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Vanguard International Growth Fund Adds Manager

By Staff Writer

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Feb. 6, 2003 — Vanguard Group said it hired another outside manager, Baillie Gifford Overseas Ltd., a Scottish investment firm, to help run the Vanguard International Growth Fund (VWIGX).

Baillie Gifford, which oversees more than $30 billion for institutions, will be responsible for about 20%-25% of the assets in the $5.7 billion Vanguard fund. The remainder will be managed by Schroder Investment Management North America Inc., which has piloted the fund since its inception in 1981.

The addition of a manager “better positions” the fund “to accommodate long-term growth in assets,” Vanguard said in a statement. The move was not related to the fund’s performance, a spokeswoman for the fund company said.

Vanguard said the investment style of the International Growth fund, which looks for companies with above-average growth potential, will not change with the addition of Baillie Gifford, which also favors growth-oriented investments.

James Anderson, a Baillie Gifford director, will join Schroder’s Richard Foulkes as a portfolio manager on the fund.

Vanguard said it does not expect the addition of a manager to “have a material impact” on the fund’s expense ratio, which is 0.67% for Investor class shares and 0.54% for Admiral shares.

International Growth, Vanguard’s largest and oldest international fund, is its first international fund to be run by multiple managers. Five of Vanguard’s 23 actively-managed stock funds are also run by multiple outside managers.

The International Growth fund lost 17.8% last year, while its peer international stock funds dropped 16.5%. Vanguard International Growth slipped 2.1% on average for the five years ended in 2002, compared to a loss of 2.3% by similar funds. The fund carries a 3-Star rank from Standard & Poor’s.