Vanguard Real Estate Index Fund |
Vanguard Real Estate II Index Fund |
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2 |
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28 |
• | For the 12 months ended January 31, 2021, returns for Vanguard Real Estate Index Fund ranged from –5.88% for Investor Shares to –5.68% for Institutional Shares. Vanguard Real Estate II Index Fund returned –5.70%. The results were in line with those of the funds’ benchmark index. |
• | The emergence of COVID-19 in early 2020 turned into a global health crisis, and aggressive attempts to contain it resulted in a sharp downturn in economic activity. Unemployment spiked, and sectors where social distancing isn’t possible were hit hard. |
• | Stocks initially plummeted as infections surged, but they finished the 12 months significantly higher, thanks in part to rapid and robust monetary and fiscal action by policymakers and the rollout of COVID-19 vaccines late in the period. |
• | Specialized real estate investment trusts (REITs), the funds’ largest holding, contributed most to their returns. Retail, residential, and office REITs were the main detractors for both funds. |
• | For the 10 years ended January 31, 2021, average annual returns for the Real Estate Index Fund ranged from 8.18% for Investor Shares to 8.36% for Institutional Shares, in line with its benchmark’s return. The Real Estate Index II Fund launched in 2017 and doesn’t have a 10-year record. |
Average Annual Total Returns Periods Ended January 31, 2021 | |||
One Year | Three Years | Five Years | |
Stocks | |||
Russell 1000 Index (Large-caps) | 19.84% | 12.48% | 16.69% |
Russell 2000 Index (Small-caps) | 30.17 | 11.11 | 16.50 |
Russell 3000 Index (Broad U.S. market) | 20.48 | 12.38 | 16.68 |
FTSE All-World ex US Index (International) | 14.59 | 3.40 | 10.77 |
Bonds | |||
Bloomberg Barclays U.S. Aggregate Bond Index (Broad taxable market) | 4.72% | 5.49% | 4.00% |
Bloomberg Barclays Municipal Bond Index (Broad tax-exempt market) | 4.01 | 5.28 | 3.79 |
FTSE Three-Month U.S. Treasury Bill Index | 0.45 | 1.53 | 1.16 |
CPI | |||
Consumer Price Index | 1.40% | 1.81% | 2.00% |
• | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
• | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Six Months Ended January 31, 2021 | |||
Beginning Account Value 7/31/2020 |
Ending Account Value 1/31/2021 |
Expenses Paid During Period | |
Based on Actual Fund Return | |||
Real Estate Index Fund | |||
Investor Shares | $1,000.00 | $1,068.30 | $1.35 |
ETF Shares | 1,000.00 | 1,068.80 | 0.57 |
AdmiralTM Shares | 1,000.00 | 1,069.10 | 0.57 |
Institutional Shares | 1,000.00 | 1,069.40 | 0.47 |
Real Estate II Index Fund | $1,000.00 | $1,069.40 | $0.42 |
Based on Hypothetical 5% Yearly Return | |||
Real Estate Index Fund | |||
Investor Shares | $1,000.00 | $1,023.88 | $1.32 |
ETF Shares | 1,000.00 | 1,024.58 | 0.56 |
Admiral Shares | 1,000.00 | 1,024.58 | 0.56 |
Institutional Shares | 1,000.00 | 1,024.68 | 0.46 |
Real Estate II Index Fund | $1,000.00 | $1,024.73 | $0.41 |
Average Annual Total Returns Periods Ended January 31, 2021 | |||||
One Year |
Five Years |
Ten Years |
Final
Value of a $10,000 Investment | ||
Real Estate Index Fund Investor Shares | -5.88% | 6.23% | 8.18% | $21,955 | |
Real Estate Spliced Index | -5.64 | 6.48 | 8.42 | 22,450 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 20.55 | 16.64 | 13.46 | 35,343 |
One Year |
Five Years |
Ten Years |
Final
Value of a $10,000 Investment | ||
Real Estate Index Fund ETF Shares Net Asset Value |
-5.80% | 6.37% | 8.32% | $22,240 | |
Real Estate Index Fund ETF Shares Market Price |
-5.85 | 6.38 | 8.32 | 22,233 | |
Real Estate Spliced Index | -5.64 | 6.48 | 8.42 | 22,450 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 20.55 | 16.64 | 13.46 | 35,343 |
Average Annual Total Returns Periods Ended January 31, 2021 | |||||
One Year |
Five Years |
Ten Years |
Final
Value of a $10,000 Investment | ||
Real Estate Index Fund Admiral Shares | -5.74% | 6.38% | 8.33% | $22,264 | |
Real Estate Spliced Index | -5.64 | 6.48 | 8.42 | 22,450 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 20.55 | 16.64 | 13.46 | 35,343 |
One Year |
Five Years |
Ten Years |
Final
Value of a $5,000,000 Investment | ||
Real Estate Index Fund Institutional Shares | -5.68% | 6.41% | 8.36% | $11,159,886 | |
Real Estate Spliced Index | -5.64 | 6.48 | 8.42 | 11,225,120 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 20.55 | 16.64 | 13.46 | 17,671,413 |
Cumulative Returns of ETF Shares: January 31, 2011, Through January 31, 2021 | |||
One Year |
Five Years |
Ten Years | |
Real Estate Index Fund ETF Shares Market Price | -5.85% | 36.23% | 122.33% |
Real Estate Index Fund ETF Shares Net Asset Value | -5.80 | 36.16 | 122.40 |
Real Estate Spliced Index | -5.64 | 36.87 | 124.50 |
Diversified Real Estate Activities | 0.2% |
Diversified REITs | 3.6 |
Health Care REITs | 8.8 |
Hotel & Resort REITs | 3.1 |
Industrial REITs | 11.0 |
Office REITs | 7.5 |
Real Estate Development | 0.3 |
Real Estate Operating Companies | 0.2 |
Real Estate Services | 3.5 |
Residential REITs | 13.6 |
Retail REITs | 9.3 |
Specialized REITs | 38.9 |
Shares | Market Value• ($000) | |||||
Temporary Cash Investments (0.6%) | ||||||
Money Market Fund (0.6%) | ||||||
6,7 | Vanguard Market Liquidity Fund, 0.107% (Cost $353,639) |
3,537,135 | 353,714 | |||
Total Investments (100.5%) (Cost $57,267,238) |
61,761,096 | |||||
Other Assets and Liabilities—Net (-0.5%) | (329,923) | |||||
Net Assets (100%) | 61,431,173 |
Cost is in $000. | |
• | See Note A in Notes to Financial Statements. |
* | Non-income-producing security. |
1 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $158,271,000. |
2 | Security value determined using significant unobservable inputs. |
3 | “Other” represents securities that are not classified by the fund’s benchmark index. |
4 | Considered an affiliated company of the fund as the issuer is another member of The Vanguard Group. |
5 | Represents a wholly owned subsidiary of the fund. See accompanying financial statements for Vanguard Real Estate II Index Fund's Schedule of Investments. |
6 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
7 | Collateral of $180,031,000 was received for securities on loan, of which $178,498,000 is held in Vanguard Market Liquidity Fund and $1,533,000 is held in cash. |
REIT—Real Estate Investment Trust. |
Over-the-Counter Total Return Swaps | ||||||
Reference Entity | Termination Date |
Counterparty | Notional Amount ($000) |
Floating Interest Rate Received (Paid)1 (%) |
Value
and Unrealized Appreciation ($000) |
Value
and Unrealized (Depreciation) ($000) |
Redfin Corp. | 2/2/22 | GSI | 24,924 | (0.120) | — | — |
Seritage Growth Properties | 2/2/22 | GSI | 7,053 | (0.120) | — | — |
— | — |
1 | Based on 1M USD London Interbank Offered Rate (LIBOR) as of the most recent payment date. Floating interest payment received/paid monthly. |
1M—1-month. | |
GSI—Goldman Sachs International. |
($000s, except shares and per-share amounts) | Amount |
Assets | |
Investments in Securities, at Value | |
Unaffiliated Issuers (Cost $50,011,001) | 54,007,852 |
Affiliated Issuers (Cost $353,639) | 353,714 |
Vanguard Real Estate II Index Fund (Cost $6,902,598) | 7,399,530 |
Total Investments in Securities | 61,761,096 |
Investment in Vanguard | 2,026 |
Cash | 1,533 |
Receivables for Investment Securities Sold | 79,898 |
Receivables for Accrued Income | 50,314 |
Receivables for Capital Shares Issued | 34,702 |
Total Assets | 61,929,569 |
Liabilities | |
Due to Custodian | 76,627 |
Payables for Investment Securities Purchased | 202,193 |
Collateral for Securities on Loan | 180,031 |
Payables for Capital Shares Redeemed | 37,830 |
Payables to Vanguard | 1,715 |
Total Liabilities | 498,396 |
Net Assets | 61,431,173 |
At January 31, 2021, net assets consisted of: | |
($000s, except shares and per-share amounts) | Amount |
Paid-in Capital | 59,473,564 |
Total Distributable Earnings (Loss) | 1,957,609 |
Net Assets | 61,431,173 |
Investor Shares—Net Assets | |
Applicable
to 6,648,554 outstanding $.001 par value shares of beneficial interest (unlimited authorization) |
187,676 |
Net Asset Value Per Share—Investor Shares | $28.23 |
ETF Shares—Net Assets | |
Applicable
to 377,418,490 outstanding $.001 par value shares of beneficial interest (unlimited authorization) |
32,064,085 |
Net Asset Value Per Share—ETF Shares | $84.96 |
Admiral Shares—Net Assets | |
Applicable
to 163,631,114 outstanding $.001 par value shares of beneficial interest (unlimited authorization) |
19,701,837 |
Net Asset Value Per Share—Admiral Shares | $120.40 |
Institutional Shares—Net Assets | |
Applicable
to 508,580,470 outstanding $.001 par value shares of beneficial interest (unlimited authorization) |
9,477,575 |
Net Asset Value Per Share—Institutional Shares | $18.64 |
Year
Ended January 31, 2021 | |
($000) | |
Investment Income | |
Income | |
Dividends—Unaffiliated Issuers | 1,246,865 |
Dividends—Affiliated Issuers | 1,380 |
Dividends—Vanguard Real Estate II Index Fund | 163,444 |
Interest—Unaffiliated Issuers | — |
Interest—Affiliated Issuers | 651 |
Securities Lending—Net | 7,817 |
Total Income | 1,420,157 |
Expenses | |
The Vanguard Group—Note B | |
Investment Advisory Services | 2,729 |
Management and Administrative—Investor Shares | 448 |
Management and Administrative—ETF Shares | 30,168 |
Management and Administrative—Admiral Shares | 19,713 |
Management and Administrative—Institutional Shares | 7,559 |
Marketing and Distribution—Investor Shares | 25 |
Marketing and Distribution—ETF Shares | 1,423 |
Marketing and Distribution—Admiral Shares | 1,045 |
Marketing and Distribution—Institutional Shares | 271 |
Custodian Fees | 332 |
Auditing Fees | 39 |
Shareholders’ Reports—Investor Shares | 7 |
Shareholders’ Reports—ETF Shares | 931 |
Shareholders’ Reports—Admiral Shares | 275 |
Shareholders’ Reports—Institutional Shares | 95 |
Trustees’ Fees and Expenses | 29 |
Total Expenses | 65,089 |
Expenses Paid Indirectly | (204) |
Net Expenses | 64,885 |
Net Investment Income | 1,355,272 |
Realized Net Gain (Loss) | |
Capital Gain Distributions Received—Unaffiliated Issuers | 454,854 |
Capital Gain Distributions Received—Affiliated Issuers | 6,418 |
Capital Gain Distributions Received—Vanguard Real Estate II Index Fund | — |
Investment Securities Sold—Unaffiliated Issuers1 | 604,279 |
Investment Securities Sold—Affiliated Issuers1 | (46,775) |
Investment Securities Sold—Vanguard Real Estate II Index Fund | — |
Futures Contracts | (3,901) |
Statement of Operations (continued) | |
Year
Ended January 31, 2021 | |
($000) | |
Swap Contracts | 45,925 |
Realized Net Gain (Loss) | 1,060,800 |
Change in Unrealized Appreciation (Depreciation) | |
Investment Securities—Unaffiliated Issuers | (7,111,833) |
Investment Securities—Affiliated Issuers | (76,047) |
Investment Securities—Vanguard Real Estate II Index Fund | (611,535) |
Swap Contracts | 1,451 |
Change in Unrealized Appreciation (Depreciation) | (7,797,964) |
Net Increase (Decrease) in Net Assets Resulting from Operations | (5,381,892) |
1 | Includes $2,132,105,000 of the net gain (loss) resulting from in-kind redemptions. |
Year Ended January 31, | ||
2021 ($000) |
2020 ($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 1,355,272 | 1,726,391 |
Realized Net Gain (Loss) | 1,060,800 | 2,458,391 |
Change in Unrealized Appreciation (Depreciation) | (7,797,964) | 5,911,672 |
Net Increase (Decrease) in Net Assets Resulting from Operations | (5,381,892) | 10,096,454 |
Distributions1 | ||
Net Investment Income | ||
Investor Shares | (4,393) | (22,650) |
ETF Shares | (714,428) | (921,879) |
Admiral Shares | (458,678) | (554,006) |
Institutional Shares | (213,294) | (244,373) |
Return of Capital | ||
Investor Shares | (3,129) | (7,475) |
ETF Shares | (508,885) | (304,249) |
Admiral Shares | (326,715) | (182,839) |
Institutional Shares | (151,929) | (80,651) |
Total Distributions | (2,381,451) | (2,318,122) |
Capital Share Transactions | ||
Investor Shares | (29,761) | (1,748,144) |
ETF Shares | (1,176,383) | 2,721,882 |
Admiral Shares | (1,182,290) | 2,583,346 |
Institutional Shares | 356,671 | 734,197 |
Net Increase (Decrease) from Capital Share Transactions | (2,031,763) | 4,291,281 |
Total Increase (Decrease) | (9,795,106) | 12,069,613 |
Net Assets | ||
Beginning of Period | 71,226,279 | 59,156,666 |
End of Period | 61,431,173 | 71,226,279 |
1 | Certain prior-period numbers have been reclassified to conform with the current-period presentation. |
Investor Shares | |||||
For a Share Outstanding Throughout Each Period |
Year Ended January 31, | ||||
2021 | 2020 | 2019 | 2018 | 2017 | |
Net Asset Value, Beginning of Period | $31.21 | $27.69 | $26.40 | $27.38 | $25.59 |
Investment Operations | |||||
Net Investment Income | .5861 | .7191 | .7871 | .7611 | .746 |
Net Realized and Unrealized Gain (Loss) on Investments | (2.498) | 3.801 | 1.639 | (.614) | 2.324 |
Total from Investment Operations | (1.912) | 4.520 | 2.426 | .147 | 3.070 |
Distributions | |||||
Dividends from Net Investment Income | (.624) | (.752) | (.851) | (.788) | (.752) |
Distributions from Realized Capital Gains | — | — | — | (.011) | (.187) |
Return of Capital | (.444) | (.248) | (.285) | (.328) | (.341) |
Total Distributions | (1.068) | (1.000) | (1.136) | (1.127) | (1.280) |
Net Asset Value, End of Period | $28.23 | $31.21 | $27.69 | $26.40 | $27.38 |
Total Return2 | -5.88% | 16.59% | 9.53% | 0.45% | 12.07% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $188 | $243 | $1,871 | $2,143 | $2,603 |
Ratio of Total Expenses to Average Net Assets | 0.26% | 0.26% | 0.25% | 0.26% | 0.26% |
Ratio of Net Investment Income to Average Net Assets | 2.18% | 2.48% | 3.02% | 2.87% | 2.60% |
Portfolio Turnover Rate3 | 8% | 6% | 24% | 6% | 7% |
1 | Calculated based on average shares outstanding. |
2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
3 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
ETF Shares | |||||
For a Share Outstanding Throughout Each Period |
Year Ended January 31, | ||||
2021 | 2020 | 2019 | 2018 | 2017 | |
Net Asset Value, Beginning of Period | $93.93 | $83.36 | $79.47 | $82.43 | $77.05 |
Investment Operations | |||||
Net Investment Income | 1.8891 | 2.3351 | 2.4871 | 2.4991 | 2.334 |
Net Realized and Unrealized Gain (Loss) on Investments | (7.525) | 11.379 | 4.934 | (1.945) | 7.022 |
Total from Investment Operations | (5.636) | 13.714 | 7.421 | .554 | 9.356 |
Distributions | |||||
Dividends from Net Investment Income | (1.947) | (2.364) | (2.646) | (2.458) | (2.353) |
Distributions from Realized Capital Gains | — | — | — | (.034) | (.563) |
Return of Capital | (1.387) | (.780) | (.885) | (1.022) | (1.060) |
Total Distributions | (3.334) | (3.144) | (3.531) | (3.514) | (3.976) |
Net Asset Value, End of Period | $84.96 | $93.93 | $83.36 | $79.47 | $82.43 |
Total Return | -5.80% | 16.70% | 9.70% | 0.59% | 12.25% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $32,064 | $37,682 | $30,857 | $32,377 | $33,527 |
Ratio of Total Expenses to Average Net Assets | 0.12% | 0.12% | 0.12% | 0.12% | 0.12% |
Ratio of Net Investment Income to Average Net Assets | 2.33% | 2.60% | 3.15% | 3.01% | 2.74% |
Portfolio Turnover Rate2 | 8% | 6% | 24% | 6% | 7% |
1 | Calculated based on average shares outstanding. |
2 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
Admiral Shares | |||||
For a Share Outstanding Throughout Each Period |
Year Ended January 31, | ||||
2021 | 2020 | 2019 | 2018 | 2017 | |
Net Asset Value, Beginning of Period | $133.12 | $118.14 | $112.63 | $116.83 | $109.19 |
Investment Operations | |||||
Net Investment Income | 2.6771 | 3.3151 | 3.5071 | 3.5381 | 3.306 |
Net Realized and Unrealized Gain (Loss) on Investments | (10.672) | 16.121 | 7.008 | (2.761) | 9.966 |
Total from Investment Operations | (7.995) | 19.436 | 10.515 | .777 | 13.272 |
Distributions | |||||
Dividends from Net Investment Income | (2.759) | (3.350) | (3.751) | (3.483) | (3.333) |
Distributions from Realized Capital Gains | — | — | — | (.048) | (.798) |
Return of Capital | (1.966) | (1.106) | (1.254) | (1.447) | (1.501) |
Total Distributions | (4.725) | (4.456) | (5.005) | (4.978) | (5.632) |
Net Asset Value, End of Period | $120.40 | $133.12 | $118.14 | $112.63 | $116.83 |
Total Return2 | -5.74% | 16.73% | 9.69% | 0.58% | 12.23% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $19,702 | $23,274 | $18,223 | $17,757 | $18,337 |
Ratio of Total Expenses to Average Net Assets | 0.12% | 0.12% | 0.11% | 0.12% | 0.12% |
Ratio of Net Investment Income to Average Net Assets | 2.33% | 2.60% | 3.16% | 3.01% | 2.74% |
Portfolio Turnover Rate3 | 8% | 6% | 24% | 6% | 7% |
1 | Calculated based on average shares outstanding. |
2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
3 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
Institutional Shares | |||||
For a Share Outstanding Throughout Each Period |
Year Ended January 31, | ||||
2021 | 2020 | 2019 | 2018 | 2017 | |
Net Asset Value, Beginning of Period | $20.60 | $18.28 | $17.43 | $18.08 | $16.90 |
Investment Operations | |||||
Net Investment Income | .4211 | .5181 | .5431 | .5681 | .515 |
Net Realized and Unrealized Gain (Loss) on Investments | (1.646) | 2.496 | 1.085 | (.444) | 1.540 |
Total from Investment Operations | (1.225) | 3.014 | 1.628 | .124 | 2.055 |
Distributions | |||||
Dividends from Net Investment Income | (.429) | (.522) | (.583) | (.542) | (.519) |
Distributions from Realized Capital Gains | — | — | — | (.007) | (.123) |
Return of Capital | (.306) | (.172) | (.195) | (.225) | (.233) |
Total Distributions | (.735) | (.694) | (.778) | (.774) | (.875) |
Net Asset Value, End of Period | $18.64 | $20.60 | $18.28 | $17.43 | $18.08 |
Total Return | -5.68% | 16.77% | 9.70% | 0.60% | 12.23% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $9,478 | $10,027 | $8,206 | $8,176 | $7,799 |
Ratio of Total Expenses to Average Net Assets | 0.10% | 0.10% | 0.09% | 0.10% | 0.10% |
Ratio of Net Investment Income to Average Net Assets | 2.37% | 2.63% | 3.18% | 3.03% | 2.76% |
Portfolio Turnover Rate2 | 8% | 6% | 24% | 6% | 7% |
1 | Calculated based on average shares outstanding. |
2 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
B. | In accordance with the terms of a Funds’ Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund investment advisory, corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
C. | The fund’s custodian bank has agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the year ended January 31, 2021, custodian fee offset arrangements reduced the fund’s expenses by $204,000 (an annual rate of less than 0.01% of average net assets). |
D. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level
1 ($000) |
Level
2 ($000) |
Level
3 ($000) |
Total ($000) | |
Investments | ||||
Assets | ||||
Common Stocks | 61,406,813 | — | 569 | 61,407,382 |
Temporary Cash Investments | 353,714 | — | — | 353,714 |
Total | 61,760,527 | — | 569 | 61,761,096 |
Derivative Financial Instruments | ||||
Assets | ||||
Swap Contracts | — | — | — | — |
E. | Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end, permanent differences primarily attributable to the accounting for in-kind redemptions and swap agreements were reclassified between the following accounts: |
Amount ($000) | |
Paid-in Capital | 2,137,973 |
Total Distributable Earnings (Loss) | (2,137,973) |
Amount ($000) | |
Undistributed Ordinary Income | — |
Undistributed Long-Term Gains | — |
Capital Loss Carryforwards | (2,472,556) |
Qualified Late-Year Losses | — |
Net Unrealized Gains (Losses) | 4,333,696 |
Year Ended January 31, | ||
2021 Amount ($000) |
2020 Amount ($000) | |
Ordinary Income* | 1,390,793 | 1,742,908 |
Long-Term Capital Gains | — | — |
Return of Capital | 990,658 | 575,214 |
Total | 2,381,451 | 2,318,122 |
* | Includes short-term capital gains, if any. |
Amount ($000) | |
Tax Cost | 57,427,400 |
Gross Unrealized Appreciation | 10,849,531 |
Gross Unrealized Depreciation | (6,515,835) |
Net Unrealized Appreciation (Depreciation) | 4,333,696 |
F. | During the year ended January 31, 2021, the fund purchased $12,507,494,000 of investment securities and sold $14,453,946,000 of investment securities, other than temporary cash investments. Purchases and sales include $8,100,287,000 and $9,386,227,000, respectively, in connection with in-kind purchases and redemptions of the fund’s capital shares. |
G. | Capital share transactions for each class of shares were: |
Year Ended January 31, | |||||
2021 | 2020 | ||||
Amount ($000) |
Shares (000) |
Amount ($000) |
Shares (000) | ||
Investor Shares | |||||
Issued | 16,000 | 586 | 395,906 | 13,631 | |
Issued in Lieu of Cash Distributions | 7,522 | 282 | 28,280 | 981 | |
Redeemed1 | (53,283) | (2,013) | (2,172,330) | (74,391) | |
Net Increase (Decrease)—Investor Shares | (29,761) | (1,145) | (1,748,144) | (59,779) | |
ETF Shares | |||||
Issued | 8,299,471 | 100,643 | 10,501,566 | 118,494 | |
Issued in Lieu of Cash Distributions | — | — | — | — | |
Redeemed | (9,475,854) | (124,400) | (7,779,684) | (87,500) | |
Net Increase (Decrease)—ETF Shares | (1,176,383) | (23,757) | 2,721,882 | 30,994 | |
Admiral Shares | |||||
Issued1 | 3,229,939 | 28,465 | 5,327,904 | 42,120 | |
Issued in Lieu of Cash Distributions | 688,666 | 6,053 | 647,759 | 5,156 | |
Redeemed | (5,100,895) | (45,719) | (3,392,317) | (26,697) | |
Net Increase (Decrease)—Admiral Shares | (1,182,290) | (11,201) | 2,583,346 | 20,579 | |
Institutional Shares | |||||
Issued | 1,959,562 | 112,493 | 2,004,257 | 102,367 | |
Issued in Lieu of Cash Distributions | 343,567 | 19,520 | 306,680 | 15,790 | |
Redeemed | (1,946,458) | (110,090) | (1,576,740) | (80,293) | |
Net Increase (Decrease)—Institutional Shares | 356,671 | 21,923 | 734,197 | 37,864 |
1 | In November 2018, the fund announced changes to the availability and minimum investment criteria of the Investor and Admiral share classes. As a result, all of the outstanding Investor Shares automatically converted to Admiral Shares beginning in April 2019, with the exception of those held by Vanguard funds and certain other institutional investors. Investor Shares—Redeemed and Admiral Shares—Issued include 57,968,000 and 13,589,000 shares, respectively, in the amount of $1,688,895,000 from the conversion during the year ended January 31, 2020. |
H. | Certain of the fund’s investments are in companies that are considered to be affiliated companies of the fund because the fund owns more than 5% of the outstanding voting securities of the company or the issuer is another member of The Vanguard Group. Transactions during the period in securities of these companies were as follows: |
Current Period Transactions | ||||||||
Jan.
31, 2020 Market Value ($000) |
Purchases at Cost ($000) |
Proceeds from Securities Sold1 ($000) |
Realized Net Gain (Loss) ($000) |
Change
in Unrealized App. (Dep.) ($000) |
Income ($000) |
Capital
Gain Distributions Received ($000) |
Jan.
31, 2021 Market Value ($000) | |
City Office REIT Inc. | NA2 | 3,574 | 10,735 | (3,318) | (7,225) | 1,018 | — | NA2 |
Host Hotels & Resorts Inc. | 586,395 | 79,820 | 126,471 | (42,789) | (69,699) | 362 | 6,418 | NA3 |
Current Period Transactions | ||||||||
Jan.
31, 2020 Market Value ($000) |
Purchases at Cost ($000) |
Proceeds from Securities Sold1 ($000) |
Realized Net Gain (Loss) ($000) |
Change
in Unrealized App. (Dep.) ($000) |
Income ($000) |
Capital
Gain Distributions Received ($000) |
Jan.
31, 2021 Market Value ($000) | |
Vanguard Market Liquidity Fund | 561,293 | NA4 | NA4 | 202 | 7 | 651 | — | 353,714 |
Vanguard Real Estate II Index Fund | 7,847,621 | 282,501 | — | — | (611,535) | 163,444 | — | 7,399,530 |
Winthrop Realty Trust | — | — | — | (870) | 870 | — | — | — |
Total | 8,995,309 | 365,895 | 137,206 | (46,775) | (687,582) | 165,475 | 6,418 | 7,753,244 |
1 | Does not include adjustments related to return of capital. |
2 | Not applicable—at January 31, 2020, and January 31, 2021, the issuer was not an affiliated company of the fund, but it was affiliated during the period. |
3 | Not applicable—at January 31, 2021, the security was still held, but the issuer was no longer an affiliated company of the fund. |
4 | Not applicable—purchases and sales are for temporary cash investment purposes. |
I. | Management has determined that no events or transactions occurred subsequent to January 31, 2021, that would require recognition or disclosure in these financial statements. |
Average Annual Total Returns Periods Ended January 31, 2021 | ||||
One Year |
Since Inception (9/26/2017) |
Final
Value of a $100,000,000 Investment | ||
Real Estate II Index Fund | -5.70% | 4.88% | $117,295,170 | |
Real Estate Spliced Index | -5.64 | 4.95 | 117,542,030 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 20.55 | 15.15 | 160,368,680 |
Diversified Real Estate Activities | 0.2% |
Diversified REITs | 3.6 |
Health Care REITs | 8.8 |
Hotel & Resort REITs | 3.1 |
Industrial REITs | 11.0 |
Office REITs | 7.5 |
Real Estate Development | 0.3 |
Real Estate Operating Companies | 0.2 |
Real Estate Services | 3.6 |
Residential REITs | 13.6 |
Retail REITs | 9.3 |
Specialized REITs | 38.8 |
($000s, except shares and per-share amounts) | Amount |
Assets | |
Investments in Securities, at Value | |
Unaffiliated Issuers (Cost $6,854,913) | 7,399,798 |
Affiliated Issuers (Cost $30,303) | 30,308 |
Total Investments in Securities | 7,430,106 |
Investment in Vanguard | 282 |
Receivables for Investment Securities Sold | 7,865 |
Receivables for Accrued Income | 6,962 |
Total Assets | 7,445,215 |
Liabilities | |
Due to Custodian | 7,305 |
Payables for Investment Securities Purchased | 14,555 |
Collateral for Securities on Loan | 23,678 |
Payables to Vanguard | 147 |
Total Liabilities | 45,685 |
Net Assets | 7,399,530 |
At January 31, 2021, net assets consisted of: | |
Paid-in Capital | 6,902,425 |
Total Distributable Earnings (Loss) | 497,105 |
Net Assets | 7,399,530 |
Net Assets | |
Applicable
to 360,944,844 outstanding $.001 par value shares of beneficial interest (unlimited authorization) |
7,399,530 |
Net Asset Value Per Share | $20.50 |
Year
Ended January 31, 2021 | |
($000) | |
Investment Income | |
Income | |
Dividends | 170,435 |
Interest1 | 54 |
Securities Lending—Net | 969 |
Total Income | 171,458 |
Expenses | |
The Vanguard Group—Note B | |
Investment Advisory Services | 1,037 |
Management and Administrative | 4,323 |
Marketing and Distribution | 44 |
Custodian Fees | 30 |
Auditing Fees | 44 |
Shareholders’ Reports | — |
Trustees’ Fees and Expenses | 3 |
Total Expenses | 5,481 |
Net Investment Income | 165,977 |
Realized Net Gain (Loss) | |
Capital Gain Distributions Received | 61,526 |
Investment Securities Sold1 | (69,498) |
Futures Contracts | (521) |
Swap Contracts | (1,198) |
Realized Net Gain (Loss) | (9,691) |
Change in Unrealized Appreciation (Depreciation) | |
Investment Securities1 | (604,438) |
Swap Contracts | 61 |
Change in Unrealized Appreciation (Depreciation) | (604,377) |
Net Increase (Decrease) in Net Assets Resulting from Operations | (448,091) |
1 | Interest income, realized net gain (loss), and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $54,000, $39,000, and ($1,000), respectively. Purchases and sales are for temporary cash investment purposes. |
Year Ended January 31, | ||
2021 ($000) |
2020 ($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 165,977 | 193,741 |
Realized Net Gain (Loss) | (9,691) | 31,455 |
Change in Unrealized Appreciation (Depreciation) | (604,377) | 902,961 |
Net Increase (Decrease) in Net Assets Resulting from Operations | (448,091) | 1,128,157 |
Distributions1 | ||
Net Investment Income | (163,444) | (199,690) |
Return of Capital | (119,057) | (65,435) |
Total Distributions | (282,501) | (265,125) |
Capital Share Transactions | ||
Issued | — | — |
Issued in Lieu of Cash Distributions | 282,501 | 265,125 |
Redeemed | — | — |
Net Increase (Decrease) from Capital Share Transactions | 282,501 | 265,125 |
Total Increase (Decrease) | (448,091) | 1,128,157 |
Net Assets | ||
Beginning of Period | 7,847,621 | 6,719,464 |
End of Period | 7,399,530 | 7,847,621 |
1 | Certain prior-period numbers have been reclassified to conform with the current-period presentation. |
For a Share Outstanding Throughout Each Period |
Year Ended January 31, | September 26, 20171 to January 31, 2018 | ||
2021 | 2020 | 2019 | ||
Net Asset Value, Beginning of Period | $22.64 | $20.10 | $19.17 | $20.00 |
Investment Operations | ||||
Net Investment Income2 | .471 | .571 | .611 | .268 |
Net Realized and Unrealized Gain (Loss) on Investments | (1.808) | 2.752 | 1.176 | (.834) |
Total from Investment Operations | (1.337) | 3.323 | 1.787 | (.566) |
Distributions | ||||
Dividends from Net Investment Income | (.465) | (.590) | (.626) | (.225) |
Distributions from Realized Capital Gains | — | — | — | (.030) |
Return of Capital | (.338) | (.193) | (.231) | (.009) |
Total Distributions | (.803) | (.783) | (.857) | (.264) |
Net Asset Value, End of Period | $20.50 | $22.64 | $20.10 | $19.17 |
Total Return | -5.70% | 16.78% | 9.68% | -2.89% |
Ratios/Supplemental Data | ||||
Net Assets, End of Period (Millions) | $7,400 | $7,848 | $6,719 | $6,126 |
Ratio of Total Expenses to Average Net Assets | 0.08% | 0.08% | 0.08% | 0.08%3 |
Ratio of Net Investment Income to Average Net Assets | 2.41% | 2.63% | 3.22% | 3.84%3 |
Portfolio Turnover Rate | 4% | 3% | 23% | 1% |
1 | Inception. |
2 | Calculated based on average shares outstanding. |
3 | Annualized. |
A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
B. | In accordance with the terms of a Funds’ Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund investment advisory, corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
C. | Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level
1 ($000) |
Level
2 ($000) |
Level
3 ($000) |
Total ($000) | |
Investments | ||||
Assets | ||||
Common Stocks | 7,399,729 | — | 69 | 7,399,798 |
Temporary Cash Investments | 30,308 | — | — | 30,308 |
Total | 7,430,037 | — | 69 | 7,430,106 |
D. | Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end, permanent differences primarily attributable to the accounting for swap agreements were reclassified between the individual components of total distributable earnings (loss). |
Amount ($000) | |
Undistributed Ordinary Income | — |
Undistributed Long-Term Gains | — |
Capital Loss Carryforwards | (39,799) |
Qualified Late-Year Losses | — |
Net Unrealized Gains (Losses) | 523,479 |
Year Ended January 31, | ||
2021 Amount ($000) |
2020 Amount ($000) | |
Ordinary Income | 163,444 | 199,690 |
Long-Term Capital Gains | — | — |
Return of Capital | 119,057 | 65,435 |
Total | 282,501 | 265,125 |
Amount ($000) | |
Tax Cost | 6,906,627 |
Gross Unrealized Appreciation | 1,454,893 |
Gross Unrealized Depreciation | (931,414) |
Net Unrealized Appreciation (Depreciation) | 523,479 |
E. | During the year ended January 31, 2021, the fund purchased $549,160,000 of investment securities and sold $247,945,000 of investment securities, other than temporary cash investments. |
F. | Capital shares issued and redeemed were: |
Year Ended January 31, |
|||
2021 Shares (000) |
2020 Shares (000) | ||
Issued | — | — | |
Issued in Lieu of Cash Distributions | 14,371 | 12,285 | |
Redeemed | — | — | |
Net Increase (Decrease) in Shares Outstanding | 14,371 | 12,285 |
G. | Management has determined that no events or transactions occurred subsequent to January 31, 2021, that would require recognition or disclosure in these financial statements. |