<PAGE> 1
CHAIRMAN'S LETTER
FELLOW SHAREHOLDER:
During the six months ended June 30, the first half of the 1995 fiscal year of
Vanguard International Equity Index Fund, the returns earned by stocks in
international markets were well below the extraordinary returns achieved in the
strong U.S. bull market. The total return of the U.S.-based Standard & Poor's
500 Composite Stock Price Index was +20.2%, while the total return of the
Morgan Stanley Capital International (MSCI) World Index--excluding the U.S.--at
+3.1%, was barely positive.
International stock returns were, of course, reflected in the total
returns (capital change plus income) of our three International Equity Index
Portfolios over the past six months. This table presents the performance of
each Portfolio relative to its MSCI target index:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Total Return
--------------------
Six Months Ended
June 30, 1995
- --------------------------------------------------------------------
<S> <C>
VANGUARD EUROPEAN PORTFOLIO +13.9%
MSCI* EUROPE (FREE) INDEX +13.1
- --------------------------------------------------------------------
VANGUARD PACIFIC PORTFOLIO - 5.7%
MSCI* PACIFIC (FREE) INDEX - 5.5
- --------------------------------------------------------------------
VANGUARD EMERGING MARKETS PORTFOLIO 0.0%
MSCI* SELECT EMERGING MARKETS (FREE) INDEX + 0.5
- --------------------------------------------------------------------
</TABLE>
* Morgan Stanley Capital International.
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 past six months is included in each Portfolio's net asset
value.
THE PERIOD IN REVIEW
If the rise of the U.S. stock market could be described as "soaring," the
decline in Pacific Basin stocks (particularly in Japan) was equally
unremitting. Returns on European bourses fell between these extremes, holding
generally flat in the first quarter, only to rally during the second quarter.
Emerging markets were roughly unchanged on balance during the six months,
albeit with a substantial amount of interim volatility, as large declines in
the first quarter were more than offset by a solid rebound in the second.
Throughout most of the world, the U.S. dollar continued to display
significant weakness. A weak dollar enhances the returns in foreign markets for
U.S. investors, since foreign currency can purchase more dollars. During the
past six months, as the table below shows, U.S. markets provided by far the
highest returns, while international markets provided somewhat more competitive
returns for Americans than for their own citizens because of the currency
impact.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Total Return
--------------------------------------------
Six Months Ended June 30, 1995
- --------------------------------------------------------------------
Return in Currency Return in
Index Local Currency Impact U.S. Dollars
- --------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES +20.2% 0.0% +20.2%
EUROPEAN + 5.7 + 7.4 +13.1
PACIFIC -17.2 +11.7 - 5.5
EMERGING MARKETS + 2.3 - 1.8 + 0.5
- --------------------------------------------------------------------
</TABLE>
The net result, as you can see, is that the "currency risk" we have warned
about in the past became largely a "currency reward" during the first half of
1995.
In any event, our tracking of the MSCI target indexes remained
exceptionally good during the period, as it has throughout the (now) five-year
history of our European and Pacific Portfolios, and during the past year in
which our Emerging Markets Portfolio has been in operation. This fact is
evident from the table presented at the outset of this letter. I would note
that it is no mean challenge for an index mutual fund to provide such fine
relative returns, given the fact that the indexes themselves are theoretical
constructs, not faced with a real world in which operating expenses,
transaction costs, and cash inflows and outflows normally impose a significant
drag on fund returns.
Perhaps more to the point is that, because of the tremendous savings
from reduced transaction costs, custody fees, and investment management
expenses, our international index funds continue to provide returns that are
fully competitive with--and often superior to--the returns on traditional
professionally managed funds.
(continued)
1
<PAGE> 2
This table presents the relative results for the first half of 1995:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Total Return
--------------------------------------------
Six Months Ended June 30, 1995
- --------------------------------------------------------------------
Competitive
Vanguard Fund
Regional Portfolio Return Average Difference
- --------------------------------------------------------------------
<S> <C> <C> <C>
EUROPEAN +13.9% +11.4% +2.5%
PACIFIC - 5.7 - 2.0 -3.7
EMERGING MARKETS 0.0 - 3.2 +3.2
- --------------------------------------------------------------------
</TABLE>
I would again call your attention to the fact that it is difficult to compare
the returns in our Pacific Portfolio with other Pacific Basin funds. Our target
index currently calls for a weighting of 79% of assets in Japan, while our
average peer's weighting is but 29%. With Tokyo the worst performing major
stock market in the world during the period, we regard our performance as
relatively satisfactory.
SUMMING UP
Global markets have given a very uneven account of themselves during the past
six months. With the differing economic, political, and market valuation
factors that affect each individual nation, such an outcome should be
considered, not as the exception, but as the rule for international investing.
Nonetheless, international investing--despite the imposition of
currency risk on top of the normal market risks of equity investing--provides
added diversification for U.S. investors who have carefully considered these
risks. For investors who wish to commit a portion of their equity portfolios
(I've recommended no more than a 20% allocation of assets to international
equities) in the challenging search for higher risk-adjusted returns, we
believe that our index approach presents a highly competitive option. With
total assets of Vanguard International Equity Index Fund already having reached
$1.7 billion, it is clear that many of you agree.
Sincerely,
/s/ JOHN C. BOGLE
- -----------------
John C. Bogle
Chairman of the Board July 23, 1995
Note: Mutual fund data from Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
---------------------------------------- DIVIDENDS PER SHARE FROM
INTERNATIONAL EQUITY INDEX PORTFOLIOS DECEMBER 31, 1994 JUNE 30, 1995 NET INVESTMENT INCOME
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EUROPEAN . . . . . . . . . . . . . . . . $11.76 $13.40 --
PACIFIC . . . . . . . . . . . . . . . . 11.31 10.65 $0.01*
EMERGING MARKETS . . . . . . . . . . . . 10.87 10.87 --
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* Carry-over dividend from 1994.
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>
SINCE INCEPTION
---------------------------------
INCEPTION TOTAL CAPITAL INCOME
PORTFOLIO DATE 1 YEAR 5 YEARS RETURN RETURN RETURN
- --------------------- --------- ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
EUROPEAN* 6/18/90 +17.96% +7.62% +8.25% +6.05% +2.20%
PACIFIC* 6/18/90 -11.60 +2.18 +2.07 +1.55 +0.52
EMERGING MARKETS** 5/4/94 + 0.71 -- +5.55 +5.04 +0.51
</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.
* PERFORMANCE FIGURES ARE ADJUSTED FOR THE 1% TRANSACTION FEE ON PURCHASES AND
THE ANNUAL ACCOUNT MAINTENANCE FEE OF $10.
** PERFORMANCE FIGURES ARE ADJUSTED FOR THE 2% TRANSACTION FEE ON PURCHASES,
THE 1% TRANSACTION FEE ON REDEMPTIONS, AND THE ANNUAL ACCOUNT MAINTENANCE
FEE OF $10.
3
<PAGE> 4
TOTAL INVESTMENT RETURN TABLES
The following tables illustrate the results of single-share investments in the
European and Pacific Portfolios for the period from June 30, 1990, to June 30,
1995. During the periods 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
Portfolios today.
<TABLE>
<CAPTION>
VANGUARD INTERNATIONAL EQUITY INDEX FUND--EUROPEAN PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
PERIOD PER SHARE DATA TOTAL INVESTMENT RETURN*
- ----------------------------------------------------------------------------------------------------------------------
European Portfolio
Value with Income ----------------------------- MSCI Europe
Year Ended Net Asset Capital Gains Income Dividends & Capital Capital Income Total (Free) Index
December 31 Value Distributions Dividends Gains Reinvested Return Return Return Total Return
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INITIAL (6/90) $ 9.92 -- -- $ 9.92 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
1990 9.06 -- $.14 9.20 -12.4% +1.3% -11.1% - 9.5%
- ----------------------------------------------------------------------------------------------------------------------
1991 9.92 -- .26 10.34 + 8.4 +2.8 +11.2 +14.1
- ----------------------------------------------------------------------------------------------------------------------
1992 9.33 -- .26 10.00 - 6.9 +2.5 - 4.4 - 3.9
- ----------------------------------------------------------------------------------------------------------------------
1993 11.88 -- .17 12.91 +26.1 +1.7 +27.8 +29.3
- ----------------------------------------------------------------------------------------------------------------------
1994 11.76 $.06 .28 13.15 - 1.5 +2.3 + 0.8 + 2.8
- ----------------------------------------------------------------------------------------------------------------------
1995 (6/30) 13.40 -- -- 14.99 +12.8 0.0 +12.8 +13.1
- ----------------------------------------------------------------------------------------------------------------------
LIFETIME +44.4% +49.2%
- ----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN +7.6% +8.3%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VANGUARD INTERNATIONAL EQUITY INDEX FUND--PACIFIC PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
PERIOD PER SHARE DATA TOTAL INVESTMENT RETURN*
- ----------------------------------------------------------------------------------------------------------------------
Pacific Portfolio
Value with Income ----------------------------- MSCI Pacific
Year Ended Net Asset Capital Gains Income Dividends & Capital Capital Income Total (Free) Index
December 31 Value Distributions Dividends Gains Reinvested Return Return Return Total Return
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INITIAL (6/90) $ 9.99 -- -- $ 9.99 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
1990 8.56 -- $.03 8.59 -14.7% +0.2% -14.5% -14.7%
- ----------------------------------------------------------------------------------------------------------------------
1991 9.42 -- .05 9.51 + 8.9 +0.6 + 9.5 +11.5
- ----------------------------------------------------------------------------------------------------------------------
1992 7.56 $.10 .05 7.78 -19.5 +0.4 -19.1 -18.5
- ----------------------------------------------------------------------------------------------------------------------
1993 10.13 .05 .06 10.54 +33.3 +0.8 +34.1 +36.1
- ----------------------------------------------------------------------------------------------------------------------
1994 11.31 .06 .08 11.91 +11.1 +0.8 +11.9 +12.8
- ----------------------------------------------------------------------------------------------------------------------
1995 (6/30) 10.65 -- .01 11.23 - 6.8 +0.1 - 6.7 - 5.5
- ----------------------------------------------------------------------------------------------------------------------
LIFETIME +11.4% +12.6%
- ----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN +2.2% +2.4%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes reinvestment of income dividends and any capital gains distributions
for both the Portfolio and the Index. Portfolio performance adjusted for the
1% transaction fee on purchases and the $10 annual account maintenance fee.
Note: No adjustment has been made for income taxes payable by shareholders on
reinvested income dividends and capital gains distributions.
4
<PAGE> 5
FINANCIAL STATEMENTS
(unaudited)
June 30, 1995
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
Market
Value
EUROPEAN PORTFOLIO Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (99.5%)
- -------------------------------------------------------------------------------
AUSTRIA (.8%)
* Austrian Airlines 2,378 $ 403
Bank Austria AG 1,460 52
Bank Austria AG Pfd. 950 44
Bank Austria AG (Ptg. Ctf.) 12,612 1,050
BWT (Benck Wassertech) 610 74
Creditanstalt Bank AG 12,540 739
Creditanstalt Bank AG Pfd. 9,738 561
Ea-Generali AG 1,661 490
Ea-Generali AG Pfd. 214 34
Lenzing 750 70
Oest Brau-Beteiligungs AG 1,750 92
Oest Elektrizitaetswirts Class A 15,405 1,130
OMV AG 11,307 1,305
Radex-Heraklith 2,110 72
Steyr-Daimler-Puch 1,944 35
Strabag Oesterreich 716 108
* Universale-Bau 1,000 41
Veitsch-Radex AG 6,610 158
Wienerberger Baustoffindustrie AG 870 334
---------
GROUP TOTAL 6,792
---------
- -------------------------------------------------------------------------------
BELGIUM (2.2%)
Bekaert NPV 1,537 1,215
Cimenteries NPV 1,060 436
Cimenteries VVPR NPV 1,050 428
Delhaize Freres 20,028 913
Electrabel NPV 14,632 3,111
Electrabel VVPR NPV 3,400 723
Fortis AG NPV 9,197 973
Generale de Banque NPV 4,560 1,465
Gevaert Photo Products NPV 15,900 880
Glaverbel 2,790 364
Group Bruxelles Lambert SA 5,950 797
Kredietbank NPV 5,938 1,404
Kredietbank VVPR NPV 1,000 237
Petrofina SA 6,760 2,040
Royale Belge NPV 4,000 753
Royale Belge VVPR NPV 510 95
Solvay et Cie. SA 3,025 1,674
Tractebel NPV 2,050 744
Tractebel VVPR NPV 120 43
* Union Miniere SA 8,168 534
---------
GROUP TOTAL 18,829
---------
- -------------------------------------------------------------------------------
DENMARK (1.8%)
Aarhus Oliefabrik A 1,620 99
Aarhus Oliefabrik B 840 51
Carlsberg Series A 8,875 411
Carlsberg Series B Pfd. 8,449 391
Danisco 15,135 656
Danske Luftfartselsk AB 1,120 85
Den Danske Bank AF 23,200 1,456
D/S 1912 B 70 1,335
D/S Svendborg B 50 1,370
* East Asiatic Co. 3,600 104
FLS Industries Class B 3,548 352
GN Store Nord 1,150 89
ISS (International Service Systems)
Series B 15,619 408
* J Lauritzen Holding B 1,065 209
Korn-Og Foderstof 2,450 100
NKT (Nordisk Kabel) 14,200 841
Novo-Nordisk Class B 7,166 764
Radiometer Class B 6,508 377
Royal Copenhagen A 100 9
Sophus Berendsen Class A 3,483 328
Sophus Berendsen Class B 6,200 584
Superfos 8,330 679
Teledanmark B 48,595 2,704
* Unidanmark Class A 25,677 1,260
---------
GROUP TOTAL 14,662
---------
- -------------------------------------------------------------------------------
FINLAND (1.3%)
Amer Group A 4,520 82
Cultor Oy-Series 1 2,750 89
Cultor Oy-Series 2 4,420 140
* Instrumentarium Class A 1,000 19
Instrumentarium Class B 3,140 59
* Kansallis Osake 210,600 229
Kesko 16,170 162
Kone Class B 228 26
Kymmene Oy 26,154 813
Metra Oy A 3,170 135
Metra Oy B 17,128 753
Nokia AB A 37,700 2,204
Nokia AB K 58,600 3,425
* Outokumpu A 46,450 771
Pohjola A 21,688 329
Pohjola B 6,300 99
Repola Oy 66,808 1,406
Sampo A 7,601 382
* Stockmann AB Oy A 1,200 60
* Stockmann AB Oy B 1,380 58
---------
GROUP TOTAL 11,241
---------
- -------------------------------------------------------------------------------
FRANCE (12.5%)
Accor 12,900 1,719
Air Liquide 11,665 1,865
Alcatel Alsthom 49,296 4,442
AXA 62,775 3,393
Banque Nationale de Paris 72,554 3,502
BIC 3,250 536
Bongrain 160 96
</TABLE>
5
<PAGE> 6
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Bouygues 8,732 $ 1,047
BSN-Gervais Danone 30,278 5,097
Carrefour 8,780 4,501
Casino Guichard Perrachon 6,000 135
Casino Guichard Perrachon Pfd. 14,600 426
Chargeurs SA 1,831 357
* Club Mediterranee 4,260 435
CMB Packaging 17,805 796
Compagnie Bancaire 10,061 1,204
Compagnie Financiere de Suez 44,791 2,494
Comptoirs Modernes 2,392 738
Credit Foncier France 4,692 520
Credit Nationale 4,222 341
DMC (Dollfus-Mieg et Cie.) 5,900 332
Docks de France 3,630 553
Eaux Cie. Generale des Eaux 42,159 4,696
Ecco 4,396 690
Elf Sanofi 12,488 692
Eridania Beghin-Say 7,785 1,201
Essilor International 4,585 834
Eurafrance 2,249 743
Europe 1 1,577 375
Finextel 21,600 316
* Geophysique 2,500 149
GTM Entrepose 3,800 300
Havas 21,093 1,671
Imetal 6,932 815
Lafarge 28,827 2,243
Lagardere Groupe 20,770 431
Legrand 5,100 810
L'Oreal 23,985 6,022
LVMH Moet-Hennessy 29,321 5,280
Lyonnaise des Eaux 22,034 2,085
Michelin Series B (Registered) 37,360 1,656
* Moulinex 14,520 351
Nord Est SA 27,800 707
Paribas A 43,844 2,637
Parisienne de Reescompte 8,003 607
Pernod-Ricard 14,113 929
Peugeot SA 16,473 2,287
Pinault-Printemps SA 8,492 1,822
Promodes 9,615 2,192
Radiotechnique 792 77
Rhone-Poulenc A 77,233 1,741
Sagem 2,040 1,172
Saint-Gobain 23,747 2,871
Saint-Louis 1,824 564
Salomon 970 439
Sanofi 18,500 1,025
Schneider SA 20,415 1,616
S.E.F.I.M.E.G. 3,350 223
Seita 18,820 558
Simco 4,328 376
Skis Rossignol 288 68
Societe Centrale des Assurance
Generales de France 22,755 2,662
Societe National Elf Aquitaine 97,265 7,193
Societe Unibail 2,180 213
Sodexho 1,550 350
Sommer Allibert 2,310 851
Sovac 7,560 671
* Thomson-C.S.F. 36,475 818
Total SA 'B' 78,177 4,709
Union Immobilier 320 31
---------
GROUP TOTAL 105,298
---------
- -------------------------------------------------------------------------------
GERMANY (14.4%)
Aachener & Muenchener
Beteiligungs (Registered) 1,250 864
Aachener & Muenchener
Beteiligungs (Bearer) 444 326
AGIV AG Industrie & Verkehr 1,887 614
Allianz AG Holdings 7,897 14,081
* Allianz AG Holdings Rights
Exp. 7/7/95 7,897 588
Asko Deutsche Kaufhaus AG 1,700 1,061
Asko Deutsche Kaufhaus AG VZA 110 60
BASF AG 24,100 5,144
Bayer AG 22,950 5,704
Bayer Vereinsbank 7,553 2,289
Bayerische Hypotheken
und Wechsel Bank 8,789 2,394
Beiersdorf AG 1,500 1,192
Bilfinger & Berger 912 421
Brau & Brunnen AG 1,992 383
* Bremer Vulk Schiff 6,033 349
Colonia Konzern AG 1,200 1,081
Colonia Konzern Rfd. 173 153
Colonia Konzern VZA 1,050 677
Continental AG 2,200 321
Daimler Benz AG 17,770 8,153
Degussa AG 1,692 524
Deutsche Bank AG 176,050 8,547
* Didier Werke 760 65
DLW 340 91
Douglas Holding AG 962 361
Dresdner Bank AG 143,110 4,136
Dyckerhoff AG 650 315
Dyckerhoff VZA 990 315
Escada STA 470 100
Escada VZA 540 104
* Fag Kugelfischer STA 350 48
Fag Kugelfischer VZA 800 103
Heidelberger Zement 1,500 1,279
Herlitz STA 1,000 212
Herlitz VZA 1,815 354
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Hochtief 1,359 $ 749
Holsten-Brauerei 337 85
Industrie-Werke Karlsruheaugsburg 450 99
Karstadt AG 2,300 1,009
Kaufhof AG 2,090 746
Kaufhof AG Pfd. 1,250 327
* Kloeckner-Humboldt-Deutz 4,500 146
Linde AG 1,404 832
* Linotype AG 950 210
Lufthansa 13,737 1,985
Lufthansa VZA 700 102
Man AG 1,875 483
Man Vorzug AG 2,050 407
Mannesmann AG 12,329 3,763
Munchener Ruckvers 2,520 5,517
Munchener Ruckvers STA 120 227
Preussag AG 3,480 1,038
* PWA Papierwerke Waldhof 3,300 592
Rheinisch-Westfaelisches
Elektrizitaetswerk AG 18,675 6,483
Rheinisch-Westfaelisches
Elektrizitaetswerk AG Pfd. 8,118 2,231
Rheinmetall 1,900 335
Rheinmetall VZA 750 105
Salamander 430 89
Sap AG 2,085 2,764
Sap AG Pfd. 1,570 1,977
Schering AG 24,950 1,741
Siemens AG 20,280 10,059
Strabag Bau AG 1,693 485
Strabag Bau AG Pfd. 143 31
* Thyssen AG 7,710 1,434
Veba AG 19,883 7,808
Viag AG 6,206 2,447
Volkswagen AG 8,300 2,396
Volkswagen AG Pfd. 1,850 408
---------
GROUP TOTAL 121,519
---------
- -------------------------------------------------------------------------------
HONG KONG (.3%)
HSBC Holdings PLC 220,000 2,822
---------
- -------------------------------------------------------------------------------
IRELAND (.6%)
Allied Irish Banks 179,900 848
* Aran Energy Ltd. 151,130 96
* Crean, James Ltd. 27,780 111
CRH PLC 79,200 529
FYFFES PLC 56,930 100
Greencore PLC 25,000 188
Independent News PLC 175,263 952
Irish Life PLC 93,700 310
Jefferson Smurfit Group 364,400 1,098
Kerry Group A 21,160 139
Waterford Wedgewood 520,880 443
Woodchester Holdings 9,100 22
---------
GROUP TOTAL 4,836
---------
- -------------------------------------------------------------------------------
ITALY (4.4%)
Aedes 5,000 31
Aedes Risp. 17,060 55
* Alitalia Linee 111,220 53
* Alitalia Linee Priv. 683,496 228
Assicurazioni Generali 301,778 7,088
Banca Commerciale Italiana Risp. 480,000 1,083
* BNA 176,925 134
* BNA Pfd. 545,637 235
* BNA Risp. 10,000 4
Banco Ambrosiano Veneto 131,255 434
Banco Ambrosiano Veneto Risp. 65,920 89
Benetton Group SPA 54,000 535
* Burgo (Cartiere) SPA 84,100 555
Cementir SPA 96,680 83
Credito Italiano 692,380 801
* Dalmine 500,000 117
Danieli & Co. 11,090 71
Danieli & Co. Risp. 9,000 27
Edison SPA 233,000 1,027
* Falck, Accia & Ferr 58,000 81
Fiat SPA 1,089,500 3,842
Fiat SPA Pfd. 454,000 984
Fiat SPA Risp. 144,000 309
Fidis 132,500 281
Franco Tosi SPA 24,100 224
Impregilo SPA 65,000 62
Istituto Bancario San Paolo SPA 246,000 1,332
Italcementi 46,057 317
Italcementi Risp. 46,235 145
Italgas 119,750 311
La Previdente 8,000 58
Lane Marzotto 11,800 74
Lane Marzotto Risp. 5,000 37
Magnetti Marelli 263,500 499
Mediobanca Banca Di Credito Finanziar 119,300 866
* Montedison Risp. 260,000 158
* Montedison SPA 1,499,274 1,070
* Olivetti & Cie. Risp. 30,000 21
* Olivetti & Cie. SPA 272,250 265
* Olivetti & Cie. SPA Pfd. 5,000 6
Parmalat Finanziaria SPA 136,000 121
* Pirelli SPA 314,000 414
* Pirelli SPA Risp. 46,300 46
RAS 80,550 852
RAS Risp. 36,000 229
Rinascente 127,062 721
Rinascente Priv. 15,000 39
Rinascente (la) Risp. 6,000 16
</TABLE>
7
<PAGE> 8
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Risanamento Napoli 1,250 $ 16
* Saffa 21,790 71
SAI 53,730 574
SAI Risp. 18,000 77
Saipem 71,500 143
Sasib 14,960 69
Sasib Risp. 24,000 64
Sirti SPA 92,690 685
SME Meridonale Finanziaria 52,945 132
* SNIA Bpd 629,000 717
* SNIA Bpd Risp. 29,411 35
* SNIA Bpd Risp. (non-cvt.) 20,000 12
Telecom Italia 2,477,166 6,692
Telecom Italia Risp. 576,944 1,215
---------
GROUP TOTAL 36,532
---------
- -------------------------------------------------------------------------------
NETHERLANDS (8.5%)
ABN AMRO Holding NV 108,954 4,202
Ahold NV 41,070 1,470
Akzo NV 24,000 2,867
Elsevier NV 240,190 2,835
Getronics NV 13,579 665
Heineken NV 17,276 2,613
Hollandsche Beton Groep NV 1,380 238
Hoogovens & Staalf 17,549 697
IHC Caland NV 4,660 132
Internationale Nederlanden Groep 102,019 5,639
KLM Royal Dutch Airlines 32,247 1,046
Koninklijke KNP BT NV 41,914 1,260
Koninklijke PTT Nederland NV 159,350 5,724
Nedlloyd Group NV 15,351 523
Oce van der Grinten 10,607 598
Philips Electronics NV
(Non-Voting) 131,355 5,557
Royal Dutch Petroleum 202,104 24,662
Royal Pakhoed Holdings 15,152 463
Stad Rotterdam 14,180 386
Stork VMF 14,772 399
Unilever NV 62,687 8,248
Wolters Kluwer 14,123 1,245
---------
GROUP TOTAL 71,469
---------
- -------------------------------------------------------------------------------
NORWAY (1.0%)
Aker AS A 18,723 251
Aker AS B 3,920 49
Bergesen Series A 24,616 559
Bergesen Series B 16,236 369
Dyno Industrier AS 21,896 554
Elkem A 17,920 250
Hafslund Nycomed AS A 16,861 398
Hafslund Nycomed AS B 16,622 384
Kvaerner Industries AS A 9,300 425
Kvaerner Industries AS B 3,800 166
Lief Hoegh 9,000 122
Norsk Hydro 66,294 2,769
Norske Skog Industries A 9,530 334
Norske Skog Industries B 3,140 104
Orkla AS A 22,100 988
Orkla AS B 2,580 109
Unitor 2,500 44
* Vard A 105,500 193
---------
GROUP TOTAL 8,068
---------
- -------------------------------------------------------------------------------
SPAIN (3.2%)
Acerinox SA 7,816 960
* Aguila (El) SA 33,558 251
Alba 7,265 375
Argentaria SA 41,000 1,515
Autopista Acesa 46,727 453
Banco Bilbao Vizcaya 46,621 1,346
Banco Central Hispanoamericano 9,402 199
Banco Santander 37,727 1,488
Dragados y Construcciones SA 34,796 506
Ebro Agricolas 28,444 296
Empresa Nacional de Electricidad SA 68,009 3,359
ENCE-Emprese Nacional
Celulosa SA 11,200 285
Ercros 80,232 91
Fabrica Auto Renault de Espana 9,213 276
Fomento de Construciones y Contra 7,208 613
Gas Natural 16,552 1,977
Iberdrola 140,963 1,062
Immobiliaria Metropolitana
Vasca Central SA 10,509 312
Inmobiliaria Urbis 18,280 92
Mapfre 16,521 812
* Metal Duro Felguera 110,508 456
Portland Valderrivas 3,848 264
Prosegur Compania 3,930 95
Repsol SA 81,837 2,575
* Sarrio Papelera 36,340 184
Tabacalera SA 20,206 756
Telefonica de Espana 351,468 4,528
Union Electrica Fenosa 27,737 130
* Uralita 61,764 745
Vallehermoso SA 27,198 466
Viscofan Envoltura 21,160 313
Zardoya Otis SA 2,206 227
---------
GROUP TOTAL 27,007
---------
- -------------------------------------------------------------------------------
SWEDEN (3.8%)
Aga AB Series A 89,150 1,047
Aga AB Series B 9,000 106
Asea AB Series A Free 43,168 3,717
Asea AB Series B Free 9,500 806
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Astra AB Series A 172,000 $ 5,303
Astra AB Series B 38,830 1,168
Atlas Copco AB Series A 67,000 939
Atlas Copco AB Series B Free 8,690 121
Electrolux Series B 29,900 1,359
Esselte AB Series A 5,660 71
Esselte AB Series B 5,790 72
Euroc Industries Series A 6,880 137
Hennes & Mauritz Series B 11,888 695
SCA Svenska Cell Series B 61,646 1,143
S E Banken Series A 181,353 941
Securitas Series B 4,070 141
Skandia 33,072 640
Skanska Series B 49,158 1,134
* SKF AB Series A 11,140 223
SKF AB Series B 5,400 109
Stora Kopparberg Series A 63,705 853
Stora Kopparberg Series B 3,550 48
Svenska Handelsbanken, Inc. Series A 61,330 914
Svenska Handelsbanken, Inc. Series B 3,360 47
Telefon AB L.M. Ericsson Series B 303,200 6,038
* Trelleborg AB Series B 41,898 489
Volvo AB Series A 41,000 780
Volvo AB Series B 139,369 2,651
---------
GROUP TOTAL 31,692
---------
- -------------------------------------------------------------------------------
SWITZERLAND (11.0%)
* Adia SA (Bearer) 3,017 626
Alusuisse-Lonza Holding AG (Bearer) 891 561
Alusuisse-Lonza Holding AG
(Registered) 2,085 1,307
BBC Brown Boveri AG A (Bearer) 1,965 2,033
BBC Brown Boveri AG B 620 124
Ciba Geigy AG 925 677
Ciba Geigy AG (Bearer) 9,196 6,737
CS Holdings (Registered) 60,095 5,503
Danzas Holding AG (Ptg. Ctf.) 270 46
Danzas Holding AG (Registered) 120 103
Forbo Holding AG (Registered) 380 185
Georg Fischer (Bearer) 190 256
Georg Fischer (Registered) 210 55
Grands Magasins Jelmoli (Bearer) 280 153
Grands Magasins Jelmoli (Registered) 610 66
Holderbank Financiere Glarus AG
(Bearer) 520 427
Holderbank Financiere Glarus AG
(Registered) 1,500 251
Interdiscount Holding (Bearer) 50 52
Interdiscount Holding (Ptg. Ctf.) 510 52
Kuoni Reisen NB (Registered) 120 193
Merkur Holding AG 1,471 412
Movenpick Holding (Bearer) 310 122
Movenpick Holding (Ptg. Ctf.) 200 90
Nestle SA (Registered) 14,089 14,663
Roche Holdings AG (Bearer) 643 7,116
Roche Holdings Ltd. 2,584 16,642
Sandoz AG (Bearer) 250 175
Sandoz AG (Registered) 11,840 8,160
Schindler Holdings AG 20 115
Schindler Holdings AG (Ptg. Ctf.) 60 58
Schindler Holdings AG (Registered) 90 95
Sika Finanz B 860 272
SMH (Bearer) 1,172 753
SMH (Registered) 4,750 639
Societe Generale de Surveillance
Holdings SA (Bearer) 522 906
Societe Generale de Surveillance
Holdings SA (Registered) 120 39
Sulzer (Ptg. Ctf.) 50 32
Sulzer (Registered) 300 203
Swiss Bank Corp. (Bearer) 6,939 2,457
Swiss Bank Corp. (Registered) 11,327 2,011
* Swiss Reinsurance (Bearer) 575 443
* Swiss Reinsurance (Registered) 4,233 3,259
* Swissair Inhaber (Registered) 400 277
Union Bank of Switzerland (Bearer) 8,061 8,347
Union Bank of Switzerland (Registered) 9,260 2,042
Zurich Insurance (Bearer) 1,293 1,621
Zurich Insurance (Registered) 2,082 2,615
---------
GROUP TOTAL 92,971
---------
- -------------------------------------------------------------------------------
UNITED KINGDOM (33.7%)
Abbey National 571,804 4,257
Amec PLC 94,340 97
Amstrad PLC 59,889 236
Anglian Water 217,661 1,735
Argos PLC 178,614 1,228
Argyll Group PLC 516,921 2,759
Arjo Wiggins Appleton PLC 275,332 1,126
Associated British Foods PLC 289,116 3,054
Barclays PLC 745,975 8,016
Barratt Development 145,451 422
Bass PLC 374,232 3,581
B.A.T. (British American
Tobacco) Industries 1,246,709 9,540
BBA Group 253,006 966
B.E.T. PLC 416,743 815
BICC PLC 146,295 691
Blue Circle Industries 302,009 1,348
BOC Group 266,351 3,402
Boots Co. PLC 422,473 3,421
Bowthorpe PLC 155,249 916
BPB Industries Ltd. 236,357 1,167
British Aerospace 162,191 1,453
British Airways PLC 393,433 2,579
British Gas 1,827,813 8,418
</TABLE>
9
<PAGE> 10
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
British Land Co., PLC 141,744 $ 901
British Petroleum Co. 1,968,619 14,109
British Steel 641,438 1,753
British Telecommunications PLC 2,315,112 14,437
BTR PLC 1,439,153 7,315
Burmah Castrol PLC 72,161 1,045
Cable and Wireless PLC 874,311 5,981
Cadbury Schweppes PLC 394,424 2,880
Calor Group 88,819 360
Caradon PLC 213,803 803
Carlton Communications PLC 56,378 854
Chubb Security PLC 101,311 506
Coats Viyella PLC 187,389 554
Cobham PLC 29,000 175
Commercial Union 278,814 2,595
* Costain Group 35,702 60
Courtalds Textiles 17,193 128
Courtaulds PLC 181,285 1,293
Dawson International PLC 85,165 156
De La Rue Co. PLC 89,165 1,328
Delta Group British 33,049 255
East Midlands Electric 39,986 408
Eastern Group 49,902 516
ECC Group (English China Clays) 46,508 287
Electrocomponents PLC 43,988 420
FKI 168,244 426
* FKI Nil Paid Rights Exp. 7/7/95 42,060 21
Forte PLC 234,082 847
General Accident PLC 114,389 1,048
General Electric PLC 1,113,978 5,440
George Wimpey PLC 112,698 204
GKN 74,985 765
Glaxo Holdings PLC 1,179,289 14,474
Grand Metropolitan PLC 660,255 4,049
Great Portland Estates 51,123 138
Great Universal Stores PLC 421,127 3,936
Guardian Royal Exchange PLC 249,316 819
Guinness PLC 815,711 6,138
Hammerson Property Investment 63,516 350
Hanson 1,632,096 5,934
Harrison and Crosfield 225,273 507
Hepworth Ceramic Holdings Ltd. 50,375 226
HSBC Holdings PLC 75 P 258,934 3,343
HSBC Holdings PLC HKD 10 417,793 5,387
IMI PLC 69,098 329
Imperial Chemical Industries 193,874 2,376
Johnson Matthey PLC 44,148 403
J. Sainsbury PLC 584,963 4,109
Kingfisher PLC 182,963 1,236
Kleinwort Benson Group 45,559 516
Ladbroke Group 487,807 1,311
Laing, John 32,357 107
Laird Group 59,150 331
Land Securities PLC 158,670 1,535
Lasmo PLC 362,571 989
Legal & General Group PLC 91,518 774
Lex Services 52,726 289
Lloyds Bank Group PLC 565,086 5,605
London Electricity PLC 42,499 434
Lonrho PLC 242,458 571
Lucas Industries 329,225 987
Manweb PLC 32,418 340
Marks and Spencer PLC 998,426 6,417
Marley 42,640 78
MEPC PLC 119,000 724
Meyer International PLC 51,941 257
National Power 529,939 3,756
Next PLC 104,066 565
North West Water Group 109,672 968
Northern Electricity PLC 52,343 661
Ocean Transportation & Trading 71,755 355
Oxford Instruments 25,820 162
Pearson, S. & Son PLC 126,019 1,193
Peninsular & Orient Steam
Navigation Co. 143,201 1,318
Pilkington 352,635 979
Prov. Financial 14,000 140
Prudential Corp. 565,968 3,016
Racal Electronics PLC 81,626 333
Rank Organization Ltd. 194,710 1,230
Redland PLC 134,287 879
Reed International PLC 199,787 2,806
Reuters Holdings PLC 585,434 4,876
Rexam PLC 225,770 1,733
RMC Group PLC 34,423 578
Rolls Royce PLC 401,498 1,115
Royal Bank of Scotland 315,413 2,145
Royal Insurance Holdings 189,775 933
RTZ Corp. 345,633 4,506
Rugby Group 267,024 450
Schroders PLC 35,739 648
Scottish Power 311,598 1,604
Scottish & Newcastle Breweries 118,531 1,043
Sears PLC 613,365 971
Sedgwick Group PLC 106,450 233
Seeboard PLC 72,592 449
Slough Estates PLC 82,589 291
Smithkline Beecham PLC Class A 483,011 4,372
Smithkline Beecham PLC
Equity Unit 371,144 3,295
Smiths Industries PLC 161,923 1,336
Southern Electric PLC 51,786 528
Southern Water 36,461 349
T & N PLC 162,499 436
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Tarmac PLC 335,080 $ 600
Tate & Lyle 98,518 666
Taylor Woodrow PLC 172,537 316
Tesco PLC 549,559 2,535
Thames Water PLC 121,699 921
Thorn EMI PLC 159,336 3,308
Trafalgar House PLC 367,275 263
Transport Development 211,521 782
Tube Investment Group 76,076 470
Unigate PLC 52,393 338
Unilever PLC 315,018 6,377
United Biscuits Holdings PLC 202,267 1,031
Vickers PLC 129,129 424
Vodafone Group PLC 1,118,425 4,155
S.G. Warburg Group PLC 40,291 467
Welsh Water 30,176 319
Williams Holdings PLC 89,847 451
Willis Corroon PLC 89,536 214
Wilson C. Holdings 86,443 205
Wolseley PLC 168,836 931
Zeneca Group PLC 288,680 4,875
---------
GROUP TOTAL 284,016
---------
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $685,647) 837,754
<CAPTION>
- -------------------------------------------------------------------------------
BONDS (.2%)
- -------------------------------------------------------------------------------
Face
Amount
(000)
------------
<S> <C> <C>
SPAIN
Banco Central Hispanoamericano
10.25%, 3/11/96 ECU 1,265 814
SWITZERLAND
Holderbank Financiere Glarus
4.50%, 8/11/08 SF 445 663
ITALY
Pirelli
5.00%, 12/31/98 ITL 327,600 175
- -------------------------------------------------------------------------------
TOTAL BONDS
(Cost $1,719) 1,652
- -------------------------------------------------------------------------------
<CAPTION>
Face Market
Amount Value
(000) (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS (.4%)
- -------------------------------------------------------------------------------
U.S. TREASURY BILL--Note D
5.68%, 9/21/95 $ 500 $ 494
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account 6.13%, 7/3/95 3,222 3,222
- -------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $3,716) 3,716
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.1%)
(Cost $691,082) 843,122
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-.1%)
- -------------------------------------------------------------------------------
Other Assets--Notes B and E 112,910
Liabilities--Note E (113,756)
---------
(846)
- -------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------
Applicable to 62,842,243 outstanding
$.001 par value shares
(authorized 500,000,000 shares) $ 842,276
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $13.40
===============================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
ECU--European Currency Units
ITL--Italina Lira
SF--Swiss Francs
(Ptg. Ctf.)--Participating Certificate
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
AT JUNE 30, 1995, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------
Amount Per
(000) Share
---------- ----------
<S> <C> <C>
Paid in Capital $675,414 $10.75
Undistributed Net
Investment Income 13,799 .22
Accumulated Net
Realized Gains 1,035 .02
Unrealized Appreciation
of Investments--Note D 152,028 2.41
- -------------------------------------------------------------------------------
NET ASSETS $842,276 $13.40
- -------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
PACIFIC PORTFOLIO Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (97.6%)
- -------------------------------------------------------------------------------
AUSTRALIA (5.2%)
Aberfoyle 123,700 $ 250
Adelaide Brighton Ltd. 26,200 24
Amcor Ltd. 284,683 2,099
Ampolex 49,400 112
Ashton Mining Ltd. 47,900 68
Australia National Industries 725,131 627
Boral Ltd. 442,400 1,091
Brambles Industries, Ltd. 87,911 831
Broken Hill Proprietary Ltd. 545,937 6,703
Burns Phillip & Co. 186,330 388
Caltex Australia 30,800 90
Coca-Cola Amatil Ltd. 140,468 866
Coles Myer Ltd. 355,750 1,115
CRA Ltd. 181,900 2,468
CSR Ltd. 267,900 839
* Dominion Mining 246,575 45
Email Ltd. 197,883 481
* Emperor Mines 52,510 63
Fai Insurances Ltd. 51,800 21
Fosters Brewing Group 739,100 655
Gold Mines Kalgoorlie 115,673 103
Goodman Fielder Ltd. 464,800 385
Hardie (James) Industries 65,400 102
Howard Smith 29,500 134
ICI Australia Ltd. 77,000 502
Lend Lease Corp. 51,390 655
MIM Holdings Ltd. 393,144 488
National Australia Bank Ltd. 279,546 2,204
Newcrest Mining Ltd. 63,945 270
News Corp. Ltd. 549,164 3,060
News Corp. Ltd. Pfd. 274,582 1,355
North Ltd. 325,613 785
OPSM Industries Protector Ltd. 116,000 169
Pacific Dunlop Ltd. 374,640 786
Pioneer International 67,000 166
QCT Resources 107,600 107
Renison Goldfields
Consolidated Ltd. 34,300 108
Rothmans Holdings 103,900 354
Santos Ltd. 290,389 696
Sons of Gwalia 112,944 520
Southcorp Holdings Ltd. 312,000 621
* TNT Ltd. 126,000 165
Tubemakers of Australia 47,500 109
Western Mining Corp. 267,100 1,465
Westpac Banking Ltd. 561,771 2,031
---------
GROUP TOTAL 36,176
---------
- -------------------------------------------------------------------------------
HONG KONG (6.3%)
The Bank of East Asia Ltd. 433,840 1,306
Cathay Pacific Air Ltd. 1,095,000 1,599
Cheung Kong Holdings Ltd. 636,000 3,148
China Light and Power Co., Ltd. 606,000 3,117
Dickson Concepts 116,000 69
Giordano International 108,000 80
Hang Seng Bank Ltd. 554,800 4,230
Hong Kong Aircraft 103,600 269
Hong Kong & China Gas Co., Ltd. 760,551 1,214
Hong Kong
Telecommunication Ltd. 3,231,000 6,389
The Hong Kong and Shanghai
Hotels Ltd. 278,000 343
Hopewell Holdings Ltd. 1,509,000 1,277
Hutchison Whampoa Ltd. 879,000 4,249
Hysan Development Co., Ltd. 447,000 1,023
Johnson Electric Holdings 65,000 131
Kumagai Gumi (HK) 65,000 56
Lai Sun Garment International 43,000 44
Miramar Hotel & Investment 139,000 284
New World Development Co., Ltd. 520,000 1,731
Orient Press Group 958,000 387
Peregrine Investment Holdings 95,000 135
Playmate Toys Holdings 112,900 32
Regal Hotels International 1,190,000 235
Shangri-La Asia 248,000 293
Shun Tak Enterprises 518,000 412
South China Morning Post 1,045,000 628
Stelux Holdings 160,000 47
Sun Hung Kai Properties Ltd. 641,400 4,746
Swire Pacific Ltd. A 416,500 3,176
Tai Cheung Properties 336,500 296
Television Broadcast Ltd. 176,000 619
Wharf Holdings Ltd. 626,000 2,043
Wing Lung Bank 55,200 312
Winsor Industrial Corp. 241,500 321
---------
GROUP TOTAL 44,241
---------
- -------------------------------------------------------------------------------
JAPAN (77.1%)
Advantest Corp. 19,000 716
AIDA Engineering Ltd. 130,000 883
Ajinomoto Co., Inc. 312,000 3,201
Alps Electric Co., Ltd. 122,000 1,276
Amada Co., Ltd. 166,000 1,417
Amano Corp. 94,000 1,107
Aoki Corp. 249,000 903
Aoyama Trading 44,000 725
Arabian Oil Co., Ltd. 22,000 930
Asahi Bank Ltd. 629,000 6,705
Asahi Breweries Ltd. 290,000 3,337
Asahi Chemical Industries 643,000 4,218
Asahi Glass Co., Ltd. 474,000 5,226
* Asahi Optical 82,000 274
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Ashikaga Bank 367,000 $ 2,594
* Asics Corp. 219,000 606
Bank of Tokyo 375,000 6,007
Bank of Yokohama 327,000 2,773
Banyu Pharmaceutical 149,000 1,753
Bridgestone Corp. 279,000 4,108
Brother Industries Ltd. 135,000 604
Canon Inc. 259,000 4,210
Casio Computer Co. 107,000 964
Chiba Bank 275,000 2,494
Chiyoda Corp. 80,000 678
Chugai Pharmaceutical Ltd. 90,000 909
Citizen Watch Co. 146,000 903
Cosmo Oil Co., Ltd. 230,000 1,298
Credit Saison 21,000 453
CSK 21,200 489
Daicel Chemical Industries 26,000 133
Daido Steel Co. 106,000 499
Daiei, Inc. 225,000 2,730
Daifuku Co. 32,000 358
Dai-ichi Kangyo Bank 854,000 15,390
Daiichi Pharmaceutical Co., Ltd. 91,000 1,329
Daikin Industries Ltd. 57,000 458
Daikyo, Inc. 88,000 622
Daimaru, Inc. 80,000 405
Dai-Nippon Ink & Chemicals 153,000 654
Dai-Nippon Printing Co. Ltd. 210,000 3,339
* Dai-Nippon Screen Manufacturing 68,000 457
* Daishowa Paper Mfg. Co., Ltd. 60,000 269
Daito Trust 27,000 254
Daiwa House Industries 121,000 1,853
Daiwa Kosho Lease 52,000 478
Daiwa Securities Ltd. 391,000 4,117
* Denki Kagaku Kogyo 182,000 605
Ebara Corp. 67,000 813
Eisai Co., Ltd. 65,000 1,110
Ezaki Glico Co. 5,000 44
Fanuc Co., Ltd. 55,500 2,393
Fuji Bank 796,000 16,032
Fuji Photo Film Co., Ltd. 139,000 3,291
Fujikura Cable 60,000 351
Fujita Corp. 159,000 747
Fujita Tourist Enterprises 29,000 639
Fujitsu Ltd. 531,000 5,285
Furukawa Electric Co. 182,000 857
* Gakken Co. 6,000 37
Gunma Bank Ltd. 116,000 1,380
Gunze Ltd. 7,000 43
Hankyu Corp. 198,000 1,187
Hankyu Department Stores 45,000 535
Haseko Co. 135,000 636
Hattori Seiko 38,000 288
Hazama Corp. 52,000 216
Higo Bank 67,000 655
Hirose Electric Co., Ltd. 11,000 680
Hitachi Ltd. 924,000 9,196
Hokkaido Bank 103,000 364
Hokuriku Bank 252,000 1,840
Honda Motor Co., Ltd. 250,000 3,828
Honshu Paper Co., Ltd. 93,000 544
House Foods Industrial Co., Ltd. 27,000 566
Hoya Corp. 29,000 854
INAX 46,000 443
Industrial Bank of Japan 645,000 16,790
Isetan Co. 55,000 745
* Ishihara Sangyo 108,000 321
Itochu Corp. 439,000 2,560
Itoham Food Co., Ltd. 66,000 505
Ito-Yokado Co. 116,080 6,112
Iwatani & Co. 78,000 367
Jaccs Co. 46,000 428
* Japan Air Lines Co., Ltd. 448,000 2,971
Japan Energy Corp. 388,000 1,257
* Japan Metals & Chemicals 8,000 37
* Japan Steel Works Ltd. 99,000 220
* Jeol Ltd. 18,000 117
JGC Corp. 47,300 460
Joyo Bank 204,000 1,725
Jusco Co., Ltd. 83,000 1,721
Kajima Corp. 221,000 2,192
Kaken Pharmaceutical 3,000 28
Kamigumi Co. 44,000 441
Kandenko Co. 50,600 691
* Kanebo Ltd. 117,000 258
Kaneka Corp. 78,000 502
Kansai Electric Power, Inc. 276,400 7,423
Kansai Paint Co., Ltd. 115,000 580
Kao Corp. 155,000 1,862
Katokichi Co., Ltd. 27,000 557
* Kawasaki Kisen Kaisha Ltd. 189,000 490
* Kawasaki Steel Corp. 852,000 2,790
Keihin Electric Express
Railway Co. Ltd. 100,000 660
Kikkoman Shoyu Co. 55,000 382
Kinden Corp. 85,800 1,637
Kinki Nippon Railway 453,000 3,970
Kirin Brewery Co., Ltd. 235,000 2,491
Kissei Pharmaceutical 20,900 662
* Kobe Steel Ltd. 779,000 1,853
Kokuyo Co., Ltd. 36,000 806
Komatsu Ltd. 223,000 1,699
Komori Corp. 22,000 448
Konami Industry Co. 11,000 192
Konica Corp. 79,000 483
Koyo Seiko Co. 70,000 519
Kubota Ltd. 329,000 2,093
</TABLE>
13
<PAGE> 14
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Kumagai Gumi Co., Ltd. 196,000 $ 820
Kurabo Industries Ltd. 76,000 274
Kuraray Co., Ltd. 60,000 651
Kureha Chemical Industries 88,000 352
Kurita Water Industries 38,000 976
Kyocera Corp. 50,000 4,111
Kyowa Hakko Kogyo 94,000 908
Kyudenko Corp. 3,000 42
Lion Corp. 85,000 491
Maeda Road Construction Co., Ltd. 20,000 386
* Makino Milling 7,000 41
Makita Corp. 40,000 547
Marubeni Corp. 390,000 1,980
Marudai Food Co. 6,000 40
* Maruha Corp. 13,000 44
Marui Co. 82,000 1,304
Matsushita Electric
Industries Co., Ltd. 589,000 9,158
Meiji Milk Products Co. 59,000 331
Meiji Seika Kaisha Ltd. 91,000 531
Minebea Co., Ltd. 95,000 609
Misawa Homes Co., Ltd. 49,000 413
Mitsubishi Corp. 436,000 4,956
Mitsubishi Chemical Corp. 523,000 2,236
Mitsubishi Electric Co. 599,000 4,205
Mitsubishi Estate Co., Ltd. 413,000 4,646
Mitsubishi Gas & Chemical 107,000 454
Mitsubishi Heavy Industries Ltd. 863,000 5,855
Mitsubishi Material 253,000 1,132
Mitsubishi Oil 98,000 940
Mitsubishi Paper Mills 75,000 394
* Mitsubishi Steel Manufacturing 77,000 375
Mitsubishi Trust & Banking Corp. 414,000 5,852
Mitsubishi Warehouse &
Transportation 35,000 478
Mitsui & Co., Ltd. 415,000 3,236
* Mitsui Engineering & Ship Building 184,000 399
Mitsui Fudosan Co. 197,000 2,253
Mitsui Marine & Fire Insurance 195,000 1,277
* Mitsui Mining & Smelting Co., Ltd. 134,000 398
* Mitsui Osk Lines Ltd. 362,000 1,002
Mitsui Soko 36,000 261
Mitsui Toatsu Chemicals Inc. 128,000 470
Mitsui Trust & Banking Co. 322,000 2,958
Mitsukoshi Ltd. 122,000 871
Mochida Pharmaceutical 39,600 606
Mori Seiki Co. 24,000 427
Murata Manufacturing Co. Ltd. 64,000 2,420
Nagase & Co. 5,000 39
Nagoya Railroad Co. 165,000 871
Nankai Railway 115,000 843
NEC Corp. 409,000 4,475
NGK Insulators 73,000 661
NGK Spark Plug Co. 50,000 554
* NKK Corp. 848,000 1,988
NTN Corp. 86,000 506
Nichido Fire Marine 91,000 734
Nichii Co., Ltd. 56,000 607
Nichirei 73,000 442
Nihon Cement Co. 62,000 376
* Niigata Engineering Co. 102,000 300
Nippon Beet Sugar 10,000 39
Nippon Comsys Corp. 37,400 454
Nippon Denko 11,000 34
Nippon Denso Co., Ltd. 231,000 4,190
Nippon Express Co., Ltd. 304,000 2,793
Nippon Fire & Marine 129,000 811
Nippon Light Metal Co. 140,000 635
Nippon Meat Packers, Inc. 80,000 1,168
Nippon Oil Co., Ltd. 298,000 1,871
Nippon Oil Fats 8,000 43
Nippon Paper Industries Co. 260,000 1,684
Nippon Seiko Kabushiki 107,000 616
Nippon Sharyo Seizo Kaisha 43,000 348
Nippon Sheet Glass Co. 91,000 406
Nippon Shinpan Co. 58,000 372
Nippon Shokubai 70,000 618
Nippon Steel Corp. 1,802,000 5,858
* Nippon Suisan Kaisha 110,000 520
Nippon Yusen 351,000 1,964
Nishimatsu Construction 62,000 730
Nissan Motor Co., Ltd. 606,000 3,869
Nisshinbo Industries 57,000 449
Nissin Food 34,000 833
Nitto Denko Corp. 40,000 622
Nomura Securities Co., Ltd. 534,000 9,309
Noritake Co., Ltd. 58,000 387
Odakyu Electric Railway 186,000 1,350
Ohbayashi-Gumi Ltd. 190,000 1,459
OJI Paper Co., Ltd. 197,000 1,891
Okamoto Industries 6,000 34
Okuma Machinery Works 51,000 324
Okumura Corp. 78,000 740
Olympus Optical Ltd. 62,000 509
Omron Tateisi Electronics Co. 57,000 1,088
Onoda Cement 161,000 732
Onward Kashiyama Co. 44,000 596
Orient Corp. 67,000 335
Orix Corp. 19,000 631
Osaka Gas Co., Ltd. 731,000 2,695
Penta Ocean Construction 138,000 878
Pioneer Electronic Corp. 49,000 831
Q. P. Corp. 4,000 37
* Renown, Inc. 89,000 262
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Ricoh Co. 170,000 $ 1,458
Rohm Co., Ltd. 26,000 1,338
Sagami Railway 92,000 429
Sakura Bank 932,000 9,715
Sanden Corp. 35,000 170
Sankyo Aluminum 7,000 33
Sankyo Co., Ltd. 133,100 3,088
Sanrio Co., Ltd. 35,000 358
Sanwa Shutter 53,000 398
Sanyo Electric Co., Ltd. 502,000 2,466
Sapporo Breweries 68,000 634
Secom Co., Ltd. 30,000 1,883
Sega Enterprises 25,000 886
Seino Transportation Co. Ltd. 52,000 876
Seiyu Ltd. 40,000 490
Sekisui Chemical Co. 157,000 1,849
Sekisui House Ltd. 197,000 2,436
* Settsu Corp. 97,000 297
Seven Eleven Japan Co. Ltd. 103,300 7,386
Seventy-Seven Bank 70,000 782
Sharp Corp. 334,000 4,406
Shimachu Co. 9,000 228
Shimano Industrial 34,000 581
Shimizu Construction Corp. 220,000 2,125
Shin-Etsu Chemical Co., Ltd. 65,000 1,141
Shionogi & Co., Ltd. 94,000 829
Shiseido Co., Ltd. 93,000 1,046
Shizuoka Bank 197,000 2,460
Shochiku Co. 27,000 299
Shokusan Jutaku 68,000 224
* Showa Denko Kabushiki 277,000 816
Skylark Co., Ltd. 31,000 482
Snow Brand Milk Products 66,000 517
Sony Corp. 105,500 5,058
Sumitomo Bank 862,000 14,925
Sumitomo Cement Co. 89,000 326
Sumitomo Chemical Co. 526,000 2,057
Sumitomo Corp. 300,000 2,728
Sumitomo Electric Co. 194,000 2,308
Sumitomo Forestry 44,000 710
* Sumitomo Heavy Industries Ltd. 211,000 591
Sumitomo Marine & Fire Insurance Co. 191,000 1,514
* Sumitomo Metal Industries 896,000 2,332
Sumitomo Metal Mining 122,000 900
Taisei Construction Corp. 262,000 1,546
Taisho Pharmaceuticals 86,000 1,661
Taiyo Yuden Co. 8,000 79
Takara Shuzo Co. 69,000 521
Takara Standard 4,000 44
Takashimaya Co. 45,000 604
Takeda Chemical Industries 231,000 3,047
Takuma Co., Ltd. 20,000 186
Tanabe Seiyaku Co., Ltd. 56,000 418
Teijin Ltd. 122,000 583
Teikoku Oil Co., Ltd. 62,000 365
Toa Corp. 84,000 565
Tobu Railway Co., Ltd. 279,000 1,738
Toho Co., Ltd. 5,200 864
Tohoku Electric Power 132,800 3,676
Tokai Bank 546,000 6,045
Tokio Marine & Fire
Insurance Ltd. 400,000 4,580
Tokyo Broadcasting System 37,000 527
Tokyo Dome 31,000 475
Tokyo Electric Power 377,700 11,567
Tokyo Electron Inc. 35,000 1,196
Tokyo Gas Co., Ltd. 773,000 3,041
Tokyo Style Co. 31,250 471
Tokyo Tatemono 63,000 319
Tokyotokeiba 54,000 214
Tokyu Corp. 343,000 2,198
Toppan Printing Co. 201,000 2,628
Toray Industries, Inc. 414,000 2,570
* Tosoh Corp. 164,000 616
Tostem Corp. 70,000 2,152
Toto Ltd. 103,000 1,468
Toyo Engineering Corp. 24,000 137
Toyo Exterior 12,000 276
Toyo Kanetsu Kabushiki 44,000 186
Toyo Seikan Kaisha Ltd. 57,000 1,665
Toyobo Co. 173,000 571
Toyoda Automatic Loom Works 66,000 1,189
Toyota Motor Corp. 1,056,000 20,896
Tsubakimoto Chain Co. 132,000 619
Tsugami Corp. 37,000 133
* Ube Industries Ltd. 231,000 805
Uni Charm 4,000 78
Uniden 11,000 163
* Unitika 182,000 463
Yamaguchi Bank 50,000 954
Yamaha Corp. 49,000 534
Yamaichi Securities Co. 333,000 1,781
Yamanouchi Pharmaceuticals Ltd. 81,000 1,822
Yamato Transport Co. 96,800 1,028
Yamazaki Baking Co., Ltd. 64,000 1,312
The Yasuda Trust and
Banking Co., Ltd. 242,000 1,582
Yokogawa Electric 15,000 105
---------
GROUP TOTAL 539,969
---------
- -------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
MALAYSIA (4.6%)
Aluminum Co. of Malaysia Bhd. 21,000 $ 31
AMMB Holdings Bhd. 100,000 1,189
Amsteel Corp. Bhd. 496,000 736
Antah Holdings 38,000 34
Aokam Perdana Bhd. 33,000 82
Berjaya Group 131,000 111
Berjaya Leisure 77,000 63
Commerce Asset Holdings Bhd. 38,000 195
DCB Holdings Bhd. 268,000 786
Edaran Otomobil 92,000 898
Ekran Bhd. 44,000 135
* Faber Group 425,000 410
Golden Hope Plantations Bhd. 357,000 656
Golden Plus Holdings Bhd. 25,000 56
Guiness Malaysia 51,000 92
Highlands & Lowlands 103,000 198
Hong Leong Industries Bhd. 24,000 150
Hong Leong Properties 299,000 405
Hume Industries Bhd. 42,000 229
* Idris Hydraulic Bhd. 332,000 452
* Industrial Oxygen Inc. Bhd. 112,000 147
Johan Holdings 721,000 662
Kedah Cement Holdings Bhd. 50,000 80
Kelanamas Industries Bhd. 19,000 31
Kemayan Oil Palm Bhd. 44,000 74
Kian Joo Can Factory 19,000 74
Kuala Lumpur Kepong Bhd. 135,000 429
Land and General Bhd. 76,500 256
Landmarks Bhd. 159,000 222
Leader Universal Holdings Bhd. 219,667 784
Magnum Corp. Bhd. 275,000 643
Malayan Banking Bhd. 220,000 1,742
Malayan Cement Bhd. 56,000 96
Malayan United Industries Bhd. 33,000 57
* Malaysia Mining Corp. 71,000 129
Malaysian Airlines System Bhd. 180,000 609
Malaysian International
Shipping Corp. Bhd. (Foreign) 249,333 731
Malaysian Mosaics 46,000 62
Malaysian Oxygen 23,000 89
Malaysian Pacific 226,000 565
Malaysian Resources Co. Bhd. 125,000 220
Malaywata Steel Bhd. 23,000 46
MBF Capital 133,000 152
Mulpha International 119,000 144
Multi-Purpose Holdings Bhd. 292,000 515
Nestle Malaysia Bhd. 40,000 307
New Straits Times 30,000 93
Oriental Holdings Bhd. 130,000 693
* Pan Malaysia Cement Works 30,000 103
Perlis Plantations Bhd. 50,000 166
* Perusahaan Otomobil 107,000 386
Petaling Garden Bhd. 557,000 717
Pilecon Engineering 414,000 530
Promet Bhd. 219,000 198
Public Bank Bhd. (Foreign) 221,000 494
Rashid Hussain Bhd. 246,000 787
Resorts World Bhd. 282,000 1,654
RJ Reynolds 309,000 593
Rothmans of Pall Mall Bhd. 74,000 577
Shell Refining Co. Bhd. 131,000 435
Sungei Way Holdings 26,000 106
Tan Chong Motor Holdings Bhd. 437,000 498
Technology Resources
Industries Bhd. 161,000 462
Telekom Malaysia Bhd. 449,000 3,407
Tenaga Nasional Bhd. 897,000 3,661
Time Engineering 34,000 114
UMW Holdings Bhd. 44,000 127
United Engineers Bhd. 118,000 750
---------
GROUP TOTAL 32,325
---------
- -------------------------------------------------------------------------------
NEW ZEALAND (.8%)
Brierley Investment 942,000 711
Carter Holt Harvey Ltd. 555,559 1,359
Fletcher Challenge Ltd. 448,269 1,258
Fletcher Challenge Ltd.
(Forestry Division) 35,000 46
Lion Nathan Ltd. 177,000 350
Telecom Corp. of New Zealand 523,900 1,961
Wilson & Horton Ltd. 10,000 57
---------
GROUP TOTAL 5,742
---------
- -------------------------------------------------------------------------------
SINGAPORE (3.6%)
Amcol Holdings 50,000 151
Chuan Hup Holdings 39,000 32
City Development Ltd. 247,000 1,511
Cycle & Carriage Ltd. 71,000 635
DBS Land 232,000 727
Development Bank of Singapore
(Foreign) 189,625 2,157
Fraser & Neave Ltd. 55,000 634
Hai Sun Hup Group 73,000 44
Haw Par Brothers International 411,400 860
Hotel Properties Ltd. 68,000 120
Inchcape Bhd. 28,000 91
Jurong Shipyard 30,000 215
Keppel Corp. 185,000 1,509
Lum Chang Holdings 55,000 47
Malayan Banking 240,000 1,889
Metro Holdings 15,000 62
Natsteel Ltd. 55,000 115
Neptune Orient Lines 338,000 392
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Overseas-Chinese Banking Corp.
(Foreign) 239,166 $ 2,653
Overseas Union Enterprises 21,000 128
Prima Ltd. 172,000 640
Robinson & Co., Ltd. 10,000 41
Shangri-La Hotel 25,000 100
Sime Darby Bhd. 645,600 1,792
Singapore Airlines Ltd. (Foreign) 355,000 3,277
Singapore Press Holdings Ltd.
(Foreign) 138,960 2,078
Straits Steamship Land Ltd. 128,000 443
Straits Trading 50,000 125
United Industrial Corp. 57,000 55
United Overseas Bank (Foreign) 230,350 2,176
---------
GROUP TOTAL 24,699
---------
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $635,173) 683,152
<CAPTION>
- -------------------------------------------------------------------------------
BOND (.4%)
- -------------------------------------------------------------------------------
Face
Amount
(000)
----------
<S> <C> <C>
JAPAN
Bank of Tokyo
6.10%, 3/31/97
(Cost $2,774) JPY 187,000 2,951
- -------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (1.9%)
- -------------------------------------------------------------------------------
U.S. TREASURY BILL--Note D
5.68%, 9/21/95 $ 2,500 2,468
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
6.13%, 7/3/95 10,829 10,829
- -------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $13,297) 13,297
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.9%)
(Cost $651,244) 699,400
- -------------------------------------------------------------------------------
<CAPTION>
Market
Value
(000)+
- -------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS AND LIABILITIES (.1%)
- -------------------------------------------------------------------------------
Other Assets--Notes B and E $ 88,304
Liabilities--Note E (87,507)
---------
797
- -------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------
Applicable to 65,725,611 outstanding
$.001 par value shares
(authorized 500,000,000 shares) $700,197
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.65
===============================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
JPY--Japanese Yen
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
AT JUNE 30, 1995, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------
Amount Per
(000) Share
---------- ----------
<S> <C> <C>
Paid in Capital $650,767 $9.90
Undistributed Net
Investment Income 3,027 .05
Accumulated Net
Realized Losses (848) (.01)
Unrealized Appreciation
of Investments--Note D 47,251 .71
- -------------------------------------------------------------------------------
NET ASSETS $700,197 $10.65
- -------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
EMERGING MARKETS PORTFOLIO Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (95.0%)
- -------------------------------------------------------------------------------
ARGENTINA (4.6%)
Astra Cia, Argentina de Petol
B Shares 106,090 $ 159
Banco Frances Del Rio Plata 36,600 220
Banco Galicia y Buenos 63,197 251
* Commercial de Plata 51,700 128
Compania Naviera Perez 214,758 902
Interamericana Auto 19,550 95
Nobleza Piccardo Ind. 28,200 116
Telefonica Argentina 790,700 1,986
YPF Sociedad Anonima 176,224 3,359
---------
GROUP TOTAL 7,216
---------
- -------------------------------------------------------------------------------
BRAZIL (13.9%)
Aracruz Celulose Pfd. B 375,578 876
Banco Bradesco 82,396,800 609
Banco Bradesco Pfd. 87,800,598 743
Banco do Brasil Pfd. 30,054,618 359
* Banco Estado Sao Paulo Pfd. 24,276,000 134
Banco Itau Pfd. 3,578,100 1,087
* Brasmotor SA Pfd. 872,000 161
Cemig Pfd. 39,520,665 772
Cervejaria Brahma 295,000 106
Cervejaria Brahma Pfd. 1,080,250 354
Cia Cimento Portland 802,800 235
Copene-Petroquimica Pfd. 530,194 414
Electrobras 16,056,541 4,214
Electrobras Pfd. B 2,399,818 643
Ericsson Telecomunicadoes Pfd. 21,379,400 90
Fosfertil Pfd. 32,300,000 122
* Industrias Klabin de Papel Pfd. 160,000 226
Iochpe-maxion Pfd. 275,000 93
* Lojas Americanas 5,202,000 118
Lojas Americanas Pfd. 5,889,033 134
Metalurgica Gerdau Pfd. 1,649,000 60
* Paranapanema SA Pfd. 6,302,000 115
Paulista de Forca E Luz 5,616,300 281
* Perdigao Pfd. 115,326 221
Petrobras Pfd. 13,561,500 1,140
* Pirelli Pneus Pfd. 46,000 129
* Refrigeraco Parana Pfd. 88,033 171
* Siderugica Nacional 19,667,000 444
Souza Cruz Ind. 87,900 663
Telebras Pfd. 99,074,200 3,245
Unipar Pfd. 47,717 55
Usiminas Pfd. 612,493 684
Vale do Rio Doce Pfd. 14,648,200 2,224
* Vidreas Santa Marina 72,539 299
* Votorantim Celulose E Papel SA 9,202,000 339
Votorantim Celulose E Papel SA Pfd. 320,324 12
White Martins 323,981 295
---------
GROUP TOTAL 21,867
---------
- -------------------------------------------------------------------------------
GREECE (1.6%)
Alpha Credit Bank 6,200 344
Commercial Bank of Greece 6,654 284
Ergo Bank 6,400 294
Ethniki General Insurance
(Registered) 3,400 30
Fourlis Brothers Corp. 2,340 30
Hellas Can 5,400 102
Hellenic Bottling Co. (Bearer) 20,700 615
* Hellenic Sugar 10,990 166
Intracom (Bearer) 5,940 164
Klonatex SA Pfd. 4,400 48
Michaniki 6,600 103
National Bank of Greece 5,800 317
---------
GROUP TOTAL 2,497
---------
- -------------------------------------------------------------------------------
HONG KONG (14.7%)
Applied International 320,000 33
The Bank of East Asia Ltd. 129,040 389
Cathay Pacific Air Ltd. 480,000 701
Cheung Kong Holdings Ltd. 436,000 2,158
China Light And Power Co., Ltd. 177,000 910
Dickson Concepts 143,000 85
Hang Lung Development Co. 216,000 343
Hang Seng Bank Ltd. 316,600 2,414
Hong Kong Aircraft 27,600 72
Hong Kong & China Gas Co., Ltd. 172,800 276
The Hong Kong and Shanghai
Hotels, Ltd. 191,000 236
Hong Kong
Telecommunication Ltd. 2,150,800 4,253
Hopewell Holdings Ltd. 576,000 488
Hutchison Whampoa Ltd. 382,000 1,846
Hysan Development Co., Ltd. 161,000 368
Miramar Hotel & Investment 100,000 204
New World Development Co., Ltd. 450,000 1,498
Orient Press Group 200,000 81
Playmate Toys Holdings 220,000 62
Sun Hung Kai Properties Ltd. 430,000 3,182
Swire Pacific Ltd. A 264,000 2,013
Television Broadcasts Ltd. 70,000 246
Wharf Holdings Ltd. 327,000 1,067
Wing Lung Bank 31,200 176
---------
GROUP TOTAL 23,101
---------
- -------------------------------------------------------------------------------
INDONESIA (6.1%)
Astra International (Foreign) 6,000 11
Bank Bali (Foreign) 43,500 110
Bank Dagang Nasional 155,000 271
Bank International Indonesia
(Foreign) 87,000 268
Barito Pacific Timber 58,000 83
Barito Pacific Timber (Foreign) 715,000 1,027
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
Duta Anggada Realty (Foreign) 179,333 $ 145
Evershine Textile (Foreign) 48,000 22
Gadjah Tunggal (Foreign) 75,000 108
Great River Ind. (Foreign) 40,000 29
Gudang Garam 16,500 127
Gudang Garam (Foreign) 192,500 1,477
Indah Kiat Pulp & Paper Corp. 423,000 608
Indocement Tunggal Perkasa 20,000 79
Indocement (Foreign) 278,500 1,094
Kabel Metal (Foreign) 69,000 116
Kalbe Farma (Foreign) 72,000 330
Lippo Bank (Foreign) 85,750 151
Mayora Indah (Foreign) 35,740 164
Pakuwon Jati (Foreign) 85,000 63
Polysindo Eka Perkasa IDR 500 65,000 36
Polysindo Eka Perkasa IDR 1,000 65,000 36
Polysindo Eka Perkasa (Foreign) 2,419,000 1,357
PT Indosat 27,500 104
PT Indosat (Foreign) 239,000 906
PT Japfa Comfeed Indonesia
(Foreign) 53,000 37
PT Modern Photo Film Co. (Foreign) 48,000 261
* PT Supreme Cable
Manufacturing Corp. (Foreign) 27,500 86
PT Unggul Indah Corp. (Foreign) 78,650 71
Sinar Mas Agro (Foreign) 69,500 73
Unilever Indonesia (Foreign) 22,000 326
---------
GROUP TOTAL 9,576
---------
- -------------------------------------------------------------------------------
MALAYSIA (18.6%)
AMMB Holdings Bhd. 54,000 642
Amsteel Corp. Bhd. 188,000 279
Aokam Perdana Bhd. 54,000 134
Commerce Asset Holdings Bhd. 72,000 369
DCB Holdings Bhd. 185,000 543
Edaran Otomobil 59,000 576
Ekran Bhd. 104,000 320
* Faber Group 174,000 168
Golden Hope Plantations Bhd. 232,000 426
Golden Plus Holdings Bhd. 49,000 111
Highlands & Lowlands 130,000 250
Hong Leong Industries Bhd. 33,000 206
Hong Leong Properties 177,000 240
Hume Industries Bhd. 71,000 387
* Idris Hydraulic Bhd. 137,000 187
* Industrial Oxygen Inc. Bhd. 147,000 193
Johan Holdings 81,000 74
Kedah Cement Holdings Bhd. 80,000 127
Kelanamas Industries Bhd. 46,000 75
Kemayan Oil Palm Bhd. 92,000 155
Kuala Lumpur Kepong Bhd. 112,000 356
Land and General Bhd. 85,500 286
Landmarks Bhd. 92,000 128
Leader Universal Holdings Bhd. 124,000 442
Magnum Corp. Bhd. 185,000 433
Malayan Banking Bhd. 281,000 2,224
Malayan Cement Bhd. 126,000 215
Malaysia Mining Corp. 104,000 189
Malaysian Airlines System Bhd. 139,000 470
Malaysian International
Shipping Corp. Bhd. (Foreign) 163,000 478
Malaysian Resources Co. Bhd. 122,000 215
Malaywata Steel Bhd. 39,000 78
Metroplex Bhd. 159,000 150
Mulpha International 160,000 194
Multi-Purpose Holdings Bhd. 216,000 381
Nestle Malaysia Bhd. 72,000 552
Oriental Holdings Bhd. 31,000 165
Perlis Plantations Bhd. 83,000 276
Perusahaan Otomobil NA 153,000 552
Petaling Garden Bhd. 71,000 91
* Promet Bhd. 128,000 116
Public Bank Bhd. (Foreign) 17,000 38
Rashid Hussain Bhd. 74,000 237
Resorts World Bhd. 236,000 1,384
Rothmans of Pall Mall Bhd. 49,000 382
Shell Refining Co. Bhd. 86,000 286
Sime Darby Bhd. 691,000 1,927
Tan Chong Motor Holdings Bhd. 140,000 160
Technology Resources
Industries Bhd. 100,000 287
Telekom Malaysia Bhd. 686,000 5,205
Tenaga Nasional Bhd. 1,150,000 4,693
UMW Holdings Bhd. 95,000 275
United Engineers Bhd. 119,000 757
---------
GROUP TOTAL 29,084
---------
- -------------------------------------------------------------------------------
MEXICO (9.0%)
* Apasco A 118,400 469
Cementos Mexicanos 33,000 112
Cementos Mexicanos SA Class A 191,687 655
Cementos Mexicanos SA Class B 162,000 582
Cifra B SA 507,300 695
Cifra C SA 236,000 308
Consorcio G Grupo Dina 89,000 74
El Puerto Liverpool L 235,950 139
Empaques Ponderosa 45,000 117
* Empresas La Moderna A 124,700 469
Empresas ICA 39,100 402
Fomento Economico
Mexicano SA B 121,150 281
* Grupo Continental A 54,800 131
* Grupo Financiero Banamex B 111,000 168
Grupo Financiero Banamex L 94,800 144
Grupo Financiero Bancomer B 488,050 142
* Grupo Financiero Bancomer L 18,075 5
</TABLE>
19
<PAGE> 20
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
* Grupo Financiero Probursa-C 210,000 $ 29
Grupo Financiero Serfin L 73,000 84
* Grupo Industrial Alfa A 69,550 843
Grupo Industrial Bimbo Series A 90,982 407
Grupo Mexico SA B 216,529 1,055
* Grupo Sidek SA 114,406 103
Grupo Televisa-CPO 50,800 518
* Industrias Penoles A 169,199 500
Kimberly Clark Class A 61,209 702
Sociedad Fomento Industrial B 89,907 300
Telefonos de Mexico A 454,600 670
Telefonos de Mexico L 2,485,050 3,660
* Transport Maritima Mexico 18,000 115
* Tubos de Acero de Mexico 24,000 115
Vitro 59,640 169
---------
GROUP TOTAL 14,163
---------
- -------------------------------------------------------------------------------
PHILIPPINES (4.0%)
Ayala Land Inc. B 710,462 808
* Basic Petroleum and
Minerals, Inc. 139,238,900 55
* International Container Terminal 206,125 141
Manila Electric B 66,525 535
Manila Mining 14,734,200 58
Metropolitan Bank & Trust Co. 45,037 980
* Oriental Petroleum and
Minerals Corp. 50,700,000 32
Petron Corp. 2,112,550 1,367
Philippine Long Distance
Telephone Co. 5,650 404
Philippine Long Distance
Telephone Co. Cvt. Pfd. 13,880 570
* Philippine National Bank Class B 33,266 398
* Philippine Overseas
Drilling & Oil 146,629,910 58
San Miguel Corp. B 199,620 830
---------
GROUP TOTAL 6,236
---------
- -------------------------------------------------------------------------------
PORTUGAL (1.3%)
Banco Commercial Portugal
(Registered) 47,400 627
Banco Espirito Santo e Commercial 26,000 434
Banco Portugues Investentos 10,300 180
* Cia de Celulose do Caima SA 1,700 59
Corticeira Amorin (Bearer) 6,100 92
Engil Sociedade de Construcao Civil 3,300 52
* Estoril-sol SA 5,300 39
* Fabrica Nacional de
Condutoreselectricos SA 2,100 49
Industria Nacional Papeis 2,700 53
Soares da Costa Rfd. 4,680 83
Sonae Industria e Investimentos 14,000 335
---------
GROUP TOTAL 2,003
---------
- -------------------------------------------------------------------------------
SINGAPORE (6.1%)
City Development Ltd. 158,000 967
Cycle & Carriage Ltd 25,000 224
Development Bank of Singapore
(Foreign) 93,000 1,058
Fraser & Neave Ltd. 23,000 265
Hotel Properties Ltd. 71,000 125
Jurong Shipyard 17,000 122
Keppel Corp. 48,000 392
Lum Chang Holdings 84,000 72
Neptune Orient Lines 97,000 112
Overseas Chinese Banking Corp.
(Foreign) 164,000 1,819
Parkway Holdings 49,000 119
Shangri-La Hotel 23,000 92
Singapore Airlines Ltd. (Foreign) 173,000 1,597
Singapore Press Holdings Ltd.
(Foreign) 54,400 814
Straits Steamship Land Ltd. 72,000 249
United Overseas Bank (Foreign) 169,600 1,602
---------
GROUP TOTAL 9,629
---------
- -------------------------------------------------------------------------------
THAILAND (12.6%)
Asia Credit Co., Ltd. (Foreign) 26,800 216
Asia Securities Trading 25,800 89
Asia Securities Trading (Foreign) 33,400 116
Ayudhya Insurance Co. (Foreign) 7,200 53
Bangkok Bank Public Co. Ltd.
(Foreign) 19,800 218
Bangkok Insurance Co., Ltd. 2,000 33
Bangkok Insurance Co., Ltd. (Foreign) 1,900 31
Bangkok Land Public Co. Ltd. (Foreign) 197,300 334
Bangkok Rubber (Foreign) 38,200 33
Bank of Ayudhya Ltd. (Foreign) 330,600 1,621
Banpu Public Co. Ltd. (Foreign) 12,800 303
* Castle Peak Garment
Factory Co., Ltd. (Foreign) 13,200 35
CMIC Finance and
Securities Co., Ltd. (Foreign) 49,400 190
CMIC Finance and
Securities Co., Ltd. (Local) 39,800 153
Dhana Siam Finance &
Securities Co., Ltd. (Foreign 61,900 366
Dusit Thani Public Co., Ltd. 49,000 48
Finance One 44,100 325
First City Investment Co. 20,600 35
First City Investment Co. (Foreign) 110,800 186
* GSS Electronics (Foreign) 7,400 35
Industrial Finance Corp.
of Thailand (Foreign) 277,400 731
International Broadcasting Corp.
Ltd. (Foreign) 36,600 154
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
* ITF Finance Co., Ltd. (Foreign) 71,900 $ 112
Krisda Mahanakorn Ltd. (Foreign) 59,400 132
Land & House Co., Ltd. (Foreign) 19,800 417
Lee Feedmill Co., Ltd (Foreign) 29,000 72
Modern Form Group Co., Ltd.
(Foreign) 30,200 53
Multi Credit Corp. of Thailand
(Foreign) 14,200 129
National Finance &
Securities Co., Ltd. (Foreign) 180,600 885
National Finance &
Securities Co., Ltd. (Local) 7,200 36
National Petrochemical 29,000 75
National Petrochemical (Foreign) 88,000 228
Nava Finance & Securities Co., Ltd. 21,200 68
Nava Finance & Securities Co., Ltd.
(Foreign) 93,600 292
* NEP Realty & Industry Co. 166,000 76
NTS Steel Groups (Foreign) 92,200 180
* One Holding Public Co., Ltd.
(Foreign) 47,600 149
* Padaeng Industry 59,800 79
* Padaeng Industry (Foreign) 28,800 38
Phatra Thanakit Co., Ltd. (Foreign) 78,700 657
Phoenix Pulp & Paper 6,400 33
Phoenix Pulp & Paper (Foreign) 37,700 197
* Pranda Jewelry Co. (Foreign) 5,100 12
PTT Exploration and
Production PLC 35,200 379
PTT Exploration and
Production PLC (Foreign) 67,500 728
Robinson Department Store
(Foreign) 229,800 503
Shinawatra Computer &
Communications Co., Ltd. 17,400 431
Shinawatra Computer &
Communications Co., Ltd. (Foreign) 46,100 1,095
Siam Cement Co., Ltd. (Foreign) 25,000 1,596
Siam City Cement Co., Ltd. 6,200 98
Siam City Cement Co., Ltd. (Foreign) 49,680 773
Siam Commercial Bank Ltd. 12,400 119
* Siam United Services (Foreign) 154,000 51
* Sun Tech Group (Foreign) 37,000 58
Tanayong Public 7,600 15
Thai Central Chemical (Foreign) 42,400 64
Thai Farmers Bank Ltd. (Foreign) 10,900 104
Thai-German Ceramic (Foreign) 25,300 85
Thai Plastic Chemical Co., Ltd. 4,400 36
* Thai Plastic Chemical Co., Ltd.
(Foreign) 26,100 212
* Thai Telephone and Telecom
(Foreign) 133,800 1,095
* Thai Telephone and Telecom (Local) 26,400 216
Thai Wah (Foreign) 21,300 22
Tipco Asphalt Co. 39,600 178
TPI Polene Co., Ltd. 16,600 113
TPI Polene Co., Ltd. (Foreign) 110,875 750
* Unicord Public Co., Ltd. (Foreign) 105,600 24
Union Asia Finance Ltd. 37,200 217
Univest Land Public (Foreign) 60,600 162
United Communication Industry 14,400 210
United Communication Industry
(Foreign) 68,200 1,028
Wattachak Public Co., Ltd. (Foreign) 69,200 147
---------
GROUP TOTAL 19,734
---------
- -------------------------------------------------------------------------------
TURKEY (2.5%)
Adana Cimento A 74,400 44
Adana Cimento C 653,000 78
Akal Tekstil 290,000 107
* Altinyildiz Mensucat New 95,000 48
Altinyildiz Mensucat 95,000 50
* Arcelik 788,801 241
Bagfas 198,000 92
* Brisa Bridgestone 304,000 103
Doktas 92,800 21
* Eczacibasi Ilac 591,000 142
EGE Biracilik 245,400 289
Ege Seramik 187,000 91
Eregli Demir Celik 2,350,250 303
Kav Orman Sanayii AS 140,000 57
* Kav Orman Sanayii AS Rights
Exp. 7/17/95 60,000 23
Konya Cimento 102,000 29
Otosan Otomobil SAS 337,000 124
Sarkuysan Elektrolitik 355,000 94
* Sifas 676,000 74
T Garanti Bankasi 1,229,000 167
T Garanti Bankasi
Non Trading Receipts 1,229,000 167
* Teletas 107,000 37
Tofas-Turk Otomobil Fabrikasi AS 351,400 310
Turkiye Is Bankasi C 3,176,000 489
Turkiye Is Bankasi C
Non Trading Receipts 2,226,000 343
Turkiye Is Bankasi B 42,000 27
Vestel Electronic Sanayi 263,000 33
* Yapi Ve Kredi Bank 1,963,000 126
Yapi Ve Kredi Bank
Non Trading Receipts 2,355,600 152
---------
GROUP TOTAL 3,861
---------
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $155,792) 148,967
- -------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT (5.4%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account 6.13%, 7/3/95
(Cost $8,472) $8,472 $ 8,472
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.4%)
(Cost $164,264) 157,439
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-.4%)
- -------------------------------------------------------------------------------
Other Assets--Note B 2,783
Liabilities (3,439)
---------
(656)
- -------------------------------------------------------------------------------
NET ASSETS (100%)
- -------------------------------------------------------------------------------
Applicable to 14,421,444 outstanding
$.001 par value shares
(authorized 500,000,000 shares) $156,783
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.87
===============================================================================
</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 $162,316 $11.25
Undistributed Net
Investment Income 1,815 .13
Accumulated Net
Realized Losses (523) (.04)
Unrealized Depreciation
of Investments--Note D (6,825) (.47)
- -------------------------------------------------------------------------------
NET ASSETS $156,783 $10.87
- -------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
EMERGING MARKETS
EUROPEAN PORTFOLIO PACIFIC PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended Six Months Ended
June 30, 1995 June 30, 1995 June 30, 1995
(000) (000) (000)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends(1) . . . . . . . . . . . . . . . . . $15,000 $ 4,728 $2,007
Interest . . . . . . . . . . . . . . . . . . . 326 254 205
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . 15,326 4,982 2,212
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services . . . . . . . $ 23 $ 23 $ 23
Management and Administrative . . . . . . . 892 763 100
Marketing and Distribution . . . . . . . . 81 996 81 867 11 134
Taxes (other than income taxes) . . . . . . . ----- 33 ----- 29 ------ 4
Custodian's Fees . . . . . . . . . . . . . . . 152 172 184
Auditing Fees . . . . . . . . . . . . . . . . 4 4 4
Shareholders' Reports . . . . . . . . . . . . 16 16 2
Annual Meeting and Proxy Costs . . . . . . . . 7 7 1
Directors' Fees and Expenses . . . . . . . . . 2 1 --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . 1,210 1,096 329
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . 14,116 3,886 1,883
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold . . . . . . . . . . 480 (198) (202)
Futures Contracts . . . . . . . . . . . . . . 135 (1,060) --
Forward Currency Contracts . . . . . . . . . . 1,092 615 --
- -----------------------------------------------------------------------------------------------------------------------------------
Realized Net Gain (Loss) . . . . . 1,707 (643) (202)
- -----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION)
Investment Securities . . . . . . . . . . . . 83,491 (43,843) 1,365
Futures Contracts . . . . . . . . . . . . . . (197) (902) --
Forward Currency Contracts . . . . . . . . . . (97) (92) --
- -----------------------------------------------------------------------------------------------------------------------------------
Change in Unrealized
Appreciation (Depreciation) . . 83,197 (44,837) 1,365
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets
Resulting from Operations . . . $99,020 $(41,594) $3,046
===================================================================================================================================
</TABLE>
(1) Dividends are net of foreign withholding taxes of $2,262,000, $621,000, and
$270,000, respectively.
23
<PAGE> 24
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EUROPEAN PORTFOLIO PACIFIC PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED Year Ended SIX MONTHS ENDED Year Ended
JUNE 30, December 31, JUNE 30, December 31,
1995 1994 1995 1994
(000) (000) (000) (000)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . $ 14,116 $ 16,595 $ 3,886 $ 4,601
Realized Net Gain (Loss) . . . . . . . . . . . . 1,707 2,659 (643) 3,641
Change in Unrealized Appreciation
(Depreciation) . . . . . . . . . . . . . . . . 83,197 (10,000) (44,837) 53,147
- ------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations . . . . . . . 99,020 9,254 (41,594) 61,389
- ------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . . . . -- (16,520) (632) (4,872)
Realized Net Gain . . . . . . . . . . . . . . . . -- (3,560) -- (3,654)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . -- (20,080) (632) (8,526)
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued --Regular . . . . . . . . . . . . . . 78,348 173,784 102,287 175,468
--In Lieu of Cash Distributions . . . -- 16,864 558 7,350
--Exchange . . . . . . . . . . . . . 23,570 75,709 29,207 114,335
Redeemed --Regular . . . . . . . . . . . . . . (35,905) (78,527) (30,153) (79,042)
--Exchange . . . . . . . . . . . . . (37,790) (62,816) (56,582) (66,483)
- ------------------------------------------------------------------------------------------------------------------------
Net Increase from
Capital Share Transactions . . . . . . . 28,223 125,014 45,317 151,628
- ------------------------------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . . . . . 127,243 114,188 3,091 204,491
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . . . . 715,033 600,845 697,106 492,615
- ------------------------------------------------------------------------------------------------------------------------
End of Period (3) . . . . . . . . . . . . . . . . $842,276 $715,033 $700,197 $697,106
========================================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . . . . . . -- $.28 $.01 $.08
Realized Net Gain . . . . . . . . . . . . . -- $.06 -- $.06
- ------------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . . . 8,007 20,475 11,976 25,165
Issued in Lieu of Cash Distributions . . . -- 1,443 54 656
Redeemed . . . . . . . . . . . . . . . . . (5,951) (11,707) (7,967) (12,797)
- ------------------------------------------------------------------------------------------------------------------------
2,056 10,211 4,063 13,024
- ------------------------------------------------------------------------------------------------------------------------
(3) Undistributed (Overdistributed) Net
Investment Income . . . . . . . . . . . $ 13,799 $ (317) $ 3,027 $ (227)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
EMERGING MARKETS PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED May 4+ to
JUNE 30, December 31,
1995 1994
(000) (000)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,883 $ 457
Realized Net Gain (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (202) (21)
Change in Unrealized Appreciation
(Depreciation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,365 (8,190)
- ------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations . . . . . . . . . . . . . . . . . . . . . . . . 3,046 (7,754)
- ------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (525)
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (300)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (825)
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued --Regular . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,180 43,149
--In Lieu of Cash Distributions . . . . . . . . . . . . . . . . . . . . . -- 757
--Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,263 55,090
Redeemed --Regular . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,613) (1,563)
--Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,470) (5,477)
- ------------------------------------------------------------------------------------------------------------------------
Net Increase from
Capital Share Transactions . . . . . . . . . . . . . . . . . . . . . . . 70,360 91,956
- ------------------------------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,406 83,377
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,377 --
- ------------------------------------------------------------------------------------------------------------------------
End of Period (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $156,783 $83,377
========================================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- $.07
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- $.04
- ------------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,565 8,198
Issued in Lieu of Cash Distributions . . . . . . . . . . . . . . . . . . . . . -- 70
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (810) (601)
- ------------------------------------------------------------------------------------------------------------------------
6,755 7,667
- ------------------------------------------------------------------------------------------------------------------------
(3) Undistributed (Overdistributed) Net
Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,815 $ (68)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of Operations.
25
<PAGE> 26
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EUROPEAN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, May 1 to
SIX MONTHS ENDED -------------------------------------------- Dec. 31,
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 . . . . . . . . $11.76 $11.88 $ 9.33 $9.92 $9.06 $10.00
------ ------ ------ ----- ----- ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . .23 .28 .17 .25 .26 .16
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . 1.41 (.06) 2.55 (.58) .86 (.94)
------ ------ ------ ----- ----- ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . 1.64 .22 2.72 (.33) 1.12 (.78)
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . -- (.28) (.17) (.26) (.26) (.16)
Distributions from Realized Capital Gains . . . . -- (.06) -- -- -- --
------ ------ ------ ----- ----- ------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . -- (.34) (.17) (.26) (.26) (.16)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . $13.40 $11.76 $11.88 $9.33 $9.92 $ 9.06
==============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . +13.95% +1.88% +29.13% -3.32% +12.40% -7.23%**
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . . . $842 $715 $601 $256 $161 $96
Ratio of Expenses to Average Net Assets . . . . . . . .32%* .32% .32% .32% .33% .40%*
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . . 3.70%* 2.41% 2.05% 3.05% 3.06% 3.68%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . 3%* 6% 4% 1% 15%+ 3%
- ------------------------------------------------------------------------------------------------------------------------------
</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 rate for 1991, excluding in-kind redemptions, was 3%.
Note: Total return figures do not reflect the 1% transaction fee on purchases or
the annual account maintenance fee of $10.
26
<PAGE> 27
<TABLE>
<CAPTION>
PACIFIC PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, May 1 to
SIX MONTHS ENDED -------------------------------------------- Dec. 31,
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 . . . . . . . . $11.31 $10.13 $ 7.56 $9.42 $8.56 $10.00
------ ------ ------ ----- ----- ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . .06 .08 .06 .05 .05 .05
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . (.71) 1.24 2.62 (1.76) .86 (1.44)
------ ------ ------ ----- ----- ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . (.65) 1.32 2.68 (1.71) .91 (1.39)
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . (.01) (.08) (.06) (.05) (.05) (.05)
Distributions from Realized Capital Gains . . . . -- (.06) (.05) (.10) -- --
------ ------ ------ ----- ----- ------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . (.01) (.14) (.11) (.15) (.05) (.05)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . $10.65 $11.31 $10.13 $7.56 $9.42 $ 8.56
==============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . -5.75% +13.04% +35.46% -18.17% +10.65% -14.01%**
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . . . $700 $697 $493 $207 $84 $31
Ratio of Expenses to Average Net Assets . . . . . . . .32%* .32% .32% .32% .32% .35%*
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . . 1.12%* .71% .75% .92% .70% 1.02%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . 1%* 4% 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 rate for 1991, excluding in-kind redemptions, was 1%.
Note: Total return figures do not reflect the 1% transaction fee on purchases or
the annual account maintenance fee of $10.
27
<PAGE> 28
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
EMERGING MARKETS PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED May 4+ to
For a Share Outstanding Throughout Each Period JUNE 30, 1995 December 31, 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . $10.87 $10.00
------ ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . .14 .06
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . . . . (.14) .92
------ ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . . -- .98
- ------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . . . -- (.07)
Distributions from Realized Capital Gains . . . . . . . -- (.04)
------ ------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . . -- (.11)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . $10.87 $10.87
========================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . . 0.00% +9.81%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . . . . . . $157 $83
Ratio of Expenses to Average Net Assets . . . . . . . . . . .60%* .60%*
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . . . . . 3.36%* 1.32%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 2%* 6%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ Commencement of operations.
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.
28
<PAGE> 29
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. 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 translated
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 bank
until maturity of each repurchase agreement. Provisions of the 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. FUTURES AND FORWARD CURRENCY CONTRACTS: The Fund utilizes Eurotop futures
contracts (European Portfolio) and Japanese-Topix futures contracts
(Pacific Portfolio) to a limited extent, with the objectives of maintaining
full exposure to the underlying stock markets, enhancing returns,
maintaining liquidity, and minimizing transaction costs. The Portfolios may
purchase futures contracts to immediately position incoming cash in the
market, thereby simulating a fully invested position in the underlying
index while maintaining a cash balance for liquidity. In the event of
redemptions, the Portfolios may pay departing shareholders from their cash
balances and reduce their futures positions accordingly. Returns may be
enhanced by purchasing futures contracts instead of the underlying
securities when futures are believed to be priced more attractively than
the underlying securities. The primary risks associated with the use of
futures contracts are imperfect correlation between changes in market
values of stocks contained in the indexes and the prices of futures
contracts, and the possibility of an illiquid market.
The European and Pacific Portfolios also enter into forward foreign
currency contracts, in order to maintain the same currency exposure as
their respective indexes. 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 fulfill its obligations under
the contract.
Futures and forward currency contracts are valued based upon their quoted
daily settlement prices. Fluctuations in the values 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 Federal income tax
purposes.
29
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (continued)
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.
The Fund does not isolate that portion of the results of operations arising
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in the market prices of securities held. Such
fluctuations are included in the realized gain (loss) or unrealized
appreciation (depreciation) on investment securities.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Capital gain distributions are determined on a tax basis
and may differ from realized capital gains for financial reporting purposes
depending on the timing of realization of gains.
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. At June 30, 1995, the Fund had contributed capital of $226,000 to
Vanguard (included in Other Assets), representing 1.1% 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, 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>
EUROPEAN $62,230 $9,592
- --------------------------------------------------------------------
PACIFIC 39,579 2,816
- --------------------------------------------------------------------
EMERGING MARKETS 70,038 835
- --------------------------------------------------------------------
</TABLE>
D. At June 30, 1995, 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 $172,499 $(20,459) $152,040
- --------------------------------------------------------------------
PACIFIC 83,972 (35,816) 48,156
- --------------------------------------------------------------------
EMERGING MARKETS 8,567 (15,392) (6,825)
- --------------------------------------------------------------------
</TABLE>
At June 30, 1995, the aggregate settlement value of open Eurotop futures
contracts (European Portfolio) and Japanese-Topix futures contracts (Pacific
Portfolio) expiring through December 1995, 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 $ 3,063 $ (58) $ 494
- --------------------------------------------------------------------
PACIFIC 14,656 (837) 2,468
- --------------------------------------------------------------------
</TABLE>
Under the terms of open forward currency exchange contracts at June 30, 1995,
the Portfolios were obligated to receive foreign currencies in exchange for
U.S. dollars as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
(000)
--------------------------------------------
Unrealized
Portfolio/ Foreign U.S. Appreciation
Contract Date Currency Dollars (Depreciation)
- --------------------------------------------------------------------
<S> <C> <C> <C>
EUROPEAN
RECEIVE 9/20/95 ECU* 2,382 $ 3,120 $ 46
- --------------------------------------------------------------------
PACIFIC
RECEIVE 9/13/95 Yen 1,315,362 15,703 (68)
- --------------------------------------------------------------------
</TABLE>
* ECU--European Currency Units.
30
<PAGE> 31
E. The market values of securities on loan to broker/dealers at June 30, 1995,
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 $ 92,165 $99,567
- --------------------------------------------------------------------
PACIFIC 71,727 77,492
- --------------------------------------------------------------------
</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.
31
<PAGE> 32
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.
Q722-6/95
[VANGUARD INTERNATIONAL EQUITY INDEX FUND LOGO]
SEMI-ANNUAL REPORT
JUNE 30, 1995
