NOTES TO FINANCIAL STATEMENTS
Vanguard Tax-Managed Funds comprise the Tax-Managed Balanced, Tax-Managed Growth and Income, Tax-
Managed Capital Appreciation, Tax-Managed Small-Cap, and Tax-Managed International Funds, each of which
is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund.
The Tax-Managed Growth and Income and Tax-Managed Capital Appreciation Funds each offer three classes
of shares: Investor Shares, Admiral Shares, and Institutional Shares. The Tax-Managed Small-Cap and Tax-
Managed International Funds each offer two classes of shares: Investor Shares and Institutional Shares. The Tax-
Managed Balanced Fund offers only Investor Shares. Investor Shares are available to any investor who meets
the funds' minimum purchase requirements. Admiral Shares are designed for investors who meet certain
administrative, servicing, tenure, and account-size criteria. Institutional Shares are designed for investors who
meet certain administrative and servicing criteria and invest a minimum of $10 million.
The Tax-Managed Balanced Fund invests in debt instruments of many municipal issuers; the issuers' abilities to
meet their obligations may be affected by economic and political developments in a specific state or region. The
Tax-Managed International Fund invests in securities of foreign issuers, which may subject it to investment risks
not normally associated with investing in securities of United States corporations.
A. The following significant accounting policies conform to generally accepted accounting principles for U.S.
mutual funds. The funds consistently follow such policies in preparing their financial statements.
1. SECURITY VALUATION: Securities are valued as of the close of trading on the New York Stock
Exchange (generally 4:00 p.m. Eastern time) on the valuation date. Equity securities are valued at the latest
quoted sales prices or official closing prices taken from the primary market in which each security trades; such