Annual report For the year ended This financial report covers the following T. Rowe Price s: T. Rowe Price Global Equity ARSN 121 250 691 T. Rowe Price Global Equity (Hedged) ARSN 153 990 044 T. Rowe Price Asia ex-japan ARSN 128 842 080
Annual report For the year ended Contents Directors report Auditor s independence declaration Statements of comprehensive income Statements of financial position Statements of changes in equity Statements of cash flows Directors declaration Independent auditor s report to the unit holders of T. Rowe Price s This annual report covers the following s as individual entities: T. Rowe Price Global Equity T. Rowe Price Global Equity (Hedged) T. Rowe Price Asia ex-japan The Responsible Entity of T. Rowe Price s is Equity Trustees Limited (ABN 46 004 031 298) (AFSL 240975). The Responsible Entity s registered office is: Level 1, 575 Bourke Street Melbourne, VIC 3000.
Directors report Directors report The directors of Equity Trustees Limited, the Responsible Entity of the T. Rowe Price s (the s ), present their report together with the financial statements of the following s for the year ended. T. Rowe Price Global Equity T. Rowe Price Global Equity (Hedged) T. Rowe Price Asia ex-japan The s are collectively known as T. Rowe Price s". Principal activities The principal activity of each is to invest in accordance with the investment objective and guidelines as set out in the respective 's current Product Disclosure Statement and its Constitution. The s did not have any employees during the year. There were no significant changes in the nature of the s' activities during the year. The various service providers for the s are detailed below: Service Responsible Entity Investment Manager Custodian and Administrator Statutory Auditor Provider Equity Trustees Limited T. Rowe Price Australia Limited JPMorgan Chase Bank, N.A. PricewaterhouseCoopers Directors The following persons held office as directors of Equity Trustees Limited during or since the end of the year and up to the date of this report: Philip D Gentry Chairman Harvey H Kalman Ian C Westley Michael J O'Brien (appointed 11 July ) - 1 -
Directors report Directors report Review and results of operations During the year, the s continued to invest their funds in accordance with the Product Disclosure Statement and the provisions of the s Constitutions. The s performance and the s benchmark returns for the year ended were as follows: name Benchmark Net return (net of fees) Benchmark return T. Rowe Price Global Equity MSCI All Country World Index ex-australia (unhedged) 23.22% 15.62% T. Rowe Price Global Equity (Hedged) MSCI All Country World Index ex-australia (hedged) 18.91% 11.76% T. Rowe Price Asia ex-japan MSCI All Country Asia ex-japan Index (unhedged) 14.33% 14.41% The performance of the s, as represented by the results of its operations, were as follows: T. Rowe Price Global Equity T. Rowe Price Global Equity (Hedged) T. Rowe Price Asia ex-japan Year ended Year ended Year ended Operating profit/(loss) for the year ($ 000) 403,390 254,024 9,988 4,000 33,929 38,932 Distributions paid and payable ($ 000) 165,249 98,365 10,616 2,041 33,592 16,809 Distributions (cents per unit) 11.34 8.09 16.15 6.47 63.95 21.70-2 -
Directors report Directors report Significant changes in the state of affairs The s have amended their Constitutions to change the obligation to distribute trust income to unit holders effective 1 July as part of a process to become eligible to elect into the new Attribution Managed Investment Trust ( AMIT ) tax regime. T. Rowe Price Australia Limited was appointed as the s' Investment Manager on 1 May. In the opinion of the directors, there were no other significant changes in the state of affairs of the s that occurred during the financial year. Matters subsequent to the end of the financial year Michael J O'Brien was appointed as a director of Equity Trustees Limited on 11 July. No other matter or circumstance has arisen since that has significantly affected, or may have a significant effect on: (i) (ii) (iii) the operations of the s in future financial years; the results of those operations in future financial years; or the state of affairs of the s in future financial years. Likely developments and expected results of operations The s will continue to be managed in accordance with the investment objectives and guidelines as set out in the Product Disclosure Statement and the provisions of the s Constitution. The results of the s operations will be affected by a number of factors, including the performance of investment markets in which the s invests. 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. Indemnification and insurance of officers No insurance premiums are paid for out of the assets of the s in regards to insurance cover provided to the officers of Equity Trustees Limited. So long as the officers of Equity Trustees Limited act in accordance with the s Constitutions and the Law, the officers remain indemnified out of the assets of the s against losses incurred while acting on behalf of the s. Indemnification of auditor The auditor of the s is in no way indemnified out of the assets of the s. - 3 -
Directors report Directors report Fees paid to and interests held in the s by the Responsible Entity and its associates Fees paid to the Responsible Entity and its associates out of s' property during the year are disclosed in Note 16 to the financial statements. No fees were paid out of s' property to the directors of the Responsible Entity during the year. The number of interests in the s held by the Responsible Entity or its associates as at the end of the financial year are disclosed in Note 16 to the financial statements. Interests in the s The movement in units on issue in the s during the year is disclosed in Note 9 to the financial statements. The value of the s assets and liabilities is disclosed on the statements of financial position and derived using the basis set out in Note 2 to the financial statements. Environmental regulation The operations of the s are not subject to any particular or significant environmental regulations under Commonwealth, State or Territory law. Rounding of amounts to the nearest thousand dollars Amounts in the Directors' report have been rounded to the nearest thousand dollars in accordance with ASIC Corporations (Rounding in Financial/Directors Reports) Instrument 2016/191, unless otherwise indicated. Financial statements presentation The s are entities of the kind referred to in ASIC Corporations (Related Scheme Reports) Instrument 2015/839 and in accordance with that Instrument, s with a common Responsible Entity (or related Responsible Entities) can include their financial reports in adjacent columns in a single set of financial reports. - 4 -
Directors report Directors report Auditor s independence declaration A copy of the Auditor s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6. This report is made in accordance with a resolution of the directors of Equity Trustees Limited through a delegated authority given by the Equity Trustees Limited's Board. Philip D Gentry Chairman Melbourne 26 September - 5 -
Auditor s Independence Declaration for the T. Rowe Price s: T. Rowe Price Global Equity T. Rowe Price Global Equity (Hedged) T. Rowe Price Asia ex-japan As lead auditor for the audits of the T. Rowe Price s for the year ended, I declare that to the best of my knowledge and belief, there have been: (a) (b) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audits; and no contraventions of any applicable code of professional conduct in relation to the audits. George Sagonas Partner PricewaterhouseCoopers Melbourne 26 September PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation.
Statements of comprehensive income T. Rowe Price Global Equity Year ended T. Rowe Price Global Equity (Hedged) Year ended T. Rowe Price s Statements of comprehensive income For the year ended T. Rowe Price Asia ex-japan Year ended Note $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Investment income Interest income 42-3 - 3 2 Dividend income 18,883 23,627 - - 4,118 3,541 Trust distribution income 447 2,695 6,187 2,203 105 - Net gains/(losses) on financial instruments held at fair value through profit or loss 5 407,226 244,574 3,856 1,807 32,828 38,121 Net foreign exchange gain/(loss) 529 445 (8) - 33 133 Other income 82 62 907 274 - - Total investment income/(loss) 427,209 271,403 10,945 4,284 37,087 41,797 Expenses Management fees 16 21,342 15,727 816 164 2,436 2,373 Custody and administration fees 589 519 95 61 170 158 Transaction costs 1,433 819 - - 411 226 Other expenses 455 314 46 59 141 108 Total expenses 23,819 17,379 957 284 3,158 2,865 Operating profit/(loss) for the year 403,390 254,024 9,988 4,000 33,929 38,932 Finance costs attributable to unit holders Distributions to unit holders* 10 - (98,365) - (2,041) - (16,809) (Increase)/decrease in net assets attributable to unit holders 9 - (155,659) - (1,959) - (22,123) Profit/(loss) for the year 403,390-9,988-33,929 - Other comprehensive income - - - - - - Total comprehensive income for the year 403,390-9,988-33,929 - *Net assets attributable to unit holders are classified from liabilities to equity from 1 July. As a result, the s' distributions are no longer classified as finance costs in the statements of comprehensive income, but rather as distributions paid and payable in the statements of changes in equity. Refer to Note 1 and Note 9 for further detail. The above statements of comprehensive income should be read in conjunction with the accompanying notes. - 7 -
Statements of financial position T. Rowe Price Global Equity As at T. Rowe Price Global Equity (Hedged) As at T. Rowe Price s Statements of financial position As at T. Rowe Price Asia ex-japan As at Note $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Assets Cash and cash equivalents 11 13,229 3,975 4,787-5,649 6,299 Receivables 13 3,276 3,155 7,161 2,416 1,100 1,068 Due from brokers - receivable for securities sold 26,178 10,545 - - 1,029 1,350 Financial assets held at fair value through profit or loss 6 2,270,425 1,655,440 80,726 35,963 208,410 224,559 Total assets 2,313,108 1,673,115 92,674 38,379 216,188 233,276 Liabilities Bank overdraft 11 3,628 - - - - - Distributions payable 10 165,249 98,365 10,616 2,041 16,504 14,662 Payables 14 2,948 5,251 983 216 454 826 Due to brokers - payable for margin 920 - - - - - Due to brokers - payable for securities purchased 8,598 11,581 - - 987 1,198 Financial liabilities held at fair value through profit or loss 7 5 434 2,601 187-1 Total liabilities ( : excluding net assets attributable to unit holders) 181,348 115,631 14,200 2,444 17,945 16,687 Net assets attributable to unit holders - liability* 9-1,557,484-35,935-216,589 Net assets attributable to unit holders - equity* 9 2,131,760-78,474-198,243 - *Net assets attributable to unit holders are classified as equity at and as a financial liability at. Refer to Note 1 for further detail. The above statements of financial position should be read in conjunction with the accompanying notes. - 8 -
Statements of changes in equity For the year ended Statements of changes in equity T. Rowe Price Global Equity Year ended T. Rowe Price Global Equity (Hedged) Year ended T. Rowe Price Asia ex-japan Year ended Note $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Total equity at the beginning of the financial year 9 - - - - - - Reclassification due to AMIT tax regime implementation* 1,557,484-35,935-216,589 - Comprehensive income for the year Profit/(loss) for the year 403,390-9,988-33,929 - Other comprehensive income - - - - - - Total comprehensive income 403,390-9,988-33,929 - Transactions with unit holders Applications 9 507,591-52,497-8,484 - Redemptions 9 (218,313) - (9,337) - (41,297) - Reinvestment of distributions 9 46,857-7 - 14,130 - Distributions paid and payable 9 (165,249) - (10,616) - (33,592) - Total transactions with unit holders 170,886-32,551 - (52,275) - Total equity at the end of the financial year* 2,131,760-78,474-198,243 - *Effective from 1 July, the s' units have been reclassified from financial liability to equity. Refer to Note 1 and 9 for further detail. As a result, equity transactions, including distributions have been disclosed in the above statements for the year ended. The above statements of changes in equity should be read in conjunction with the accompanying notes. - 9 -
Statements of cash flows T. Rowe Price Global Equity Year ended T. Rowe Price Global Equity (Hedged) Year ended T. Rowe Price s Statements of cash flows For the year ended T. Rowe Price Asia ex-japan Year ended Note $ 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 1,195,379 1,096,719 29,834 6,321 188,261 156,772 Purchase of financial instruments held at fair value through profit or loss (1,422,125) (1,243,505) (66,124) (38,697) (139,124) (168,794) Transaction costs on purchase of financial instruments held at fair value (1,433) (819) - - (411) (226) Net movement in margin accounts 920 - - - - - Dividend and distribution income received 18,498 17,868-78 3,902 3,461 Interest income received 34-2 - 3 2 Management fees paid (23,991) (13,179) (47) (5) (2,829) (1,920) Custody and administration fees paid (446) (323) (97) - (121) (170) Other income received 51 61 147 72 - - Other expenses paid (252) (319) (46) (74) (170) (108) Net cash inflow/(outflow) from operating activities 12(a) (233,365) (143,497) (36,331) (32,305) 49,511 (10,983) Cash flows from financing activities Proceeds from applications by unit holders 508,283 396,314 52,497 33,756 8,723 46,112 Payments for redemptions by unit holders (218,313) (223,479) (9,337) (1,370) (41,297) (31,792) Distributions paid to unit holders (51,508) (31,877) (2,034) (81) (17,620) (3,650) Net cash inflow/(outflow) from financing activities 238,462 140,958 41,126 32,305 (50,194) 10,670 Net increase/(decrease) in cash and cash equivalents 5,097 (2,539) 4,795 - (683) (313) Cash and cash equivalents at the beginning of the year 3,975 6,069 - - 6,299 6,479 Effects of foreign currency exchange rate changes on cash and cash equivalents 529 445 (8) - 33 133 Cash and cash equivalents at the end of the year 11 9,601 3,975 4,787-5,649 6,299 Non-cash operating and financing activities 12(b) 46,915 35,751 2,210-14,181 7,216 The above statements of cash flows should be read in conjunction with the accompanying notes. - 10 -
For the year ended Contents 1 General information 2 Summary of significant accounting policies 3 Financial risk management 4 Fair value measurement 5 Net gains/(losses) on financial instruments held at fair value through profit or loss 6 Financial assets held at fair value through profit or loss 7 Financial liabilities held at fair value through profit or loss 8 Derivative financial instruments 9 Net assets attributable to unit holders 10 Distribution to unit holders 11 Cash and cash equivalents 12 Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities 13 Receivables 14 Payables 15 Remuneration of auditor 16 Related party transactions 17 Events occurring after the reporting period 18 Contingent assets and liabilities and commitments - 11 -
For the year ended 1 General information These financial statements cover the below s, (the s ) as individual entities. The s are Australian registered managed investment scheme, which were constituted on the dates in the below table and will terminate in accordance with the provisions of the s Constitution or by Law. T. Rowe Price Global Equity 4 August 2006 T. Rowe Price Global Equity (Hedged) 28 October 2011 T. Rowe Price Asia ex-japan 4 December 2007 The Responsible Entity of the s is Equity Trustees Limited (ABN 46 004 031 298) (AFSL 240975) (the Responsible Entity ). The Responsible Entity s registered office is Level 1, 575 Bourke Street Melbourne, VIC 3000. The financial statements are presented in the Australian currency unless otherwise noted. The principal activity of each is to invest in accordance with the investment objective and guidelines as set out in the s' current Product Disclosure Statement and its Constitution. On 5 May 2016, a new tax regime applying to Managed Investment Trusts ( MITs ) was established under the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016. The Attribution Managed Investment Trust ( AMIT ) regime allows MITs that meet certain requirements to make an irrevocable choice to be an AMIT. In order to allow the s to elect into the AMIT tax regime, the s' Constitution has been amended and the other conditions to adopt the AMIT tax regime have been met effective 1 July. The Responsible Entity is therefore no longer contractually obligated to pay distributions. Consequently the units in the s have been reclassified from a financial liability to equity on 1 July, see Note 9 for further information. The financial statements were authorised for issue by the directors on the date the Directors declaration was signed. The directors of the Responsible Entity have the power to amend and reissue the financial statements. 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated in the following text. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 in Australia. The s are for-profit entities 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 statements of financial position are 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 balances are expected to be recovered or settled within 12 months, except for investments in financial assets and liabilities and net assets attributable to unit holders. The s 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 reporting date. - 12 -
For the year ended 2 Summary of significant accounting policies (a) Basis of preparation In the case of net assets attributable to unit holders, the units are redeemable on demand at the unit holder 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 Standards (IFRS) The financial statements of the s also comply with IFRS as issued by the International Accounting Standards Board (IASB). (ii) New and amended standards adopted by the s There are no standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 July that have a material impact on the amounts recognised in the prior periods or will affect the current or future periods. (iii) New standards and interpretations not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for the reporting period and have not been early adopted by the s. The directors assessment of the impact of these new standards (to the extent relevant to the s) and interpretations is set out below: AASB 9 Financial Instruments (and applicable amendments) (effective from 1 January ) AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. It has now also introduced revised rules around hedge accounting and impairment. The standard is not applicable until 1 January but is available for early adoption. The directors do not expect this to have a significant impact on the recognition, classification and measurement of the s financial instruments as they are carried at fair value through profit or loss. The derecognition rules have not changed from the previous requirements, and the s do not apply hedge accounting. AASB 9 introduces a new impairment model. However, as the s investments are all held at fair value through profit or loss, the change in impairment rules will not impact the s. AASB 15 Revenue from Contracts with Customers (effective from 1 January ) AASB 15 will replace AASB 118 Revenue which covers contracts for goods and services and AASB 111 Construction Contracts which covers construction contracts. AASB 15 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 s main sources of income are interest, dividends, distributions 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 AASB 15 to have a significant impact on the s accounting policies or the amounts recognised in the financial statements. There are no other standards that are not yet effective and that are expected to have a material impact on the s in the current or future reporting periods and on foreseeable future transactions. - 13 -
For the year ended 2 Summary of significant accounting policies (b) Financial instruments (i) Classification The s investments are categorised as held at fair value through profit or loss. They comprise of:! Financial instruments held for trading These are investments in derivative financial instruments such as forward currency contract. The s 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 listed and unlisted equity securities and listed and unlisted unit trusts. Financial assets and liabilities designated at fair value through profit or loss at inception are those managed and their performance evaluated on a fair value basis in accordance with the s documented investment strategy as outlined in the Product Disclosure Statement. The s policy is for the Investment Manager to evaluate information about these financial instruments on a fair value basis together with other related financial information. (ii) Recognition and derecognition The s recognise financial assets and financial liabilities on the date it becomes party to the contractual agreement (trade date) and recognises changes in fair value of the financial assets or financial liabilities from this date. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or the s have transferred substantially all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation under the liabilities are discharged. (iii) Measurement! Financial instruments held at fair value through profit or loss At initial recognition, the s measure financial assets and financial liabilities at its fair value. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the statements of comprehensive income. Subsequent to initial recognition, all financial assets and liabilities at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of financial assets or liabilities at fair value through profit or loss category are presented in the statements of comprehensive income in the period in which they arise. For further details on how the fair value of financial instruments is determined, please see Note 4 to the financial statements. - 14 -
For the year ended 2 Summary of significant accounting policies (b) Financial instruments (iv) Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statements of financial position when the s have 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. As at the end of the reporting period, there are no financial assets or liabilities offset or with the right to offset in the statements of financial position. (c) Net assets attributable to unit holders Units are redeemable at the unit holders' option; however, applications and redemptions may be suspended by the Responsible Entity if it is in the best interests of the unit holders. The units can be put back to the s at any time for cash based on the current redemption price. The units are carried at the redemption amount that is payable at the reporting date if the holder exercises the right to put the units back to the s. Units are classified as equity when they satisfy the following criteria under AASB 132 Financial Instruments: Presentation:! the puttable financial instrument entitles the holder to a pro-rata share of net assets in the event of the s liquidation;! the puttable financial instrument is in the class of instruments that is subordinate to all other classes of instruments and class features are identical;! the puttable financial instrument does not include any contractual obligations to deliver cash or another financial asset, or to exchange financial instruments with another entity under potentially unfavourable conditions to the s, and it is not a contract settled in the s own equity instruments; and! the total expected cash flows attributable to the puttable financial instrument over the life are based substantially on the profit or loss. As at, net assets attributable to unit holders are classified as a financial liability. Effective from 1 July, the s' units have been reclassified from financial liability to equity as they satisfied all the above criteria. (d) Cash and cash equivalents For the purpose of presentation in the statements of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Payments and receipts relating to the purchase and sale of investment securities are classified as cash flows from operating activities, as trading of these securities represent the s main income generating activity. - 15 -
For the year ended 2 Summary of significant accounting policies (e) Investment income (i) Interest income Interest income on cash and cash equivalents is recognised in the statements of comprehensive income on an accruals basis. Changes in fair value of financial instruments are recorded in accordance with the policies described in Note 2(b) to the financial statements. (ii) Dividends and distributions Dividend income is recognised on the ex-dividend date with any related foreign withholding tax recorded as an expense. The s currently incur withholding tax imposed by certain countries on investment income. Such income is recorded net of withholding tax in the statements of comprehensive income. Trust distributions are recognised on an entitlement basis. (f) Expenses All expenses are recognised in the statements of comprehensive income on an accruals basis. (g) Income tax Under current legislation, the s are not subject to income tax provided they attribute the entirety of their taxable income to its unit holders. The benefits of any imputation credits and foreign tax paid are passed on to unit holders. (h) Distributions The s may distribute their distributable income, in accordance with the s Constitution, to unit holders by cash or reinvestment. The distributions are recognised in the statements of changes in equity. (i) Increase/decrease in net asset attributable to unit holders Income not distributed is included in net assets attributable to unit holders. Movements in net assets attributable to unit holders are recognised in the statements of comprehensive income as finance costs. - 16 -
For the year ended 2 Summary of significant accounting policies (j) Foreign currency translation (i) Functional and presentation currency Balances included in the s financial statements are measured using the currency of the primary economic environment in which they operate (the functional currency ). This is the Australian dollar, which reflects the currency of the economy in which the s compete for funds and are regulated. The Australian dollar is also the s presentation currency. (ii) Transactions and balances Transactions in foreign currency 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 the statements of comprehensive income. The s do not isolate that portion of unrealised gains or losses on securities and derivative financial instruments that are measured at fair value through profit or loss and which is due to changes in foreign exchange rates. Such fluctuations are included with the net gains/(losses) on financial instruments at fair value through profit or loss. (k) Due from/to brokers Amounts due from/to brokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet delivered by year end. Trades are recorded on trade date, and normally settled within two business days. A provision for impairment of amounts due from brokers is established when there is objective evidence that the s will not be able to collect all amounts due from the relevant broker. Indicators that the amount due from brokers is impaired include significant financial difficulties of the broker, and the probability that the broker will enter into bankruptcy or financial reorganisation and default in payments. (l) Receivables Receivables may include amounts for interest, dividends and trust distributions. Dividends and trust distributions are accrued when the right to receive payment is established. Where applicable, interest is accrued on a daily basis. Amounts are generally received within 30 days of being recorded as receivables. Collectability of receivables is reviewed on an ongoing basis. Receivables which are known to be uncollectable are written off by reducing the carrying amount directly. The amount of the impairment loss is recognised in the statements of comprehensive income within other expenses. Subsequent recoveries of amounts previously written off are credited against other expenses in the statements of comprehensive income. (m) Payables Payables include liabilities, accrued expenses owed by the s' and any distributions declared which are unpaid as at the end of the reporting period. A separate distribution payable is recognised in the statements of financial position. Distributions declared effective in relation to unit holders who have previously elected to reinvest distributions are recognised as reinvested effective 1 July of the following financial year. - 17 -
For the year ended 2 Summary of significant accounting policies (n) Applications and redemptions Applications received for units in the s are recorded net of any entry fees payable prior to the issue of units in the s. Redemptions from the s are recorded gross of any exit fees payable after the cancellation of units redeemed. (o) Goods and Services Tax (GST) The GST incurred on the costs of various services provided to the s by third parties such as management, administration and custodian services where applicable, have been passed on to the s. The s qualify for Reduced Input Tax Credits (RITC) at a rate of at least 55% where applicable. Hence fees for these services and any other expenses have been recognised in the statements of comprehensive income net of the amount of GST recoverable from the Australian Taxation Office (ATO). Amounts payable are inclusive of GST. The net amount of GST recoverable from the ATO is included in receivables in the statements of financial position. Cash flows relating to GST are included in the statements of cash flows on a gross basis. (p) Use of estimates The s make estimates and assumptions that affect the reported amounts of assets and liabilities within the current and next financial year. Estimates are continually evaluated and are 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 s 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 Investment Manager. 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 more information on how fair value is calculated refer to Note 4 to the financial statements. (q) Rounding of amounts The s are entities of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument 2016/191 relating to the rounding off of amounts in the financial statements. Amounts in the financial statements have been rounded to the nearest thousand dollars unless otherwise indicated. (r) Comparative revisions Comparative 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. - 18 -
For the year ended 3 Financial risk management The s activities expose them to a variety of financial risks including market risk (which incorporates price risk, foreign exchange risk and interest rate risk), credit risk and liquidity risk. The s overall risk management programme focuses on ensuring compliance with the s Product Disclosure Statement and the investment guidelines of the s. It also seek to maximise the returns derived for the level of risk to which the s are exposed and seek to minimise potential adverse effects on the s financial performances. All securities investments present a risk of loss of capital. The maximum loss of capital on unit trusts is limited to the fair value of those positions. The maximum loss of capital on derivatives is limited to the notional contract values of those positions. The investments of the s, and associated risks, are managed by a specialist Investment Manager, T. Rowe Price Australia Limited (''TRP'' or the "Investment Manager'') under an Investment Management Agreement (IMA) approved by the Responsible Entity, and containing the investment strategy and guidelines of the s, consistent with those stated in the Product Disclosure Statement. The s use different methods to measure different types of risk to which they are exposed. These methods are explained below. (a) Market risk (i) Price risk The s are exposed to price risk on listed equity securities or listed or quoted on recognised securities exchanges. Price risk arises from investments held by the s for which prices in the future are uncertain. Where non-monetary financial instruments are denominated in currencies other than the Australian dollar, the price in the future will fluctuate because of changes in foreign exchange rates which are considered a component of price risk. All securities investments present a risk of loss of capital. The maximum loss of capital on long equity securities and unit trusts is limited to the fair value of those positions. The Investment Manager uses research and analysis to monitor variables that elevate price risk and to minimize the downside impact of these variables on the s' investments. Additionally, the Investment Manager performs regular reviews of both large security positions held across all portfolios and large market exposure for the s. The table at Note 3(b) summarises the sensitivity of the s assets and liabilities to price risk. The analysis is based on the assumption that the markets in which the s invest moves by +/-10% (: +/-10%). (ii) Foreign exchange risk The s operate internationally and hold 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 fluctuate due to changes in exchange rates. The foreign exchange risk relating to non-monetary assets and liabilities is a component of price risk and not foreign exchange risk. However, the Investment Manager monitors the exposure of all foreign currency denominated assets and liabilities. The Investment Manager performs regular reviews of currency exposure within the s. The s may enter into forward currency contracts designed to either hedge currency exposure from portfolio investments, or alternatively increase exposure to preferred foreign currencies. It is currently the Investment Manager's intent not to hedge currency exposure to reduce the risk of adverse fluctuations in the value of the Australian dollar relative to other currencies. - 19 -
For the year ended 3 Financial risk management (a) Market risk (ii) Foreign exchange risk The table below summarises the s' financial assets and liabilities, monetary and non-monetary, which are denominated in a currency other than the Australian dollar. T. Rowe Price Global Equity As at US Dollars Euro Swiss Francs British Pounds Hong Kong Dollars Indonesian Rupiah Indian Rupee Other Currencies Cash and cash equivalents 12,638 69 - - - - - 522 Receivables 734 650 743-34 252 156 449 Due from brokers - receivable for securities sold 24,168 472 - - - - - 1,538 Financial assets held at fair value through profit or loss 1,320,491 149,950 30,879 78,204 100,879 56,897 148,989 384,136 Due to brokers - payable for margin (920) - - - - - - - Due to brokers - payable for securities purchased (5,442) (443) - - (654) - - (2,059) Financial liabilities held for trading at fair value through profit or loss - (4) - - - - - (1) Net exposure excluding forward currency contracts 1,351,669 150,694 31,622 78,204 100,259 57,149 149,145 384,585 Net increase/(decrease) in exposure from forward currency contracts 124,290 (34,511) - (11,481) 657 - - (78,956) Net exposure including forward currency contracts 1,475,959 116,183 31,622 66,723 100,916 57,149 149,145 305,629-20 -
For the year ended 3 Financial risk management (a) Market risk (ii) Foreign exchange risk T. Rowe Price Global Equity As at US Dollars Euro Swiss Francs British Pounds Hong Kong Dollars Indonesian Rupiah Indian Rupee Other Currencies Cash and cash equivalents 1,465 47 - - - - - 362 Receivables 502 502 634-65 203 140 192 Due from brokers - receivable for securities sold 9,029 424 - - - - - 1,092 Financial assets held at fair value through profit or loss 936,999 94,899 49,547 67,385 42,129 64,200 99,515 300,766 Due to brokers - payable for securities purchased (4,791) - - - (303) - - (6,487) Financial liabilities held for trading at fair value through profit or loss - (279) - (155) - - - - Net exposure excluding forward currency contracts 943,204 95,593 50,181 67,230 41,891 64,403 99,655 295,925 Net increase/(decrease) in exposure from forward currency contracts 91,762 (16,996) - (8,315) 303 - - (66,755) Net exposure including forward currency contracts 1,034,966 78,597 50,181 58,915 42,194 64,403 99,655 229,170-21 -
For the year ended 3 Financial risk management (a) Market risk (ii) Foreign exchange risk T. Rowe Price Global Equity (Hedged) As at US Dollars Euro British Pounds Japanese Yen Other Currencies Cash and cash equivalents 2,706 - - - - Receivables 1 - - - - Due from brokers - receivable for securities sold - - - - - Financial assets held at fair value through profit or loss 380 34 22-68 Financial liabilities held for trading at fair value through profit or loss (1,961) (52) (22) - (81) Net exposure excluding forward currency contracts 1,126 (18) - - (13) Net increase/(decrease) in exposure from forward currency contracts (55,721) (4,368) (2,506) (574) (22,749) Net exposure including forward currency contracts (54,595) (4,386) (2,506) (574) (22,762) As at US Dollars Euro British Pounds Japanese Yen Other Currencies Financial assets held at fair value through profit or loss 40 2 3-16 Financial liabilities held for trading at fair value through profit or loss (15) (37) (16) - (116) Net exposure excluding forward currency contracts 25 (35) (13) - (100) Net increase/(decrease) in exposure from forward currency contracts (24,585) (1,861) (1,416) (199) (10,954) Net exposure including forward currency contracts (24,560) (1,896) (1,429) (199) (11,054) - 22 -
For the year ended 3 Financial risk management (a) Market risk (ii) Foreign exchange risk T. Rowe Price Asia ex-japan As at US Dollars Singapore Dollars South Korean Won Indian Rupee Hong Kong Dollars Taiwan Dollars Indonesian Rupiah Other Currencies Cash and cash equivalents - - - 5 166 301-119 Receivables - - 132 55 124 621 7 5 Due from brokers - receivable for securities sold - - - - 727 302 - - Financial assets held at fair value through profit or loss 29,604 6,023 25,362 21,924 65,229 24,652 4,762 30,851 Due to brokers - payable for securities purchased - - (190) - (797) - - - Net exposure excluding forward currency contracts 29,604 6,023 25,304 21,984 65,449 25,876 4,769 30,975 Net increase/(decrease) in exposure from forward currency contracts - - - - 68 (303) - - Net exposure including forward currency contracts 29,604 6,023 25,304 21,984 65,517 25,573 4,769 30,975 As at US Dollars Singapore Dollars South Korean Won Indian Rupee Hong Kong Dollars Taiwan Dollars Indonesian Rupiah Other Currencies Cash and cash equivalents - 42-87 138 - - 60 Receivables - - 22 53 77 490 27 5 Due from brokers - receivable for securities sold 747-206 256-140 - 1 Financial assets held at fair value through profit or loss 27,992 3,837 40,744 29,587 57,987 31,441 6,695 26,274 Net exposure excluding forward currency contracts 28,739 3,879 40,972 29,983 58,202 32,071 6,722 26,340 Net increase/(decrease) in exposure from forward currency contracts (748) 425 (75) - 286 (139) - - Net exposure including forward currency contracts 27,991 4,304 40,897 29,983 58,488 31,932 6,722 26,340-23 -
For the year ended 3 Financial risk management (a) Market risk (ii) Foreign exchange risk The table at Note 3(b) summarises the sensitivities of the s monetary assets and liabilities to foreign exchange risk. The analysis is based on the assumption that the Australian dollar weakened and strengthened by 10% (: +/-10%) against the material foreign currencies to which the s are exposed. (iii) Interest rate risk The s' interest bearing financial assets expose them to risks associated with the effects of fluctuation in the prevailing levels of market interest rate on its financial positions and cash flows. The impact of interest rate risk on net assets attributable to unit holders and operating profit are considered immaterial to the s. (b) Summarised sensitivity analysis The following table summarises the sensitivity of the s operating profit and net assets attributable to unit holders to market risk. The reasonably possible movements in the risk variables have been determined based on the management's best estimates, having regard to a number of factors, including historical levels of changes in foreign exchange rates, and historical correlation of the s investments with the relevant benchmark and market volatility. However, actual movements in the risk variables may be greater or less than anticipated due to a number of factors, including unusually large market movements resulting from changes in the performance of the economies, markets and securities in which the s invest. As a result, historic variations in risk variables should not be used to predict future variations in the risk variables. Impact on operating profit/net assets attributable to unit holders Price risk T. Rowe Price Global Equity T. Rowe Price Global Equity (Hedged) T. Rowe Price Asia ex-japan +10% -10% +10% -10% +10% -10% $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 As at 226,944 (226,944) 7,975 (7,975) 20,841 (20,841) As at 165,411 (165,411) 3,483 (3,483) 22,456 (22,456) - 24 -
For the year ended 3 Financial risk management (b) Summarised sensitivity analysis Impact on operating profit/net assets attributable to unit holders Foreign exchange risk T. Rowe Price Global Equity US Dollars Euro Swiss Franc British Pounds Hong Kong Dollars Indonesian Rupiah Indian Rupee Other Currencies +10% -10% +10% -10% +10% -10% +10% -10% +10% -10% -10% -10% -10% -10% -10% -10% $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 As at 15,547 (15,547) (3,377) 3,377 74 (74) (1,148) 1,148 4 (4) 25 (25) 16 (16) (7,851) 7,851 As at 9,797 (9,797) (1,602) 1,602 63 (63) (832) 832 7 (7) 20 (20) 14 (14) (7,160) 7,160 Impact on operating profit/net assets attributable to unit holders Foreign exchange risk T. Rowe Price Global Equity (Hedged) US Dollars Euro British Pounds Japanese Yen Other Currencies +10% -10% +10% -10% +10% -10% -10% -10% -10% -10% $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 As at (5,301) 5,301 (437) 437 (251) 251 (57) 57 (2,275) 2,275 As at (2,459) 2,459 (186) 186 (142) 142 (20) 20 (1,095) 1,095-25 -
For the year ended 3 Financial risk management (b) Summarised sensitivity analysis Foreign exchange risk Impact on operating profit/net assets attributable to unit holders T. Rowe Price Asia ex-japan US Dollars Singapore Dollars South Korean Won Indian Rupee Hong Kong Dollars Taiwan Dollars Indonesian Rupiah Other Currencies +10% -10% +10% -10% +10% -10% +10% -10% +10% -10% -10% -10% -10% -10% -10% -10% $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 As at - - - - (6) 6 6 (6) 29 (29) 92 (92) 1 (1) 12 (12) As at - - - - 15 (15) 31 (31) 15 (15) 20 (20) 3 (3) 7 (7) (c) Credit risk The s are exposed to credit risk, which is the risk that a counterparty will be unable to pay its obligations in full when they fall due, causing a financial loss to the s. The s do not have a significant concentration of credit risk that arises from an exposure to a single counterparty or group of counterparties having similar characteristics. The main concentration of credit risk, to which the s are exposed, arises from cash and cash equivalents and amounts due from brokers balances. None of these assets are impaired nor past their due date. The maximum exposure to credit risk at the reporting date is the carrying amount of cash and cash equivalents and amounts due from brokers. (d) Liquidity risk Liquidity risk is the risk that the s 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. Exposure to liquidity risk for the s may arise from the requirement to meet daily unit holder redemption requests or to fund foreign exchange related cash flow requirements. In order to manage the s overall liquidity, the Responsible Entity has the discretion to reject an application for units and to defer or adjust redemption of units if the exercise of such discretion is in the best interests of unit holders. The s did not reject or withhold any redemptions during and. - 26 -
For the year ended 3 Financial risk management (d) Liquidity risk (i) Maturities of non-derivative financial liabilities The tables below analyse the s' non-derivative financial liabilities into relevant maturity groupings based on the remaining period at reporting date to the contractual maturity date. The amounts in the tables are the contractual undiscounted cash flows. Units are redeemed on demand at the unit holder s option. However, the Responsible Entity does not envisage that the contractual maturity disclosed in the tables below will be representative of the actual cash outflows, as holders of these instruments typically retain them for the medium to long term. T. Rowe Price Global Equity As at As at Less than 1 1-6 6-12 Over 12 Less than 1 1-6 6-12 Over 12 month months months months Total month months months months Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Bank overdraft 3,628 - - - 3,628 - - - - - Distributions payable 165,249 - - - 165,249 98,365 - - - 98,365 Payables 2,948 - - - 2,948 5,251 - - - 5,251 Due to brokers - payable for margin 920 - - - 920 - - - - - Due to brokers - payable for securities purchased 8,598 - - - 8,598 11,581 - - - 11,581 Net assets attributable to unit holders- liability - - - - - 1,557,484 - - - 1,557,484 Contractual cash flows (excluding derivatives) 181,343 - - - 181,343 1,672,681 - - - 1,672,681-27 -