Vanguard Tax-Managed International Fund Annual Report ...

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32 Tax-Managed International Fund The following table summarizes changes in investments valued based on Level 3 inputs during the year ended December 31, 2009: Investments in Common Stocks Amount Valued Based on Level 3 Inputs ($000) Balance as of December 31, 2008 — Transfers into Level 3 72 Change in Unrealized Appreciation (Depreciation) 8 Balance as of December 31, 2009 80 E. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes. During the year ended December 31, 2009, the fund realized net foreign currency gains of $2,812,000, which increased distributable net income for tax purposes; accordingly, such gains have been reclassified from accumulated net realized losses to overdistributed net investment income. During the year ended December 31, 2009, the fund realized $55,364,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital. For tax purposes, at December 31, 2009, the fund had $1,441,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $483,857,000 to offset future net capital gains of $12,748,000 through December 31, 2010, $27,239,000 through December 31, 2011, $5,174,000 through December 31, 2012, $99,680,000 through December 31, 2016, and $339,016,000 through December 31, 2017. In addition, the fund realized losses of $52,484,000 during the period from November 1, 2009, through December 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010. At December 31, 2009, the cost of investment securities for tax purposes was $5,577,206,000. Net unrealized appreciation of investment securities for tax purposes was $403,800,000, consisting of unrealized gains of $788,405,000 on securities that had risen in value since their purchase and $384,605,000 in unrealized losses on securities that had fallen in value since their purchase. F. During the year ended December 31, 2009, the fund purchased $1,792,082,000 of investment securities and sold $611,583,000 of investment securities, other than temporary cash investments.
Tax-Managed International Fund G. Capital share transactions for each class of shares were: Investor Shares Year Ended December 31, 2009 2008 Amount Shares Amount Shares ($000) (000) ($000) (000) Issued 125,159 14,090 305,754 26,025 Issued in Lieu of Cash Distributions 26,118 2,418 28,971 3,486 Redeemed 1 (150,505) (17,213) (255,074) (24,427) Net Increase (Decrease)—Investor Shares 772 (705) 79,651 5,084 Institutional Shares Issued 13,419 1,577 80,348 5,969 Issued in Lieu of Cash Distributions 3,723 345 6,027 723 Redeemed 1 (81,195) (9,541) (163,552) (15,951) Net Increase (Decrease)—Institutional Shares (64,053) (7,619) (77,177) (9,259) ETF Shares Issued 1,367,568 47,062 2,441,432 70,686 Issued in Lieu of Cash Distributions — — — — Redeemed 1 (111,570) (3,500) — — Net Increase (Decrease)—ETF Shares 1,255,998 43,562 2,441,432 70,686 1 Net of redemption fees for fiscal 2009 and 2008 of $931,000 and $1,382,000, respectively (fund totals). H. In preparing the financial statements as of December 31, 2009, management considered the impact of subsequent events occurring through February 16, 2010, for potential recognition or disclosure in these financial statements. 33
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