Vanguard® International High Dividend Yield Index Fund will follow an income investing strategy and invest in companies with high dividend yields, while Vanguard® International Dividend Appreciation Index Fund will emphasize stocks with high dividend growth prospects. The funds are available to all investors in three low-cost share classes, including ETF Shares.

These new funds will complement two existing funds focused on U.S. dividend-paying companies: Vanguard High Dividend Yield Index Fund and Vanguard Dividend Appreciation Index Fund.

“The two new dividend-oriented international index funds will allow investors to mirror domestic dividend-oriented strategies internationally,” said Vanguard Chairman and CEO Bill McNabb. “The funds will appeal to investors looking for broad geographic diversity and real income growth with long-term capital growth.”

Benefits of international diversification

Vanguard research found that non-U.S. equities have diversified the returns of U.S. equities on average over time. Economies for different countries and geographic regions aren’t correlated, meaning they don’t move in the same direction in tandem. Of course, there are exceptions, such as the global downturn that occurred in 2008–2009. Even then, however, the rates of recovery varied from country to country.

Fund objective details

Vanguard International High Dividend Yield Index Fund will seek to track the performance of the FTSE All-World ex US High Dividend Yield Index, a new benchmark of more than 800 of the highest-yielding stocks in developed and emerging markets.

An international dividend portfolio has historically experienced a higher dividend yield than one with a U.S.-only exposure because U.S. equities tend to have slightly lower yields.1 Investors seeking higher yields than the broader market may find this fund appealing.

Vanguard International Dividend Appreciation Index Fund will use the NASDAQ International Dividend Achievers Select Index as its benchmark. This new benchmark comprises more than 200 all-cap developed and emerging markets stocks excluding the U.S. with a long record of increasing annual dividend payments. The resulting multi-country portfolio offers a more diversified exposure to stocks with stable earnings growth, and low debt, than one with U.S.-only securities.

Investors seeking a portfolio of diversified international securities with a long history of increasing annual dividend payments may wish to consider this fund.

Share class choices at low cost

Investors have several share class options from which to choose:
Vanguard International High Dividend Yield Index Fund
Share ClassMinimum initial investmentEstimated expense ratio
Investor$3,0000.40%
Admiral™$10,0000.30%
ETFNA0.30%
Vanguard International Dividend Appreciation Index Fund
Share ClassMinimum initial investmentEstimated expense ratio
Investor$3,0000.35%
Admiral$10,0000.25%
ETFNA0.25%
In addition to low expense ratios, Vanguard clients can purchase ETFs commission-free through our brokerage platform.

Expert management

Both new funds will be managed by Vanguard through its Equity Index Group (EIG), one of the world’s largest index managers, overseeing 79 indexed funds and annuity portfolios with aggregate assets of $2 trillion.

Justin Hales, a portfolio manager in EIG, will manage the new funds. Mr. Hales has worked in investment management for nine years. He’s joined by Michael Perre, an EIG portfolio manager with 25 years of experience working in investment management.

1Source: FTSE, for the period from March 2004 to March 2015.

Notes:
You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (who may charge commissions). See the Vanguard Brokerage Services Commission and Fee Schedules on Vanguard.com for limits. Vanguard ETF Shares are not redeemable directly with the issuing Fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.

Investments issued by non-U.S. companies are subject to risks including country/regional risk, which is the chance that political upheaval, financial troubles, or natural disasters will adversely affect the value of securities issued by companies in foreign countries or regions; and currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates. Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets. Past performance is no guarantee of future returns. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.