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Previous: PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND, N-30D, 1994-08-31 |
Next: AEP GENERATING CO /OH/, 35-CERT, 1994-08-31 |
<PAGE> 1
CHAIRMAN'S LETTER
FELLOW SHAREHOLDER:
Following their outstanding gains (+30% or more) in 1993, international equity
markets presented a sort of "mixed bag" during the six months ended June 30,
the first half of Vanguard International Equity Index Fund's 1994 fiscal year.
In this environment, the Pacific Index provided a solid gain, the European
Index edged lower, and the Emerging Markets Index was hit fairly hard.
Our two original Portfolios clearly reflected the trends in Europe and
the Pacific, and, once again, closely matched their target indexes. Our new
Emerging Markets Portfolio was spared the unpleasantness in its arena by virtue
of commencing operations in May, after the sharp decline in the emerging
markets early in 1994. This table presents the total return achieved by each
Portfolio through June 30, 1994, along with the comparable figures for the
respective unmanaged Morgan Stanley Capital International (MSCI) target
indexes:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------
Total Return
----------------
Six Months Ended
June 30, 1994
- - ----------------------------------------------------------
<S> <C>
VANGUARD EUROPEAN PORTFOLIO - 2.6%
MSCI EUROPE (FREE) INDEX - 2.5
- - ----------------------------------------------------------
VANGUARD PACIFIC PORTFOLIO + 19.2%
MSCI PACIFIC INDEX + 19.3
- - ----------------------------------------------------------
VANGUARD EMERGING MARKETS PORTFOLIO + 5.7%*
MSCI SELECT EMERGING MARKETS (FREE) INDEX + 1.9*
- - ----------------------------------------------------------
</TABLE>
* Since inception, May 4, 1994. This Portfolio earned a significant
margin over our Index standard during May, largely as a result of the
timing of initial cash inflow. During June, the Portfolio's return was
substantially the same as that of the Index.
The net asset values for each Portfolio at the beginning and end of the fiscal
period are shown in the table at the close of this letter. Since dividends from
net investment income are normally paid annually (at year end), any income
earned during the period is included in each Portfolio's net asset value.
* THE PERIOD IN REVIEW
With a single major exception (Japan), markets all over the world declined
during the first half of 1994. However, the declines were generally
substantially moderated for U.S. investors due to the weakness in the U.S.
dollar. When the dollar falls relative to a given country's currency, the
returns to U.S. investors in that country's stock market are enhanced. (And, to
be sure, a rising dollar reduces local currency returns.)
Since December 31, 1993, there has been considerable turmoil in the
world's currency markets. The dollar has dropped sharply, if not uniformly,
and, as in 1993, has in many instances overpowered local currency returns. This
table shows the currency impact thus far in 1994:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
Six Months Ended June 30, 1994
-----------------------------------------------------
Local Currency Currency U.S. Dollar
Return Impact Return
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES INDEX* - 3.4% 0.0% - 3.4%
EUROPEAN INDEX - 9.3 + 6.8 - 2.5
PACIFIC INDEX + 7.3 +12.0 + 19.3
EMERGING MARKETS INDEX + 20.5 -30.9 - 10.4
- - ------------------------------------------------------------------------------------------------
</TABLE>
* Standard & Poor's 500 Composite Stock Price Index.
It is not possible to categorize simply the major factors that affected
international markets during the past six months. Markets in each country stand
pretty much on their own, although all were importantly influenced by the
fluctuating value of the dollar, and all seem to have inflation under
reasonable control. In general, two broad trends remain in place: (1) the
European economies are generally weak, while the Japanese economy appears to be
gaining in strength; and (2) interest rates have risen in Europe, but remain
low in Japan. In all, broad portfolio diversification seems more important than
ever.
* THE VANGUARD PORTFOLIOS
As noted earlier in this letter, Vanguard's record of matching our target
indexes has been exemplary. To minimize fund transaction costs, we own in each
market a representative sampling of stocks, rather than all of them. Our Core
Management Group was successful in having these selected groups of stocks
mirror the indexes' returns. Our low portfolio turnover also minimizes cost,
and our 1% charge for new purchases of Fund shares provided a positive offset
to the costs we incurred in investing
1
<PAGE> 2
new capital flows. Of course, our low operating costs (0.32% of average net
assets) further helped to minimize the gap that would be expected between the
results of a "real-world" international portfolio and its "paper-world"
counterpart.
With the year now half over, we are "holding our own" or better
relative to actively managed (and expensive!) traditional funds. The total
return on our European Portfolio was -2.6%, close to the -1.0% return achieved
by the average European mutual fund; the total return on the Pacific Portfolio
was +19.2%, far ahead of the -9.1% return of the Pacific fund average. You will
recall that the competitive European funds hold portfolios that are similar to
ours in their diversification. However, our Pacific Portfolio is heavily
weighted in Japan (82% of assets, the same as the MSCI Pacific Index), while
the average Pacific fund has but a 32% representation in Japan. For this
reason, we did not "apologize" for our lagging return in 1993, and we promised
not to "brag" when the Japanese market does particularly well. So, despite our
good results so far this year, we shan't do so now.
* IN SUMMARY
We begin the second half of 1994 with little sign that the turbulence in
international stock and currency markets is abating. Given that forecasting
these trends with accuracy is impossible (even for the "experts," who are
having a bad year), and that foreign investing carries currency risk that is
not a factor in investing in U.S. markets by U.S. investors, we stick by our
recommendation that prudent investors should limit their international holdings
to no more than 20% of their equity position.
As always, the unexpected awaits us as we move into the second half of
1994. But we are confident that our index-oriented strategy will continue to
give a solid account of itself in our European and Pacific Portfolios, and that
our Emerging Markets Portfolio, off to a fine start, will, over time, do so as
well.
Sincerely,
/s/ JOHN C. BOGLE
- - ------------------
John C. Bogle
Chairman of the Board
July 26, 1994
Note: Mutual fund data from Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------
Net Asset Value Per Share
------------------------------------
December 31, 1993 June 30, 1994
- - -----------------------------------------------------------------------------
<S> <C> <C>
VANGUARD EUROPEAN PORTFOLIO* $11.88 $11.54
VANGUARD PACIFIC PORTFOLIO 10.13 12.08
VANGUARD EMERGING MARKETS PORTFOLIO 10.00** 10.57
- - -----------------------------------------------------------------------------
</TABLE>
* On March 22, 1994, the European Portfolio paid a "carryover" dividend
of $.03 per share from net investment income earned and not
distributed in 1993.
** Inception date, May 4, 1994.
We are pleased to have this opportunity to welcome the shareholders in our new
Emerging Markets Portfolio, whose assets have reached $30 million since
inception on May 4, 1994. This Portfolio is expected to have greater volatility
and risk than our two other Portfolios, and should, over time, provide higher
returns. Its expense ratio is expected to be 0.60%. The Portfolio also incurs
two transaction fees: 2% of the amount of each new purchase and 1% of the
amount of each redemption will be paid directly to the Portfolio. These fees
tend to be advantageous to long-term investors in the Portfolio and
disadvantageous to short-term investors.
2
<PAGE> 3
STATEMENT OF NET ASSETS FINANCIAL STATEMENTS (unaudited)
June 30, 1994
<TABLE>
<CAPTION>
Market
Value
EUROPEAN PORFOLIO Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (98.9%)
- - --------------------------------------------------------------------------------
AUSTRIA (1.0%)
* Austrian Airlines 2,378 $ 405
Bank Austria AG 1,460 59
Bank Austria AG Pfd. 950 51
BWT (Benck Wassertech) 360 52
Creditanstalt Bank 12,540 835
Creditanstalt Bank Pfd. 9,738 621
Ea-Generali AG 1,661 517
Lenzing 450 50
OEMV AG ATS 11,307 888
Oest Brau-Beteil 570 35
Oesterreicherische Wirtsc. Class A 15,405 878
Radex-Heraklith 1,220 50
Strabag Oesterreich 400 62
Universal-Bau 1,000 74
Veitsch-Fadex AG 1,660 52
Weinerberger Baustoffindustrie AG 862 284
* Z-Laenderbank Austria 14,642 1,397
-----------
GROUP TOTAL 6,310
-----------
- - --------------------------------------------------------------------------------
BELGIUM (2.3%)
* Acec Union Miniere NPV 8,168 650
AG Financiere 9,197 701
Bekaert Class B 1,537 1,124
Cimenteries Cbr Put Warrants Exp. 12/20/96 2,110 11
Cimenteries Cbr 1,050 394
Cimenteries Cbr Belgium NPV 1,060 399
Delhaize Freres 20,028 810
* Electrabel NPV 18,132 3,069
Electrabel-VVPR NPV 3,100 529
Generale de Banque NPV 4,560 1,125
Gevaert Photo Products NPV 2,650 722
Glaverbel 2,790 381
Group Bruxelles Lambert SA 3,250 405
Kredietbank AFV 1,000 199
Kredietbank NPV 2,038 403
Petrofina SA 6,660 2,048
Royale Belge 4,000 615
Royale Belge AFV-1 310 48
Solvay et Cie. SA 3,025 1,303
Tractebel 2,050 614
Tractebel Inv. Intl. Cap. NPV 120 35
-----------
GROUP TOTAL 15,585
-----------
- - --------------------------------------------------------------------------------
DENMARK (2.0%)
Carlsberg Series A 8,875 402
Carlsberg Series B Pfd. 8,449 383
Danisco 3,027 445
Danske Luftfart 70 50
Den Danske Bank AF 23,200 1,244
D/S 1912 B 280 1,380
D/S Svenborg 200 1,423
* East Asiatic Co. 22,600 649
FLS Industries Class B 3,548 300
GN Store Nord 750 65
* ISS (International Service Systems) 21,619 745
J Lauritzen Holding 2,965 598
Korn-Og Foderstof 290 56
NKT (Nordisk Kabel) 14,200 657
Novo-Nordisk Class B 7,166 734
Radiometer Class B 4,339 385
Sophus Berendsen Class A 3,483 312
Sophus Berendsen Class B 6,200 554
Superfos 8,330 552
* Teledanmark B 26,125 1,309
* Unidanmark AS Class B 25,677 922
-----------
GROUP TOTAL 13,165
-----------
- - --------------------------------------------------------------------------------
FINLAND (1.1%)
Amer Group A 1,520 35
Cultor Oy 1 1,850 43
Instrumentarium 1,840 38
* Kansallis Osake 79,000 164
Kesko 4,070 38
Kone Corp. B 3,478 360
Kymmene Corp. 52,354 1,133
Metra AB A 970 29
Metra Oy 17,128 503
Nokia AB 13,900 1,128
Nokia AB Oy Pfd. 3,600 295
Outokumpu A 55,500 901
Pohjola A 22,688 286
Pohjola B 3,600 40
Repola Oy 86,808 1,495
Sampo A 7,601 329
* Stockmann A 1,200 47
* Stockmann AB Oy (Free) 1,380 48
* Unitas A 60,000 143
-----------
GROUP TOTAL 7,055
-----------
- - --------------------------------------------------------------------------------
FRANCE (12.7%)
Accor 5,800 669
Air Liquide 10,423 1,403
Alcatel Alsthom 47,171 5,099
AXA 62,075 2,545
* Banque Nationale de Paris 54,454 2,316
Bic 1,625 351
Bongrain 60 32
Bouygues 7,939 842
BSN-Gervais Danone 29,678 4,261
Carrefour 8,580 2,829
Casino Guich-Perr 6,000 125
Casino (Etabl. Economique) 14,600 369
Chargeurs SA 1,665 398
</TABLE>
3
<PAGE> 4
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Club Mediterranee 4,260 $ 303
CMB Packaging 17,805 544
Compagnie Bancaire 6,796 610
Compagnie Financier de Suez 44,091 2,133
Compagnie Generale des Eaux 10,072 4,136
Comptoirs Modernes 2,392 566
Credit Foncier France 4,692 784
Credit National 4,222 382
Docks de France 3,630 424
Dollfus-Mieg & Cie. 5,900 427
Ecco 3,517 482
Elf Sanofi 3,122 488
Eridania Beghin Say 7,785 1,223
Essilor International 6,285 792
Eurafrance 2,142 765
* Europe 1 1,577 490
Finextel 21,600 491
Geophysique (Cie. Generale) 2,500 267
GTM Entrepose 3,800 295
Havas 9,006 700
Imetal 6,932 685
Lafarge-Coppee 21,838 1,626
Lagardere Group 20,770 463
Legrande (Bearer) 510 517
L'Oreal 23,285 4,557
LVMH Moet Hennessy 25,565 4,049
Lyonnaise des Eaux 11,834 1,078
Michelin Class B (Registered) 27,060 1,119
Moulinex 29,712 712
Nord Est SA 27,800 677
Paribas Compagnie Financiere 36,943 2,332
Parisienne de Reescompte 8,002 591
Pernod-Ricard 11,761 816
Peugeot Citroen SA 12,973 1,832
Pinault-Printemps SA 8,292 1,289
Promodes 9,415 1,462
Radiotechnique 4,752 415
* Rhone-Poulenc 72,733 1,650
Sagem 2,040 986
Saint Gobain 19,502 2,354
Saint-Louis 1,824 545
Salomon 970 337
Schneider SA 14,415 949
Simco Pfd. 203 18
Simco-Union Pout 4,125 385
* Skis Rossignol 140 50
Societe Generale de France 22,455 2,296
Societe National Elf Aquitaine 90,501 6,283
Societe Unibail 2,180 191
Sodexho 1,550 264
Sommer Allibert 2,950 995
Sovac-Credit Mobilier 7,560 737
S.E.F.I.M.E.G. 3,350 270
Thomson-C.S.F. 36,475 1,029
Total SA 68,546 3,932
Union Immobilier 320 31
-----------
GROUP TOTAL 85,063
-----------
- - --------------------------------------------------------------------------------
GERMANY (14.2%)
Aachener & Muenchener (Bearer) 444 383
Aachener & Muenchener Beteiligungs (Registered) 1,250 1,023
AGIV AG Industrie & Verkehr 820 282
AGIV AG Industrie & Verkehr Rfd. 117 39
Allianz AG Holdings 7,101 10,455
Allianz AG Holdings Rfd. 466 687
Asko Deutsche Kaufhaus AG 2,000 1,279
BASF AG 23,350 4,515
Bayer AG 22,050 4,763
Bayer Vereins Bank 7,453 2,084
Bayerische Hypotheken und Wechsel Bank 3,939 1,025
Beiersdorf AG 1,500 868
Bilfinger & Berger 912 440
Brau & Brunnen AG 1,350 362
* Bremer Vulk Schiff 6,033 337
Colonia Konzern AG 1,200 914
Colonia Konzern VZA 1,050 586
* Continental AG 2,200 339
* Daimler Benz 17,170 7,806
Degussa AG 1,692 508
Deutsche Bank AG 17,220 7,386
* Didier 460 47
DLW 140 41
Douglas Holding 962 305
Dresdner Bank AG 14,026 3,295
Dyckerhoff AG 650 279
Dyckerhoff VZA 990 340
* Fag Kugelfischer STA 250 37
Heidelberger Zement 650 498
Herlitz STA 1,000 228
Herlitz VZA 1,815 355
Hochtief 1,680 1,074
Holsten-Brauerei 150 47
Industrie-Werke Karlsruhe 150 35
Karstadt AG 2,300 823
Kaufhof AG 2,090 660
Kaufhof AG Pfd. 1,250 301
* Klockner-Humbolt-Deutz 4,500 411
Linde AG 1,170 669
Linotype AG 950 207
* Lufthansa 10,650 1,229
* Lufthansa VZA 400 45
Man AG 1,875 463
Man Vorzug AG 2,050 397
Mannesmann AG 9,065 2,265
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Mannesmann AG Rfd. 1,114 $ 279
Munchener Ruckver 2,000 3,593
Munchener Ruckver STA 20 34
Preussag AG 3,480 975
* PWA Papierwerke Waldhof 3,300 482
Rheinisch-Westfaelisches
Elektrizitaetswerk AG 18,375 4,770
Rheinisch-Westfaelisches
Elektrizitaetswerk AG Pfd. 7,818 1,665
Rheinmetall Berlin 1,900 353
Salamander 430 104
Sap AG 327 687
Sap AG VZA 444 878
Schering AG 1,210 721
Siemens AG 19,780 8,012
Strabag Bau AG 1,293 395
Strabag Bau AG Pfd. 143 34
Thyssen AG 7,710 1,389
Veba AG 18,683 5,840
Viag AG 5,551 1,615
Viag AG Rfd. 555 157
Volkswagen AG 6,750 1,991
Volkswagenwerke AG 1,850 426
-----------
GROUP TOTAL 94,532
-----------
- - --------------------------------------------------------------------------------
IRELAND (.5%)
Allied Irish Bank 179,900 648
CRH PLC 79,200 390
FYFFES 33,330 45
Greencore 25,000 126
Independent News 175,263 743
Irish Life 93,700 267
Jefferson Smurfit Group 182,200 924
Kerry Group 7,560 34
* Waterford Wedgewood 520,880 418
Woodchester Invest 9,100 15
-----------
GROUP TOTAL 3,610
-----------
- - --------------------------------------------------------------------------------
ITALY (5.2%)
Alitalia Linee 41,220 27
Alitalia Linee Priv 683,496 336
Assicurazioni Generali 267,980 6,864
Banca Commerciale Italiana Risp. 336,000 967
Banca Nazionale dell' Agricoltura 176,925 335
Banca Nazionale dell' Agricoltura Pfd. 545,637 488
Banco Ambrosiano Veneto 131,255 361
Banco Ambrosiano Veneto Risp. 23,920 40
* Benetton Group SPA 54,000 788
* Burgo (Cartiere) SPA 84,100 519
Cementir SPA 32,680 45
Cogefar Impresit 40,000 56
Credito Italiano 692,380 890
* Dalmine 1,000,000 284
* Danieli & Co. 6,090 43
Edison SPA 119,000 564
Falck, Acc & Fer 30,000 88
* Fiat SPA 663,500 2,659
* Fiat SPA Pfd. 206,000 511
* Fiat SPA Risp. 60,000 143
Fidis 132,500 472
* Fin Cirio Bertolli 92,945 61
Franco Tosi SPA 24,100 287
Gilardini 263,500 706
Istituto Bancario San Paolo Ditorino SPA 246,000 1,513
Italcable 92,543 547
Italcable Svg 6,030 29
Italcementi 46,057 356
Italcementi Svg N/CVT 170,635 726
Italgas 119,750 397
La Previdente 4,000 37
Lane Marzotto 6,800 46
Mediobanca Banca di Credito Finanziar 157,000 1,443
* Montedison Risp. 260,000 196
* Montedison SPA 574,274 528
Olivetti & Cie. 272,250 407
Parmalat SPA 136,000 181
Pirelli SPA 307,000 478
RAS 54,550 864
RAS Risp. 36,000 348
Rinascente 127,062 795
* Saffa 11,790 42
SAI 53,730 681
SAI Risp. 18,000 119
Saipem 121,500 307
Sasib 7,960 38
SIP 1,761,063 4,373
SIP di Risp. 489,072 1,014
Sirti SPA 92,690 682
SME Meridonale Finanziaria 92,945 234
* SNIA 629,000 971
-----------
GROUP TOTAL 34,886
-----------
- - --------------------------------------------------------------------------------
NETHERLANDS (6.8%)
ABN AMRO Holding NV 87,874 2,893
Ahold NV 41,070 1,026
Akzo NV 18,700 1,997
Assur Con Stad Rotte 9,180 199
Elsevier NV 15,520 1,318
Getronics NV 13,579 331
Heineken NV 8,493 1,023
Hollandsche Beton 210 35
* Hoogovens & Staalf 16,984 680
IHC Caland 1,620 33
</TABLE>
5
<PAGE> 6
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
International Nederlanden Groep 75,391 $ 3,220
* KLM Royal Dutch Airlines 19,057 529
Koninklijke Knp BT NV 41,914 1,012
Nedlloyd Group NV 15,351 541
Oce Van Der Grinten 10,607 442
Philips Gloeilampenfabrieken NV (Non-Voting) 112,995 3,221
Royal Dutch Petroleum 185,872 19,492
Royal Pakhoed Holdings 13,180 326
Stork VMF 14,373 355
Unilever NV 60,707 6,159
Wolters Kluwer 13,919 815
-----------
GROUP TOTAL 45,647
-----------
- - --------------------------------------------------------------------------------
NORWAY (.7%)
Aker Free 15,723 186
Bergesen Series A 24,616 566
Bergesen Series B 16,236 376
Dyno Industrier AS 21,896 507
Hafslund Nycomed Series A Free 16,258 282
Hafslund Nycomed Series B Free 16,018 268
Kvaerner Industries A Free 4,000 165
Kvaerner Industries B Free 3,000 121
Leif Hoegh 9,000 121
Norsk Hydro 57,494 1,809
Orkla-Borregard 4,000 128
Orkla-Borregard B 1,580 48
Unitor 2,500 43
* Vard A 8,000 45
-----------
GROUP TOTAL 4,665
-----------
- - --------------------------------------------------------------------------------
SPAIN (3.8%)
Acerinox SA 7,516 757
* Aguila (El) SA 33,558 376
Alba 7,265 304
* Argentaria SA 41,000 1,589
Autopista Aces 46,727 431
Banco Bilbao Vizcaya 46,621 1,020
Banco Central Hispanoamericano 45,402 883
Banco de Santander 26,327 947
* Banesto Banco Espanole de Credito 40,751 288
Carburos Metalic 9,732 331
Catalana de Gas 6,252 496
Dragados y Construcciones SA 32,696 519
Ebro Agricolas 24,944 260
Empresa Nacional de Electricidad SA 67,309 3,013
ENCE 8,000 147
* Ercros 366,732 638
Fabric Auto Renault de Espana 9,013 507
Formento Construciones y Contra 6,908 724
Hidroelectrica Iberica Iberduero SA 140,963 997
Inmobiliaria 9,108 325
Inmobiliaria Metropolitana Vasco 1,401 50
Mapfre 16,521 631
Metal Duro Felguera 144,508 846
Portland Valde Rivas 3,848 310
Prosegur Compania 2,330 52
Repsol SA 80,737 2,319
* Sarrio Papelera 11,040 49
Tabacalera SA 20,206 517
Telefonica de Espana 272,768 3,669
Union Electrica Fenosa 47,737 233
Uralita 127,664 1,518
Vallehermoso SA 25,198 454
Viscofan Envoltura 1,560 39
Zardoya Otis SA 2,006 242
-----------
GROUP TOTAL 25,481
-----------
- - --------------------------------------------------------------------------------
SWEDEN (3.3%)
Aga AB 89,150 747
Aga AB Series B Free 9,000 72
Asea AB Series A Free 22,068 1,633
Asea AB Series B Free 9,500 709
Astra AB Series A 168,400 3,389
Astra AB Series B 33,830 663
Atlas Copco Series A Free 67,000 766
Atlas Copco Series B Free 2,900 34
Electrolux Series B Free 29,900 1,371
* Esselte AB Series A Free 3,160 42
* Esselte AB Series B Free 3,190 44
Euroc Industries Series A Free 2,280 37
* Frigoscandia AB Series A 17,830 71
* Frigoscandia AB Series B 1,800 7
Hennes & Mauritz Series B 11,888 590
S E Banken Series A 203,353 1,204
Securitas Series B Free 1,070 33
Skandia Free 33,072 464
Skanska Series B 32,758 634
* SKF AB Series A Free 11,140 189
* SKF AB Series B 5,400 95
Stora Kopparberg Series A 12,741 629
Stora Kopparberg Series B Free 710 35
* Svenska Cell Series B Free (SCA) 61,646 873
Svenska Handelsbanken Series A 96,330 1,288
Svenska Handelsbanken Series B Free 3,360 48
Telefon AB L.M. Ericsson Series B 82,800 4,129
* Trelleborg AB Series B Free 17,298 231
Volvo AB Series A Free 8,200 716
Volvo AB Series B 12,975 1,129
-----------
GROUP TOTAL 21,872
-----------
- - --------------------------------------------------------------------------------
SWITZERLAND (10.4%)
* Adia SA (Bearer) 3,017 508
* Alusuisse-Lonza Holding AG (Bearer) 891 429
Alusuisse-Lonza Holding AG (Registered) 1,025 492
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
BBC Brown Boveri B 220 $ 36
BBC Brown Boveri (Bearer) 1,925 1,685
Ciba Geigy AG 925 561
Ciba Geigy AG (Bearer) 8,896 5,232
CS Holdings Warrants Exp. 12/16/94 22,025 78
CS Holdings (Bearer) 6,975 2,906
CS Holdings (Registered) 15,050 1,217
Danzas 120 145
Forbo Holding AG 30 57
Forbo Holding AG (Registered) 50 46
Georg Fischer B 190 195
Grands Magasins Jelmoli Warrants Exp. 3/29/96 2,010 5
* Grands Magasins Jelmoli (Bearer) 280 177
Grands Magasins Jelmoli (Registered) 610 72
Holderbank Financiere Glarus AG (Bearer) 850 558
Holderbank Financiere Glarus AG (Registered) 1,500 192
Interdiscount Holding B 30 49
Merkur Holding AG 1,471 393
Nestle SA (Registered) 13,609 11,474
Roche Holdings AG (Bearer) 613 5,815
Roche Holdings Ltd. 2,424 11,546
Sandoz AG (Bearer) 250 134
Sandoz AG (Registered) 10,650 5,510
Schindler Holding 30 36
Schindler Holding (Registered) 30 35
Sika Finanz 1,000 51
SMH (Bearer) 962 556
SMH (Registered) 4,750 581
Societe Generale de Surveillance Holdings SA 120 35
Societe Generale de Surveillance Holdings SA
(Bearer) 522 774
* Sulzer PC 50 32
* Sulzer (Registered) 300 198
Swiss Bank Corp Warrants Exp. 6/30/98 317 3
Swiss Bank Corp (Bearer) Warrants Exp. 6/30/98 195 4
* Swiss Bank Corp. (Bearer) 6,829 2,006
* Swiss Bank Corp. (Registered) 11,117 1,612
Swiss Reinsurance (Bearer) 575 257
Swiss Reinsurance (Registered) 4,183 1,746
Swissair Inhaber 400 230
* Union Bank of Switzerland 6,800 1,521
* Union Bank of Switzerland (Bearer) 7,801 6,856
Zurich Insurance (Bearer) 1,643 1,611
Zurich Insurance (Registered) 2,052 2,019
-----------
GROUP TOTAL 69,675
-----------
- - --------------------------------------------------------------------------------
UNITED KINGDOM (34.9%)
Abbey National 498,569 3,118
Amec PLC 206,431 337
Amstrad Consumer Electric 574,427 252
Anglian Water 192,390 1,411
Argos PLC 152,618 804
Argyll Group PLC 534,918 1,895
Arjo Wiggins Appleton PLC 275,332 1,136
Associated British Foods PLC 280,743 2,181
Barclays PLC 670,858 5,362
Barratt Development 119,111 363
Bass PLC 304,680 2,360
BBA Group 203,390 611
BICC PLC 112,480 677
Blue Circle Industries 175,523 768
BOC Group 229,734 2,449
Boots Co. PLC 355,812 2,937
Bowater PLC 137,620 922
Bowthorpe PLC 57,063 281
BPB Industries Ltd. 147,305 685
British Aerospace 136,195 971
British Airways PLC 312,967 1,798
British Gas 1,674,905 6,926
British Land Co., PLC 105,843 641
British Petroleum Co. 1,850,976 11,104
British Steel 630,469 1,379
British Telcommunications PLC 2,146,180 12,428
BTR PLC 1,272,581 6,938
Burmah Castrol PLC 67,464 900
B.A.T. (British American Tobacco) Industries 1,084,121 6,679
B.E.T. PLC 328,614 577
Cable and Wireless PLC 682,068 4,244
Cadbury Schweppes PLC 276,080 1,790
Calor Group 74,993 308
* Camas PLC 46,508 49
Carlton Communications PLC 49,675 626
Chubb Security PLC 101,311 474
Coats Viyella PLC 187,389 606
Commercial Union 137,645 1,073
* Costain Group 259,978 108
Courtalds Textiles 32,193 233
Courtaulds PLC 225,285 1,641
Dawson International PLC 85,165 194
De La Rue Co. PLC 36,899 508
Delta Group British 33,049 248
East Midlands Electric PLC 45,439 421
Eastern Electricity PLC 49,902 475
ECC Group 46,508 247
Electrocomponents PLC 43,988 320
FKI 168,244 441
Forte PLC 234,082 822
</TABLE>
7
<PAGE> 8
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
FR Group 29,000 $ 119
General Accident PLC 114,389 939
General Electric PLC 1,064,736 4,616
GKN 38,727 331
Glaxo Holdings PLC 975,321 8,172
Grand Metropolitan PLC 649,239 4,070
Great Portland Estates 101,123 293
Great Universal Stores PLC 417,439 3,620
Guardian Royal Exchange PLC 198,749 520
Guinness PLC 783,376 5,272
Hammerson Property Investment 63,516 335
Hanson 1,567,451 5,963
Harrison and Crosfield 225,273 573
Hepworth Ceramic Holdings Ltd. 50,375 248
HSBC Holdings PLC 278,000 2,946
HSBC Holdings (Foreign) 617,060 6,723
IMI PLC 69,098 326
Imperial Chemical Industries 190,991 2,280
Johnson Matthey PLC 44,148 339
Kingfisher PLC 182,963 1,406
Kleinwort Benson Group 45,559 303
Ladbroke Group 487,807 1,157
Laing, John 64,357 261
Laird Group 59,150 330
Land Securities PLC 158,670 1,510
Lasmo PLC 576,271 1,269
Legal & General Group PLC 91,518 589
Lex Services 52,726 352
Lloyds Bank Group PLC 541,359 4,377
London Electricity PLC 42,499 374
Lonrho 242,458 474
Lucas Industries 329,225 862
Manweb PLC 32,418 346
Marks and Spencer PLC 961,727 5,799
* Marley 14,640 32
MB Group 245,803 1,147
MEPC PLC 119,000 772
Meyer International PLC 51,941 308
National Power 525,151 3,510
Next PLC 160,524 593
North West Water Group 109,672 801
Northern Electricity PLC 52,343 549
Ocean Transportation & Trading 71,755 311
Pearson, S. & Son PLC 126,019 1,137
Peninsular & Orient Steam Navigation Co. 143,201 1,396
Pilkington 352,635 907
Prov. Financial 4,850 33
Prudential Corp. 559,037 2,471
Racal Electronics PLC 81,626 285
Rank Organization Ltd. 164,657 938
Redland PLC 134,287 1,013
Reed International PLC 197,067 2,285
Reuters Holdings PLC 576,144 3,802
RMC Group PLC 34,423 432
Rolls Royce PLC 338,764 903
Royal Bank of Scotland 378,481 2,466
Royal Insurance Holdings 150,291 588
RTZ Corp. 175,334 2,228
* RTZ Corp. (Bearer) 164,800 2,279
Rugby Group 267,024 531
J. Sainsbury PLC 675,075 4,232
Schroders PLC 23,826 418
Scottish & Newcastle Breweries 118,531 929
Scottish Power 311,598 1,728
Sears PLC 613,365 1,082
Sedgwick Group PLC 106,450 282
Seeboard PLC 72,592 378
Slough Estates PLC 82,589 291
Smithkline Beecham PLC Class A 474,255 2,987
Smithkline Beecham PLC Equity Unit 366,545 2,061
Smiths Industries PLC 161,923 1,100
Southern Electric PLC 51,786 470
Southern Water 36,461 264
T & N PLC 162,499 551
Tarmac PLC 245,100 555
Tate & Lyle 98,518 621
Taylor Woodrow PLC 172,537 351
Tesco PLC 541,764 1,873
Thames Water PLC 121,699 830
Thorn EMI PLC 195,423 3,025
Trafalgar House PLC 367,275 484
Transport Development 211,521 713
Tube Investment Group 76,076 418
Unigate PLC 52,393 290
Unilever PLC 304,328 4,523
United Biscuits Holdings PLC 202,267 978
Vickers PLC 129,129 346
Vodafone Group PLC 291,131 2,197
S.G. Warburg Group PLC 52,191 554
Welsh Water 30,176 266
Williams Holdings PLC 89,847 465
Willis Corroon PLC 89,536 201
Wilson C. Holdings 106,443 325
George Wimpey PLC 112,698 290
Wolseley PLC 84,418 953
Zeneca Group PLC 283,918 3,179
-----------
GROUP TOTAL 232,739
-----------
- - --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $614,022) 660,285
- - --------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS (.6%)
- - --------------------------------------------------------------------------------
U.S. TREASURY BILL--Note D
4.26%, 9/22/94 $ 400 $ 396
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account 4.26%, 7/1/94 3,598 3,598
- - --------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $3,994) 3,994
- - --------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.5%)
(Cost $618,016) 664,279
- - --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.5%)
- - --------------------------------------------------------------------------------
Other Assets--Notes B and E 134,500
Liabilities--Note E (130,948)
-----------
3,552
- - --------------------------------------------------------------------------------
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 57,892,791, outstanding
$.001 par value shares
(authorized 500,000,000 shares) $667,831
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $11.54
================================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
AT JUNE 30, 1994, NET ASSETS CONSISTED OF:
- - --------------------------------------------------------------------------------
Amount Per
(000) Share
-------- ------
<S> <C> <C>
Paid in Capital $611,869 $10.57
Undistributed Net
Investment Income 8,322 .15
Accumulated Net
Realized Gains 1,620 .03
Unrealized Appreciation
of Investments--Note D 46,020 .79
- - --------------------------------------------------------------------------------
NET ASSETS $667,831 $11.54
- - --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Market
Value
PACIFIC PORTFOLIO Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (99.1%)
- - --------------------------------------------------------------------------------
AUSTRALIA (4.4%)
* Aberfoyle 8,000 $ 24
Amcor Ltd. 156,000 1,015
Australia National Industries 464,774 619
Boral Ltd. 397,331 971
Brambles Industries, Ltd. 92,611 884
Broken Hill Proprietary Co. Ltd. 344,100 4,491
Burns Phillip & Co. 18,000 45
Coca-Cola Amatil Ltd. 140,468 889
Coles Myer Ltd. 343,750 1,066
CRA Ltd. 181,900 2,363
CSR Ltd. 158,900 558
Dominion Mining 246,575 81
Email Ltd. 187,883 629
* Emperor Mines 52,510 102
Fosters Brewing Corp. 739,100 573
General Property Trust 401,289 716
Gold Mines Kalgoorlie 115,673 103
Goodman Fielder Ltd. 464,800 435
ICI Australia Ltd. 77,000 603
Lend Lease Corp. 50,200 596
MIM Holdings Ltd. 393,144 811
National Australia Bank Ltd. 286,800 2,278
Newcrest Mining Ltd. 63,945 303
News Corp. Ltd. 487,164 2,976
North Broken Hill Peko Ltd. 325,613 812
OPSM Industries 32,000 50
Pacific Dunlop Ltd. 167,640 529
Pioneer International 24,000 50
Rothmans Australian 103,900 403
Santos Ltd. 290,389 807
Sons of Gwalia 56,472 384
Southcorp Holdings Ltd. 21,000 43
* TNT 126,000 207
Western Mining Corp. 251,100 1,334
Westfield Trust (New Units) 24,618 41
Westfield Trust (Units) 654,739 1,121
Westpac Banking Ltd. 407,404 1,329
-----------
GROUP TOTAL 30,241
-----------
- - --------------------------------------------------------------------------------
HONG KONG (5.9%)
Applied International 579,000 150
The Bank of East Asia, Ltd. 187,500 813
Cathay Pacific Air 1,034,000 1,525
Cheung Kong Holdings Ltd. 628,000 2,742
China Light & Power 537,000 2,745
Dairy Farm International Holding Ltd. 534,000 726
Hang Seng Bank 454,800 3,001
Harbour Centre 289,000 396
Hong Kong Aircraft 9,200 49
</TABLE>
9
<PAGE> 10
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Hong Kong & China Gas 408,793 $ 777
Hong Kong Electric Holdings 530,000 1,598
Hong Kong Land Holdings 802,000 2,023
The Hong Kong and Shanghai Hotels, Ltd. 278,000 417
Hong Kong Telecommunication Ltd. 3,064,200 5,788
Hopewell Holdings 1,509,000 1,220
Hutchinson Whampoa Ltd. 879,000 3,611
Hysan Development Co., Ltd. 243,000 645
Jardine Matheson Holdings 183,600 1,413
Johnson Electric Holdings 20,000 47
Mandarin Oriental International Ltd. 38,000 53
Miramar Hotel & Investment 125,000 354
New World Development 465,000 1,275
Orient Press Group 62,000 46
Regal Hotels International 194,000 48
Shun Tak Enterprises 48,000 50
South China Morning Post 1,976,000 1,157
Sun Hung Kai Properties Ltd. 502,400 2,893
Swire Pacific Ltd. 401,500 2,883
Tai Cheung Properties 35,000 52
Television Broadcasts Ltd. 13,000 51
Wharf Holdings Ltd. 615,000 2,268
Wing Lung Bank 7,000 51
Winsor Industrial Corp. 29,000 43
-----------
GROUP TOTAL 40,910
-----------
- - --------------------------------------------------------------------------------
JAPAN (82.3%)
AIDA Engineering 39,000 339
Advantest Corp. 4,000 147
Ajinomoto Co., Inc. 155,000 2,120
* Alps Electric Co., Ltd. 69,000 993
Amada Co., Ltd. 62,000 741
Amano Corp. 33,000 629
Aoki Construction Co. 180,000 919
Aoyama Trading 31,000 1,209
Arabian Oil Co. Ltd. 13,000 678
Asahi Bank Ltd. 567,000 7,181
Asahi Breweries, Ltd. 154,000 1,669
Asahi Chemical Industries 283,000 2,107
Asahi Glass Co. Ltd. 280,000 3,461
* Asahi Optical 36,000 219
Ashikaga Bank 167,000 1,262
Asics Corp. 56,000 271
Bank of Tokyo 515,000 8,349
Bank of Yokohama 327,000 3,075
Banyu Pharmaceutical 57,000 542
Bridgestone Corp. 202,000 3,275
Brother Industries Ltd. 92,000 729
Canon Inc. 199,000 3,488
Casio Computer Co. 8,000 109
Chiba Bank 184,000 1,708
Chiyoda Corp. 70,000 894
Chugai Pharmaceutical Ltd. 60,000 729
Citizen Watch Co. 75,000 703
Cosmo Oil Co., Ltd. 211,000 1,834
Credit Saison 4,000 93
CSK 18,200 691
Daicel Chemical Industries 26,000 154
Daido Steel Co. 106,000 580
Daiei Inc. 171,000 2,963
Daifuku 32,000 444
Dai-ichi Kangyo Bank 775,000 15,391
Daiichi Pharmaceutical Co. Ltd. 91,000 1,355
Daikin Industries Ltd. 57,000 556
Daikyo Inc. 88,000 1,007
Daimaru Inc. 80,000 662
Dai-Nippon Ink & Chemicals 153,000 860
Dai-Nippon Printing Co. Ltd. 210,000 4,106
* Dai-Nippon Screen Manufacturing 68,000 610
Daishowa Seoshi Paper 72,000 730
Daito Trust 27,000 643
Daiwa House Industries 99,000 1,545
Daiwa Kosho Lease 5,000 52
Daiwa Securities Ltd. 394,000 6,906
* Denki Kagaku Kogyo 182,000 723
Ebara Corp. 67,000 1,168
Eisai Co., Ltd. 65,000 1,133
Ezaki Glico Co. 5,000 56
Fanuc Co. Ltd. 55,500 2,665
Fuji Bank 736,000 16,854
Fuji Photo Film Co. Ltd. 139,000 3,098
Fujikura Cable 60,000 530
Fujita Corp. 159,000 1,012
Fujita Tourist Enterprises 29,000 661
Fujitsu Ltd. 427,000 4,889
Furukawa Electric Co. 172,000 1,253
* Gakken Co. 6,000 54
Gunma Bank Ltd. 116,000 1,293
Gunze 7,000 51
Hankyu Corp. 198,700 1,174
Hankyu Department Stores 45,000 579
Haseko 135,000 978
Hattori Seiko 38,000 400
Hazama-Gumi Ltd. 102,000 510
Higo Bank 67,000 531
Hirose Electric Co. Ltd. 11,000 711
Hitachi Ltd. 800,000 8,349
Hokkaido Bank 103,000 470
Hokuriku Bank 252,000 1,810
Honda Motor Co. Ltd. 250,000 4,382
Honshu Paper Co., Ltd. 93,000 647
House Foods Industrial Co., Ltd. 27,300 567
Hoya Corp. 29,000 632
INAX 46,000 508
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Industrial Bank of Japan Ltd. 595,000 $ 19,533
Isetan 55,000 1,087
* Ishihara Sangyo 108,000 472
C Itoh & Co. 433,000 3,255
Itoham Food Co., Ltd. 66,000 565
Ito-Yokado Co. 102,000 5,581
Iwatani & Co. 75,000 464
Jaccs 46,000 545
* Japan Air Lines Co. Ltd. 422,000 3,053
Japan Energy Corp. 388,000 1,801
Japan Metals Chem 8,000 51
Japan Steel Works Ltd. 99,000 370
Jeol 18,000 171
JGC Corp. 10,000 157
Joyo Bank 204,000 1,833
Jusco Co., Ltd. 83,000 1,901
Kajima Corp. 221,000 2,228
Kaken Pharmaceutical 3,000 43
Kamigumi 44,000 522
Kandenko 46,000 1,021
Kanebo Ltd. 118,450 458
Kanegafuchi Chemical Industry Co. Ltd. 78,000 593
Kansai Electric Power Inc. 236,400 6,347
Kansai Paint Co., Ltd. 115,000 662
Kao Corp. 155,000 1,885
Katokichi 2,000 55
* Kawasaki Kisen Kaisha Ltd. 230,000 883
* Kawasaki Steel Corp. 811,000 3,435
Keihin Electric Express Railway Co. Ltd. 100,000 669
Kikkoman 55,000 471
Kinden Corp. 46,200 838
Kinki Nippon Railway 371,000 3,169
Kirin Brewery Co. Ltd. 235,000 2,786
Kissei Pharm 19,000 801
Kobe Steel Ltd. 779,000 2,494
Kokuyo Co., Ltd. 36,000 974
Komatsu 223,000 2,169
Komori Corp. 2,000 64
Konami 11,000 390
Konica 79,000 563
Koyo Seiko Co. 70,000 623
Kubota Ltd. 329,000 2,450
Kumagai Gumi Co., Ltd. 196,000 1,001
Kurabo Industries Ltd. 76,000 363
Kuraray 9,000 111
Kureha Chemical Industries 88,000 562
Kurita Water Industries 6,000 176
Kyocera Corp. 47,000 3,548
Kyowa Hakko Kogyo 94,000 885
Kyudenko Corp. 3,000 50
Lion Corp. 81,000 591
Maeda Road Construction Co. Ltd. 20,000 393
* Makino Milling 7,000 60
Makita Electric Works 40,000 815
Marubeni Corp. 356,000 1,962
Marudai Food Co. 6,000 52
* Maruha Corp. 13,000 58
Marui 82,000 1,520
Matsushita Electric Industries Co. Ltd. 588,000 10,784
Meiji Milk Products Co. 59,000 467
Meiji Seika Kaisha Ltd. 91,000 638
* Minebea Co., Ltd. 95,000 830
Misawa Homes Co., Ltd. 49,000 571
Mitsubishi Chemical Industries Ltd. 341,000 1,814
Mitsubishi Corp. 387,000 4,862
Mitsubishi Electric Co. 434,000 2,942
Mitsubishi Estate Co. Ltd. 417,000 5,197
Mitsubishi Gas & Chemical 107,000 530
Mitsubishi Heavy Industries Ltd. 858,000 6,859
Mitsubishi Material 129,000 736
Mitsubishi Oil 98,000 1,053
Mitsubishi Paper Mills 75,000 555
Mitsubishi Petrochemical 140,000 1,001
* Mitsubishi Steel Manufacturing 77,000 467
Mitsubishi Trust & Banking Corp. 418,000 6,946
Mitsubishi Warehouse & Transportation 35,000 592
Mitsui & Co., Ltd. 379,000 3,210
Mitsui Engineering & Ship Building 184,000 671
Mitsui Marine & Fire Insurance 195,000 1,626
Mitsui Mining & Smelting Co., Ltd. 134,000 581
Mitsui Osk Lines Ltd. 362,000 1,478
Mitsui Real Estate Development 128,000 1,556
Mitsui Toatsu Chemicals Inc. 128,000 521
Mitsui Trust & Banking Co. 287,000 3,548
Mitsui Warehouse 36,000 309
Mitsukoshi Ltd. 122,000 1,273
Mochida Pharmaceutical 33,600 691
Mori Seiki Co. 24,000 615
Murata Manufacturing Co. Ltd. 52,000 2,445
Nagase 5,000 51
Nagoya Railroad Co. 165,170 890
Nankai Railway 10,000 89
NEC Corp. 409,000 5,056
NGK Insulators 73,000 777
NGK Spark Plug Co. 50,000 694
Nicherei 73,000 525
Nichido Fire Marine 91,000 819
Nichii Co., Ltd. 56,000 891
Nihon Cement Co. 62,000 461
Niigata Engineering Co. 102,000 502
Nippon Beet Sugar 10,000 51
Nippon Comsys 34,000 534
</TABLE>
11
<PAGE> 12
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Nippon Denko 11,000 $ 48
Nippon Denso Co. Ltd. 231,000 4,868
Nippon Express Co.,Ltd. 283,000 3,011
Nippon Fire & Marine 88,000 662
Nippon Kokan (NKK) 848,000 2,277
Nippon Light Metal Co. 140,000 1,020
Nippon Meat Packers Inc. 80,000 1,232
Nippon Oil Co. Ltd. 298,000 2,295
* Nippon Oil Fats 8,000 55
Nippon Paper Industries, Co. 260,000 1,939
Nippon Seiko Kabushiki 107,000 814
Nippon Sharyo Seizo Kaisha 43,000 501
Nippon Sheet Glass Co. 91,000 505
Nippon Shinpan Co. 58,000 549
Nippon Shokubai 70,000 709
Nippon Steel Corp. 1,722,000 6,002
* Nippon Suisan Kaisha 110,000 551
Nippon Yusen Kabushiki Kaisha 351,000 2,241
Nishimatsu Construction 47,000 562
Nissan Motor Co., Ltd. 606,000 5,373
Nisshinbo Industries 57,000 653
Nissin Food 34,000 927
Nitto Denko Corp. 40,000 640
The Nomura Securities Co. Ltd. 478,000 11,527
Noritake Co., Ltd. 58,000 455
NTN Toyo-Bearing Co. 86,000 621
Odakyu Electric Railway 186,000 1,376
Ohbayashi-Gumi Ltd. 190,000 1,309
OJI Paper Co., Ltd. 197,000 2,096
Okamoto Industries 6,000 53
* Okuma Machinery Works 51,000 433
Okumura Corp. 78,000 717
Olympus Optical Ltd. 62,000 716
Omron Tateisi Electronics Co. 52,000 933
Onoda Cement 161,000 1,023
Onward Kashiyama Co. 44,000 633
Orient Corp. 67,000 458
Orix Corp. 19,000 782
Osaka Gas Co., Ltd. 584,000 2,746
Penta Ocean Construction 138,000 931
Pioneer Electronic Corp. 49,000 1,385
Q P Corp. 4,000 51
* Renown Inc. 89,000 505
Ricoh Co. 170,000 1,628
Rohm 16,000 742
Sagami Railway 92,000 490
Sakura Bank 817,000 11,589
Sanden Corp. 35,000 232
Sankyo Aluminum 7,000 48
Sankyo Co., Ltd. 121,000 2,697
Sanrio Co., Ltd. 35,000 706
Sanwa Shutter 5,000 47
Sanyo Electric Co., Ltd. 502,000 2,823
Sapporo Breweries 68,000 645
Secom Co., Ltd. 30,000 2,052
Sega Enterprises 25,000 1,938
Seino Transportation Co. Ltd. 36,000 675
Seiyu 40,000 563
Sekisui Chemical Co. 157,000 1,782
Sekisui House Ltd. 197,000 2,535
* Settsu 97,000 451
Seven Eleven Japan Co. Ltd. 87,000 6,920
Seventy-Seven Bank 59,000 598
Sharp Corp. 258,000 4,679
Shimachu 7,000 282
Shimano Industrial 34,000 754
Shimizu Construction Corp. 220,000 2,220
Shin-Etsu Chemical Co. Ltd. 65,000 1,390
Shionogi & Co., Ltd. 94,000 839
Shiseido Co., Ltd. 93,000 1,112
Shizuoka Bank 172,000 2,440
Shochiko 27,000 347
* Shokusan Jutaku 82,000 475
* Showa Denko Kabushiki 277,000 974
Skylark Co., Ltd. 31,000 710
Snow Brand Milk Products 66,000 516
Sony Corp. 88,500 5,425
Sumitomo Corp. 266,000 2,776
Sumitomo Bank 783,000 17,216
Sumitomo Cement Co. 89,000 485
Sumitomo Chemical Co. 526,000 2,846
Sumitomo Electric Co. 194,000 2,968
Sumitomo Forestry 5,000 101
Sumitomo Heavy Industries Ltd. 211,000 892
Sumitomo Marine & Fire Insurance Co. 191,000 1,864
Sumitomo Metal Industries 761,000 2,290
Sumitomo Metal Mining 122,000 1,205
Taisei Construction Corp. 262,000 1,805
Taisho Pharmaceuticals 86,000 1,717
Taiyo Yuden Co. 8,000 103
Takara Shuzo Co. 69,000 556
Takara Standard 4,000 51
Takashimaya Co. 45,000 616
Takeda Chemical Industries 231,000 2,762
Takuma 47,000 905
Tanabe Seiyaku Co., Ltd. 56,000 502
Teijin Ltd. 122,000 664
Teikoku Oil Co., Ltd. 62,000 492
Toa Harbor Works 84,000 700
Tobu Railway Co., Ltd. 200,580 1,333
Toho Co., Ltd. 5,200 1,070
Tohoku Electric Power 114,800 3,094
Tokai Bank 478,000 6,345
Tokio Marine & Fire Insurance Ltd. 376,000 4,724
Tokyo Broadcasting System 37,000 645
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Tokyo Dome 31,000 $ 622
Tokyo Electric Power 373,700 12,117
Tokyo Electron Inc. 35,000 1,167
Tokyo Gas Co., Ltd. 681,000 3,450
Tokyo Style Co. 22,000 437
Tokyo Tatemono 63,000 442
Tokyotokeiba 54,000 315
Tokyu Corp. 343,000 2,631
Toppan Printing Co. 159,000 2,384
Toray Industries Inc. 414,000 3,121
* Tosoh Corp. 40,000 156
Tostem Corp. 52,000 1,723
Toto Ltd. 103,000 1,805
Toyo Engineering Corp. 7,000 53
Toyo Exterior 1,000 35
Toyo Kanetsu Kabushiki 44,000 296
Toyo Seikan Kaisha Ltd. 57,000 1,848
Toyobo 173,000 784
Toyoda Automatic Loom Works 66,000 1,311
Toyota Motor Corp. 955,000 21,385
Tsubakimoto Chain Co. 132,000 825
Tsugami Corp. 37,000 195
* Ube Industries Ltd. 231,000 929
Uni Charm 2,000 60
Uniden 1,000 31
Unitika 182,000 715
Yamaguchi Bank 5,000 91
Yamaha Corp. 49,000 640
Yamaichi Securities Co. 307,000 2,921
Yamanouchi Pharmaceuticals Ltd. 81,000 1,543
Yamato Transport Co. 88,000 1,168
Yamazaki Baking Co., Ltd. 64,000 1,355
The Yasuda Trust & Banking Co., Ltd. 228,000 2,199
Yokogawa Electric 15,000 160
-----------
GROUP TOTAL 569,852
-----------
- - --------------------------------------------------------------------------------
MALAYSIA (3.3%)
Amalgamated Steel Mills 339,000 451
AMMB Holdings Bhd. 6,000 54
Development & Commercial Bank Bhd. 24,000 55
Edaran Otomobil 92,000 576
Faber Merlin Malaysia 36,000 45
General Lumber Holdings 15,000 50
Golden Hope Plantations Bhd. 257,000 407
Golden Plus Holdings 121,000 353
Hong Leong Properties 36,000 47
Idris Hydraulic Bhd. 26,000 46
Johan Holdings 721,000 623
Kuala Lumpur Kepong Bhd. 26,000 61
Landmarks Bhd. 355,000 641
Leader Universal Holdings Bhd. 10,000 53
Magnum Corp. Bhd. 275,000 586
Malayan Banking Bhd. 220,000 1,234
Malayan United Industries Bhd. 33,000 48
Malaysian Airlines System Bhd. 180,000 429
Malaysian International Shipping Corp. Bhd.
(Foreign) 187,000 650
Malaysian Pacific 226,000 349
Malaysian Resources Co. 125,000 233
Multi-Purpose Holdings Bhd. 163,000 242
Nestle Malaysia Bhd. 89,000 575
Oriental Holdings Bhd. 130,000 604
Perusahaan Otomobil NA 140,000 489
Petaling Garden Bhd. 557,000 680
Pilecon Engineering 414,000 624
Promet Bhd. 567,000 571
Public Bank Bhd. (Foreign) 221,000 416
Rashid Hussain Bhd. 230,000 451
Resorts World Bhd. 282,000 1,625
RJ Reynolds 309,000 494
Rothmans of Pall Mall Bhd. 74,000 469
Shell Refining Co. Bhd. 16,000 48
Tan Chong Motor Holdings Bhd. 404,000 422
* Technology Resources Industries 214,000 871
Telekom Malaysian Bhd. 393,000 2,929
Tenaga Nasional 734,000 4,117
United Engineers 118,000 476
-----------
GROUP TOTAL 23,094
-----------
- - --------------------------------------------------------------------------------
NEW ZEALAND (.7%)
Brierley Investment 660,000 483
Carter Holt Harvey 545,259 1,214
Fletcher Challenge Forestry Division 35,000 45
Fletcher Challenge Ltd. 448,269 979
Lion Nathan 177,000 325
Telecom Corp. of New Zealand 523,900 1,413
Wilson & Horton Ltd. 10,000 47
-----------
GROUP TOTAL 4,506
-----------
- - --------------------------------------------------------------------------------
SINGAPORE (2.5%)
City Development 144,000 609
Cycle & Carriage 7,000 52
DBS Land 49,000 141
Development Bank of Singapore (Foreign) 189,625 1,815
Fraser & Neave Ltd. 55,000 606
Haw Par Brothers International 411,400 836
Jurong Shipyard 30,000 265
Keppel Corp. 185,000 1,273
Malayan Banking 240,000 1,353
Neptune Orient Lines 34,000 53
Overseas Chinese Banking Corp. (Foreign) 239,166 2,117
Prima 200,000 793
</TABLE>
13
<PAGE> 14
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Sime Darby Bhd. 538,000 $ 1,347
Singapore Airlines Ltd. (Foreign) 325,000 2,684
Singapore Press Holdings Ltd. (Foreign) 115,800 1,936
Straits Steamship 19,000 46
United Industrial Corp. 57,000 47
United Overseas Bank (Foreign) 181,125 1,449
-----------
GROUP TOTAL 17,422
-----------
- - --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $552,372) 686,025
- - --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (.7%)
- - --------------------------------------------------------------------------------
Face
Amount
(000)
------
<S> <C> <C>
U.S. TREASURY BILL--Note D
4.26%, 9/22/94 $2,000 1,980
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account 4.26%, 7/1/94 2,906 2,906
- - --------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $4,886) 4,886
- - --------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.8%)
(Cost $557,258) 690,911
- - --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.2%)
- - --------------------------------------------------------------------------------
Other Assets--Notes B and E 159,808
Liabilities--Note E (158,163)
-----------
1,645
- - --------------------------------------------------------------------------------
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 57,353,477 outstanding
$.001 par value shares
(authorized 500,000,000 shares) $692,556
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $12.08
================================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
AT JUNE 30, 1994, NET ASSETS CONSISTED OF:
- - --------------------------------------------------------------------------------
Amount Per
(000) Share
-------- -------
<S> <C> <C>
Paid in Capital $553,764 $ 9.66
Undistributed Net
Investment Income 2,373 .04
Undistributed Net
Realized Gains 2,551 .05
Unrealized Appreciation
of Investments--Note D 133,868 2.33
- - --------------------------------------------------------------------------------
NET ASSETS $692,556 $12.08
- - --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Market
Value
EMERGING MARKETS PORTFOLIO Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (94.7%)
- - --------------------------------------------------------------------------------
ARGENTINA (4.9%)
* Astra International 15,250 $ 30
* Banco Frances 6,200 47
* Banco Galicia Y Buenos 7,150 47
* Compania Naviera Perez 22,800 109
* Interamericana Auto 3,050 34
* Telefonica 57,050 335
* YPF Sociedad Anonima 15,550 369
-----------
GROUP TOTAL 971
-----------
- - --------------------------------------------------------------------------------
BRAZIL (11.6%)
* Aracruz Pfd. B 42,684 81
* Banco Bradesco 11,562,100 62
* Banco Bradesco Pfd. 10,924,998 61
* Banco Do Brasil Pfd. 4,977,018 88
* Banco Itau Pfd. 682,400 121
* Cemig Pfd. 1,356,300 99
* Cervejaria Brahma 134,000 29
* Cervejaria Brahma Pfd. 235,150 54
* Cia Cimento Portland 149,800 42
* Electrobras 1,941,500 432
* Electrobras Pfd. B 315,000 70
* Paulista Forca Luz 762,600 30
* Petroleo Brasileiro Pfd. 2,256,500 223
* Souza Cruz 11,300 61
* Telebras 12,736,200 370
* Usiminas Pfd. 138,844,500 147
* Vale Do Rio Doce Pfd. 2,403,300 246
* Vidreas Santa Marina 10,500 37
* White Martins 4,525,400 36
-----------
GROUP TOTAL 2,289
-----------
- - --------------------------------------------------------------------------------
GREECE (1.5%)
* Commercial Bank 1,600 47
* Credit Bank 900 36
* Ergo Bank 800 30
* Ethniki General Insurance (Registered) 2,000 19
* Fourlis 1,100 31
* Hellas Can 3,100 48
* Hellenic Bottling Co. 1,300 37
* Intracom (Bearer) 700 33
* National Bank of Greece 400 20
-----------
GROUP TOTAL 301
-----------
- - --------------------------------------------------------------------------------
HONG KONG (13.8%)
The Bank of East Asia, Ltd. 14,000 61
Cathay Pacific Air 78,000 115
Cheung Kong Holdings Ltd. 37,000 162
China Light & Power 32,000 164
Dairy Farm International Holdings Ltd. 55,000 75
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Hang Seng Bank 30,000 $ 198
Hong Kong & China Gas 32,000 61
The Hong Kong and Shanghai Hotels, Ltd. 26,000 39
Hong Kong Electric Holdings 31,000 93
Hong Kong Land Holdings 49,000 124
Hong Kong Telecommunications Ltd. 184,800 349
Hong Leong Properties 28,000 37
Hopewell Holdings 72,000 58
Hutchinson Whampoa Ltd. 62,000 255
Hysan Development Co., Ltd. 19,000 50
Jardine Matheson Holdings 17,200 132
New World Development 49,000 134
Sun Hung Kai Properties Ltd. 41,000 236
Swire Pacific Ltd. 26,000 187
Television Broadcasts Ltd. 14,000 55
Wharf Holdings Ltd. 40,000 147
-----------
GROUP TOTAL 2,732
-----------
- - --------------------------------------------------------------------------------
INDONESIA (5.0%)
* Astra International 1,500 11
* Bank International Indonesia 14,000 44
* Bank International Indonesia (Foreign) 14,500 36
* Barito Pacific Timber 23,500 88
* Barito Pacific Timber (Foreign) 27,000 101
* Duta Anggada Realty 9,000 21
* Duta Anggada Realty (Foreign) 9,000 21
* Gadjah Tunggal 12,500 21
* Gadjah Tunggal (Foreign) 16,500 27
* Indocement 12,000 90
* Jembo Cable Co. 7,500 16
* Kalbe Farma (Foreign) 20,000 68
* Lippo Bank 8,500 20
* Mayora Indah 6,000 27
* Perusahaan Gudang Garam 12,000 52
* Perusahaan Rokok Guda 6,500 25
* Polysindo Eka Perkasa 40,000 82
* Polysindo Eka Perkasa (Foreign) 60,500 124
* Sucaco (Alien) 5,000 23
* Unilever (Foreign) 4,500 81
* Unilever Indonesia 1,000 18
-----------
GROUP TOTAL 996
-----------
- - --------------------------------------------------------------------------------
MALAYSIA (20.1%)
* Amalgamated Steel Mills 34,000 45
* AMMB Holdings Bhd. 7,000 62
Commerce Asset Holdings Bhd. 12,000 43
Development & Commercial Bank Bhd. 29,000 66
Edaran Otomobil 10,000 63
Faber Merlin Malaysia 32,000 40
General Lumber Holdings 14,000 47
Golden Hope Plantations Bhd. 45,000 71
Golden Plus Holdings Bhd. 10,000 29
Highlands & Lowlands 33,000 43
Hong Leong Industries Bhd. 8,000 36
* Hume Industries Bhd. 22,000 80
* Idris Hydraulic Bhd. 22,000 39
* Industrial Oxygen Inc. Bhd. 23,000 21
* Kedah Cement Holdings Bhd. 13,000 18
* Kelanamas Industries Bhd. 9,000 25
* Kemayan Oil Palm Bhd. 19,000 31
* Kuala Lumpur Kepong Bhd. 20,000 46
* Landmarks Bhd. 17,000 31
Leader Universal Holdings Bhd. 15,000 80
Magnum Corp. Bhd. 37,000 79
Malayan Banking Bhd. 46,000 258
Malayan Cement Bhd. 29,000 48
Malaysian Airlines System Bhd. 25,000 60
Malaysian International Shipping Corp. Bhd.
(Foreign) 11,000 38
* Malaysian Resources Co. Bhd. 20,000 37
MBF Holdings Bhd. 29,000 18
* Metroplex Bhd. 38,000 34
Multi-Purpose Holdings Bhd. 38,000 56
* Multi-Purpose Holdings Bhd. Rights Exp. 7/25/94 9,600 3
Nestle Malaysia Bhd. 18,000 116
Oriental Holdings Bhd. 5,000 23
Perlis Plantations Bhd. 14,000 43
* Perusahaan Otomobil NA 22,000 77
Promet Bhd. 19,000 19
* Public Bank Bhd. (Foreign) 17,000 32
* Rashid Hussain Bhd. 13,000 26
* Resorts World Bhd. 43,000 248
Rothmans of Pall Mall Bhd. 13,000 83
* Shell Refining Co. Bhd. 23,000 69
Sime Darby Bhd. 76,000 193
Tan Chong Motor Holdings Bhd. 36,000 38
* Technology Resources Industries 28,000 114
Telekom Malaysian Bhd. 77,000 574
* Tenaga Nasional Bhd. 118,000 662
* UMW Holdings Bhd. 16,000 38
* United Engineers Bhd. 21,000 85
-----------
GROUP TOTAL 3,987
-----------
- - --------------------------------------------------------------------------------
MEXICO (17.9%)
* Apasco 'A' 16,400 122
* Cementos Mexicanos CPO 4,000 26
* Cementos Mexicanos SA Class A 22,687 144
* Cementos Mexicanos SA Class B 23,000 152
* CIFRA 'B' SA 83,400 202
</TABLE>
15
<PAGE> 16
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
* Cifra 'C' SA 29,000 $ 68
* El Puerto Liverpool 'L' 50,400 70
* Empresa La Moderna 'A' 19,000 119
* Empresas ICA 5,800 139
* Fomento Economico Mexicano SA 22,150 91
* Grupo Continental 'A' 4,800 22
* Grupo Financiero Banamex 'C' 12,000 76
* Grupo Financiero Bancomer SA de C.V. Class C 44,050 49
* Grupo Financiero Serfin 'L' 6,000 27
* Grupo Industrial Minera Mexico 20,550 90
* Grupo Industrial Bimbo Series 'A' 16,300 120
* Grupo Industrial Alfa 'A' 6,550 60
* Grupo Televisa-CPO 13,200 335
* Industrias Penoles 'A' 19,199 54
* Kimberly Clark Class A 9,609 178
* Soc Fomento Industrial 'B' 11,000 71
* Telefonos de Mexico 'A' 116,400 325
* Telefonos de Mexico 'L' 334,350 937
* Vitro-CP 11,000 70
-----------
GROUP TOTAL 3,547
-----------
- - --------------------------------------------------------------------------------
PHILIPPINES (2.4%)
Ayala Land Inc. 'B' 58,750 60
International Container Terminal 55,600 57
Manila Electric B 4,850 61
* Philippine Long Distance Telephone 2,200 137
* Philippines National Bank B 4,700 76
San Miquel Corp. B 15,800 80
-----------
GROUP TOTAL 471
-----------
- - --------------------------------------------------------------------------------
PORTUGAL (1.2%)
* Banco Commercial Portugal 6,200 77
* Banco Portugues Investentos 2,200 31
* Banco Espir Santo 2,700 49
* Soares Da Costa 1,000 18
* Sonae Investimentos 4,300 71
-----------
GROUP TOTAL 246
-----------
- - --------------------------------------------------------------------------------
SINGAPORE (5.0%)
City Development 9,000 38
Cycle & Carriage 4,000 30
Development Bank of Singapore (Foreign) 11,000 105
Fraser & Neave Ltd. 7,000 77
Keppel Corp. 8,000 55
Lum Chang 70,000 66
Overseas Chinese Banking Corp. (Foreign) 14,000 124
Parkway Holdings 12,000 23
Shangri-La Hotel 23,000 79
Singapore Airlines Ltd. (Foreign) 23,000 190
Singapore Press Holdings Ltd. (Foreign) 6,000 100
United Overseas Bank (Foreign) 12,000 96
-----------
GROUP TOTAL 983
-----------
- - --------------------------------------------------------------------------------
THAILAND (9.9%)
* Ayudhya Insurance Co. 3,200 35
* Bangkok Bank Public Co. Ltd. (Foreign) 19,800 150
* Bangkok Insurance Co., Ltd. 700 19
* Bangkok Land Co. 2,200 7
* Bangkok Land Public 19,900 64
* Bank of Ayudhya Ltd. (Foreign) 25,200 82
* Bank of Ayudhya Ltd. (Local) 31,400 103
* Castle Peak Garment 13,200 44
* Dhana Siam Finance & Securities Co., Ltd. 2,800 66
* Dhana Siam Finance & Securities Co., Ltd.
(Foreign) 3,500 83
* Finance One 2,700 44
* First City Investment Co. 14,200 26
* Industrial Finance Corp. of Thailand ( Foreign) 25,000 51
* Industrial Finance Corp. of Thailand 22,000 45
* Krisda Mahanakorn Co. 6,800 20
* Land & House Co., Ltd. (Foreign) 6,600 116
* National Finance & Securities Co., Ltd. 4,000 51
* Nava Finance & Securities 4,200 30
* One Holding Ltd. 7,600 23
* Phatra Thanakit (Foreign) 1,200 39
* Phatra Thanakit (Local) 600 19
* Robinson Department Store Co., Ltd. 118,400 183
* Shinawatra Computer & Communications Co., Ltd. 6,300 141
* Shinawatra Computer & Communications Co., Ltd.
(Foreign) 2,100 47
* Siam Cement Co., Ltd. (Foreign) 1,500 70
* Siam City Cement Co., Ltd. (A) 4,100 72
* Siam Commercial Bank Ltd. 12,400 94
* Thai Farmers Bank Ltd. (Foreign) 10,900 57
* Thai-German Ceramic (Foreign) 3,000 16
* TPI Polene Co., Ltd. 15,400 105
* TPI Polene Co., Ltd. (Foreign) 5,100 32
* Wattachak Co. 1,800 17
-----------
GROUP TOTAL 1,951
-----------
- - --------------------------------------------------------------------------------
TURKEY (1.4%)
Arcelik 213,633 77
EGE Biracilik 6,000 14
* Kav 80,000 36
* T Garanti Bankasi 125,000 20
Tanayong Public 7,600 18
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- - --------------------------------------------------------------------------------
<S> <C> <C>
Tofas Turk Otomobil Fabrikasi AS 52,700 $ 83
Turkiye is Bankasi 170,000 26
-----------
GROUP TOTAL 274
-----------
- - --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $19,089) 18,748
- - --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT (9.6%)
- - --------------------------------------------------------------------------------
Face
Amount
(000)
------
<S> <C> <C>
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
4.26%, 7/1/94 (Cost $1,899) $1,899 1,899
- - --------------------------------------------------------------------------------
TOTAL INVESTMENTS (104.3%)
(Cost $20,988) 20,647
- - --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-4.3%)
- - --------------------------------------------------------------------------------
Other Assets--Note B 542
Accounts Payable for Securities Purchased (1,394)
Other Liabilities (3)
-----------
(855)
</TABLE>
<TABLE>
<CAPTION>
Market
Value
(000)+
- - --------------------------------------------------------------------------------
<S> <C>
NET ASSETS (100%)
- - --------------------------------------------------------------------------------
Applicable to 1,872,015 outstanding
$.001 par value shares
(authorized 500,000,000 shares) $19,792
- - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.57
================================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
AT JUNE 30, 1994, NET ASSETS CONSISTED OF:
- - --------------------------------------------------------------------------------
Amount Per
(000) Share
------- ------
<S> <C> <C>
Paid in Capital $20,075 $10.72
Undistributed Net
Investment Income 56 .03
Undistributed Net
Realized Gains 2 --
Unrealized Depreciation
of Investments--Note D (341) (.18)
- - --------------------------------------------------------------------------------
NET ASSETS $19,792 $10.57
- - --------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS--THE AVERAGE ANNUAL TOTAL RETURNS FOR THE
PORTFOLIOS (PERIODS ENDED JUNE 30, 1994) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
SINCE INCEPTION
---------------------------
INCEPTION TOTAL INCOME CAPITAL
PORTFOLIO DATE 1 YEAR RETURN RETURN RETURN
- - ---------------------------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
EUROPEAN PORTFOLIO* 6/18/90 +14.72% +5.71% +2.15% +3.56%
PACIFIC PORTFOLIO* 6/18/90 +16.42 +5.51 + .48 +5.03
EMERGING MARKETS PORTFOLIO** 5/4/94 N/A +5.70 0.00 +5.70
</TABLE>
ALL OF THESE DATA REPRESENT PAST PERFORMANCE. THE INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
* RETURNS ARE ADJUSTED FOR THE 1% PORTFOLIO TRANSACTION FEE ON PURCHASES
AND THE ANNUAL ACCOUNT MAINTENANCE FEE OF $10.00.
** CUMULATIVE RETURN SINCE INCEPTION. RETURN IS NOT ADJUSTED FOR THE 2%
PORTFOLIO TRANSACTION FEE ON PURCHASES, THE 1% PORTFOLIO TRANSACTION
FEE ON REDEMPTIONS, AND THE ANNUAL ACCOUNT MAINTENANCE FEE OF $10.00.
17
<PAGE> 18
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
EMERGING MARKETS
EUROPEAN PORTFOLIO PACIFIC PORTFOLIO PORTFOLIO
- - -------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended May 4, 1994 to
June 30, 1994 June 30, 1994 June 30, 1994
(000) (000) (000)
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends(1) . . . . . . . . . . . . . . . $ 11,248 $ 3,290 $ 45
Interest . . . . . . . . . . . . . . . . . 204 61 11
- - -------------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . 11,452 3,351 56
- - -------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B . . . . . . . . .
Investment Advisory Services . . . . . . $ 71 $ 45
Management and Administrative . . . . . . 635 603
Marketing and Distribution . . . . . . . 66 772 63 711 --
Taxes (other than income taxes)--Note A . . . ------ 26 ------ 22 --
Custodian's Fees . . . . . . . . . . . . . . 203 156 --
Auditing Fees . . . . . . . . . . . . . . . . 4 5 --
Shareholders' Reports . . . . . . . . . . . . 38 44 --
Annual Meeting and Proxy Costs . . . . . . . 6 6 --
Directors' Fees and Expenses . . . . . . . . 2 1 --
- - -------------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . 1,051 945 --
- - -------------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . 10,401 2,406 56
- - -------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold . . . . . . . . . 1,449 2,086 2
Futures Contracts . . . . . . . . . . . . . . (706) 551 --
Forward Currency Contracts . . . . . . . . . 648 29 --
- - -------------------------------------------------------------------------------------------------------------------
Realized Net Gain . . . . . . . . 1,391 2,666 2
- - -------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION)
Investment Securities . . . . . . . . . . . . (32,542) 94,610 (341)
Futures Contracts . . . . . . . . . . . . . . (407) (60) --
Forward Currency Contracts . . . . . . . . . 138 377 --
- - -------------------------------------------------------------------------------------------------------------------
Change in Unrealized
Appreciation (Depreciation) . . (32,811) 94,927 (341)
- - -------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets
Resulting from Operations . . $(21,019) $99,999 $(283)
===================================================================================================================
</TABLE>
(1) Dividends are net of foreign withholding taxes of $1,755,000, $551,000, and
$16,000, respectively.
18
<PAGE> 19
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EMERGING
MARKETS
EUROPEAN PORTFOLIO PACIFIC PORTFOLIO PORTFOLIO
- - -------------------------------------------------------------------------------------------------------------------
SIX MONTHS Year Ended SIX MONTHS Year Ended
ENDED JUNE 30, December 31, ENDED JUNE 30, December 31, MAY 4, 1994 TO
1994 1993 1994 1993 JUNE 30, 1994
(000) (000) (000) (000) (000)
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . $ 10,401 $ 8,240 $ 2,406 $ 2,833 $ 56
Realized Net Gain . . . . . . . . . . 1,391 776 2,666 2,508 2
Change in Unrealized Appreciation
(Depreciation) . . . . . . . . . . (32,811) 97,183 94,927 58,530 (341)
- - -------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations . . . (21,019) 106,199 99,999 63,871 (283)
- - -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . (1,687) (8,362) -- (2,867) --
Realized Net Gain . . . . . . . . . . -- -- -- (2,387) --
- - -------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . (1,687) (8,362) -- (5,254) --
- - -------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued -- Regular . . . . . . . . . 101,331 190,298 96,736 205,281 7,322
-- In Lieu of Cash
Distributions . . . . . . 1,446 7,046 -- 4,530 --
-- Exchange . . . . . . . . . 48,406 124,502 75,830 174,449 12,946
Redeemed -- Regular . . . . . . . . . (28,241) (40,561) (34,382) (72,255) (63)
-- Exchange . . . . . . . . . (33,250) (34,640) (38,242) (84,944) (130)
- - -------------------------------------------------------------------------------------------------------------------
Net Increase from
Capital Share Transactions . . . 89,692 246,645 99,942 227,061 20,075
- - -------------------------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . 66,986 344,482 199,941 285,678 19,792
- - -------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . 600,845 256,363 492,615 206,937 --
- - -------------------------------------------------------------------------------------------------------------------
End of Period (3) . . . . . . . . . . $ 667,831 $600,845 $ 692,556 $492,615 $ 19,792
===================================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . $ .03 $ .17 -- $ .06 --
Realized Net Gain . . . . . . . -- -- -- $ .05 --
- - -------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . 12,384 29,683 15,310 36,353 1,890
Issued in Lieu of Cash
Distributions . . . . . . . . . 123 584 -- 452 --
Redeemed . . . . . . . . . . . . (5,189) (7,181) (6,595) (15,525) (18)
- - -------------------------------------------------------------------------------------------------------------------
7,318 23,086 8,715 21,280 1,872
- - -------------------------------------------------------------------------------------------------------------------
(3) Undistributed (Overdistributed) Net
Investment Income . . . . . . $ 8,322 $ (392) $ 2,373 $ (33) $ 56
- - -------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EUROPEAN PORTFOLIO
- - ------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
SIX MONTHS ENDED -------------------------- May 1 to
For a Share Outstanding Throughout Each Period JUNE 30, 1994 1993 1992 1991 December 31, 1990
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . $11.88 $9.33 $9.92 $9.06 $10.00
------ ----- ----- ----- ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . .16 .17 .25 .26 .16
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . . (.47) 2.55 (.58) .86 (.94)
------ ----- ----- ----- ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . (.31) 2.72 (.33) 1.12 (.78)
- - ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . (.03) (.17) (.26) (.26) (.16)
Distributions from Realized Capital Gains . . . . -- -- -- -- --
------ ----- ----- ----- ------
TOTAL DISTRIBUTIONS . . . . . . . . . . . (.03) (.17) (.26) (.26) (.16)
- - ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . $11.54 $11.88 $9.33 $9.92 $9.06
==================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . -2.61% +29.13% -3.32% +12.40% -7.23%**
- - ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . . . $668 $601 $256 $161 $96
Ratio of Expenses to Average Net Assets . . . . . . .32%* .32% .32% .33% .40%*
Ratio of Net Investment Income to Average
Net Assets . . . . . . . . . . . . . . . . . . . 3.15%* 2.05% 3.05% 3.06% 3.68%*
Portfolio Turnover Rate . . . . . . . . . . . . . . 5%* 4% 1% 15%+ 3%
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Pacific Portfolio
- - ------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
SIX MONTHS ENDED --------------------------- May 1 to
For a Share Outstanding Throughout Each Period JUNE 30, 1994 1993 1992 1991 December 31, 1990
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . $10.13 $7.56 $9.42 $8.56 $10.00
------ ----- ----- ----- ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . .04 .06 .05 .05 .05
Net Realized and Unrealized Gain (Loss) on
Investments . . . . . . . . . . . . . . . . . . 1.91 2.62 (1.76) .86 (1.44)
------ ----- ----- ----- ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . 1.95 2.68 (1.71) .91 (1.39)
- - ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . -- (.06) (.05) (.05) (.05)
Distributions from Realized Capital Gains . . . . -- (.05) (.10) -- --
------ ----- ----- ----- ------
TOTAL DISTRIBUTIONS . . . . . . . . . . . -- (.11) (.15) (.05) (.05)
- - ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . $12.08 $10.13 $7.56 $9.42 $8.56
==================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . +19.25% +35.46% -18.17% +10.65% -14.01%**
- - ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . . . $693 $493 $207 $84 $31
Ratio of Expenses to Average Net Assets . . . . . . .32%* .32% .32% .32% .35%*
Ratio of Net Investment Income to Average Net Assets .80%* .75% .92% .70% 1.02%*
Portfolio Turnover Rate . . . . . . . . . . . . . . 3%* 7% 3% 21%+ 2%
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Subscription period for the Portfolio was May 1, 1990, to June 17,
1990, during which time all assets were held in money market
instruments. Performance measurement begins on June 18, 1990.
+ Portfolio turnover rates for 1991, excluding in-kind redemptions, were
3% and 1% for the European and Pacific Portfolios, respectively.
Note: Total return figures do not reflect the 1% transaction fee on
purchases or the annual account maintenance fee of $10.
20
<PAGE> 21
<TABLE>
<CAPTION>
EMERGING MARKETS PORTFOLIO
- - ------------------------------------------------------------------------------------------------------------------
For a Share Outstanding Throughout The Period May 4, 1994 to June 30, 1994
- - ------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . $10.00
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . .03
Net Realized and Unrealized Gain (Loss) on Investments . . . . . . . . .54
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . . . . . . . . . . .57
- - ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . . . . . . . . . . . --
Distributions from Realized Capital Gains . . . . . . . . . . . . . . . --
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . --
- - ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . $10.57
==================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +5.70%
- - ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . . . . . . . . . . . . . . $20
Ratio of Expenses to Average Net Assets . . . . . . . . . . . . . . . . . --
Ratio of Net Investment Income to Average Net Assets . . . . . . . . . . 2.94%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . 0%
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
Note: Total return does not reflect the 2% transaction fee on purchases, the 1%
transaction fee on redemptions, or the annual account maintenance fee of $10.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
Vanguard International Equity Index Fund is registered under the Investment
Company Act of 1940 as a diversified open-end investment company and consists
of the European, Pacific, and Emerging Markets Portfolios. The Portfolios
invest in foreign securities which involve 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: Securities listed on foreign exchanges are valued
at the latest quoted sales prices on the valuation date; 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 Central Europe 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 bank until maturity of
each repurchase agreement. Provisions of the agreement ensure 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. FUTURES AND FORWARD CURRENCY CONTRACTS: The European and Pacific
Portfolios utilize futures contracts to a limited extent, and may
enter into forward foreign currency contracts to protect the
securities and related receivables and payables against changes in
future foreign exchange rates. The primary risks associated with the
use of futures contracts are imperfect correlation between the change
in market value of the securities held by the Fund and the prices of
futures contracts, and the possibility of an illiquid market. Risks
associated with forward currency contracts include movement in the
value of the foreign currency relative to the U.S. dollar and the
ability of the counterparty to perform. Futures and forward currency
contracts are valued based upon their quoted daily settlement prices.
Fluctuations in the value of such contracts are recorded as unrealized
appreciation (depreciation) until terminated, at which time realized
gains (losses) are recognized. Unrealized appreciation (depreciation)
related to open futures and forward currency contracts is required to
be treated as realized gain (loss) for tax purposes.
5. OTHER: Security transactions are accounted for on the date the
securities are purchased or sold. Costs used in determining realized
gains and losses on the sale of investment securities are those of
specific securities sold. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
* B. The Vanguard Group, Inc. furnishes at cost investment advisory,
corporate management, administrative, marketing and distribution services. The
costs of such services are allocated to the Fund under methods approved by the
Board of Directors. No costs were allocated to the Emerging Markets Portfolio
for the period May 4, 1994, to June 30, 1994. At June 30, 1994, the Fund had
contributed capital of $210,000 to Vanguard (included in Other
22
<PAGE> 23
Assets), representing 1.0% of Vanguard's capitalization. The Fund's directors
and officers are also directors and officers of Vanguard.
* C. During the six months ended June 30, 1994, 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>
EUROPEAN $110,594 $17,115
- - -----------------------------------------------------------------------
PACIFIC 111,973 9,201
- - -----------------------------------------------------------------------
EMERGING MARKETS 19,089 2
- - -----------------------------------------------------------------------
</TABLE>
* D. At June 30, 1994, unrealized appreciation (depreciation) of investment
securities for Federal income tax purposes was:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------
(000)
-----------------------------------------------------
Net Unrealized
Appreciated Depreciated Appreciation
Portfolio Securities Securities (Depreciation)
- - ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EUROPEAN $ 74,372 $(28,109) $ 46,263
- - ---------------------------------------------------------------------------------------------
PACIFIC 140,650 (6,997) 133,653
- - ---------------------------------------------------------------------------------------------
EMERGING MARKETS 415 (756) (341)
- - ---------------------------------------------------------------------------------------------
</TABLE>
At June 30, 1994, the aggregate settlement value of open Eurotop futures
contracts (European Portfolio) and Japan-Topix futures contracts (Pacific
Portfolio) expiring in September 1994, the related unrealized depreciation, and
the market value of securities deposited as initial margin for those contracts
were:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------
(000)
--------------------------------------------------
Market Value
Aggregate of Securities
Settlement Unrealized Deposited as
Portfolio Value Depreciation Initial Margin
- - ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EUROPEAN $7,475 $(374) $ 396
- - ---------------------------------------------------------------------------------------------
PACIFIC 4,939 (17) 1,980
- - ---------------------------------------------------------------------------------------------
</TABLE>
Under terms of open forward currency exchange contracts at June 30, 1994, the
Portfolios were obligated to receive foreign currencies in exchange for U.S.
dollars as follows:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------
(000)
--------------------------------------------------
Portfolio/ Foreign U.S. Unrealized
Contract Date Currency Dollars Appreciation
- - ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EUROPEAN
RECEIVE 9/22/94 ECU* 6,674 $7,849 $ 131
- - ---------------------------------------------------------------------------------------------
PACIFIC
RECEIVE 9/14/94 YEN 488,603 4,748 232
- - ---------------------------------------------------------------------------------------------
</TABLE>
*ECU--European Currency Units.
* E. The market values of securities on loan to broker/dealers at June 30,
1994, and the cash collateral received with respect to such loans, were:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------
(000)
--------------------------------
Market Value Cash
of Loaned Collateral
Portfolio Securities Received
- - ------------------------------------------------------------------------
<S> <C> <C>
EUROPEAN $113,563 $122,674
- - ------------------------------------------------------------------------
PACIFIC 147,370 155,084
- - ------------------------------------------------------------------------
</TABLE>
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.
23
<PAGE> 24
THE VANGUARD FAMILY OF FUNDS
MONEY MARKET FUNDS
Vanguard Money Market Reserves
TAX-EXEMPT MONEY MARKET FUNDS
Vanguard Municipal Bond Fund-Money Market Portfolio
Vanguard State Tax-Free Funds (CA, NJ, OH, PA)
TAX-EXEMPT INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds (CA, FL, NJ, NY, OH, PA)
FIXED INCOME FUNDS
Vanguard Admiral Funds
Vanguard Bond Index Fund
Vanguard Fixed Income Securities Fund
Vanguard Preferred Stock Fund
BALANCED FUNDS
Vanguard Asset Allocation Fund
Vanguard Balanced Index Fund
Vanguard STAR Fund
Vanguard/Wellesley Income Fund
Vanguard/Wellington Fund
EQUITY FUNDS
GROWTH AND INCOME FUNDS
Vanguard Convertible Securities Fund
Vanguard Equity Income Fund
Vanguard Index Trust
Vanguard Quantitative Portfolios
Vanguard/Trustees' Equity Fund-U.S. Portfolio
Vanguard/Windsor Fund
Vanguard/Windsor II
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 Equity Index Fund
Vanguard International Growth Portfolio
Vanguard/Trustees' Equity Fund-International Portfolio
The Vanguard Group * Vanguard Financial Center
Valley Forge, PA 19482
New Account Information: 1-(800) 662-7447
Shareholder Account Services: 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.
Q722-06/94
VANGUARD
INTERNATIONAL
EQUITY INDEX FUND
[PHOTO -- SEE EDGAR APPENDIX]
SEMIANNUAL REPORT
JUNE 30, 1994
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