NOTES TO FINANCIAL STATEMENTS
Vanguard Tax-Managed Fund is registered under the Investment Company Act of 1940 as a diversified open-
end investment company and consists of the Growth and Income, Capital Appreciation, and Balanced Portfolios.
A. The following significant accounting policies are in conformity with generally accepted accounting principles for
investment companies. Such policies are consistently followed by the Fund in the preparation of financial
1. SECURITY VALUATION: Securities listed on an exchange are valued at the latest quoted sales prices as of
the close of the New York Stock Exchange (generally 4:00 PM) on the valuation date; such securities not traded
are valued at the mean of the latest quoted bid and asked prices. Unlisted securities held by the Growth and
Income Portfolio are valued at the latest quoted bid prices; such securities held by the Capital Appreciation
Portfolio and the equity portion of the Balanced Portfolio are valued at the mean of the latest quoted bid and
asked prices. Municipal bonds are valued utilizing primarily the latest bid prices or, if bid prices are not available,
on the basis of valuations based on a matrix system (which considers such factors as security prices, yields,
maturities, and ratings), both as furnished by an independent pricing service. Temporary cash investments are
valued at amortized cost which approximates market value.
2. FEDERAL INCOME TAXES: Each Portfolio of the Fund intends to continue to qualify as a regulated
investment company and distribute all of its taxable income. Accordingly, no provision for Federal income taxes is
required in the financial statements.
3. REPURCHASE AGREEMENTS: The Growth and Income and Capital Appreciation Portfolios, along with
other members of The Vanguard Group of Investment Companies, transfer uninvested cash balances into a
Pooled Cash Account, the daily aggregate of which is invested in repurchase agreements secured by U.S.
Government obligations. Securities pledged as c