ordinary Class units
NZD Hedged Class units
Ordinary Class units
NZD Hedged Class units
Ordinary Class units
NZD Hedged Class units
30 June 2017 30 June 2016 30 June 2017 Total 30 June 2016 Total
No. ‘000 No. ‘000 No. ‘000 No. ‘000 $’000 $’000 $’000 $’000 $’000 $’000
Opening balance – – – – – – – – – –
Applications 286,258 670,902 – – 291,926 655,507 947,433 – – –
Redemptions (44,410) (30,622) – – (46,636) (34,418) (81,054) – – –
Units issued upon reinvestment of distributions 726 – – – 745 – 745 – – –
Increase/(decrease) in net assets attributable to unitholders – – – – 50,022 – – –
Closing balance 242,574 640,280 – – – – 917,146 – – –
Each unit represents a right to an individual share in the Funds and does not extend to a right to the underlying assets of the Funds. The Vanguard Emerging Markets Shares Index Fund, Vanguard International Property Securities Index Fund, Vanguard International Property Securities Index Fund (Hedged), Vanguard International Small Companies Index Fund, Vanguard International Small Companies Index Fund (Hedged), Vanguard Global Minimum Volatility Fund, Vanguard Global Infrastructure Index Fund, Vanguard Global Infrastructure Index Fund (Hedged), Vanguard Global Value Equity Fund and Vanguard Global Quantatitive Equity Fund have no separate classes of units and each unit has the same rights attaching to it as all other units of the Funds.
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Notes to the Financial Statements
97
Notes to the financial statements (continued)
For the year ended 30 June 2017
9. Net assets attributable to unitholders (continued)
Capital Risk Management The Funds consider their net assets attributable to unitholders as capital, notwithstanding net assets attributable to unitholders are classified as a liability. The amount of net assets attributable to unitholders can change significantly on a daily basis as the Funds are subject to daily applications and redemptions at the discretion of unitholders.
Daily applications and redemptions are reviewed relative to the liquidity of the Funds’ underlying assets on a daily basis by the Responsible Entity. Under the terms of the Fund Constitutions, the Responsible Entity has the discretion to reject an application for units and to defer or adjust a redemption of units if the exercise of such discretion is in the best interests of unitholders.
The Funds’ investment strategy remains unchanged and they continues to hold direct investments which provide exposure to liquid assets including equity securities, income securities, interest earnings and cash equivalent securities. As such, the Funds will meet any capital requirements from the liquidation of liquid assets, which include cash and cash equivalents.
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Notes to the Financial Statements
98
Notes to the financial statements (continued)
For the year ended 30 June 2017
10. Distributions to unitholders paid and payableVanguard International Fixed Interest Index Fund (Hedged)
Ordinary Class units ETF Class units
30 June 2017 30 June 2016 30 June 2017 30 June 2016
$'000 CPU $'000 CPU $'000 CPU $'000 CPU
Distributions paid
31 March 154,840 6.9495 – – 4,484 289.4645 – –
Distributions payable
30 June 39,209 1.5763 44,745 2.2174 1,371 65.2296 362 103.3802
194,049 8.5258 44,745 2.2174 5,855 354.6941 362 103.3802
Vanguard International Credit Securities Index Fund (Hedged)
Ordinary Class units ETF Class units
30 June 2017 30 June 2016 30 June 2017 30 June 2016
$'000 CPU $'000 CPU $'000 CPU $'000 CPU
Distributions paid
31 March 55,943 5.0659 – – 3,464 216.6059 – –
Distributions payable
30 June 34,288 2.8675 49,960 5.2422 2,385 116.1793 468 212.8053
90,231 7.9334 49,960 5.2422 5,849 332.7852 468 212.8053
Vanguard International Shares Index Fund
Ordinary Class units ETF Class units B Class units
30 June 2017 30 June 2016 30 June 2017 30 June 2016 30 June 2017 30 June 2016
$'000 CPU $'000 CPU $'000 CPU $'000 CPU $'000 CPU $'000 CPU
Distributions paid
30 September 56,746 0.8221 64,066 0.9470 1,180 24.9066 595 29.8121 509 24.9623 229 30.0703
31 December 67,110 1.1623 57,477 0.8655 2,052 35.5383 820 26.7259 901 35.3468 271 26.7530
31 March 48,744 0.8630 54,651 0.7762 1,831 26.5001 822 23.6453 867 26.3982 370 23.9950
Distributions payable
30 June 550,909 9.9631 229,087 3.5986 8,677 98.5136 6,064 149.2126 3,670 97.6911 2,769 166.1934
723,509 12.8105 405,281 6.1873 13,740 185.4586 8,301 229.3959 5,947 184.3984 3,639 247.0117
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Notes to the Financial Statements
99
Notes to the financial statements (continued)
For the year ended 30 June 2017
10. Distributions to unitholders paid and payable (continued)
Vanguard International Shares Index Fund (Hedged)
AUD Class units NZD Class units
30 June 2017 30 June 2016 30 June 2017 30 June 2016
$'000 CPU $'000 CPU $'000 CPU $'000 CPU
Distributions paid
30 September – – – – – – – –
31 December – – – – – – – –
31 March 158,241 4.2575 – – 8,741 3.0571 – –
Distributions payable
30 June 412,305 11.3912 258,746 7.4172 40,723 15.1943 25,628 2.0318
570,546 15.6487 258,746 7.4172 49,464 18.2514 25,628 2.0318
Vanguard Emerging Markets Shares Index Fund
Vanguard International Property Securities Index Fund
Vanguard International Property Securities Index Fund (Hedged)
30 June 2017 30 June 2016 30 June 2017 30 June 2016 30 June 2017 30 June 2016
$'000 CPU $'000 CPU $'000 CPU $'000 CPU $'000 CPU $'000 CPU
Distributions paid
30 September 11,459 2.0824 14,773 1.9228 15,972 0.9299 10,016 0.6014 – – – –
31 December 1,668 0.2968 2,232 0.3228 16,132 0.9768 14,782 0.8324 – – – –
31 March 1,487 0.2589 2,093 0.2942 7,766 0.4098 17,760 0.9862 53,587 3.1216 – –
Distributions payable
30 June 29,545 5.0282 38,998 6.5538 104,083 6.1912 96,654 5.9550 253,663 16.1983 83,499 6.4231
44,159 7.6663 58,096 9.0936 143,953 8.5077 139,212 8.3750 307,250 19.3199 83,499 6.4231
Vanguard International Small Companies Index Fund
Vanguard International Small Companies Index Fund (Hedged)
Vanguard Global Minimum Volatility Fund
30 June 2017 30 June 2016 30 June 2017 30 June 2016 30 June 2017 30 June 2016
$'000 CPU $'000 CPU $'000 CPU $'000 CPU $'000 CPU $'000 CPU
Distributions paid
30 September 1,028 0.4551 1,923 0.5050 – – – – – – – –
31 December 1,496 0.6361 1,136 0.4058 – – – – – – – –
31 March 1,075 0.4410 871 0.3031 1,807 2.7392 – – – – – –
Distributions payable
30 June 24,304 9.1176 16,633 7.6893 5,073 6.8852 18,143 42.9946 1,127 5.1684 460 2.3019
27,903 10.6498 20,563 8.9032 6,880 9.6244 18,143 42.9946 1,127 5.1684 460 2.3019
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Notes to the Financial Statements
100
Notes to the financial statements (continued)
For the year ended 30 June 2017
10. Distributions to unitholders paid and payable (continued)
Vanguard Global Infrastructure Index Fund
Vanguard Global Infrastructure Index Fund (Hedged)
30 June 2017 30 June 2016 30 June 2017 30 June 2016
$'000 CPU $'000 CPU $'000 CPU $'000 CPU
Distributions paid
30 September 1,037 0.5949 1,011 0.6802 – – – –
31 December 1,263 0.6061 921 0.5963 – – – –
31 March 1,339 0.6208 882 0.5471 152 0.2088 – –
Distributions payable
30 June 13,489 5.7601 3,707 2.3064 6,958 9.4067 885 2.2415
17,128 7.5819 6,521 4.1300 7,110 9.6155 885 2.2415
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity Fund
30 June 2017 30 June 2016 30 June 2017 30 June 2016
$'000 CPU $'000 CPU $'000 CPU $'000 CPU
Distributions paid
30 September – – – – 35 0.2433 – –
31 December 33 0.2572 – – 144 0.9900 – –
31 March 38 0.2570 – – 49 0.3270 – –
Distributions payable
30 June 645 4.2804 – – 626 4.0081 75 0.5163
716 4.7946 – – 854 5.5684 75 0.5163
Vanguard International Shares Select Exclusions Index Fund
Ordinary Class units NZD Hedged Class units
30 June 2017 30 June 2016 30 June 2017 30 June 2016
$'000 CPU $'000 CPU $'000 CPU $'000 CPU
Distributions paid
31 March 795 0.3654 – – – – – –
Distributions payable
30 June 2,425 0.9996 – – – – – –
3,220 1.3650 – – – – – –
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Notes to the Financial Statements
101
Notes to the financial statements (continued)
For the year ended 30 June 2017
11. Cash and cash equivalentsVanguard International
Fixed Interest Index Fund (Hedged)
Vanguard International Credit Securities Index
Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund
(Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Domestic cash at bank 5,794 – 2,479 3,431 64,404 5,664 1,267 – 1,710 347
Foreign cash at bank 13,524 8,630 20,333 10,334 217,900 106,485 12,174 13,369 12,044 4,598
Total cash and cash equivalents 19,318 8,630 22,812 13,765 282,304 112,149 13,441 13,369 13,754 4,945
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index
Fund (Hedged)
Vanguard International Small Companies Index
Fund
Vanguard International Small Companies Index
Fund (Hedged)
Vanguard Global Minimum
Volatility Fund
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Domestic cash at bank 115 2,344 2,579 2,434 333 (445) 502 625 196 –
Foreign cash at bank 30,555 3,643 – – 3,520 – 431 76 49 25
Total cash and cash equivalents 30,670 5,987 2,579 2,434 3,853 (445) 933 701 245 25
Vanguard Global Infrastructure
Index Fund
Vanguard Global Infrastructure Index Fund
(Hedged)
Vanguard International Shares Select Exclusions
Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative
Equity Fund
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Domestic cash at bank 1,015 171 139 38 2,502 – 138 – 216 5
Foreign cash at bank 1,226 292 – – 19,343 – 109 – 356 10
Total cash and cash equivalents 2,241 463 139 38 21,845 – 247 – 572 15
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Notes to the Financial Statements
102
Notes to the financial statements (continued)
For the year ended 30 June 2017
12. Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities
Vanguard International Fixed Interest Index Fund
(Hedged)
Vanguard International Credit Securities Index Fund
(Hedged)
Vanguard International Shares Index
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000
(a) Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities
Profit/(loss) for the year – – – – – –
Increase/(decrease) in net assets attributable to unitholders (233,625) 246,081 (63,158) 57,111 920,024 (258,854)
Distributions to unitholders 199,904 45,107 96,080 50,428 743,196 417,221
Proceeds from sale of financial instruments held at fair value through profit or loss 801,241 1,740,112 844,663 1,186,846 3,982,216 5,498,187
Purchases of financial instruments held at fair value through profit or loss (1,255,235) (1,261,769) (1,098,507) (830,408) (2,490,201) (2,164,016)
Net gains/(losses) on financial instruments held at fair value through profit or loss 26,464 (298,980) (37,266) (112,473) (1,404,837) 112,566
Net change in receivables 107 111 70 44 (3,218) 3,250
Net change in payables 193 (50) 62 (70) 43 (541)
Non cash items – – – – (13,119) (4,718)
Net cash inflow/(outflow) from operating activities (460,951) 470,612 (258,056) 351,478 1,734,104 3,603,095
(b) Non cash financing activities
During the year, the following distribution payments were satisfied by the issue of units under the distribution reinvestment plan 144,712 39,129 83,901 - 332,469 600,579
Vanguard International Shares Index
Fund (Hedged)
Vanguard Emerging Markets Shares
Index Fund
Vanguard International Property Securities
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000
(a) Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities
Profit/(loss) for the year – – – – – –
Increase/(decrease) in net assets attributable to unitholders 119,929 (209,260) 141,440 (192,452) (241,606) 219,402
Distributions to unitholders 620,010 284,374 44,159 58,096 143,953 139,212
Proceeds from sale of financial instruments held at fair value through profit or loss 2,578,226 3,662,579 141,869 499,185 822,915 611,971
Purchases of financial instruments held at fair value through profit or loss (866,463) (3,496,406) (88,726) (188,418) (928,191) (553,951)
Net gains/(losses) on financial instruments held at fair value through profit or loss (519,098) 69,793 (165,546) 162,684 155,743 (295,664)
Net change in receivables (79,523) 78,667 1,844 3,071 (1,235) (597)
Net change in payables (54) 128 60 (220) 19 48
Non cash items (142,072) (60,703) (3,987) (4,267) (1,422) (300)
Net cash inflow/(outflow) from operating activities 1,710,955 329,172 71,113 337,679 (49,824) 120,121
(b) Non cash financing activities
During the year, the following distribution payments were satisfied by the issue of units under the distribution reinvestment plan 279,689 – 29,632 16,500 108,193 87,187
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Vanguard Wholesale Funds
Notes to the Financial Statements
103
Notes to the financial statements (continued)
For the year ended 30 June 2017
12. Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities (continued)
Vanguard International Property Securities Index
Fund (Hedged)
Vanguard International Small
Companies Index Fund
Vanguard International Small Companies Index Fund
(Hedged)
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000
(a) Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities
Profit/(loss) for the year – – – – – –
Increase/(decrease) in net assets attributable to unitholders (298,312) 137,943 28,096 (25,720) 4,763 (26,529)
Distributions to unitholders 307,250 83,499 27,903 20,563 6,880 18,143
Proceeds from sale of financial instruments held at fair value through profit or loss 861,150 939,381 88,715 335,223 42,412 197,006
Purchases of financial instruments held at fair value through profit or loss (977,455) (818,621) (129,403) (95,854) (51,554) (79,890)
Net gains/(losses) on financial instruments held at fair value through profit or loss 95,997 (131,426) (50,918) 12,705 (7,066) 11,148
Net change in receivables (15,479) (21,350) (74) 318 (2,079) 10,864
Net change in payables 9 6 26 (81) – (3)
Non cash items (89,901) (69,109) (155) (445) (2,540) (878)
Net cash inflow/(outflow) from operating activities (116,741) 120,323 (35,810) 246,709 (9,184) 129,861
(b) Non cash financing activities
During the year, the following distribution payments were satisfied by the issue of units under the distribution reinvestment plan 108,246 – 19,418 41,147 1,815 –
Vanguard Global Minimum Volatility Fund
Vanguard Global Infrastructure
Index Fund
Vanguard Global Infrastructure Index Fund
(Hedged)
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000
(a) Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities
Profit/(loss) for the year – – – – – –
Increase/(decrease) in net assets attributable to unitholders 1,456 1,148 (4,307) 11,548 (1,039) 2,217
Distributions to unitholders 1,127 460 17,128 6,521 7,110 885
Proceeds from sale of financial instruments held at fair value through profit or loss 10,093 8,773 92,629 24,299 86,318 20,032
Purchases of financial instruments held at fair value through profit or loss (11,860) (29,047) (169,546) (41,373) (117,457) (27,375)
Net gains/(losses) on financial instruments held at fair value through profit or loss (2,140) (1,063) (6,365) (13,867) (1,411) (1,782)
Net change in receivables (3) (86) (245) (78) (2,948) (179)
Net change in payables (1) 7 38 9 1 –
Non cash items (10) – (226) (66) (1,737) (592)
Net cash inflow/(outflow) from operating activities (1,338) (19,808) (70,894) (13,007) (31,163) (6,794)
(b) Non cash financing activities
During the year, the following distribution payments were satisfied by the issue of units under the distribution reinvestment plan 460 – 3,367 2,394 893 –
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Notes to the Financial Statements
104
Notes to the financial statements (continued)
For the year ended 30 June 2017
12. Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities (continued)
Vanguard International Shares Select Exclusions
Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative Equity
Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000
(a) Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities
Profit/(loss) for the year – – – – – –
Increase/(decrease) in net assets attributable to unitholders 50,022 – 1,391 – 1,961 (124)
Distributions to unitholders 3,220 – 716 – 854 75
Proceeds from sale of financial instruments held at fair value through profit or loss 53,293 – 5,770 – 9,936 3,060
Purchases of financial instruments held at fair value through profit or loss (902,300) – (20,699) – (10,610) (17,886)
Net gains/(losses) on financial instruments held at fair value through profit or loss (44,294) – (1,884) – (2,547) 202
Net change in receivables (1,366) – (29) – (7) (32)
Net change in payables 198 – 5 – – 5
Non cash items (408) – (13) – (24) –
Net cash inflow/(outflow) from operating activities (841,635) – (14,743) – (437) (14,700)
(b) Non cash financing activities
During the year, the following distribution payments were satisfied by the issue of units under the distribution reinvestment plan 745 – 72 – 228 –
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Vanguard Wholesale Funds
Notes to the Financial Statements
105
Notes to the financial statements (continued)
For the year ended 30 June 2017
13. Remuneration of auditorsThe auditor’s remuneration is borne by the Responsible Entity. During the year, the following fees were paid or payable for services provided by the auditor of the Funds.
Vanguard International Fixed Interest Index
Fund (Hedged)
Vanguard International Credit Securities Index
Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund (Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
PricewaterhouseCoopers
Audit and other assurance services
Audit and review of financial statements 30,000 30,000 26,000 26,000 24,500 24,500 28,000 28,000 18,500 18,500
Audit of compliance plan 1,933 1,933 1,933 1,933 1,933 1,933 1,933 1,933 1,933 1,933
Audit of specified assertions and internal controls report 6,046 5,963 6,046 5,963 6,046 5,963 6,046 5,963 6,046 5,963
Total remuneration for audit and other assurance services 37,979 37,896 33,979 33,896 32,479 32,396 35,979 35,896 26,479 26,396
Taxation services
Tax compliance services 9,950 7,360 9,950 7,360 9,950 4,360 8,335 5,745 9,950 7,360
Total remuneration for taxation services 9,950 7,360 9,950 7,360 9,950 4,360 8,335 5,745 9,950 7,360
Total remuneration of PricewaterhouseCoopers 47,929 45,256 43,929 41,256 42,429 36,756 44,314 41,641 36,429 33,756
Vanguard International
Property Securities Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies Index
Fund
Vanguard International Small Companies Index
Fund (Hedged)
Vanguard Global Minimum
Volatility Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
PricewaterhouseCoopers
Audit and other assurance services
Audit and review of financial statements 18,500 18,500 21,000 21,000 18,500 20,500 15,500 15,500 15,500 15,500
Audit of compliance plan 1,933 1,933 1,933 1,933 1,933 1,933 1,933 1,933 1,933 1,933
Audit of specified assertions and internal controls report 6,046 5,963 6,046 5,963 6,046 5,963 6,046 5,963 6,046 5,963
Total remuneration for audit and other assurance services 26,479 26,396 28,979 28,896 26,479 28,396 23,479 23,396 23,479 23,396
Taxation services
Tax compliance services 9,950 7,360 8,335 5,745 9,950 7,360 8,335 5,745 9,950 2,228
Total remuneration for taxation services 9,950 7,360 8,335 5,745 9,950 7,360 8,335 5,745 9,950 2,228
Total remuneration of PricewaterhouseCoopers 36,429 33,756 37,314 34,641 36,429 35,756 31,814 29,141 33,429 25,624
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Notes to the Financial Statements
106
Notes to the financial statements (continued)
For the year ended 30 June 2017
13. Remuneration of auditors (continued)
The auditor’s remuneration is borne by the Responsible Entity. During the year, the following fees were paid or payable for services provided by the auditor of the Funds.
Vanguard Global Infrastructure
Index Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
Vanguard International Shares Select
Exclusions Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative
Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
PricewaterhouseCoopers
Audit and other assurance services
Audit and review of financial statements 20,000 13,000 15,550 15,500 17,000 – 15,500 – 15,500 15,500
Audit of compliance plan 1,933 1,933 1,933 1,933 1,933 – 1,933 – 1,933 1,933
Audit of specified assertions and internal controls report 6,046 5,963 6,046 5,963 6,046 – 6,046 – 6,046 5,963
Total remuneration for audit and other assurance services 27,979 20,896 23,529 23,396 24,979 – 23,479 – 23,479 23,396
Taxation services
Tax compliance services 9,950 7,360 8,335 5,745 9,950 – 9,950 – 9,950 2,228
Total remuneration for taxation services 9,950 7,360 8,335 5,745 9,950 – 9,950 – 9,950 2,228
Total remuneration of PricewaterhouseCoopers 37,929 28,256 31,864 29,141 34,929 – 33,429 – 33,429 25,624
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Vanguard Wholesale Funds
Notes to the Financial Statements
107
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactionsResponsible EntityThe Responsible Entity of the Vanguard Wholesale Funds is Vanguard Investments Australia Ltd (ABN 72 072 881 086 AFSL 227263), which is a wholly owned subsidiary of The Vanguard Group, Inc.
Key management personnelKey management personnel includes persons who were directors of Responsible Entity at any time during the financial year as follows:
• J M Norris• G W Reed (Resigned 31 July 2017)• C R Comegys (Resigned 31 August 2017)• C Kelton• M Lovett (Resigned 6 December 2016)• L Carr (Appointed 6 December 2016)
No other person had authority and responsibility for planning, directing and controlling the activities of the Funds, directly or indirectly during the financial year.
Transactions with key management personnelKey management personnel services are provided by Vanguard Investments Australia Ltd and included in the management fees. There is no separate charge for these services. There was no compensation paid directly by the Funds to any of the key management personnel.
Key management personnel unitholdingsThe key management personnel of Vanguard Investments Australia Ltd (VIA) did not hold any units in the Funds during the period.
Key management personnel remunerationKey management personnel are paid by the Responsible Entity. Payments made from the Funds do not include any amounts directly attributable to key management personnel remuneration.
Key management personnel loan disclosuresThe Funds have not made, guaranteed or secured, directly or indirectly, any loans to the key management personnel or their personally related entities at any time during the reporting period.
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Vanguard Annual Report
Notes to the Financial Statements
108
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Responsible Entity’s fees and other transactionsDuring the year ended 30 June 2017, the Responsible Entity received an all inclusive management fee (inclusive of GST, net of RITC available to the Funds) over the Funds’ average net assets attributable to unitholders for the year as follows:
Management costs
2017 2016
% per annum % per annum
Vanguard International Fixed Interest Index Fund (Hedged) 0.26 0.26
Vanguard International Fixed Interest Index Fund (Hedged) (ETF Class units) 0.20 0.20
Vanguard International Credit Securities Index Fund (Hedged) 0.32 0.34
Vanguard International Credit Securities Index Fund (Hedged) (ETF Class units) 0.30 0.30
Vanguard International Property Securities Index Fund 0.40 0.40
Vanguard International Property Securities Index Fund (Hedged) 0.43 0.43
Vanguard International Shares Index Fund (Ordinary Class units) 0.18 0.18
Vanguard International Shares Index Fund (ETF Class units) 0.18 0.18
Vanguard International Shares Index Fund (B Class units) 0.18 0.18
Vanguard International Shares Index Fund (Hedged) AUD Class 0.21 0.21
Vanguard International Shares Index Fund (Hedged) NZD Class 0.24 0.31
Vanguard Emerging Markets Shares Index Fund 0.56 0.56
Vanguard International Small Companies Index Fund 0.39 0.39
Vanguard International Small Companies Index Fund (Hedged) 0.42 0.42
Vanguard Global Minimum Volatility Fund 0.35 0.45
Vanguard Global Infrastructure Index Fund 0.49 0.49
Vanguard Global Infrastructure Index Fund (Hedged) 0.52 0.52
Vanguard International Shares Select Exclusions Index Fund 0.20 N/A
Vanguard International Shares Select Exclusions Index Fund - NZD Hedged 0.26 N/A
Vanguard Global Value Equity Fund 0.35 N/A
Vanguard Global Quantitative Equity Fund 0.35 0.45
Effective from 1 May 2017, the management cost of Vanguard Global Minimum Volatility Fund was reduced from 0.45% p.a. to 0.35% p.a.
Effective from 1 May 2017, the management cost of Vanguard Global Value Equity Fund was reduced from 0.45% p.a. to 0.35% p.a.
Effective from 1 May 2017, the management cost of Vanguard Global Quantitative Equity Fund was reduced from 0.45% p.a. to 0.35% p.a.
Effective from 1 December 2016, the management cost of Vanguard International Shares Fund (Hedged) NZD Class was reduced from 0.31% p.a. to 0.24% p.a.
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Vanguard Wholesale Funds
Notes to the Financial Statements
109
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Responsible Entity’s fees and other transactions (continued)All related party transactions are conducted on normal commercial terms and conditions. The transactions during the year and amounts payable at year end between the Funds and the Responsible Entity are as follows:
Vanguard International Fixed Interest Index Fund
(Hedged)
Vanguard International Credit Securities Index
Fund (Hedged)
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund (Hedged)
Vanguard Emerging Markets Shares
Index Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Responsible Entity’s fees for the year 7,241 7,706 4,534 4,982 21,915 23,647 2,119 2,993 5,818 6,954
Total fees payable to the Responsible Entity at year end 642 548 398 339 1,809 1,766 121 358 537 477
Vanguard International
Property Securities Index Fund
Vanguard International Property Securities Index
Fund (Hedged)
Vanguard International Small Companies Index
Fund
Vanguard International Small Companies Index
Fund (Hedged)
Vanguard Global Minimum
Volatility Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Responsible Entity’s fees for the year 7,882 8,163 454 406 1,392 1,760 20 33 95 87
Total fees payable to the Responsible Entity at year end 679 660 48 40 133 107 2 3 7 8
Vanguard Global
Infrastructure Index Fund
Vanguard Global Infrastructure Index
Fund (Hedged)
Vanguard International Shares Select
Exclusions Index Fund
Vanguard Global Value Equity Fund
Vanguard Global Quantitative
Equity Fund
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
30 June2017
30 June2016
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Responsible Entity’s fees for the year 1,071 797 19 10 947 – 54 – 66 28
Total fees payable to the Responsible Entity at year end 108 70 2 1 174 – 5 – 5 5
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Notes to the Financial Statements
110
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Related party unitholdingsParties related to the Funds including the Responsible Entity, its affiliates or other funds managed by the Responsible Entity held units in the Funds as follows:
Vanguard International Fixed Interest Index Fund (Hedged)
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Index Diversified Bond Fund 24,433,290 23,316,489 27,793,254 0.94 3,446,931 4,563,732 1,988,133
Vanguard LifeStrategy® Conservative Fund 5,088,251 7,490,566 8,928,755 0.30 2,659,752 257,437 548,642
Vanguard LifeStrategy® Balanced Fund 11,945,080 16,230,082 19,346,256 0.65 5,197,583 912,581 1,259,467
Vanguard LifeStrategy® Growth Fund 12,208,105 15,718,473 18,736,419 0.63 5,326,030 1,815,662 1,233,432
Vanguard LifeStrategy® High Growth Fund 3,973,725 5,176,898 6,170,862 0.21 2,130,034 926,861 411,036
Vanguard Conservative Index Fund 155,017,537 233,062,739 277,810,785 9.37 90,525,481 12,480,279 17,987,557
Vanguard Balanced Index Fund 246,871,507 372,603,161 444,142,969 14.98 155,049,911 29,318,257 28,043,661
Vanguard Growth Index Fund 143,711,598 209,517,921 249,745,361 8.42 89,014,784 23,208,461 15,550,364
Vanguard High Growth Index Fund 29,220,329 39,587,530 47,188,336 1.59 21,830,564 11,463,363 2,929,269
Vanguard Diversified Bond Index Fund 32,468,542 49,573,200 59,091,254 1.99 20,361,595 3,256,937 3,855,385
Vanguard Managed Payout Fund 11,706,893 12,794,086 15,250,550 0.51 2,276,701 1,189,508 974,754
Vanguard International Fixed Interest Index Fund (Hedged)
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Index Diversified Bond Fund 24,365,568 24,433,290 31,627,076 1.21 2,453,794 2,386,072 541,793
Vanguard LifeStrategy® Conservative Fund 3,946,222 5,088,251 6,586,363 0.25 1,375,091 233,062 112,829
Vanguard LifeStrategy® Balanced Fund 9,925,285 11,945,080 15,462,017 0.59 2,809,863 790,068 264,875
Vanguard LifeStrategy® Growth Fund 11,807,421 12,208,105 15,802,484 0.60 1,246,896 846,212 270,707
Vanguard LifeStrategy® High Growth Fund 3,777,830 3,973,725 5,143,691 0.20 608,246 412,351 88,115
Vanguard Conservative Index Fund 284,332,958 155,017,537 200,658,671 7.68 44,427,665 173,743,086 3,437,418
Vanguard Balanced Index Fund 463,427,388 246,871,507 319,556,803 12.23 65,674,961 282,230,842 5,474,223
Vanguard Growth Index Fund 207,323,266 143,711,598 186,023,973 7.12 20,443,812 84,055,480 3,186,716
Vanguard High Growth Index Fund 35,817,223 29,220,329 37,823,543 1.45 9,738,213 16,335,107 647,943
Vanguard Diversified Bond Index Fund 87,952,473 32,468,542 42,028,112 1.61 20,992,606 76,476,537 719,970
Vanguard Managed Payout Fund - 11,706,893 15,153,702 0.58 12,573,345 866,452 259,593For
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Notes to the Financial Statements
111
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Related party unitholdings (continued)
Vanguard International Credit Securities Index Fund (Hedged)
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Index Diversified Bond Fund 14,221,004 13,004,693 15,305,222 1.09 2,619,537 3,835,848 1,037,023
Vanguard LifeStrategy® Conservative Fund 2,932,720 4,204,804 4,948,634 0.35 1,488,695 216,611 300,978
Vanguard LifeStrategy® Balanced Fund 6,658,785 9,111,115 10,722,870 0.76 3,192,026 739,696 680,189
Vanguard LifeStrategy® Growth Fund 6,910,458 8,872,163 10,441,649 0.74 2,550,314 588,609 678,023
Vanguard LifeStrategy® High Growth Fund 2,288,265 2,976,957 3,503,580 0.25 1,331,521 642,829 219,012
Vanguard Conservative Index Fund 89,447,057 130,889,051 154,043,325 10.95 50,647,930 9,205,936 9,837,116
Vanguard Balanced Index Fund 142,025,197 208,411,880 245,279,941 17.43 85,630,699 19,244,016 15,291,749
Vanguard Growth Index Fund 84,371,128 118,417,391 139,365,427 9.90 46,886,518 12,840,255 8,510,800
Vanguard High Growth Index Fund 16,934,177 23,184,911 27,286,321 1.94 13,262,509 7,011,775 1,605,182
Vanguard Diversified Bond Index Fund 18,753,894 27,960,620 32,906,853 2.34 11,581,444 2,374,718 2,100,116
Vanguard International Credit Securities Index Fund (Hedged)
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Index Diversified Bond Fund 14,486,094 14,221,004 17,438,908 1.49 1,853,696 2,118,786 745,489
Vanguard LifeStrategy® Conservative Fund 2,466,768 2,932,720 3,596,331 0.31 934,739 468,787 153,738
Vanguard LifeStrategy® Balanced Fund 5,781,361 6,658,785 8,165,523 0.70 1,808,866 931,442 349,065
Vanguard LifeStrategy® Growth Fund 7,112,459 6,910,458 8,474,145 0.73 939,171 1,141,172 362,258
Vanguard LifeStrategy® High Growth Fund 2,304,042 2,288,265 2,806,049 0.24 1,025,535 1,041,312 119,955
Vanguard Conservative Index Fund 172,030,034 89,447,057 109,686,987 9.39 29,315,492 111,898,469 4,688,965
Vanguard Balanced Index Fund 278,806,813 142,025,197 174,162,419 14.90 23,965,474 160,747,090 7,445,200
Vanguard Growth Index Fund 124,972,434 84,371,128 103,462,484 8.85 15,437,122 56,038,428 4,422,877
Vanguard High Growth Index Fund 20,735,588 16,934,177 20,766,015 1.78 3,889,345 7,690,756 887,718
Vanguard Diversified Bond Index Fund 52,521,675 18,753,894 22,997,494 1.97 8,924,544 42,692,325 983,111
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Vanguard Annual Report
Notes to the Financial Statements
112
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Related party unitholdings (continued)
Vanguard International Shares Index Fund
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Index International Shares Fund 140,140,213 139,671,341 271,576,957 2.53 11,485,762 11,954,634 17,906,968
Vanguard LifeStrategy® Conservative Fund 1,527,428 1,940,734 3,773,564 0.04 777,586 364,280 241,178
Vanguard LifeStrategy® Balanced Fund 7,341,050 8,643,778 16,806,963 0.16 2,145,527 842,799 1,088,899
Vanguard LifeStrategy® Growth Fund 17,632,939 19,918,933 38,730,375 0.36 2,910,944 624,950 2,515,889
Vanguard LifeStrategy® High Growth Fund 22,382,515 25,023,533 48,655,759 0.45 3,519,163 878,145 3,156,136
Vanguard Conservative Index Fund 47,934,362 60,223,249 117,098,086 1.09 17,312,191 5,023,304 7,554,488
Vanguard Balanced Index Fund 155,024,264 198,013,877 385,018,183 3.58 62,328,329 19,338,716 24,531,893
Vanguard Growth Index Fund 214,086,412 266,152,052 517,506,051 4.81 88,690,962 36,625,322 32,669,561
Vanguard High Growth Index Fund 167,371,243 180,447,650 350,862,410 3.26 61,168,495 48,092,088 22,171,018
Vanguard International Shares Index Fund (Hedged) 2,363,176,265 1,651,907,727 3,211,969,386 29.87 412,578,724 1,123,847,262 221,611,082
Vanguard Global Shares Index Fund (Hedged) 1,666,052 3,756,823 227,287,437 0.07 2,150,353 59,582 5,946,837
Vanguard Managed Payout Fund 11,014,978 12,578,376 24,457,395 0.23 1,910,671 347,273 1,593,976
Vanguard International Shares Index Fund
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Index International Shares Fund 144,417,442 140,140,213 253,361,442 2.20 17,002,439 21,279,668 8,767,945
Vanguard LifeStrategy® Conservative Fund 1,119,248 1,527,428 2,761,458 0.02 502,057 93,877 91,127
Vanguard LifeStrategy® Balanced Fund 5,308,680 7,341,050 13,271,987 0.12 2,275,024 242,654 431,552
Vanguard LifeStrategy® Growth Fund 15,696,929 17,632,939 31,878,836 0.28 2,548,318 612,308 1,064,204
Vanguard LifeStrategy® High Growth Fund 19,436,881 22,382,515 40,465,661 0.35 3,915,357 969,723 1,337,885
Vanguard Conservative Index Fund 77,860,179 47,934,362 86,661,201 0.75 21,805,377 51,731,194 4,026,465
Vanguard Balanced Index Fund 259,141,903 155,024,264 280,270,525 2.44 68,963,798 173,081,437 13,169,156
Vanguard Growth Index Fund 271,098,137 214,086,412 387,049,805 3.36 50,639,884 107,651,609 15,215,385
Vanguard High Growth Index Fund 175,461,806 167,371,243 302,592,800 2.63 35,455,058 43,545,621 10,903,482
Vanguard International Shares Index Fund (Hedged) 2,492,567,197 2,363,176,265 4,272,419,454 37.12 693,684,410 823,075,342 145,744,425
Vanguard Global Shares Index Fund (Hedged) 414,995 1,666,052 93,321,737 0.77 1,322,447 71,390 3,638,544
Vanguard Managed Payout Fund - 11,014,978 19,914,132 0.17 11,179,951 164,973 396,386For
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Vanguard Wholesale Funds
Notes to the Financial Statements
113
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Related party unitholdings (continued)
Vanguard International Shares Index Fund (Hedged)
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end*
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Index Hedged International Shares Fund 144,812,192 155,967,560 120,859,262 4.31 30,287,116 19,131,748 24,150,454
Vanguard International Shares Index Fund (Hedged)
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Index Hedged International Shares Fund 154,185,547 144,812,192 112,045,214 4.15 7,365,448 16,738,803 10,741,043
* The interest held is based on the proportion of units held in the AUD class.
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Vanguard Annual Report
Notes to the Financial Statements
114
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Related party unitholdings (continued)
Vanguard Emerging Markets Shares Index Fund
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard LifeStrategy® Conservative Fund 245,289 282,443 540,597 0.05 37,154 – 20,980
Vanguard LifeStrategy® Balanced Fund 1,153,313 1,290,273 2,469,582 0.22 184,857 47,897 96,770
Vanguard LifeStrategy® Growth Fund 2,696,797 2,962,615 5,670,445 0.50 265,818 – 223,401
Vanguard LifeStrategy® High Growth Fund 3,478,266 3,686,030 7,055,061 0.63 264,579 56,815 279,448
Vanguard Conservative Index Fund 7,510,755 9,675,294 18,518,514 1.65 2,164,539 – 699,135
Vanguard Balanced Index Fund 24,420,502 29,184,864 55,859,831 4.97 7,371,308 2,606,946 2,103,438
Vanguard Growth Index Fund 32,031,368 38,688,786 74,050,334 6.58 9,459,637 2,802,219 2,797,499
Vanguard High Growth Index Fund 25,767,858 25,636,702 49,068,647 4.36 5,547,517 5,678,673 1,863,519
Vanguard Emerging Markets Shares Index Fund
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard LifeStrategy® Conservative Fund 158,037 245,289 409,109 0.04 144,194 56,942 21,641
Vanguard LifeStrategy® Balanced Fund 799,827 1,153,313 1,923,566 0.19 353,486 – 99,056
Vanguard LifeStrategy® Growth Fund 2,190,618 2,696,797 4,497,885 0.45 506,179 – 236,955
Vanguard LifeStrategy® High Growth Fund 2,756,655 3,478,266 5,801,266 0.58 721,611 – 305,980
Vanguard Conservative Index Fund 12,326,587 7,510,755 12,526,902 1.26 5,680,706 10,496,538 856,052
Vanguard Balanced Index Fund 38,242,812 24,420,502 40,730,021 4.10 12,217,340 26,039,650 2,700,364
Vanguard Growth Index Fund 38,997,660 32,031,368 53,423,892 5.38 9,073,401 16,039,693 3,184,401
Vanguard High Growth Index Fund 24,804,309 25,767,858 42,977,224 4.33 7,136,964 6,173,415 2,390,362
Vanguard International Property Securities Index Fund
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard International Property Securities Index Fund (Hedged) 1,041,518,141 1,251,897,108 1,352,299,257 74.47 727,465,828 517,086,861 105,386,415
Vanguard International Property Securities Index Fund
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard International Property Securities Index Fund (Hedged) 1,122,526,765 1,041,518,141 1,274,505,749 64.17 351,883,917 432,892,542 90,450,947
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Vanguard Wholesale Funds
Notes to the Financial Statements
115
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Related party unitholdings (continued)
Vanguard International Property Securities Index Fund (Hedged)
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard LifeStrategy® Conservative Fund 562,874 672,762 529,530 0.04 281,328 171,440 130,806
Vanguard LifeStrategy® Balanced Fund 2,363,638 3,235,529 2,546,684 0.21 917,511 45,620 618,645
Vanguard LifeStrategy® Growth Fund 5,515,336 6,765,999 5,325,517 0.43 1,403,123 152,460 1,300,349
Vanguard LifeStrategy® High Growth Fund 6,565,913 8,404,423 6,615,122 0.54 1,882,037 43,527 1,605,402
Vanguard Conservative Index Fund 16,609,721 25,214,489 19,846,324 1.61 9,213,041 608,273 4,845,942
Vanguard Balanced Index Fund 48,726,109 70,947,721 55,842,951 4.53 27,769,269 5,547,657 13,567,313
Vanguard Growth Index Fund 63,209,212 87,190,625 68,627,740 5.57 35,188,405 11,206,992 16,627,322
Vanguard High Growth Index Fund 48,011,489 56,976,437 44,846,154 3.64 26,846,968 17,882,020 10,844,808
Vanguard Managed Payout Fund 2,778,704 3,587,724 2,823,897 0.23 809,020 – 689,520
Vanguard International Property Securities Index Fund (Hedged)
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard LifeStrategy® Conservative Fund 492,977 562,874 552,668 0.04 99,978 30,081 36,154
Vanguard LifeStrategy® Balanced Fund 2,015,609 2,363,638 2,320,782 0.18 348,029 – 151,819
Vanguard LifeStrategy® Growth Fund 5,280,090 5,515,336 5,415,336 0.42 480,469 245,223 354,257
Vanguard LifeStrategy® High Growth Fund 6,669,057 6,565,913 6,446,865 0.51 399,735 502,879 421,737
Vanguard Conservative Index Fund 33,275,252 16,609,721 16,308,566 1.28 7,872,423 24,537,954 1,066,863
Vanguard Balanced Index Fund 93,157,611 48,726,109 47,842,645 3.75 17,445,845 61,877,347 3,129,738
Vanguard Growth Index Fund 92,345,545 63,209,212 62,063,150 4.86 11,855,835 40,992,168 4,060,006
Vanguard High Growth Index Fund 59,350,990 48,011,489 47,140,981 3.69 3,180,172 14,519,673 3,083,837
Vanguard Managed Payout Fund – 2,778,704 2,728,323 0.21 2,778,704 – 178,480
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Vanguard Annual Report
Notes to the Financial Statements
116
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Related party unitholdings (continued)
Vanguard International Small Companies Index Fund
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard LifeStrategy® Conservative Fund 295,393 361,375 543,653 0.14 127,371 61,389 37,952
Vanguard LifeStrategy® Balanced Fund 1,402,279 1,636,922 2,462,586 0.61 784,577 549,934 172,018
Vanguard LifeStrategy® Growth Fund 3,409,405 3,560,322 5,356,148 1.34 226,969 76,052 378,797
Vanguard LifeStrategy® High Growth Fund 3,980,045 4,589,688 6,904,728 1.72 609,643 - 484,776
Vanguard Conservative Index Fund 8,592,812 13,611,893 20,477,731 5.11 6,691,165 1,672,084 1,409,631
Vanguard Balanced Index Fund 28,483,716 37,771,995 56,824,190 14.17 10,731,444 1,443,165 3,937,274
Vanguard Growth Index Fund 38,296,703 48,624,983 73,151,423 18.24 12,090,084 1,761,804 5,062,392
Vanguard High Growth Index Fund 30,306,287 32,526,996 48,933,613 12.20 10,710,940 8,490,231 3,388,486
Vanguard International Small Companies Index Fund (Hedged) 25,348,310 44,179,582 66,463,762 16.57 22,881,812 4,050,540 4,618,499
Vanguard International Small Companies Index Fund
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard LifeStrategy® Conservative Fund 216,722 295,393 404,631 0.14 123,558 44,887 25,972
Vanguard LifeStrategy® Balanced Fund 979,780 1,402,279 1,920,852 0.65 647,101 224,602 123,719
Vanguard LifeStrategy® Growth Fund 2,900,585 3,409,405 4,670,225 1.58 551,518 42,698 299,656
Vanguard LifeStrategy® High Growth Fund 3,446,050 3,980,045 5,451,893 1.84 546,617 12,622 351,798
Vanguard Conservative Index Fund 13,870,394 8,592,812 11,770,491 3.97 4,113,721 9,391,303 857,079
Vanguard Balanced Index Fund 46,941,638 28,483,716 39,017,185 13.17 13,186,188 31,644,110 2,834,361
Vanguard Growth Index Fund 52,736,203 38,296,703 52,459,080 17.70 4,409,935 18,849,435 3,609,592
Vanguard High Growth Index Fund 32,760,381 30,306,287 41,513,755 14.01 8,524,338 10,978,432 2,745,705
Vanguard International Small Companies Index Fund (Hedged) 122,878,086 25,348,310 34,722,292 11.72 23,134,382 120,664,157 2,827,380
For
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Vanguard Wholesale Funds
Notes to the Financial Statements
117
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Related party unitholdings (continued)
Vanguard Global Minimum Volatility Fund
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Managed Payout Fund 19,981,620 19,716,195 22,387,739 90.42 518,503 783,928 1,019,004
Vanguard Global Minimum Volatility Fund
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Managed Payout Fund – 19,981,620 21,142,172 100.00 19,981,620 – 459,957
Vanguard Global Infrastructure Index Fund
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Global Infrastructure Index Fund (Hedged) 32,488,784 64,179,974 69,166,758 27.41 103,672,194 71,981,004 4,684,909
Vanguard Managed Payout Fund – 8,100,956 8,729,590 3.46 8,100,956 – 563,963
Vanguard Global Infrastructure Index Fund
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Global Infrastructure Index Fund (Hedged) 25,694,684 32,488,784 35,558,974 20.22 14,769,245 7,975,145 1,340,538
For
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Vanguard Annual Report
Notes to the Financial Statements
118
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Related party unitholdings (continued)
Vanguard Global Infrastructure Index Fund (Hedged)
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Managed Payout Fund 5,809,225 – – – 143,549 5,952,774 –
Vanguard Global Infrastructure Index Fund (Hedged)
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Managed Payout Fund – 5,809,225 5,269,548 14.72 5,809,225 – 130,214
Vanguard Global Value Equity Fund
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Investments Australia Ltd – 13,250,117 14,707,630 87.98 13,250,117 – –
Vanguard Global Quantitative Equity Fund
30 June 2017
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Investments Australia Ltd 14,484,068 14,690,169 16,580,794 94.07 206,101 – –
Vanguard Global Quantitative Equity Fund
30 June 2016
Number of units held
opening
Number of units held
closing
Fair value of
investments
Interest held at
year end
Number of units
acquired
Number of units
disposed
Distributions paid/payable by
the Fund
Unitholder Units Units $ % Units Units $
Vanguard Investments Australia Ltd – 14,484,068 14,385,576 100.00 14,484,068 – 74,786
For
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Vanguard Wholesale Funds
Notes to the financial statements
119
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
InvestmentsThe Funds held investments in the following schemes which were also managed by Responsible Entity or its related parties:
Vanguard International Shares Index Fund (Hedged)
30 June 2017Fair value of investment
Interest held
Distribution received/
receivable
Number of units
acquired
Number of units
disposed
Distribution receivable
unpaid
$ % $ Units Units $
Vanguard International Shares Index Fund 3,211,969,386 29.87 221,611,082 412,578,724 1,123,847,262 164,580,401
3,211,969,386 221,611,082 412,578,724 1,123,847,262 164,580,401
Vanguard International Shares Index Fund (Hedged)
30 June 2016Fair value of investment
Interest held
Distribution received/
receivable
Number of units
acquired
Number of units
disposed
Distribution receivable
unpaid
$ % $ Units Units $
Vanguard International Shares Index Fund 4,268,057,455 37.12 145,744,425 693,684,410 823,075,342 85,041,265
4,268,057,455 145,744,425 693,684,410 823,075,342 85,041,265
Vanguard International Property Securities Index Fund (Hedged)
30 June 2017Fair value of investment
Interest held
Distribution received/
receivable
Number of units
acquired
Number of units
disposed
Distribution receivable
unpaid
$ % $ Units Units $
Vanguard International Property Securities Index Fund 1,352,299,257 74.47 105,386,415 727,465,828 517,086,861 77,507,336
1,352,299,257 105,386,415 727,465,828 517,086,861 77,507,336
Vanguard International Property Securities Index Fund (Hedged)
30 June 2016Fair value of investment
Interest held
Distribution received/
receivable
Number of units
acquired
Number of units
disposed
Distribution receivable
unpaid
$ % $ Units Units $
Vanguard International Property Securities Index Fund 1,274,505,749 64.17 90,450,947 351,883,917 432,892,542 62,022,389
1,274,505,749 90,450,947 351,883,917 432,892,542 62,022,389
Vanguard International Small Companies Index Fund (Hedged)
30 June 2017Fair value of investment
Interest held
Distribution received/
receivable
Number of units
acquired
Number of units
disposed
Distribution receivable
unpaid
$ % $ Units Units $
Vanguard International Small Companies Index Fund 66,463,762 16.57 4,618,499 22,881,812 4,050,540 4,028,106
66,463,762 4,618,499 22,881,812 4,050,540 4,028,106
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Vanguard Annual Report
Notes to the financial statements
120
Notes to the financial statements (continued)
For the year ended 30 June 2017
14. Related party transactions (continued)
Investments (continued)
Vanguard International Small Companies Index Fund (Hedged)
30 June 2016Fair value of investment
Interest held
Distribution received/
receivable
Number of units
acquired
Number of units
disposed
Distribution receivable
unpaid
$ % $ Units Units $
Vanguard International Small Companies Index Fund 34,722,292 11.72 2,827,380 23,134,382 120,664,157 1,949,115
34,722,292 2,827,380 23,134,382 120,664,157 1,949,115
Vanguard Global Infrastructure Index Fund (Hedged)
30 June 2017Fair value of investment
Interest held
Distribution received/
receivable
Number of units
acquired
Number of units
disposed
Distribution receivable
unpaid
$ % $ Units Units $
Vanguard Global Infrastructure Index Fund 69,166,758 27.41 4,684,909 518,503 783,928 3,696,854
69,166,758 4,684,909 518,503 783,928 3,696,854
Vanguard Global Infrastructure Index Fund (Hedged)
30 June 2016Fair value of investment
Interest held
Distribution received/
receivable
Number of units
acquired
Number of units
disposed
Distribution receivable
unpaid
$ % $ Units Units $
Vanguard Global Infrastructure Index Fund 35,558,974 20.22 1,340,538 14,769,245 7,975,145 749,320
35,558,974 1,340,538 14,769,245 7,975,145 749,320
The fair value of financial assets held in the investee fund is included in financial assets at fair value through profit or loss in the balance sheet.
Interest held represents the entity’s average percentage interest in the total net assets of the investee funds.
The Funds’ maximum exposure to loss from its interest in investee funds is equal to the total fair value of its investments in the investee funds as there are no off-balance sheet exposure relating to any of the investee funds. Once the Fund has disposed of its shares in an investee fund, it ceases to be exposed to any risk from that investee fund.
The proportion of ownership interest is equal to the proportion of the voting power held.
The Funds did not hold any investments in Vanguard Investments Australia Ltd during the year.
Other transactions within the FundsApart from those details disclosed in this note, no directors have entered into a material contract with the Funds during the financial year and there were no material contracts involving directors’ interests subsisting at year end.F
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Notes to the financial statements
121
Notes to the financial statements (continued)
For the year ended 30 June 2017
15. Responsible Entity’s feesVanguard
International Fixed Interest Index Fund (Hedged)
Vanguard International Credit Securities
Index Fund (Hedged)
Vanguard Emerging Markets Shares Index Fund
Ordinary Class units ETF Class units Ordinary Class units ETF Class units
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Responsible Entity's fees incurred by the Funds 7,132 7,766 109 10 4,374 4,971 160 11 5,818 6,954
Management costs per annum 0.26% 0.26% 0.20% 0.20% 0.32% 0.34% 0.30% 0.30% 0.56% 0.56%
Vanguard International Shares
Index Fund
Vanguard International Shares Index Fund
(Hedged) *
Vanguard Global Minimum Volatility Fund
Ordinary Class units ETF Class units B Class units
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Responsible Entity's fees incurred by the Funds 21,035 23,250 640 89 240 308 2,119 2,993 95 87
Management costs per annum 0.18% 0.18% 0.18% 0.18% 0.18% 0.18% *** *** 0.35% 0.45%
* The management costs per annum for Vanguard International Shares Index Fund (Hedged) AUD Class is 0.21% (2016: 0.21%), and for Vanguard International Shares Index Fund
(Hedged) - NZD class change from 0.31 to 0.24 on 1 December 2016 (2016: 0.31%).
Vanguard International Property Securities
Index Fund
Vanguard International Property Securities Index Fund (Hedged)
Vanguard International Small Companies
Index Fund
Vanguard International Small Companies
Index Fund (Hedged)
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Responsible Entity’s fees incurred by the Funds 7,882 8,163 454 406 1,392 1,760 20 33
Management costs per annum 0.40% 0.40% 0.43% 0.43% 0.39% 0.39% 0.42% 0.42%
Vanguard Global Infrastructure
Index Fund
Vanguard Global Infrastructure
Index Fund (Hedged)
Vanguard Global Value Equity Fund
Vanguard Global Quantitative
Equity Fund
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
30 June 2017
30 June 2016
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Responsible Entity’s fees incurred by the Funds 1,071 797 19 10 54 – 66 28
Management costs per annum 0.49% 0.49% 0.52% 0.52% 0.35% –% 0.35% 0.45%
Vanguard International Shares Select Exclusions Index Fund
Ordinary Class units NZD Hedged Class units
30 June 2017
30 June 2016
30 June 2017
30 June 2016
$’000 $’000 $’000 $’000
Responsible Entity’s fees incurred by the Funds 208 – 739 –
Management costs per annum 0.20% –% 0.26% –%
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Notes to the financial statements
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Notes to the financial statements (continued)
For the year ended 30 June 2017
16. Dividend and distribution incomeDividend and distribution income is net of foreign withholding taxes for the following funds:
2017 2016
$’000 $’000
Vanguard International Property Securities Index 11,067 11,495
Vanguard International Shares Index Fund 35,500 39,613
Vanguard Emerging Markets Shares Index Fund 3,045 3,942
Vanguard Global Minimum Volatility Fund 74 60
Vanguard Global Infrastructure Index Fund 888 696
Vanguard International Small Companies Index Fund 864 1,065
Vanguard Global Quantitative Equity Fund 47 24
Vanguard Global Value Equity Fund 38 –
17. Interest incomeThe following table details the interest income earned by the Funds during the year:
2017 2016
Average Balance Interest
Average Rate
Average Balance Interest
Average Rate
$’000 $’000 % $’000 $’000 %
Vanguard International Fixed Interest Index Fund (Hedged)
Fixed interest securities - international 2,784,879 54,507 1.95 2,936,165 68,285 2.33%
Vanguard International Credit Securities Index Fund (Hedged)
Fixed interest securities - international 1,330,423 41,459 3.11 1,431,166 49,194 3.44%
Interest revenue is recognised on an entitlements basis, and is shown in the income statement as part of net gains/losses on financial instruments designated at fair value. This is due to the discount securities and fixed interest securities being classified as financial instruments designated at fair value through profit or loss upon initial recognition, as detailed in note 2(b).
Interest revenue is net of withholding taxes of $318,363 for Vanguard International Fixed Interest Index Fund (Hedged) and $21,028 of Vanguard International Credit Securities Index Fund (Hedged).
18. Events occurring after the reporting periodThere are no significant events that have occurred since balance date which would impact on the financial position of the Funds as disclosed in the balance sheet as at 30 June 2017 or on the results and cash flows of the Funds for the year ended on that date.
19. Contingent assets, contingent liabilities and commitments
There are no outstanding contingent assets, liabilities or commitments as at 30 June 2017 (2016: Nil).
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Directors’ Declaration
123
Directors’ DeclarationIn the opinions of the directors of the Responsible Entity:
(a) the financial statements and notes set out on pages 20 to 122 are in accordance with the Corporations Act 2001, including:
(iv) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(v) giving a true and fair view of each Fund’s financial position as at 30 June 2017 and of its performance for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the Funds will be able to pay their debts as and when they become due and payable.
(c) Note 2(a) confirms that the financial statements comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
This declaration is made in accordance with a resolution of the directors.
C Kelton Managing Director Melbourne 31 August 2017
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Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFSL 227263) (‘Vanguard’) is the product issuer and responsible entity of the interests in the Vanguard Wholesale Funds. Interests in the Vanguard Wholesale Funds are offered through a Product Disclosure Statement (‘PDS’) only. You can access the relevant PDS at www.vanguard.com.au or by calling 1300 655 102.
Past performance is not an indication of future performance. In preparing this Annual Report, individual circumstances, for example tax implications, have not been taken into account and it may, therefore, not be applicable to an individual’s situation. Before making an investment decision, you should consider your circumstances and whether the information contained in the Annual Report is applicable to your situation. This Annual Report was prepared in good faith and we accept no liability for any errors or omissions. All marks are the exclusive property of their respective owners.
The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities. The PDS contains a more detailed description of the limited relationship MSCI has with Vanguard and any related funds.
London Stock Exchange Group companies include FTSE International Limited (‘FTSE’), Frank Russell Company (‘Russell’), MTS Next Limited (‘MTS’), and FTSE TMX Global Debt Capital Markets Inc. (‘FTSE TMX’). All rights reserved. ‘FTSE®’, ‘Russell®’, ‘MTS®’, ‘FTSE TMX®’ and ‘FTSE Russell’ and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX and Russell under licence. All information is provided for information purposes only. No responsibility or liability can be accepted by the London Stock Exchange Group companies nor its licensors for any errors or for any loss from use of this publication. Neither the London Stock Exchange Group companies nor any of their licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Indices or the fitness or suitability of the Indices for any particular purpose to which they might be put.
The funds are not sponsored, endorsed, sold or promoted by Barclays Capital Inc. or its affiliates (“Barclays”). Barclays does not make any representation regarding the advisability of investing in the funds or the advisability of investing in securities generally. Barclays’ only relationship with Vanguard is the licensing of the Index which is determined, composed and calculated by Barclays without regard to Vanguard or the funds. Barclays has no obligation to take the needs of Vanguard or the owners of the fund into consideration in determining, composing or calculating the Index. Barclays has no obligation or liability in connection with administration, marketing or trading of these funds.
©2017 Vanguard Investments Australia Ltd. All rights reserved.
Responsible EntityVanguard Investments Australia Ltd ABN 72 072 881 086 AFSL 227263
Level 34 Freshwater Place 2 Southbank Boulevard Southbank Vic 3006
Telephone: (03) 8888 3888 Facsimile: 1300 765 712
vanguard.com.au
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Connect with Vanguard®
vanguard.com.au1300 655 102
©2017 Vanguard Investments Australia Ltd. All rights reserved.
ARWSIF_092016
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