<PAGE> 1
CHAIRMAN'S LETTER
FELLOW SHAREHOLDER:
During the six months ended June 30, the first half of the 1995 fiscal year for
Vanguard Trustees' Equity Fund, the domestic stock market--led by the large
capitalization blue-chip stocks--surged ahead to its best half-year performance
in recent memory. In the international arena, most European bourses turned in
solid results; however, these gains were all but eradicated by the sharp
decline in the Japanese market, the largest of the non-U.S. stock markets.
In this environment, our U.S. Portfolio provided a return that was
well into double-digit territory, ahead of the return of the average
competitor, but short of the broad stock market. The return of our
International Portfolio, albeit above that of both its average competitor and
the unmanaged market index, was considerably less generous. The table below
presents the total returns (capital change plus income) of our two Portfolios
during the past six months, compared with those of their respective benchmarks:
for the International Portfolio, the unmanaged Morgan Stanley Capital
International Europe, Australia, and Far East ("EAFE") Index and the average
diversified international fund; and for the U.S. Portfolio, the unmanaged
Standard & Poor's 500 Composite Stock Price Index and the average growth and
income fund.
<TABLE>
<CAPTION>
- --------------------------------------------------------
Total Return
----------------
Six Months Ended
June 30, 1995
- --------------------------------------------------------
<S> <C>
TRUSTEES' INTERNATIONAL PORTFOLIO + 3.4%
- --------------------------------------------------------
MSCI* EAFE INDEX + 2.8%
AVERAGE INTERNATIONAL FUND + 2.2
========================================================
TRUSTEES' U.S. PORTFOLIO +17.8%
- --------------------------------------------------------
STANDARD & POOR'S 500 STOCK INDEX +20.2%
AVERAGE GROWTH AND INCOME FUND +17.0
- --------------------------------------------------------
</TABLE>
* Morgan Stanley Capital International.
The total return of the International Portfolio is based on net asset values of
$31.48 per share on December 31, 1994, and $32.00 per share on June 30, 1995,
with the latter figure adjusted to take into account the reinvestment of two
dividends totaling $.38 per share from net investment income and a carry-over
distribution of $.17 per share from net capital gains realized during 1994. For
the U.S. Portfolio, the respective net asset values were $29.09 per share and
$33.98 per share, and there were two quarterly dividends totaling $.28 per
share from net investment income.
THE INTERNATIONAL PORTFOLIO
If the rise of the U.S. stock market over the past six months could be
described as "soaring," the decline in Japan, the world's second largest stock
market, was equally unremitting. Returns on European bourses fell somewhere
between these two extremes, holding generally flat in the first quarter, only
to rally during the second quarter. Emerging markets, on the other hand, were
roughly unchanged on balance--albeit with a substantial level of interim
volatility--as large declines in the first quarter were partially offset by
gains in the second.
Throughout most of the world, the U.S. dollar continued to display
significant weakness. A weak dollar, of course, enhances the returns to U.S.
investors in foreign markets, since foreign currency can purchase a greater
number of U.S. dollars. As a result, U.S. investors fared much better on their
international investments over the past six months than investors domiciled
within the respective countries.
The Portfolio's modest absolute return of +3.4% reflects the overall
weakness of the international stock markets. That said, we weathered the
volatile world markets better than most of our peers, as the average
international fund provided a total return of +2.2%. We achieved this positive
margin in spite of our relatively higher weighting in Japan, as good stock
selection on the part of our adviser helped us to avoid the worst of that
market's decline. A good bit of our advantage over the competitive funds
resulted from our large overweighting--not to mention excellent stock
selection--in the Netherlands, which boasted one of the top-performing markets.
We are also pleased to have outpaced the +2.8% return of the unmanaged
EAFE Index, a tough bogey for all professional money managers to beat.
Ironically,
1
<PAGE> 2
our advantage versus the Index resulted largely from our relatively lower
weighting in Japan, combined with good overall stock selection.
THE U.S. PORTFOLIO
After a moderately disappointing 1994, the U.S. stock market sprung to life as
1995 began. During the past six months, the market moved upward, week after
week, in virtually straight-line fashion, delighting the bulls and astonishing
the bears. On balance, the Dow Jones Industrial Average rose from 3834 as the
year began to 4556 on June 30.
As usual, there were many opinions as to the source of the market's
surprising strength. In my view, it resulted from a combination of: (1) the
sharp decline in interest rates (the yield on the long-term U.S. Treasury bond
fell from 7.8% to 6.6% during the period, a dip of 120 basis points); (2) the
diminishing threat of additional increases in short-term interest rates by the
Federal Reserve Board; (3) a slight softening in U.S. economic growth,
resulting in continued optimism about the outlook for inflation; (4)
record-breaking corporate profits; and (5) a hint of speculative fever in the
marketplace.
Whatever the reason, the stock market, as measured by the Standard &
Poor's 500 Index, provided an outstanding six-month return of +20.2%. The
breadth of the market's strength was particularly striking, with every major
market sector exhibiting double-digit gains. This breadth was largely reflected
in the different "styles" of investing, although growth stocks provided returns
marginally higher than value stocks, and large capitalization stocks outpaced
smaller stocks.
The U.S. Portfolio "held its own" over this six-month period,
achieving a +17.8% return that was a hair better than the +17.0% return of its
average competitor, if somewhat behind the +20.2% return of the Standard &
Poor's 500 Index. Relative to both standards, the Portfolio benefited from a
large overweighting in the market-leading technology sector, made even better
by sector-leading stock selections. However, two countervailing factors more
than offset our advantage over the Index: (1) nearly 30% of the Portfolio's
assets are invested in smaller stocks, which lagged the broad market; and (2)
while our stock selection was superior in the technology sector, overall stock
selection within the other major sectors was largely a negative for the
Portfolio.
IN SUMMARY
As the domestic stock market repeatedly breaks new "high-water marks," I should
caution that all financial markets move in cycles. That said, U.S. stocks have
increased so much, in such a short time, it seems appropriate to sound a note
of caution, and urge shareholders in our U.S. Portfolio not to count on more
of the same during the second half of the year. The successful investor must at
all times maintain financial discipline, avoiding greed at market highs, and
avoiding fear at market lows.
Along with the risks of market gyrations--particularly so in the case
of foreign stock ownership--the potential rewards achievable by investing in
stocks for the long-term endure both in the U.S. and abroad. We remain
confident that both our U.S. Portfolio and our International Portfolio will
provide returns that are competitive with comparable funds during the years
ahead.
Sincerely,
/s/ JOHN C. BOGLE
- ---------------------
John C. Bogle
Chairman of the Board
August 1, 1995
Note: Mutual fund data from Lipper Analytical Services, Inc.
2
<PAGE> 3
AVERAGE ANNUAL TOTAL RETURNS
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE PORTFOLIOS (PERIODS ENDED JUNE 30,
1995) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
10 YEARS
-------------------------------
INCEPTION TOTAL CAPITAL INCOME
PORTFOLIO DATE 1 YEAR 5 YEARS RETURN RETURN RETURN
- --------- --------- ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
U.S. PORTFOLIO 1/31/80 +20.74% +10.41% +11.69% + 8.65% +3.04%
INTERNATIONAL PORTFOLIO 5/16/83 + 2.12 + 3.93 +15.75 +12.76 +2.99
</TABLE>
ALL OF THESE DATA REPRESENT PAST PERFORMANCE. THE INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT INVESTORS' SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
3
<PAGE> 4
REPORT FROM BATTERYMARCH FINANCIAL MANAGEMENT, INC.
PERFORMANCE
The total return for the International Portfolio for the first six months of
1995 was +3.4% versus +2.8% for the MSCI Europe, Australia, and Far East
("EAFE") Index. The average international fund returned +2.2% for the same
period.
These strong relative results can be summed up by three themes: the
U.S. dollar, the Japanese market, and emerging markets. The U.S. dollar
continued its 1994 slide through the first quarter of 1995 falling
approximately 15% versus the Japanese yen before stabilizing. For the first
half, foreign currency exposure accounted for a significant portion of the
Portfolio's return as well as the performance of the EAFE Index. Some
competitive funds were partially hedged during the first quarter and therefore
sacrificed currency return.
Even with the strong yen, the Japanese market fell 8.2% in U.S. dollar
terms during the first half of the fiscal year. However, the Portfolio's
average weight in Japan was 10 percentage points below the EAFE weighting, and
therefore helped our relative performance. The Portfolio's Japanese holdings,
while outperforming the market, were still a drag on performance. The prospects
for the Japanese market going forward are discussed below.
The MSCI Emerging Markets Free Index was down 3% for the six months;
however, there were strong returns for emerging markets in the Far East and in
Europe. The Portfolio, with its exposure to the more developed of these
markets, benefited from its holdings in Turkey, Greece, and Indonesia. We had
only a very small exposure to Mexico, which was among the weakest countries.
Taken as a group, the Portfolio's 9% investment in emerging markets boosted
performance relative to the Index.
INVESTMENT ENVIRONMENT
During 1994, faster-than-expected growth raised inflation concerns and interest
rates. This has now been reversed. Growth expectations in Japan, Europe, and
the United States have been reduced. Global interest rates have fallen
significantly in the first half of this year, which has calmed fears of a
U.S.-led recession. Earnings estimates, while being lowered, still project
significant year-over-year growth.
In Europe, several factors are contributing to slower growth. The
strong currencies of the German block are penalizing export earnings. The
stringent budget requirements to meet European Monetary Union targets raise the
prospect of a dampening effect of fiscal policy. Good news on the inflation
front, however, paves the way for monetary policy accommodation and a prolonged
sustainable recovery. We have increased the Portfolio's exposure to Europe,
focusing on those stocks that our strategic themes identify as having
above-average attractiveness.
The Japanese market weakness stemmed from several sources. The economy
continued to stagnate. First-quarter real GDP rose at a seasonally adjusted
rate of +0.3%, while prices fell. Consumption, as well as private and public
investment, were weak, reflecting widespread pessimism. Compounding the
pessimism was disappointment over the Ministry of Finance's proposals to deal
with problem bank loans. The strong yen has been an important factor in
squeezing profits in the export sector. We have reduced the Portfolio's
exposure to Japan in light of the deteriorating earnings prospects, while still
maintaining substantial holdings in the most attractive companies identified by
our strategic themes.
INVESTMENT STRATEGY
We identify companies which are attractive based on one of four strategic
themes:
Traditional Value--identifies smaller capitalization stocks with
attractive combinations of low price-to-book ratios, low price-to-earnings
ratios, and high dividend yields, ranked within country and economic sector.
Corporate Value--focuses on companies with high ratios of capitalized
net cash flow-to-price, ranked within their industries and worldwide.
Global Competitors--identifies companies with good profitability and
strong balance sheets within their industries worldwide, and includes a number
of medium-sized companies. A buy/hold/sell discipline combines value and
earnings momentum indicators.
Early Database--identifies stocks where increasing amounts of
fundamental and pricing data are available to permit quantitative screening for
value. Standard global data services are supplemented by
4
<PAGE> 5
qualitative analysis. These companies are in the more advanced emerging markets
of Greece, Malaysia, Mexico, Philippines, Portugal, Thailand, and Turkey.
The majority of the stocks in the Portfolio are identified by the
Corporate Value and Traditional Value themes which provide the Portfolio with
its medium capitalization and value emphasis. We believe that these are the
kinds of companies which will continue to benefit the most from the
restructuring of industry around the world.
Respectfully,
Batterymarch Financial Management, Inc.
July 27, 1995
5
<PAGE> 6
REPORT FROM GEEWAX, TERKER & COMPANY
Recently, the market environment has begun to favor our style of investing, as
we have almost caught up to the broad market indexes of the Standard & Poor's
500 and the Wilshire 5000. The U.S. Portfolio returned +17.8% for the first
half of the fiscal year, while the S&P 500 returned +20.2% and the Wilshire
5000 returned +19.2%. The Portfolio is normally not rewarded when large
capitalization stocks perform well and earnings news is positive--as was the
case for the first half of the year. The recent performance turnaround
continues into this third quarter, even though extremely good operating income
is not being rewarded.
The U.S. Portfolio is nicely situated with high-quality capital
equipment/technology companies comprising a major growth component. Cyclical
growth is adequately represented by the paper/chemical industry. Our
utility/consumer/financial orientation is providing a good yield plus growth at
a reasonable P/E multiple.
As you may be able to infer, we are quite happy with the overall
structure of the Portfolio. Our turnover rate was only 17% for the second
quarter versus 41% for the first. This low turnover should continue as we do
not see anything on the horizon that would require a major alteration in our
present holdings. The current composition has a good technology growth bet, a
sound foreign sales bet, a high-quality yield bet, and a good
earnings-at-a-price bet. These bets are finally starting to pay off! I was
heartened by noticing that our three-year performance history rated an "A" in
The Wall Street Journal (July 26, 1995), for growth and income funds.
As investment advisers, we will continue to position the Portfolio
toward stocks that: (1) have reasonable valuations given their growth potential
and market risk conditions; (2) have good recent earnings/revenue "news"; and
(3) have been experiencing recent upward revisions in earnings expectations.
Our overall bias is to be invested in companies smaller than Exxon, General
Electric, Philip Morris, etc.--so that we will have a smaller median market
capitalization than the broad-based market indexes. We will continue to
position the Portfolio to capitalize on strong earnings/revenues, good earnings
surprises, reasonable price multiples, and modest coverage by Wall Street
analysts, which should lead to decent excess returns over time.
We thank you for your continued support.
Respectfully,
John J. Geewax
Portfolio Manager
Geewax, Terker & Company
July 27, 1995
6
<PAGE> 7
TOTAL INVESTMENT RETURN TABLE
The following table illustrates the results of a single-share investment in
Trustees' Equity Fund-International Portfolio for the period from May 31, 1983,
to June 30, 1995. During the period illustrated, stock prices fluctuated
widely; these results should not be considered a representation of the dividend
income or capital gain or loss that may be realized from an investment made in
the Portfolio today.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PERIOD PER SHARE DATA TOTAL INVESTMENT RETURN*
- ----------------------------------------------------------------------------------------------------------------------------
International Portfolio
Value with Income ----------------------------
Year Ended Net Asset Capital Gains Income Dividends & Capital Capital Income Total EAFE Index
December 31 Value Distributions Dividends Gains Reinvested Return Return Return Total Return
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INITIAL (5/83) $25.00 -- -- $ 25.00 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
1983 25.98 $ .02 $ .44 26.46 + 4.8% +1.8% + 6.6% +11.8%
- ----------------------------------------------------------------------------------------------------------------------------
1984 24.59 .11 1.09 26.26 - 4.9 +4.1 - 0.8 + 7.9
- ----------------------------------------------------------------------------------------------------------------------------
1985 30.91 2.54 .93 36.85 +36.1 +4.2 +40.3 +56.7
- ----------------------------------------------------------------------------------------------------------------------------
1986 38.68 6.55 1.03 55.53 +46.8 +3.9 +50.7 +69.9
- ----------------------------------------------------------------------------------------------------------------------------
1987 28.66 18.32 .75 68.79 +22.1 +1.8 +23.9 +24.9
- ----------------------------------------------------------------------------------------------------------------------------
1988 28.27 4.58 .99 81.71 +14.8 +4.0 +18.8 +28.6
- ----------------------------------------------------------------------------------------------------------------------------
1989 32.44 2.08 .79 102.93 +22.8 +3.2 +26.0 +10.8
- ----------------------------------------------------------------------------------------------------------------------------
1990 26.58 1.01 .95 90.31 -15.1 +2.8 -12.3 -23.2
- ----------------------------------------------------------------------------------------------------------------------------
1991 27.78 .61 .77 99.30 + 6.9 +3.1 +10.0 +12.5
- ----------------------------------------------------------------------------------------------------------------------------
1992 24.44 .28 .67 90.64 -11.0 +2.3 - 8.7 -11.8
- ----------------------------------------------------------------------------------------------------------------------------
1993 31.04 -- .81 118.28 +27.0 +3.5 +30.5 +32.9
- ----------------------------------------------------------------------------------------------------------------------------
1994 31.48 .63 .56 124.50 + 3.5 +1.8 + 5.3 + 8.1
- ----------------------------------------------------------------------------------------------------------------------------
1995 (6/30) 32.00 .17 .38 128.75 + 2.2 +1.2 + 3.4 + 2.8
- ----------------------------------------------------------------------------------------------------------------------------
LIFETIME +418.9% +542.9%
- ----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN +14.6% +16.7%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes reinvestment of income dividends and any capital gains
distributions for both the Portfolio and the Index.
Note: No adjustment has been made for income taxes payable by shareholders on
reinvested income dividends and capital gains distributions.
7
<PAGE> 8
TOTAL INVESTMENT RETURN TABLE
The following table illustrates the results of a single-share investment in
TRUSTEES' EQUITY FUND--U.S. PORTFOLIO since inception through June 30, 1995.
During the period illustrated, stock prices fluctuated widely; these results
should not be considered a representation of the dividend income or capital
gain or loss that may be realized from an investment made in the Portfolio
today.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PERIOD PER SHARE DATA TOTAL INVESTMENT RETURN*
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Portfolio
Value with Income --------------------------- S&P 500
Year Ended Net Asset Capital Gains Income Dividends & Capital Capital Income Total Index Total
December 31 Value Distributions Dividends Gains Reinvested Return Return Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INITIAL (1/80) $25.00 -- -- $ 25.00 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
1980 26.95 $ .84 $1.49 29.35 +11.2% +6.2% +17.4% +24.6%
- ------------------------------------------------------------------------------------------------------------------------------------
1981 27.05 .87 1.80 32.38 + 3.6 +6.7 +10.3 - 4.9
- ------------------------------------------------------------------------------------------------------------------------------------
1982 30.56 1.19 1.75 40.42 +17.4 +7.4 +24.8 +21.5
- ------------------------------------------------------------------------------------------------------------------------------------
1983 35.72 2.15 1.52 52.19 +23.9 +5.2 +29.1 +22.5
- ------------------------------------------------------------------------------------------------------------------------------------
1984 30.56 2.51 1.57 50.69 - 7.4 +4.5 - 2.9 + 6.2
- ------------------------------------------------------------------------------------------------------------------------------------
1985 31.15 4.10 1.45 61.09 +15.4 +5.1 +20.5 +31.6
- ------------------------------------------------------------------------------------------------------------------------------------
1986 28.69 6.15 1.16 70.41 +11.3 +4.0 +15.3 +18.6
- ------------------------------------------------------------------------------------------------------------------------------------
1987 22.77 5.88 .72 71.60 - 0.3 +2.0 + 1.7 + 5.2
- ------------------------------------------------------------------------------------------------------------------------------------
1988 26.35 1.00 .97 89.24 +20.1 +4.5 +24.6 +16.5
- ------------------------------------------------------------------------------------------------------------------------------------
1989 26.15 3.81 .88 104.61 +13.8 +3.4 +17.2 +31.6
- ------------------------------------------------------------------------------------------------------------------------------------
1990 22.90 -- 1.08 95.90 -12.4 +4.1 - 8.3 - 3.1
- ------------------------------------------------------------------------------------------------------------------------------------
1991 28.20 -- .71 121.38 +23.1 +3.5 +26.6 +30.4
- ------------------------------------------------------------------------------------------------------------------------------------
1992 28.43 .86 .67 129.21 + 3.9 +2.6 + 6.5 + 7.6
- ------------------------------------------------------------------------------------------------------------------------------------
1993 30.65 2.16 .43 151.49 +15.6 +1.6 +17.2 +10.1
- ------------------------------------------------------------------------------------------------------------------------------------
1994 29.09 .03 .34 145.56 - 5.0 +1.1 - 3.9 + 1.3
- ------------------------------------------------------------------------------------------------------------------------------------
1995 (6/30) 33.98 -- .28 171.50 +16.8 +1.0 +17.8 +20.2
- ------------------------------------------------------------------------------------------------------------------------------------
LIFETIME +586.0% +759.4%
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN +13.3% +15.0%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes reinvestment of income dividends and any capital gains distributions
for both the Portfolio and the Index.
Note: No adjustment has been made for income taxes payable by shareholders on
reinvested income dividends and capital gains distributions.
8
<PAGE> 9
FINANCIAL STATEMENTS
(unaudited)
June 30, 1995
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
Market
Value
U.S. PORTFOLIO Shares (000)+
- -------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (97.5%)
- -------------------------------------------------------------------
BASIC MATERIALS (9.0%)
Aluminum Co. of America 10,800 $ 541
ASARCO, Inc. 14,100 430
Boise Cascade Corp. 8,000 324
Bowater, Inc. 13,000 583
Cabot Corp. 4,500 237
Dow Chemical Co. 8,700 625
E.I. du Pont de Nemours & Co. 3,600 247
Eastman Chemical 6,000 357
Federal Paper Board Co., Inc. 8,000 283
Geon Co. 18,800 541
Georgia-Pacific Corp. 8,700 755
M.A. Hanna Co. 20,000 520
International Paper Co. 5,000 429
James River Corp. 7,000 193
Olin Corp. 11,000 567
PPG Industries, Inc. 3,500 151
Phelps Dodge Corp. 14,200 838
Potash Corp. of Saskatchewan,
Inc. 5,000 279
Praxair, Inc. 19,000 475
Scott Paper Co. 12,000 594
Sigma Aldrich Corp. 6,000 294
* Stone Container Corp. 16,500 351
Terra Industries, Inc. 9,500 115
Union Carbide Corp. 20,500 684
Willamette Industries, Inc. 6,800 374
Worthington Industries, Inc. 6,165 126
------------
GROUP TOTAL 10,913
------------
- -------------------------------------------------------------------
CAPITAL GOODS & CONSTRUCTION (9.0%)
Case Corp. 14,000 417
Caterpillar, Inc. 23,500 1,510
Crane Co. 11,000 399
Cummins Engine Co., Inc. 15,500 676
Deere & Co. 5,400 462
Dover Corp. 11,100 808
General Electric Co. 8,000 451
* General Instrument 17,700 679
W.W. Grainger, Inc. 12,500 734
Lockheed Martin Corp. 14,079 889
Millipore Corp. 3,000 203
TRW, Inc. 9,000 719
Tecumseh Products Co. Class A 3,500 152
Tyco International Ltd. 26,803 1,447
* USG Corp. 11,000 261
United Technologies Corp. 7,500 586
Westinghouse Electric Corp. 39,200 573
------------
GROUP TOTAL 10,966
------------
- -------------------------------------------------------------------
CONSUMER CYCLICALS (7.1%)
Black & Decker Corp. 30,000 926
Breed Technological Inc. 6,500 156
Brunswick Corp. 14,500 247
Dana Corp. 24,000 687
The Walt Disney Co. 32,000 1,780
* Eckerd Corp. 5,900 189
* Federated Department Stores 9,300 239
The Goodyear Tire & Rubber Co. 10,400 429
* Hospitality Franchise Systems, Inc. 6,000 208
La Quinta Inns Inc. 7,300 197
Leggett & Platt, Inc. 8,000 352
Maytag Corp. 11,000 176
* Office Depot, Inc. 15,400 433
Paccar, Inc. 6,700 312
Rite Aid Corp. 31,500 807
Sears, Roebuck & Co. 15,700 940
Superior Industries International,
Inc. 18,000 560
Wolverine World Wide, Inc. 1,250 26
------------
GROUP TOTAL 8,664
------------
- -------------------------------------------------------------------
CONSUMER STAPLES (9.5%)
American Brands, Inc. 10,000 398
American Stores Co. 12,500 352
Coca-Cola Enterprises, Inc. 7,700 168
ConAgra, Inc. 28,500 994
Dean Foods Corp. 23,500 658
Dole Food Co. 4,600 134
Giant Food, Inc. Class A 1,000 28
Hannaford Brothers Co. 11,000 314
Hormel Foods Corp. 10,200 266
IBP, Inc. 18,400 800
* The Kroger Co. 19,000 511
Philip Morris Cos., Inc. 37,900 2,819
RJR Nabisco Holdings Corp. 38,260 1,066
Ralston-Purina Group 5,000 255
* Safeway, Inc. 32,300 1,207
* Stop & Shop Cos. Inc. 2,000 51
Sysco Corp. 18,400 543
* Vons Cos., Inc. 40,200 809
Winn Dixie Stores, Inc. 3,100 179
------------
GROUP TOTAL 11,552
------------
- -------------------------------------------------------------------
ENERGY (11.0%)
Amoco Corp. 6,400 426
Atlantic Richfield Co. 21,500 2,360
* BJ Services Co. 7,500 171
Baker Hughes, Inc. 26,100 535
Chevron Corp. 55,600 2,592
Exxon Corp. 22,000 1,554
Mobil Corp. 16,000 1,536
Panhandle Eastern Corp. 6,700 163
Royal Dutch Petroleum Co. ADR 4,000 488
Sun Co., Inc. 14,400 394
</TABLE>
9
<PAGE> 10
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
U.S. PORTFOLIO Shares (000)+
- -------------------------------------------------------------------
<S> <C> <C>
Texaco, Inc. 36,700 2,408
USX-Marathon Group 40,000 790
------------
GROUP TOTAL 13,417
------------
- -------------------------------------------------------------------
FINANCIAL (6.8%)
AFLAC, Inc. 17,500 765
Allstate Corp. 7,000 207
American General Corp. 13,900 469
The Bank of New York Co., Inc. 18,500 747
Citicorp 9,700 561
CoreStates Financial Corp. 2,500 87
Equitable of Iowa Co. 4,900 161
Federal National Mortgage Assn. 7,000 661
First Chicago Corp. 2,000 120
First Interstate Bancorp. 2,500 201
First USA Inc. 22,100 981
Green Tree Financial Corp. 15,000 666
MBNA Corp. 5,000 169
NBD Bancorp, Inc. 6,000 192
Charles Schwab Corp. 22,450 974
SunAmerica Inc. 11,000 561
Union Planters Corp. 2,000 53
Wells Fargo & Co. 4,000 721
------------
GROUP TOTAL 8,296
------------
- -------------------------------------------------------------------
HEALTH CARE (10.6%)
Abbott Laboratories, Inc. 20,000 810
American Home Products Corp. 36,300 2,809
* Amgen, Inc. 12,200 979
Bergen Brunswig Corp. Class A 27,650 632
Bristol-Myers Squibb Co. 39,600 2,698
Cardinal Health, Inc. 6,500 307
* Humana, Inc. 20,500 361
Johnson & Johnson 24,400 1,650
Eli Lilly & Co. 10,500 824
Mylan Laboratories, Inc. 31,500 969
* Oxford Health Plan 17,000 795
------------
GROUP TOTAL 12,834
------------
- -------------------------------------------------------------------
TECHNOLOGY (15.4%)
* ADC Telecommunications, Inc. 10,000 355
* ALC Communications 14,100 636
* Amphenol Corp. 9,000 262
Apple Computer, Inc. 13,000 603
* Applied Materials, Inc. 6,600 569
* Arrow Electronics, Inc. 2,900 144
* Atmel Corp. 24,000 1,329
* Cabletron Systems, Inc. 3,750 200
Computer Associates
International, Inc. 23,900 1,619
* DSC Communications Corp. 24,000 1,116
* KLA Instruments Corp. 11,700 904
* LSI Logic Corp. 16,000 626
Micron Technology Inc. 49,900 2,738
* Microsoft Corp. 10,000 904
Motorola, Inc. 24,812 1,666
* Oracle Corp. 13,500 520
Reynolds & Reynolds Class A 2,000 59
* Seagate Technology 17,000 667
* Silicon Graphics, Inc. 23,000 917
* Sun Microsystems, Inc. 7,500 364
* Tellabs, Inc. 10,000 480
Texas Instruments, Inc. 9,700 1,299
Xerox Corp. 7,300 856
------------
GROUP TOTAL 18,833
------------
- -------------------------------------------------------------------
TRANSPORT & SERVICES (4.2%)
* AMR Corp. 6,300 470
Burlington Northern, Inc. 24,100 1,527
CSX Corp. 14,900 1,119
Consolidated Freightways, Inc. 23,000 509
Delta Air Lines, Inc. 6,000 443
* Federal Express Corp. 11,500 699
Ryder System, Inc. 15,900 380
------------
GROUP TOTAL 5,147
------------
- -------------------------------------------------------------------
UTILITIES (13.5%)
Ameritech Corp. 42,800 1,883
Bell Atlantic Corp. 46,400 2,598
BellSouth Corp. 37,700 2,394
Consolidated Edison Co. of
New York, Inc. 26,200 773
DQE Inc. 13,500 317
Duke Power Co. 1,400 58
FPL Group, Inc. 25,400 981
GTE Corp. 62,600 2,136
MCN Corp. 26,200 517
Northeast Utilities 6,300 142
NYNEX Corp. 63,700 2,564
Pacific Gas & Electric Co. 32,300 937
Rochester Gas and Electric Corp. 4,000 85
SBC Communications, Inc. 22,000 1,048
------------
GROUP TOTAL 16,433
------------
- -------------------------------------------------------------------
MISCELLANEOUS (1.4%)
* Litton Industries, Inc. 23,800 878
Loews Corp. 2,100 254
Olsten Corp. 7,000 229
Textron, Inc. 5,900 343
------------
GROUP TOTAL 1,704
------------
- -------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $98,006) 118,759
- -------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
Face Market
Amount Value
U.S. PORTFOLIO (000) (000)+
- -------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT (2.5%)
- -------------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account 6.13%, 7/3/95
(Cost $3,074) $3,074 $ 3,074
- ------------------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(Cost $101,080) 121,833
- ------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES
- ------------------------------------------------------------------
Other Assets--Note C 320
Liabilities (319)
----------
1
- ------------------------------------------------------------------
NET ASSETS (100%)
- ------------------------------------------------------------------
Applicable to 3,585,402 outstanding
shares of beneficial interest
(unlimited authorization) $121,834
- ------------------------------------------------------------------
NET ASSET VALUE PER SHARE $33.98
==================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
AT JUNE 30, 1995, NET ASSETS CONSISTED OF:
- ------------------------------------------------------------------
Amount Per
(000) Share
--------- ------
<S> <C> <C>
Paid in Capital $ 98,071 $27.35
Undistributed Net
Investment Income 73 .02
Accumulated Net Realized Gains 2,937 .82
Unrealized Appreciation of
Investments--Note D 20,753 5.79
- ------------------------------------------------------------------
NET ASSETS $121,834 $33.98
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Market
Value
INTERNATIONAL PORTFOLIO Shares (000)+
- ------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (97.2%)
- ------------------------------------------------------------------
AUSTRALIA (2.4%)
Advance Bank Australia 'A' 64,900 $ 418
Advance Bank Australia
Rights Exp. 7/21/95 45,430 16
Australia & New Zealand
Bank Group 1,059,500 3,755
Broken Hill Proprietary Ltd. 412,830 5,069
CSR Ltd. 693,300 2,172
Gio Australia Holdings Ltd. 525,000 971
Santos Ltd. 1,669,700 4,001
Howard Smith 332,100 1,507
Stockland Trust Group 2,492,000 5,794
Westfield Trust (Units) 583,300 1,017
-------------
GROUP TOTAL 24,720
-------------
- ------------------------------------------------------------------
AUSTRIA (.2%)
* Austrian Airlines 9,560 1,619
Constantia Iso Holding AG 5,999 379
Constantia Verpackungen AG 2,999 223
-------------
GROUP TOTAL 2,221
-------------
- ------------------------------------------------------------------
CANADA (2.0%)
* Avencor Inc. 135,700 2,889
Canadian Imperial Bank of
Commerce 79,300 1,905
Canadian Occidental Petroleum
Ltd. 31,300 971
Fletcher Challenge Canada Ltd. 150,800 2,401
Hemlo Gold Mines, Inc. 90,900 976
Imasco Ltd. 171,800 3,048
Ipsco 51,600 958
Laidlaw Inc. Class B 123,000 1,184
Macmillan Bloedel Ltd. 59,400 832
Noranda Inc. 21,400 421
Petro-Canada 119,800 1,134
Power Corp. 119,600 1,828
Shell Canada Ltd. Class A 35,300 1,076
Transalta Corp. 81,500 860
-------------
GROUP TOTAL 20,483
-------------
- ------------------------------------------------------------------
DENMARK (.7%)
* ISS (International Services
Systems) Series B 153,700 4,013
Jyske Bank 33,400 2,542
Superfos 5,100 415
-------------
GROUP TOTAL 6,970
-------------
- ------------------------------------------------------------------
FRANCE (7.5%)
BIC 40,600 6,700
Bon Marche 4,800 876
Compagne Generale d'Industrie
et de Participations 3,100 723
Comptoirs Modernes 21,100 6,507
</TABLE>
11
<PAGE> 12
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- ------------------------------------------------------------------
<S> <C> <C>
Eridania Beghin-Say 33,600 5,185
Esso Francais 18,900 2,316
Finextel 49,900 731
Fromageries Bel 12,300 10,403
LVMH Moet-Hennessy 29,600 5,331
Navigation Mixte 28,800 5,941
Pernod-Ricard 38,500 2,534
Poliet Ex Lambert Freres 17,600 1,599
Roussel-Uclaf 6,300 984
Saint-Louis 14,236 4,405
Sagem 27,200 15,627
Sodexho 17,670 3,992
Sovac 26,100 2,315
-------------
GROUP TOTAL 76,169
-------------
- ------------------------------------------------------------------
GERMANY (6.4%)
Altana AG 16,150 8,728
Bayer AG 27,790 6,907
Bayerische Hypotheken und
Wechsel Bank 19,000 5,175
Bayer Vereinsbank 8,250 2,501
Berliner Handels und
Frankfurter Bank 25,040 6,567
Cassella AG 200 376
Douglas Holding AG 6,600 2,480
Hoechst AG 24,640 5,318
Industrie-Werke
Karlsruheaugsburg 18,400 4,028
RWE-DEA AG 1,326 381
Rheinisch-Westfaelisches
Elektrizitaetswerk AG 25,700 8,922
* Varta AG 15,480 2,941
Viag AG 23,500 9,267
* Wurtt Metallwaren 6,900 1,560
-------------
GROUP TOTAL 65,151
-------------
- ------------------------------------------------------------------
GREECE (1.3%)
* Aegek SA 160,800 3,573
Alpha Credit Bank 40,300 2,237
Ergo Bank 44,210 2,034
Hellenic Bottling Co. (Bearer) 111,150 3,300
* Petzetakis SA 432,900 2,116
-------------
GROUP TOTAL 13,260
-------------
- ------------------------------------------------------------------
HONG KONG (3.6%)
China Light and Power 399,000 2,052
China Travel International 2,306,000 405
Citic Pacific Ltd. 608,000 1,528
Cross-Harbor Tunnel Co. 1,215,000 2,340
Great Eagle Holdings Ltd. 817,000 1,742
Guoco Group 143,000 667
Hang Seng Bank Ltd. 70 1
Henderson Land Development
Co. Ltd. 463,000 2,537
Hong Kong Aircraft 100,000 260
* Hong Kong Realty & Trust
Class A 2,465,000 3,950
Hong Kong Telecommunication
Ltd. 3,641,600 7,201
HSBC Holdings PLC 95,000 1,219
Hopewell Holdings Ltd. 1,667,000 1,411
Hutchison Whampoa Ltd. 260,000 1,257
Hysan Development Co., Ltd. 931,000 2,130
Johnson Electric Holdings 830,000 1,673
New World Development Co.,
Ltd. 312,000 1,038
Orient Overseas Holdings 197,641 91
Peregrine Investment Holdings 337,000 479
Sun Hung Kai Properties Ltd. 93,700 693
Tai Cheung Properties 854,502 751
Television Broadcasts Ltd. 313,000 1,100
Varitronix International 498,000 872
Wharf Holdings Ltd. 169,800 554
-------------
GROUP TOTAL 35,951
-------------
- ------------------------------------------------------------------
INDONESIA (1.6%)
Astra International (Foreign) 695,000 1,232
Bank Dagang Nasional Indonesia 443,000 775
Bank Internasional Indonesia
(Foreign) 542,500 1,674
Hanjaya Mendala Sampoerna
(Foreign) 393,750 3,093
Indah Kiat Pulp & Paper Corp. 1,156,600 1,661
Indosat (Foreign) 262,000 994
* Indofood (Foreign) 246,000 1,060
* Inti Indorayon Otama (Foreign) 545,000 1,125
Inti Indorayon Otama ADR 38,000 235
Indocement (Foreign) 116,000 456
Kalbe Farma (Foreign) 353,000 1,616
Matahari Putra Prima 406,500 648
Tjiwi Kimia (Foreign) 634,500 1,274
Unilever Indonesia (Foreign) 27,400 406
-------------
GROUP TOTAL 16,249
-------------
- ------------------------------------------------------------------
IRELAND (1.1%)
Allied Irish Banks 343,864 1,621
Bank of Ireland Stock (Dublin) 346,200 1,966
CRH PLC 263,600 1,760
Greencore PLC 249,000 1,875
Irish Life PLC 453,100 1,498
Jefferson Smurfit Group 879,800 2,650
-------------
GROUP TOTAL 11,370
-------------
- ------------------------------------------------------------------
ITALY (2.4%)
* Banca Toscana 1,072,400 2,362
* Breda Ernesto Finanziaria 3,759,600 0
Franco Tosi SPA 48,550 451
* Finmeccanica SPA 1,133,940 713
Istituto Bancario San Paolo SPA 619,600 3,355
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- ------------------------------------------------------------------
<S> <C> <C>
Magnetti Marelli 1,922,300 $ 3,643
Sirti SPA 768,900 5,683
Telecom Italia 2,792,640 7,544
-------------
GROUP TOTAL 23,751
-------------
- ------------------------------------------------------------------
JAPAN (26.3%)
AIDA Engineering Ltd. 431,000 2,929
Aoki Corp. 1,732,000 6,283
Best Denki 50,000 742
Brother Industries Ltd. 1,151,000 5,152
Calsonic Corp. 81,000 550
Chudenko Corp. 31,500 1,247
Chugoku Electric Power Co. 180,500 4,932
Citizen Watch Co. 248,000 1,534
Daido Steel Co. 955,000 4,499
Daiichi Pharmaceutical Co., Ltd. 223,000 3,257
Danto Corp. 40,000 532
Fuji Photo Film Co., Ltd. 294,000 6,960
Fujisawa Pharmaceutical 242,000 2,531
Fujita Corp. 343,000 1,612
Fukusuke Corp. 36,000 165
Hazama Corp. 766,000 3,185
Hitachi Cable Ltd. 303,000 1,970
Hitachi Maxwell 164,000 2,299
Hokkaido Electric Power 116,400 3,126
Hokuriku Electric Power 126,800 3,360
House Foods Industrial Co., Ltd. 546,000 11,447
Itoham Food Co., Ltd. 381,000 2,917
Japan Synthetic Rubber 194,000 983
Kandenko Co. 67,000 915
Kirin Brewery Co., Ltd. 1,000 11
Kokuyo Co., Ltd. 8,000 179
Kyowa Hakko Kogyo 499,000 4,820
Kyushu Electric Power 266,800 7,196
Kyudenko Corp. 172,000 2,391
Marudai Food Co. 576,000 3,847
Marui Co. 228,000 3,625
Maruichi Steel Tube 111,000 2,157
Maruetsu Inc. 27,000 227
Matsushita-Kotobuki Electric 98,000 1,916
Mitsubishi Material 1,434,000 6,418
NHK Spring Co. 224,000 934
New Japan Securities Co., Ltd. 1,485,000 6,437
Nichicon Corp. 510,000 6,127
Nintendo Co. 50,200 2,885
Nippon Credit Bank 104,000 514
Nippon Meat Packers, Inc. 241,000 3,520
Nippon Shokubai 44,000 388
Nishimatsu Construction 671,000 7,903
Nisshin Oil Mills 268,000 1,856
Nisshin Steel Co. 634,000 2,322
Nisshinbo Industries 424,000 3,341
NTN Corp. 1,122,000 6,608
Okumura Corp. 225,000 2,133
Ono Pharmaceutical Co., Ltd. 25,000 1,090
Onward Kashiyama Co. 1,239,000 16,783
Ricoh Co. 383,000 3,284
Royal Co. 128,000 1,779
Sankyo Co., Ltd. 500 12
Santen Pharmaceutical Co. Ltd. 25,000 663
Sega Enterprises 37,000 1,312
Sekisui House Ltd. 553,000 6,839
Shikoku Electric Power 17,800 495
Shiseido Co., Ltd. 166,000 1,867
Showa Electric Wire & Cable 70,000 298
SXL Corp. 38,000 408
* Sumitomo Metal Industries 2,380,000 6,195
Sumitomo Forestry 51,000 823
Sumitomo Warehouse 228,000 1,378
TDK Corp. 63,000 2,864
Taisei Construction Corp. 834,000 4,921
Takeda Chemical Industries 594,000 7,836
Takasago Thermal Engineering 119,000 1,864
Takuma Co., Ltd. 76,000 705
Teikoku Oil Co., Ltd. 266,000 1,567
Tokyo Sowa Bank 284,000 1,388
Toho Co., Ltd. 9,000 1,495
Tohoku Electric Power 186,600 5,165
Tokyo Steel Manufacturing 212,000 3,621
Tokyo Tanabe Co., Ltd. 12,000 85
Tokyo Style Co. 299,000 4,508
Tokyu Construction 595,000 3,049
Toppan Printing Co. 479,000 6,263
Toyoda Automatic Loom Works 118,000 2,127
Uny Co. 116,000 1,858
Wacoal Corp. 1,023,000 12,652
Yamatake-Honeywell 397,000 5,144
The Yasuda Trust and Banking
Co., Ltd. 689,000 4,504
Yokohama Rubber Co. 126,000 671
-------------
GROUP TOTAL 266,395
-------------
- ------------------------------------------------------------------
MALAYSIA (2.3%)
AMMB Holdings Bhd. 81,000 963
Arab Malaysia Corp. 575,000 2,052
* Berjuntai Tin 199,000 857
Genting Bhd. 229,500 2,269
Hong Leong Industries Bhd. 193,000 1,203
* Industrial Oxygen Inc. Bhd. 825,000 1,083
Land and General Bhd. 561,000 1,875
Malayan Banking Bhd. 63,000 499
Malaysia Mining Co. 1,395,000 2,525
Malaysian Airlines System Bhd. 157,000 531
</TABLE>
13
<PAGE> 14
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- ------------------------------------------------------------------
<S> <C> <C>
Malaysian International
Shipping Corp. Bhd. (Foreign) 530,666 $ 1,556
Malaysian Tobacco 754,000 1,237
Resorts World Bhd. 171,000 1,003
Sungei Way Holdings 427,000 1,743
Tractors Malaysia Holdings 1,120,000 1,681
* Uniphone Telecommunications
Warrants Exp. 9/7/99 121,500 62
United Engineers Bhd. 196,000 1,246
Westmont Bhd. 227,000 1,127
-------------
GROUP TOTAL 23,512
-------------
- ------------------------------------------------------------------
MEXICO (.6%)
Cementos Mexicanos SA Class B 289,237 1,040
Cifra C SA 866,600 1,132
* Grupo Carso Series A-1 216,600 1,183
* Grupo Sidek B 583,400 522
Kimberly Clark Class A 104,200 1,195
Telefonos de Mexico L 818,400 1,205
-------------
GROUP TOTAL 6,277
-------------
- ------------------------------------------------------------------
NETHERLANDS (9.2%)
ABN AMRO Holding NV 224,000 8,639
Aegon 303,035 10,476
Ahrend Groep CVA 1,000 132
Amev NV 161,600 8,807
Cap Volmac Group 70,000 1,065
DSM 80,400 6,923
Getronics NV 17,000 832
Grolsch NV 56,000 1,965
Heineken NV 36,300 5,490
Hollandsche Beton Groep NV 7,600 1,309
Hoogovens & Staalf 129,200 5,133
* Internatio-Muller NV 6,900 492
Internationale Nederlanden Groep 159,500 8,816
Kon Bijenkorf 5,000 359
* Koninklijke Van Ommeren NV 14,000 432
Royal Dutch Petroleum 65,000 7,932
Telegraaf Holdings 59,600 7,265
Unilever NV 122,170 16,074
Volker Stevin CVA 13,500 871
-------------
GROUP TOTAL 93,012
-------------
- ------------------------------------------------------------------
NEW ZEALAND (.5%)
* Brierley Investment 619,000 467
Lion Nathan 1,367,700 2,705
Telecom Corp. of New Zealand 475,400 1,779
-------------
GROUP TOTAL 4,951
-------------
- ------------------------------------------------------------------
NORWAY (.8%)
Kvaerner AS A 13,000 595
Norsk Hydro 170,400 7,117
-------------
GROUP TOTAL 7,712
-------------
- ------------------------------------------------------------------
PHILIPPINES (1.3%)
Ayala Corp 'B' 1,427,440 1,567
Engineering Equipment 8,870,000 703
JG Summit Holdings Inc. B 4,151,600 1,205
Manila Electric B 156,150 1,255
Metro Pacific A Corp. 3,932,000 486
Metropolitan Bank & Trust Co. 20,837 454
Petron Corp. 1,535,000 993
* Philex Mining Corp. B 3,807,000 545
Philippine Long Distance
Telephone Co. 32,480 2,325
Philippine National Bank
Class B 46,600 557
RFM Corp. 1,514,000 398
San Miguel Corp. B 415,220 1,726
* SM Prime Holdings 4,105,400 1,127
-------------
GROUP TOTAL 13,341
-------------
- ------------------------------------------------------------------
PORTUGAL (1.1%)
Banco Totta & Acores 83,800 1,774
Banco Portugues Investentos 75,400 1,316
Cimentos de Portugal 95,640 1,555
* Portugal Telecom SA 145,182 2,777
Soares Da Costa Rfd. 109,800 1,948
* Sonae Industries 124,900 1,705
-------------
GROUP TOTAL 11,075
-------------
- ------------------------------------------------------------------
SINGAPORE (1.6%)
Asia Pacific Breweries Ltd. 18,000 105
City Development Ltd. 235,307 1,440
Cycle & Carriage Ltd. 174,000 1,556
Dairy Farm International
Holding Ltd. 558,000 480
Fraser & Neave Ltd. 91,000 1,048
Inchcape Bhd. 130,000 424
Jardine Strategic 651,000 2,096
Keppel Corp. 137,000 1,118
Overseas Union Bank 299,000 1,883
Rothmans Industries Ltd. 284,000 1,544
Singapore Press Holdings
Ltd. (Foreign) 73,200 1,095
Singapore Technologies
Industries 1,003,000 1,522
Straits Steamship Land Ltd. 447,000 1,548
-------------
GROUP TOTAL 15,859
-------------
- ------------------------------------------------------------------
SPAIN (5.7%)
Acerinox SA 5,000 614
Autopistas Del Mare Nostrum 438,300 5,248
Banco Santander 144,200 5,686
Banco Popular Espanol 26,800 3,984
Banco Central Hispanoamericano 242,213 5,131
Banco Bilbao Vizcaya 221,908 6,405
Dragados y Construcciones SA 51,200 744
Fuerzas Electrica 1,155,900 6,720
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- ------------------------------------------------------------------
<S> <C> <C>
Iberdrola SA 878,100 $ 6,614
Sevillana de Electricidad Cia 1,390,600 8,556
Tabacalera SA 19,000 711
Union Electrica Fenosa 1,613,500 7,568
-------------
GROUP TOTAL 57,981
-------------
- ------------------------------------------------------------------
SWEDEN (.7%)
Electrolux Series B 22,100 1,005
Hennes & Mauritz Series B 24,300 1,422
Incentive AB Series 'B' 19,300 777
Mo och Domsjo AB Series B 36,200 2,086
Svenska Cell Series B 58,000 1,075
Svenska Handelsbanken, Inc.
Series A 72,700 1,083
-------------
GROUP TOTAL 7,448
-------------
- ------------------------------------------------------------------
SWITZERLAND (6.0%)
Baer Holdings 2,610 3,058
BBC Brown Boveri AG A (Bearer) 7,120 7,367
CS Holdings (Registered) 47,025 4,306
Elektrowatt AG (Bearer) 22,920 6,585
Holderbank Financiere Glarus
AG (Bearer) 11,670 9,572
* Holderbank Financiere Warrants
Exp. 12/20/95 68,050 92
Magazine Zum Globus Inhaber
(Registered) 1,500 1,081
Schindler Holdings AG 200 1,146
Societe Generale de Surveillance
Holdings SA (Bearer) 5,000 8,680
Swiss Bank Corp. (Bearer) 25,810 9,140
* Swissair Inhaber (Registered) 5,200 3,597
Winterthur (Bearer) 9,080 5,548
* Winterthur Rights Exp. 7/5/95 9,080 65
-------------
GROUP TOTAL 60,237
-------------
- ------------------------------------------------------------------
THAILAND (1.4%)
Advanced Info Service Ltd. 31,000 460
American Standard Sanitaryware
(Foreign) 18,150 297
Ban-Pu Coal Co., Ltd. (Foreign) 16,000 379
Bangkok Bank Public Co. Ltd. 208,000 2,292
Dhana Siam Finance & Securities
Co. Ltd. (Foreign) 226,000 1,337
Land and House Co., Ltd.
(Foreign) 26,000 548
Shinawatra Computer &
Communications Co., Ltd.
(Foreign) 61,100 1,451
Siam Cement Co., Ltd.
(Foreign) 26,600 1,699
Siam Commercial Bank Ltd. 49,400 472
Siam Pulp & Paper (Foreign) 251,100 834
TPI Polene Co., Ltd. (Foreign) 87,500 592
Thai Farmers Bank Ltd. (Foreign) 80,800 773
* Thai Plastic Chemical Co.,
Ltd. (Foreign) 187,850 1,522
Thai Telephone and Telecom
(Foreign) 62,500 512
United Communication
Industry (Foreign) 34,600 522
-------------
GROUP TOTAL 13,690
-------------
- ------------------------------------------------------------------
TURKEY (1.7%)
Akbank Turkery 6,992,792 1,780
Alarko Holdings 1,469,682 1,297
* Arcelik 5,630,528 1,720
Brisa Bridgestone 6,138,500 2,083
Cimsa Cemento 3,015,500 2,149
* EGE Biracilik 1,524,560 1,794
* Koc Holding 1,575,140 1,550
Migros 1,219,200 1,365
* Migros Rights Exp. 8/1/95 609,600 669
Netas 5,782,950 1,995
* Tofas-Turk Otomobil Fabrikasi
AS 1,146,000 1,011
-------------
GROUP TOTAL 17,413
-------------
- ------------------------------------------------------------------
UNITED KINGDOM (8.8%)
Anglian Water 100,300 799
Arjo Wiggins Appleton PLC 213,700 874
BTR PLC 554,600 2,819
Caradon PLC 234,800 882
Charter Consolidated
(Registered) 343,600 4,963
Coats Viyella PLC 1,313,300 3,886
Cobham PLC 225,000 1,362
Commercial Union 689,900 6,420
East Midlands Electric 268,664 2,740
Eastern Group 783,900 8,100
General Accident PLC 401,400 3,678
Greenalls Group 168,580 1,301
Harrison and Crosfield 257,100 579
Hazlewood Foods 575,525 971
Lloyds Abbey Life 425,500 2,647
Manweb PLC 108,200 1,135
Marley 178,900 329
Midlands Electric 126,800 1,271
North West Water Group 225,800 1,994
Northern Electricity PLC 347,720 4,389
Northumbrian Water 59,100 874
Norweb PLC 110,500 1,190
Peninsular & Orient Steam
Navigation Co. 556,800 5,124
Pentland Group 334,800 687
* Powell Duffryn 75,000 649
Rothmans International Units 312,300 3,060
Royal Insurance Holdings 302,800 1,488
</TABLE>
15
<PAGE> 16
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- ------------------------------------------------------------------
<S> <C> <C>
Severn Trent Water PLC 110,200 $ 952
Slough Estates PLC 341,500 1,203
Smithkline Beecham PLC Class A 118,800 1,075
South Wales Electricity 108,100 1,199
South West Water 244,400 1,934
Southern Water 207,500 1,989
Sun Alliance Group 1,138,300 6,084
Thames Water PLC 269,100 2,036
Vsel Consortium PLC 46,600 1,580
Williams Holdings PLC 454,000 2,279
Willis Corroon PLC 221,100 528
* Yorkshire Electric 287,900 3,160
Yorkshire Water 75,700 694
-------------
GROUP TOTAL 88,924
-------------
- ------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $830,591) 984,122
- ------------------------------------------------------------------
TEMPORARY CASH INVESTMENT (3.5%)
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Face
Amount
(000)
--------
<S> <C>
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account 6.13%, 7/3/95
(Cost $35,278) $35,278 35,278
- ------------------------------------------------------------------
TOTAL INVESTMENTS (100.7%)
(Cost $865,869) 1,019,400
- ------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-.7%)
- ------------------------------------------------------------------
Other Assets--Notes C and E 120,339
Liabilities--Note E (127,859)
-------------
(7,520)
- ------------------------------------------------------------------
NET ASSETS (100%)
- ------------------------------------------------------------------
Applicable to 31,623,440 outstanding
shares of beneficial interest
(unlimited authorization) $1,011,880
- ------------------------------------------------------------------
NET ASSET VALUE PER SHARE $32.00
==================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
AT JUNE 30, 1995, NET ASSETS CONSISTED OF:
- ------------------------------------------------------------------
Amount Per
(000) Share
----------- ------
<S> <C> <C>
Paid in Capital $ 829,325 $26.23
Undistributed Net
Investment Income 2,326 .07
Accumulated Net Realized Gains 26,698 .84
Unrealized Appreciation
of Investments--Note D 153,531 4.86
- ------------------------------------------------------------------
NET ASSETS $1,011,880 $32.00
- ------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
U.S. INTERNATIONAL
PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, 1995 June 30, 1995
(000) (000)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends(1) . . . . . . . . . . . . . . . . . $ 1,221 $15,008
Interest . . . . . . . . . . . . . . . . . . . 78 1,075
- -------------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . . . 1,299 16,083
- -------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B . . . . . . . . 117 577
The Vanguard Group--Note C . . . . . . . . . . .
Management and Administrative . . . . . . . . $61 $780
Marketing and Distribution . . . . . . . . . . 11 72 99 879
--- ----
Taxes (other than income taxes) . . . . . . . . 10 90
Custodians' Fees . . . . . . . . . . . . . . . . 12 355
Auditing Fees . . . . . . . . . . . . . . . . . 4 5
Shareholders' Reports . . . . . . . . . . . . . 5 35
Annual Meeting and Proxy Costs . . . . . . . . . 1 7
Trustees' Fees and Expenses . . . . . . . . . . -- 2
- -------------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . . . 221 1,950
- -------------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . . . 1,078 14,133
- -------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN ON INVESTMENT
SECURITIES SOLD . . . . . . . . . . . . . . . . . 4,678 26,658
- -------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENT SECURITIES . . . . . 13,425 (6,934)
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations . . . . . . . . . . . $19,181 $33,857
===================================================================================================================
</TABLE>
(1) Dividends for the International Portfolio are net of foreign withholding
taxes of $2,238,000.
17
<PAGE> 18
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. PORTFOLIO INTERNATIONAL PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED Year Ended SIX MONTHS ENDED Year Ended
JUNE 30, 1995 December 31, 1994 JUNE 30, 1995 December 31, 1994
(000) (000) (000) (000)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . $ 1,078 $ 1,409 $ 14,133 $ 18,821
Realized Net Gain (Loss) . . . . . . . . . 4,678 (1,747) 26,658 48,027
Change in Unrealized
Appreciation (Depreciation) . . . . . . 13,425 (5,504) (6,934) (17,417)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in
Net Assets Resulting
from Operations . . . . . . . . 19,181 (5,842) 33,857 49,431
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . (1,019) (1,401) (12,184) (19,131)
Realized Net Gain . . . . . . . . . . . . -- (129) (5,359) (21,716)
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . (1,019) (1,530) (17,543) (40,847)
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued --Regular . . . . . . . . . . . 3,584 13,497 58,141 155,908
--In Lieu of
Cash Distributions . . . . . 930 1,340 16,478 38,823
--Exchange . . . . . . . . . . 4,884 33,652 41,543 192,662
Redeemed --Regular . . . . . . . . . . . (6,677) (15,728) (71,838) (198,824)
--Exchange . . . . . . . . . . (11,827) (31,355) (101,883) (126,363)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) from
Capital Share Transactions . . (9,106) 1,406 (57,559) 62,206
- -----------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) . . . . 9,056 (5,966) (41,245) 70,790
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . 112,778 118,744 1,053,125 982,335
- -----------------------------------------------------------------------------------------------------------------------------
End of Period (3) . . . . . . . . . . . . $121,834 $112,778 $1,011,880 $1,053,125
=============================================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . . . . $.28 $.34 $.38 $.56
Realized Net Gain . . . . . . . . . . -- $.03 $.17 $.63
- -----------------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . 271 1,527 3,169 10,643
Issued in Lieu of Cash Distributions . 29 45 522 1,222
Redeemed . . . . . . . . . . . . . . . (591) (1,570) (5,525) (10,051)
- -----------------------------------------------------------------------------------------------------------------------------
(291) 2 (1,834) 1,814
- -----------------------------------------------------------------------------------------------------------------------------
(3) Undistributed Net
Investment Income . . . . . . . . . $ 73 $ 14 $ 2,326 $ 377
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
SIX MONTHS ENDED -----------------------------------------------------
For a Share Outstanding Throughout Each Period JUNE 30, 1995 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . $29.09 $30.65 $28.43 $28.20 $22.90 $26.15
------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . .30 .34 .43 .68 .71 1.02
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . 4.87 (1.53) 4.38 1.08 5.30 (3.19)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . . 5.17 (1.19) 4.81 1.76 6.01 (2.17)
- ---------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . (.28) (.34) (.43) (.67) (.71) (1.08)
Distributions from Realized Capital Gains -- (.03) (2.16) (.86) -- --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . . (.28) (.37) (2.59) (1.53) (.71) (1.08)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . $33.98 $29.09 $30.65 $28.43 $28.20 $22.90
===========================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . +17.82% -3.91% +17.24% +6.45% +26.57% -8.33%
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . $122 $113 $119 $68 $115 $100
Ratio of Expenses to Average Net Assets . . . .43%* .73% .90% .65% .44% .52%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . 1.85%* 1.14% 1.43% 2.33% 2.67% 4.18%
Portfolio Turnover Rate . . . . . . . . . . . 115%* 151% 139% 209% 84% 81%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
19
<PAGE> 20
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
SIX MONTHS ENDED -----------------------------------------------------
For a Share Outstanding Throughout Each Period JUNE 30, 1995 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . $31.48 $31.04 $24.44 $27.78 $26.58 $32.44
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . .44 .55 .50 .66 .78 1.02
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . .63 1.08 6.91 (3.05) 1.80 (4.92)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . . 1.07 1.63 7.41 (2.39) 2.58 (3.90)
- ---------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . (.38) (.56) (.81) (.67) (.77) (.95)
Distributions from Realized Capital Gains (.17) (.63) -- (.28) (.61) (1.01)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . . (.55) (1.19) (.81) (.95) (1.38) (1.96)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . $32.00 $31.48 $31.04 $24.44 $27.78 $26.58
===========================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . +3.41% +5.25% +30.49% -8.72% +9.96% -12.26%
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . $1,012 $1,053 $982 $678 $878 $796
Ratio of Expenses to Average Net Assets . . . .38%* .34% .40% .42% .38% .44%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . 2.75%* 1.71% 1.76% 2.48% 2.87% 3.62%
Portfolio Turnover Rate . . . . . . . . . . . 43%* 40% 39% 51% 46% 18%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
20
<PAGE> 21
Notes To Financial Statements
Vanguard/Trustees' Equity Fund is registered under the Investment Company Act
of 1940 as a diversified open-end investment company and consists of the U.S.
and International Portfolios. The International Portfolio invests in securities
of foreign issuers which may subject the Portfolio to investment risks not
normally associated with investing in securities of United States corporations.
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
statements.
1. SECURITY VALUATION: Market values for securities listed on U.S. exchanges
are based upon the latest quoted sales prices for such securities on the
appropriate exchange 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. Securities
listed on foreign exchanges are valued at the latest quoted sales prices.
Securities not listed are valued at the latest quoted bid prices.
Temporary cash investments are valued at cost which approximates market
value. Foreign currency amounts are converted into U.S. dollars at the bid
prices of such currencies against U.S. dollars last quoted by major banks
as of 4:00 PM London Time.
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 Fund, along with other members of The Vanguard
Group of Investment Companies, transfers 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 collateral for repurchase agreements are held by the Fund's
custodian banks until maturity of each repurchase agreement. Provisions of
each agreement require that the market value of this collateral is
sufficient in the event of default; however, in the event of default or
bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.
4. DISTRIBUTIONS: Distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined on a tax basis and may
differ from net investment income and realized capital gains for financial
reporting purposes.
5. OTHER: Dividend income is recorded on the ex-dividend date. Security
transactions are accounted for on the date the securities are purchased or
sold. Costs used in determining realized gains and losses are those of
specific securities sold. The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the portion arising from changes in market prices of
securities. Such fluctuations are included in net realized gain (loss) and
unrealized appreciation (depreciation) on investments.
B. Under the terms of a contract which expires March 31, 1996, the U.S.
Portfolio pays Geewax, Terker & Company an investment advisory fee which
represents a percentage rate of average net assets of the Portfolio adjusted
for the investment performance of the Portfolio relative to that of the
Standard & Poor's 500 Composite Stock Price Index. For the six months ended
June 30, 1995, the investment advisory fee of the U.S. Portfolio represented
an effective annual rate of .20 of 1% of average net assets.
Under the terms of a contract which expires January 4, 1997, the International
Portfolio pays Batterymarch Financial Management, Inc. an investment advisory
fee calculated at an annual percentage rate of average net assets of the
Portfolio. For the six months ended June 30, 1995, the investment advisory fee
of the International Portfolio represented an effective annual rate of .11 of
1% of average net assets.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (continued)
C. The Vanguard Group, Inc. furnishes at cost corporate management,
administrative, marketing, and distribution services. The costs of such
services are allocated to the Fund under methods approved by the Board of
Trustees. At June 30, 1995, the Fund had contributed capital of $158,000 to
Vanguard (included in Other Assets), representing .8% of Vanguard's
capitalization. The Fund's trustees and officers are also directors and
officers of Vanguard.
D. During the six months ended June 30, 1995, purchases and sales of
investment securities other than U.S. Government securities and temporary cash
investments were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
(000)
---------------------------------
Portfolio Purchases Sales
- -------------------------------------------------------------------------------------
<S> <C> <C>
U.S. $ 65,071 $ 74,629
- -------------------------------------------------------------------------------------
INTERNATIONAL 214,463 287,941
- -------------------------------------------------------------------------------------
</TABLE>
At December 31, 1994, the U.S. Portfolio had available realized capital losses
of $1,747,000 to offset future net capital gains of $932,000 through December
31, 2002, and $815,000 through December 31, 2003.
At June 30, 1995, unrealized appreciation for financial reporting and Federal
income tax purposes was:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
(000)
----------------------------------------------------
Net
Appreciated Depreciated Unrealized
Portfolio Securities Securities Appreciation
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. $ 21,582 $ (829) $ 20,753
- -------------------------------------------------------------------------------------
INTERNATIONAL 198,496 (44,965) 153,531
- -------------------------------------------------------------------------------------
</TABLE>
E. The market value of International Portfolio securities on loan to
broker/dealers at June 30, 1995, was $91,082,000 for which the Portfolio had
received cash collateral of $99,445,000.
Security loans are required to be secured at all times by collateral at least
equal to the market value of securities loaned; however, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.
22
<PAGE> 23
TRUSTEES AND OFFICERS
JOHN C. BOGLE, Chairman and Chief Executive Officer
Chairman and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
JOHN J. BRENNAN, President
President and Director of The Vanguard Group, Inc.,
and of each of the investment companies in The Vanguard Group.
ROBERT E. CAWTHORN, Chairman of Rhone-Poulenc
Rorer, Inc.; Director of Sun Company, Inc.
BARBARA BARNES HAUPTFUHRER, Director of The Great
Atlantic and Pacific Tea Company, Alco Standard Corp.,
Raytheon Company, Knight-Ridder, Inc., and
Massachusetts Mutual Life Insurance Co.
BRUCE K. MACLAURY, President of The Brookings
Institution; Director of American Express Bank Ltd.,
The St. Paul Companies, Inc., and Scott Paper Company.
BURTON G. MALKIEL, Chemical Bank Chairman's
Professor of Economics, Princeton University; Director
of Prudential Insurance Co. of America, Amdahl
Corporation, Baker Fentress & Co., The Jeffrey Co.,
and Southern New England Communications Company.
ALFRED M. RANKIN, JR., Chairman, President, and
Chief Executive Officer of NACCO Industries, Inc.;
Director of NACCO Industries, The BFGoodrich
Company, and The Standard Products Company.
JOHN C. SAWHILL, President and Chief Executive Officer
of The Nature Conservancy; formerly, Director and
Senior Partner of McKinsey & Co. and President of
New York University; Director of Pacific Gas and
Electric Company and NACCO Industries.
JAMES O. WELCH, JR., Retired Chairman of Nabisco
Brands, Inc.; retired Vice Chairman and Director of
RJR Nabisco; Director of TECO Energy, Inc. and
Kmart Corporation.
J. LAWRENCE WILSON, Chairman and Chief Executive Officer of Rohm & Haas
Company; Director of Cummins Engine Company; Trustee of Vanderbilt University
and the Culver Educational Foundation.
OTHER FUND OFFICERS
RICHARD F. HYLAND, Treasurer; Treasurer of The
Vanguard Group, Inc., and of each of the investment
companies in The Vanguard Group.
RAYMOND J. KLAPINSKY, Secretary; Senior Vice President
and Secretary of The Vanguard Group, Inc.; Secretary of
each of the investment companies in The Vanguard Group.
KAREN E. WEST, Controller; Vice President of The
Vanguard Group, Inc.; Controller of each of the
investment companies in The Vanguard Group.
OTHER VANGUARD GROUP OFFICERS
ROBERT A. DISTEFANO IAN A. MACKINNON
Senior Vice President Senior Vice President
Information Technology Fixed Income Group
JEREMY G. DUFFIELD F. WILLIAM MCNABB III
Senior Vice President Senior Vice President
Planning & Development Institutional
JAMES H. GATELY RALPH K. PACKARD
Senior Vice President Senior Vice President
Individual Investor Group Chief Financial Officer
23
<PAGE> 24
THE VANGUARD FAMILY OF FUNDS
FIXED INCOME FUNDS
MONEY MARKET FUNDS
Vanguard Admiral Funds
U.S. Treasury Money
Market Portfolio
Vanguard Money Market Reserves
TAX-EXEMPT MONEY MARKET FUNDS
Vanguard Municipal Bond Fund
Money Market Portfolio
Vanguard State Tax-Free Funds
Money Market Portfolios
(CA, NJ, OH, PA)
TAX-EXEMPT INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds
Insured Longer-Term Portfolios
(CA, FL, NJ, NY, OH, PA)
INCOME FUNDS
Vanguard Admiral Funds
Vanguard Fixed Income Securities Fund
Vanguard Preferred Stock Fund
EQUITY AND BALANCED FUNDS
GROWTH AND INCOME FUNDS
Vanguard Convertible
Securities Fund
Vanguard Equity Income Fund
Vanguard Quantitative Portfolios
Vanguard/Trustees' Equity Fund
U.S. Portfolio
Vanguard/Windsor Fund
Vanguard/Windsor II
BALANCED FUNDS
Vanguard Asset Allocation Fund
Vanguard LifeStrategy Funds
Income Portfolio
Conservative Growth Portfolio
Moderate Growth Portfolio
Growth Portfolio
Vanguard STAR Portfolio
Vanguard/Wellesley Income Fund
Vanguard/Wellington Fund
GROWTH FUNDS
Vanguard/Morgan Growth Fund
Vanguard/PRIMECAP Fund
Vanguard U.S. Growth Portfolio
AGGRESSIVE GROWTH FUNDS
Vanguard Explorer Fund
Vanguard Specialized Portfolios
INTERNATIONAL FUNDS
Vanguard International
Growth Portfolio
Vanguard/Trustees' Equity Fund
International Portfolio
INDEX FUNDS
Vanguard Index Trust
Total Stock Market Portfolio
500 Portfolio
Extended Market Portfolio
Growth Portfolio
Value Portfolio
Small Capitalization Stock Portfolio
Vanguard International Equity
Index Fund
European Portfolio
Pacific Portfolio
Emerging Markets Portfolio
Vanguard Bond Index Fund
Vanguard Tax-Managed Fund
Vanguard Balanced Index Fund
[THE VANGUARD GROUP LOGO]
Vanguard Financial Center Valley Forge, Pennsylvania 19482
New Account Information: Shareholder Account Services:
1-(800) 662-7447 1-(800) 662-2739
This Report has been prepared for shareholders and may be distributed to
others only if preceded or accompanied by a current prospectus. All Funds in
the Vanguard Family are offered by prospectus only.
Q252-6/95
[VANGUARD TRUSTEES' EQUITY FUND LOGO]
SEMI-ANNUAL REPORT
JUNE 30, 1995
