Vanguard Tax-Managed International Fund Annual Report ...

Among the driving factors behind
European markets’ strong performance
was a rebound in the financial sector.
Europe’s troubled banks, battered in
the credit crisis of 2008, have since
benefited from hefty government rescue
efforts. Strong gains in the materials and
industrial sectors reflected increased
demand for commodities as economies
began to stabilize.
In the Pacific region, which accounts
for about a third of the portfolio, the
fund’s holdings returned nearly 25%
in 2009. Australia was the largest
contributor in this region, buoyed by
its financial and materials stocks. The
Hong Kong and Singapore markets
also performed very strongly.
1 Derived from data provided by Lipper Inc.
Japan, whose market had the secondlargest
weighting in the fund at the end
of the period, produced the weakest
12-month return. The Japanese economy
has never quite recovered from sharp
declines in exports that followed the
financial crisis. A strong yen, which made
Japanese products less competitive
abroad, has complicated the problem.
Still, the Tax-Managed International
Fund recorded one of its best years ever
as investors regained optimism about the
markets and grew more willing to invest
in sectors that could benefit from an
economic turnaround: financials, materials,
and consumer discretionary stocks.
Total Returns
Ten Years Ended December 31, 2009
Average
Annual Return
Tax-Managed International Fund Investor Shares 1.24%
MSCI EAFE Index 1.17
International Funds Average1 0.27
The figures shown represent past performance, which is not a guarantee of future results. (Current performance
may be lower or higher than the performance data cited. For performance data current to the most recent monthend,
visit our website at www.vanguard.com/performance.) Note, too, that both investment returns and principal
value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost.
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