Vanguard International Value Fund
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Vanguard ®
Vanguard ® International Value Fund
Product Summary Vanguard Style View : Foreign Large Value
Large-, mid-, and small-cap international equity.
Seeks long-term capital appreciation. Diversified portfolio of value stocks from non-U.S. markets.
Broadly diversified in international developed and emerging markets. Market
Dvlp Emrg
Fundamental, value-oriented investment process.
Market capitalization
Large
Diversified, multi-manager structure.
Mid
Small
Central tendency
Expected range of fund holdings
Quarterly Commentary For the 12 months ended September 30, the fund underperformed
its benchmark (+3.00%). Overweight allocations to health care
Global equity markets extended their rally into the third quarter, (+22.9%) and information technology (+35.1%) boosted relative
driven by optimism about the global economic recovery. The returns. However, these positive results were offset by poor
continued monetary stimulus from central banks and ongoing U.S. selection in communication services (+12.0%), consumer
dollar weakness have benefited foreign markets, which had discretionary (+18.2%), and industrials (+4.7%). Poor selection in
positive but more modest returns compared to the United States. Europe (–0.3%) and North America (–1.9%), along with an
Overall, U.S. equities (+9.51%, as measured by the FTSE USA underweight allocation to emerging markets (+10.6%), hurt
Index) outpaced global equities (+6.70%, as measured by the results. Alibaba Group Holding (+76%), Capri Holdings (–46%), and
FTSE Global All Cap ex-US Index). Developed markets lagged CK Hutchison Holdings (–28%) were among the largest detractors.
emerging markets on the United Kingdom’s performance, with the
FTSE Developed Index (+7.95%) lagging the FTSE Emerging Index People and Process
(+9.19%). Large- and mega-capitalization stocks performed best,
with the Russell Top 50 Index (+11.79%) strongly leading both the Vanguard International Value Fund seeks long-term capital
Russell 1000 Index (+9.47%) and the Russell 2000 Index appreciation through broadly diversified exposure to the major
(+4.93%). Meanwhile, the outperformance of growth against value equity markets outside the United States. The fund’s investment
became even more pronounced, with the Russell 3000 Growth advisors employ fundamental research to construct portfolios of
Index (+12.86%) posting returns that were more than double undervalued stocks in developed and emerging markets. In
those of the Russell 3000 Value Index (+5.42%). addition, Vanguard may invest the fund’s cash flows in equity
index futures and/or exchange-traded funds to manage liquidity
In this environment, Vanguard International Value Fund lagged its needs while ensuring that the fund remains fully invested.
benchmark, the MSCI All Country World Index ex USA (+6.25%).
An underweight allocation to and positive selection within
financials (+0.0%) and real estate (+2.4%) boosted relative ARGA Investment Management, LP
returns. Samsung (+23%) and out-of-benchmark holding Kingfisher
(+41%) were among the top contributors. The firm invests in businesses that it believes are undervalued
based on long-term earnings power and dividend-paying capability.
These positive results, however, were offset by unfavorable ARGA’s investment philosophy is based on the belief that
selection in consumer discretionary (+16.6%), communication investors overreact to short-term developments, leading to
services (+3.4%), and industrials (+10.0%). An underweight opportunities to generate gains from investing in “good
allocation to and poor selection in consumer staples (+4.7%) also businesses at great prices.” Its value-oriented process uses a
hurt results. A significant underweight to Alibaba Group Holding dividend discount model (DDM) to select stocks that trade at a
(+36%) was the largest detractor for the quarter. Overweights to discount to intrinsic value based upon the company’s long-term
Telefonica (–28%) and Vodafone Group (–17%) also detracted earnings power and dividend-paying capability.
from performance.
Unfavorable selection in Europe (+4.6%), mainly in France (+3.0%) Firm Description
and Germany (+8.4%), hurt performance, as did an underweight
allocation to and poor security selection within both emerging ARGA Investment Management, LP, Stamford, Connecticut, is an
markets (+9.4%) and North America (+6.3%). independent investment management firm focused on global
equities. The firm has advised Vanguard International Value Fund
since 2012.
As of September 30, 2020Vanguard International Value Fund
Investment Manager Biographies Arjun Kumar, CFA, Sprucegrove Board Director. Portfolio manager.
Advised the fund since 2020. Worked in investment management
A. Rama Krishna, Founder and Chief Investment Officer. Portfolio since 2002. B.A., University of Toronto. M.B.A., University of
manager. Advised the fund since 2012. Worked in investment Toronto.
management since 1987. B.A., Saint Stephen's College, University
of Delhi. M.B.A. and M.A., University of Michigan. Lazard Asset Management LLC
Steven Morrow, Director of Research. Portfolio manager. Advised The firm employs a research-driven, bottom-up, relative value
the fund since 2012. Worked in investment management since approach in selecting stocks. Lazard seeks to identify individual
1993. B.S., University of New Hampshire. M.B.A., Cornell stocks that offer an appropriate trade-off between low relative
University. valuation and high financial productivity. The cross-border portfolio
management team uses return on equity as the primary measure
Sprucegrove Investment Management Ltd. of financial productivity, while secondary measures include return
on assets, cash return on equity, and operating margin. Lazard’s
Sprucegrove’s investment philosophy is grounded in the belief that research analysts utilize a global sector approach to fundamental
the short-term focus of many investors allows high-quality analysis. Stock selection is the result of a bottom-up process,
companies to trade at a discount, allowing a firm that strictly regardless of sector and regional boundaries. Holdings and sector
adheres to its disciplined long-term approach to be patient and weightings may differ from those in the benchmark.
wait for exploitable valuation opportunities. The firm seeks to
purchase high-quality businesses at a substantial discount to their Firm Description
long-term value and hold them through periods of market volatility,
with a typical holding period of ten years. Based in New York, Lazard Asset Management is a wholly owned
subsidiary of Lazard Freres & Co., LLC. The firm has advised
Firm Description Vanguard International Value Fund since 2006.
Sprucegrove is a Toronto-based boutique asset manager that was Investment Manager Biographies
founded in 1993 by three partners and is 100% employee-owned.
Its consistent philosophy and process over the long term has been Michael G. Fry, Managing Director. Portfolio manager. Advised the
focused on constructing portfolios of quality companies at fund since 2010. Worked in investment management since 1981.
attractive valuations. The firm has advised Vanguard International B.Sc, Flinders University, Adelaide, Australia.
Value Fund since 2020.
Michael A. Bennett, CPA, Managing Director. Portfolio manager.
Investment Manager Biographies Advised the fund since 2010. Worked in investment management
since 1987. B.S., New York University. M.B.A., University of
Shirley Woo, CFA, Sprucegrove Board Director. Portfolio manager. Chicago.
Advised the fund since 2020. Worked in investment management
since 1987. B.A., University of Toronto.
Investment Advisors
Target Asset Allocation
%
Sprucegrove Investment Management Ltd. 35
Lazard Asset Management LLC 40
ARGA Investment Management, LP 25
Total 100
As of September 30, 2020Vanguard International Value Fund
Total Returns
Expense Year
Ratio Quarter to Date 1 Year 3 Years 5 Years 10 Years
International Value Fund (5/16/1983) 0.38% 3.99% -11.80% -4.07% -1.62% 4.45% 3.54%
Spliced International Index — 6.25 -5.44 3.00 1.16 6.23 4.00
International Funds Average — 6.82 -3.21 5.52 1.51 5.82 4.59
As of September 30, 2020Vanguard International Value Fund
Quarterly Returns
Year-End
Spliced
International International Assets
Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Value Index (Millions)
2020 -26.30% 15.08% 3.99% — — — $9,517
2019 9.44 2.42 -1.25 8.77% 20.39% 21.51% 10,708
2018 -0.63 -3.20 0.99 -12.01 -14.52 -14.20 8,930
2017 8.06 5.77 6.72 4.90 27.96 27.19 10,308
2016 -0.51 0.13 6.04 -1.11 4.46 4.50 7,931
2015 4.18 1.22 -13.41 2.46 -6.44 -5.66 7,636
2014 -0.08 5.03 -5.74 -5.68 -6.69 -3.87 7,879
2013 2.15 -0.03 11.81 6.98 22.15 15.29 8,263
2012 12.24 -7.80 7.22 8.30 20.18 16.83 6,808
2011 1.87 0.70 -20.73 5.05 -14.58 -13.71 6,081
2010 1.50 -15.96 18.00 6.61 7.31 8.13 7,623
Fund Facts
Volatility Measures
Fund Number 0046 R-Squared Beta
Ticker VTRIX
Spliced International Index 0.97 1.03
Newspaper Listing IntlVal
MSCI AC World Index ex US Gross 0.97 1.03
CUSIP Number 921939203
Assets (millions) $9,517
Inception 5/16/1983
Expense Ratio Top 10 Largest Holdings
(as of 10/2020) 0.38%
% of
Total Net Assets
Samsung Electronics Co. Ltd. 2.2%
Equity Characteristics
MSCI AC Novartis AG 1.8
International World Index SAP SE 1.7
Value ex USA
Tesco plc 1.6
Number of stocks 224 2,375
Panasonic Corp. 1.3
Median market cap $28.0 Billion $36.1 Billion
Tencent Holdings Ltd. 1.2
Average market cap $62.9 Billion $97.4 Billion
Nintendo Co. Ltd. 1.2
Price/earnings ratio 17.1x 18.3x
POSCO 1.2
Price/book ratio 1.2x 1.6x
Return on equity 11.7% 13.7% LafargeHolcim Ltd. 1.1
Earnings growth rate 8.2% 10.1% Vivendi SA 1.1
Equity yield (dividend) 3.2% 2.8% Total 14.4%
Short-term reserves 7.4% — The holdings listed exclude any temporary cash investments and equity
index products.
Turnover rate (fiscal year end) 38.4% —
As of September 30, 2020Vanguard International Value Fund
Sector Diversification (% of Stocks)
MSCI AC
International World Index Overweight/
Value ex USA Underweight
Communication Services 9.5% 7.5% 2.0
Consumer Discretionary 11.6 13.8 -2.2
Consumer Staples 7.0 9.7 -2.7
Energy 2.7 4.2 -1.5
Financials 16.9 16.9 0.0
Health Care 7.9 10.5 -2.6
Industrials 15.7 11.7 4.0
Information Technology 13.1 11.7 1.4
Materials 10.1 7.9 2.2
Other 0.0 0.0 0.0
Real Estate 2.4 2.7 -0.3
Utilities 3.1 3.4 -0.3
Total 100.0% 100.0%
Sector categories are based on the Global Industry Classification Standard
(GICS), except for the Other category (if applicable), which includes
securities that have not been provided a GICS classification as of the effective
reporting period.
As of September 30, 2020Vanguard International Value Fund
Market allocation (% of Stocks)
International
Value
Europe
United Kingdom 11.6%
France 9.7
Germany 7.4
Switzerland 6.8
Netherlands 2.4
Italy 1.7
Sweden 1.6
Denmark 1.3
Norway 1.1
Spain 1.0
Finland 1.0
Other 1.4
Subtotal 47.0
Pacific
Japan 14.6%
Korea 6.0
Hong Kong 1.8
Singapore 1.3
Other 0.8
Subtotal 24.5
Emerging Markets
China 5.8%
India 1.6
Brazil 1.2
Other 1.8
Subtotal 10.4
North America
United States 14.3%
Canada 2.4
Subtotal 16.7
Middle East
Other 0.1%
Other 1.3
Total 100.0%
As of September 30, 2020Vanguard International Value Fund
3 month attribution
Portfolio Benchmark Attribution
Avg. 3 mo. Contrib. Avg. 3 mo. Contrib. Alloc. Select Total
weight return Return weight return Return effect effect effect
Financials 15.1 -0.4 -0.1 17.8 0.0 0.1 0.1 0.0 0.1
Real Estate 1.9 5.7 0.1 2.8 2.4 0.1 0.0 0.0 0.1
Materials 6.5 12.1 0.7 7.8 11.2 0.8 -0.1 0.0 0.0
Consumer Staples 5.9 2.2 0.1 9.8 4.7 0.5 0.1 -0.2 -0.1
Energy 3.4 -13.8 -0.5 4.6 -7.4 -0.3 0.1 -0.2 -0.1
Utilities 3.6 0.5 0.0 3.4 2.1 0.1 0.0 -0.1 -0.1
Health Care 12.2 1.5 0.2 10.4 2.7 0.3 -0.1 -0.1 -0.2
Information Technology 13.7 10.1 1.3 11.4 13.5 1.4 0.1 -0.4 -0.3
Cash 3.8 0.0 0.0 0.0 0.0 0.0 -0.4 0.0 -0.4
Communication Services 9.9 0.5 0.1 7.5 3.4 0.3 -0.1 -0.3 -0.4
Industrials 14.2 6.4 0.9 11.4 10.0 1.1 0.1 -0.4 -0.4
Consumer Discretionary 9.7 12.5 1.1 13.1 16.6 2.0 -0.3 -0.3 -0.7
Total 100.0 3.8 3.8 100.0 6.3 6.3 -0.4 -2.1 -2.5
12 month attribution
Portfolio Benchmark Attribution
Avg. 12 mo. Contrib. Avg. 12 mo. Contrib. Alloc. Select Total
weight return Return weight return Return effect effect effect
Health Care 13.3 16.2 2.5 9.8 22.9 2.4 0.8 -0.7 0.2
Information Technology 13.5 27.2 3.6 10.2 35.1 3.3 0.8 -0.7 0.2
Real Estate 1.7 -23.4 -0.5 3.0 -13.7 -0.7 0.3 -0.2 0.1
Cash 4.7 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Utilities 3.1 3.2 -0.1 3.5 0.6 -0.1 0.0 0.0 0.0
Materials 4.8 10.3 1.0 7.4 12.4 1.2 -0.2 -0.1 -0.3
Consumer Staples 5.6 -6.0 -0.4 9.9 0.5 0.2 0.1 -0.5 -0.4
Financials 17.7 -22.2 -5.3 19.7 -16.6 -4.5 0.6 -1.2 -0.6
Energy 4.9 -43.9 -3.2 5.6 -32.9 -2.0 -0.1 -0.8 -0.9
Industrials 12.2 -3.3 -0.2 11.6 4.7 0.5 0.1 -1.1 -1.0
Consumer Discretionary 9.0 1.1 0.2 12.2 18.2 2.3 -0.5 -1.4 -1.9
Communication Services 9.7 -12.1 -0.9 7.2 12.0 1.0 0.2 -2.3 -2.2
Total 100.0 -3.3 -3.3 100.0 3.4 3.4 2.2 -8.9 -6.7
3 month regional attribution
Portfolio Benchmark Attribution
Avg. 3 mo. Contrib. Avg. 3 mo. Contrib. Alloc. Select Total
weight return Return weight return Return effect effect effect
Middle East 0.0 0.0 0.0 0.2 -6.0 0.0 0.0 0.0 0.0
Other 0.0 0.0 0.0 0.8 8.9 0.1 0.0 0.0 0.0
Pacific 26.1 6.0 1.4 27.0 6.3 1.6 0.0 -0.1 -0.1
North America 7.5 3.6 0.2 6.9 6.3 0.4 0.0 -0.2 -0.2
Cash 3.8 0.0 0.0 0.0 0.0 0.0 -0.5 0.0 -0.5
Emerging Markets 10.1 7.0 0.7 24.9 9.4 2.3 -0.5 -0.2 -0.7
Europe 52.5 2.7 1.5 40.2 4.6 1.9 -0.2 -0.9 -1.1
TOTAL 100.0 3.8 3.8 100.0 6.3 6.3 -1.1 -1.4 -2.5
As of September 30, 2020Vanguard International Value Fund
12 month regional attribution
Portfolio Benchmark Attribution
Avg. 12 mo. Contrib. Avg. 12 mo. Contrib. Alloc. Select Total
weight return Return weight return Return effect effect effect
Cash 4.7 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Middle East 0.0 0.0 0.0 0.3 -9.6 0.0 0.0 0.0 0.0
Other 0.0 0.0 0.0 0.7 -4.1 0.0 0.0 0.0 0.0
Pacific 27.1 3.1 0.5 27.5 4.6 1.1 0.0 -0.5 -0.5
North America 6.9 -20.4 -1.6 7.1 -1.9 -0.1 -0.1 -1.4 -1.5
Emerging Markets 9.8 -5.2 -0.6 23.6 10.6 1.9 -0.7 -1.6 -2.2
Europe 51.5 -4.9 -1.6 40.8 -0.2 0.6 -0.2 -2.4 -2.6
TOTAL 100.0 -3.3 -3.3 100.0 3.4 3.4 -0.9 -5.8 -6.7
The portfolio attribution data shown above is provided by FactSet based on information provided by Vanguard about the fund.s daily portfolio holdings as of
the market close. Because the fund buys and sells stocks throughout the trading day and not necessarily at the market close, the attribution data shown
above is an estimate and may not precisely reflect actual attribution information. Information noted above does not reflect fair-value adjustments to prices of
foreign securities held in the portfolio.
Top contributors—3 month Top detractors—3 month
3 mo. Total Ending Bench 3 mo. Total Ending Bench
return effect weight weight return effect weight weight
Kingfisher plc 40.6 0.3 0.7 0.0 Telefonica SA -27.8 -0.2 0.4 0.1
Samsung SDI Co. Ltd 18.3 0.2 0.9 0.1 Vodafone Group Plc -16.6 -0.2 0.7 0.2
Vestas Wind Systems A/S 59.4 0.1 0.6 0.2 Taiwan Semiconductor
Manufacturing Co. Ltd. 43.4 -0.2 0.4 1.7
Royal Dutch Shell Plc -1.0 0.1 0.2 0.5
Nokia Oyj -10.1 -0.2 0.8 0.1
Nintendo Co. Ltd. 27.7 0.1 1.3 0.3
Alibaba Group Holding Ltd. 7.9 -0.5 0.5 2.6
Top contributors—12 month Top detractors—12 month
12 mo. Total Ending Bench 12 mo. Total Ending Bench
return effect weight weight return effect weight weight
Samsung SDI Co. Ltd 92.6 0.7 0.9 0.1 Telefonica SA -52.2 -0.4 0.4 0.1
Fresenius Medical Care AG & Co. Safran SA -37.1 -0.4 0.9 0.2
KGaA 27.7 0.4 1.2 0.1
CK Hutchison Holdings Ltd. -28.2 -0.5 0.7 0.1
Kingfisher plc 53.2 0.4 0.7 0.0
Capri Holdings Limited -45.7 -0.6 1.0 0.0
STMicroelectronics NV 56.4 0.3 0.0 0.1
Alibaba Group Holding Ltd. 7.9 -1.0 0.5 2.6
Nintendo Co. Ltd. 51.5 0.3 1.3 0.3
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