<PAGE> 1
A MESSAGE TO SHAREHOLDERS
FELLOW SHAREHOLDER:
During the six months ended June 30, the first half of the 1996 fiscal year for
Vanguard International Equity Index Fund, the returns earned by stocks in
international markets were generally strong. In local currency terms, the
Morgan Stanley Capital International (MSCI) Total International Index
provided a return of +10.2%, roughly paralleling the return on the U.S.
Standard & Poor's 500 Composite Stock Price Index. However, a strong dollar
reduced the returns on the international index to +5.9% for U.S. investors.
These international stock returns were, of course, reflected in the
total returns (capital change plus reinvested dividends) of our four
International Index Portfolios. You will note that we have included in this
Semi-Annual Report the results of the Vanguard Total International Portfolio,
which is a Portfolio of Vanguard STAR Fund. We have done so to facilitate
comparison both with the broad financial markets and the other Vanguard
International Index Portfolios. This table presents the performance of each
Portfolio relative to its MSCI target index:
<TABLE>
<CAPTION>
- --------------------------------------------------------
TOTAL RETURN
-------------------
SIX MONTHS ENDED
JUNE 30, 1996
- --------------------------------------------------------
<S> <C>
VANGUARD EUROPEAN PORTFOLIO + 7.0%
MSCI EUROPE INDEX + 6.7
- --------------------------------------------------------
VANGUARD PACIFIC PORTFOLIO + 3.3%
MSCI PACIFIC (FREE) INDEX + 2.7
- --------------------------------------------------------
VANGUARD EMERGING MARKETS PORTFOLIO +14.8%
MSCI SELECT EMERGING MARKETS
(FREE) INDEX +13.7
- --------------------------------------------------------
VANGUARD TOTAL INTERNATIONAL PORTFOLIO + 6.4%*
MSCI TOTAL INTERNATIONAL INDEX + 5.9
- --------------------------------------------------------
</TABLE>
*Performance figure for an account invested in a combination of the three
underlying Portfolios, weighted in accordance with the Total International
Portfolio's allocation guidelines. Actual performance since the Portfolio's
inception on April 29, 1996, was -0.6% versus -0.8% for the Index.
Detailed per share figures for each Portfolio, including net asset values,
income dividends, and any capital gains distributions, are presented in the
table that follows this letter.
THE PERIOD IN REVIEW
After the dichotomies in global markets we witnessed during 1995--remarkably
strong in the U.S. and Europe, surprisingly weak in the Pacific and emerging
nations--their course was remarkably uniform during the first half of 1996.
Optimism about prospective global economic conditions prevailed, and regional
differences were muted, with gains in the area of +10% being the rule.
That said, these gains were achieved on a local currency basis; i.e.,
measured in the monetary units of each nation. However, the U.S. dollar
was strong in world currency markets, meaning that the international gains
achieved by U.S. citizens--measured in dollars--were significantly reduced.
With foreign currency purchasing fewer dollars, from one-fourth to
two-thirds of the reported local gains were erased. This table tells the story:
<TABLE>
<CAPTION>
- --------------------------------------------------------
TOTAL RETURN
------------------------------
SIX MONTHS ENDED
JUNE 30, 1996
------------------------------
LOCAL
CURRENCY CURRENCY U.S. DOLLAR
INDEX RETURN IMPACT RETURN
- --------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES +10.1% -- +10.1%
- --------------------------------------------------------
EUROPEAN +10.4% -3.7% + 6.7%
PACIFIC + 7.5 -4.8 + 2.7
EMERGING MARKETS +18.0 -4.3 +13.7
- --------------------------------------------------------
TOTAL INTERNATIONAL +10.2% -4.3% + 5.9%
- --------------------------------------------------------
</TABLE>
As we have noted in the past, this "currency risk" that is assumed by investors
in international stocks is in addition to the normal market and business risks
assumed by investors in U.S. equities, since an investment in an international
stock is actually an investment in a foreign currency as well. To be sure, with
the dollar's weakness in earlier years, we enjoyed a "currency reward." So far
in 1996, however, it has worked the other way.
Vanguard International Index Portfolios closely tracked the markets in
which they invest. In fact, as
1
<PAGE> 2
shown in the table at the outset, each Portfolio actually outpaced, by a slight
margin, its market index benchmark. (This achievement is unlikely to recur with
much frequency, given that, unlike the theoretical indexes, our Portfolios
incur real-world operating costs.) However, while our indexed Pacific and
Emerging Markets Portfolios provided returns that were reasonably competitive
with actively managed mutual funds operating in these markets, our European
Portfolio fell surprisingly short of most competitive funds. The gap arose
largely from the fact that our Portfolio (and its target index) has a bias
toward large value stocks, while the active managers presently have a bias
toward smaller growth stocks, which provided substantially higher returns
during the period. We expect such aberrations will even out over time.
Our Total International Portfolio began operations on April 29. It is
an integrated combination of the shares of our European, Pacific, and Emerging
Markets Portfolios, weighted in accordance with their market capitalizations.
As such, the new Portfolio can be operated efficiently and at low cost. It
seems destined to grow as its three siblings have (their aggregate assets now
total some $2.8 billion) and has already attracted more than $110 million of
assets. The Total International Portfolio, then, is off to a good start.
IN SUMMARY
With the revived strength of the dollar, investors in Vanguard's International
Index Portfolios generally received modest, but positive, returns during the
past six months. Nonetheless, the Portfolios remain an attractive means to
participate in the risks and rewards of foreign markets, which have tended in
the past to provide broadened diversification to internationally oriented
investors. We look forward to reporting to you in our 1996 Annual Report six
months hence.
Sincerely,
/s/ JOHN C. BOGLE
John C. Bogle
Chairman of the Board
/s/ JOHN J. BRENNAN
John J. Brennan
President
July 24, 1996
Note: Mutual fund data from Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, 1996
Net Asset Value Per Share ------------------------------------
------------------------------------------ Dividends From
Portfolio December 31, 1995 June 30, 1996 Net Investment Income*
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EUROPEAN $14.02 $14.98 $.01
PACIFIC 11.50 11.88 --
EMERGING MARKETS 10.75 12.33 .01
TOTAL INTERNATIONAL 10.26** 10.20 --
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In addition, a distribution from net realized capital gains was paid by the
European Portfolio ($.01 per share).
** Net asset value as of the Portfolio's inception, April 29, 1996.
2
<PAGE> 3
TOTAL INVESTMENT RETURN TABLES
The following tables illustrate the results of single-share investments in the
VANGUARD INTERNATIONAL EQUITY INDEX FUND-EUROPEAN and PACIFIC PORTFOLIOS since
inception through June 30, 1996. During the period illustrated, stock prices
fluctuated widely; these results should not be considered a representation of
the dividend income or capital gain or loss that may be realized from an
investment made in the Portfolios today.
<TABLE>
<CAPTION>
EUROPEAN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
PERIOD PER SHARE DATA TOTAL INVESTMENT RETURN*
- ------------------------------------------------------------------------------------------------------------------------------------
MSCI Europe
European Portfolio Index
Value with Income ---------------------------------- -----------
Year Ended Net Asset Capital Gains Income Dividends & Capital Capital Income Total Total
December 31 Value Distributions Dividends Gains Reinvested Return Return Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INITIAL (6/90) $ 9.92 -- -- $ 9.92 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
1990 9.06 -- $.14 9.20 - 9.6% +1.4% - 8.2% - 6.5%
- ------------------------------------------------------------------------------------------------------------------------------------
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 14.02 .04 .32 16.09 +18.4 +2.6 +21.0 +22.1
- ------------------------------------------------------------------------------------------------------------------------------------
1996 (6/30) 14.98 .01 .01 17.21 + 5.8 +0.1 + 5.9 + 6.7
- ------------------------------------------------------------------------------------------------------------------------------------
LIFETIME +71.1% +77.1%
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN + 9.3% + 9.9%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PACIFIC PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
PERIOD PER SHARE DATA TOTAL INVESTMENT RETURN*
- ------------------------------------------------------------------------------------------------------------------------------------
MSCI Pacific
Pacific Portfolio (Free) Index
Value with Income --------------------------------- ------------
Year Ended Net Asset Capital Gains Income Dividends & Capital Capital Income Total Total
December 31 Value Distributions Dividends Gains Reinvested Return Return Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INITIAL (6/90) $ 9.99 -- -- $ 9.99 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
1990 8.56 -- $.03 8.59 -15.2% +0.3% -14.9% -15.1%
- ------------------------------------------------------------------------------------------------------------------------------------
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 11.50 -- .12 12.24 + 0.7 +1.0 + 1.7 + 2.9
- ------------------------------------------------------------------------------------------------------------------------------------
1996 (6/30) 11.88 -- -- 12.64 + 2.2 0.0 + 2.2 + 2.7
- ------------------------------------------------------------------------------------------------------------------------------------
LIFETIME +24.8% +25.4%
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN + 3.7% + 3.8%
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
3
<PAGE> 4
STATEMENT OF NET ASSETS
FINANCIAL STATEMENTS (unaudited)
June 30, 1996
<TABLE>
<CAPTION>
Market
Value
EUROPEAN PORTFOLIO Shares (000)+
- ---------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (99.2%)
- ---------------------------------------------------------------------------------------
AUSTRIA (.8%)
* Austrian Airlines 2,678 $ 412
BWT (Benck Wassertech) 2,060 262
Bank Austria AG 7,930 269
Bank Austria AG Pfd. 7,420 308
Bank Austria AG (Ptg. Ctf.) 27,342 2,195
Creditanstalt Bank AG 17,640 1,167
Creditanstalt Bank AG Pfd. 11,958 606
EA-Generali AG 3,581 1,061
EA-Generali AG Pfd. 214 31
Lenzing 3,840 242
OMV AG 11,697 1,185
Oest Brau-Beteiligungs AG 6,940 395
Oest Elektrizitaetswirts Class A 15,405 1,176
Radex-Heraklith 10,617 331
* Steyr-Daimler-Puch 14,144 218
Universale-Bau 1,000 42
Wienerberger Baustoffindustrie AG 3,810 769
--------------
COUNTRY TOTAL 10,669
--------------
- --------------------------------------------------------------------------------------
BELGIUM (2.2%)
Bekaert NPV 1,837 1,472
Cimenteries NPV 12,050 904
Delhaize Freres 23,128 1,155
Electrabel NPV 25,332 5,409
Fortis AG NPV 17,097 2,243
Generale de Banque NPV 4,860 1,687
Gevaert Photo Products NPV 15,900 1,063
Glaverbel 2,859 310
Group Bruxelles Lambert SA 10,850 1,358
Kredietbank NPV 5,938 1,776
Kredietbank VVPR NPV 1,000 298
Petrofina SA 6,760 2,119
Royale Belge NPV 9,310 1,825
Solvay et Cie. SA 3,825 2,347
Tractebel NPV 6,070 2,485
* Union Miniere SA 16,868 1,292
--------------
COUNTRY TOTAL 27,743
--------------
- --------------------------------------------------------------------------------------
DENMARK (1.7%)
Aarhus Oliefabrik A 2,220 119
Aarhus Oliefabrik B 1,440 76
Carlsberg Series A 12,675 746
Carlsberg Series B Pfd. 8,449 497
D/S 1912 B 80 1,814
D/S Svendborg B 170 5,550
Danisco 15,135 753
Den Danske Bank AF 23,200 1,554
* East Asiatic Co. 7,200 146
FLS Industries Class B 5,448 548
GN Store Nord 1,150 102
ISS (International Service
Systems) Series B 15,619 349
* J Lauritzen Holding B 1,065 122
Korn-OG Foderstof 2,450 111
NKT (Nordisk Kabel) 14,200 705
Novo-Nordisk Class B 7,166 1,014
Radiometer Class B 6,508 399
Royal Copenhagen A 7,900 667
SAS Danmark A/S 14,480 197
SAS Danmark A/S Rights Exp. 7/4/96 57,920 44
Sophus Berendsen Class A 3,883 516
Sophus Berendsen Class B 9,100 1,217
Superfos 8,330 775
Teledanmark B 64,695 3,239
Unidanmark Class A 25,677 1,191
--------------
COUNTRY TOTAL 22,451
--------------
- --------------------------------------------------------------------------------------
FINLAND (1.1%)
Amer Group A 8,720 146
Cultor Oy--Series 1 2,750 134
Cultor Oy--Series 2 4,420 226
Instrumentarium Class A 1,000 33
Instrumentarium Class B 3,140 101
Kesko 21,370 315
Kone Class B 4,048 450
* Merita Ltd. A 400,667 837
Metra Oy A 3,170 143
Metra Oy B 17,128 767
Nokia AB A 79,300 2,919
Nokia AB K 63,200 2,308
Outokumpu Oy A 46,450 780
Pohjola A 21,688 364
Pohjola B 6,300 107
Sampo A 7,601 440
Stockmann AB Oy A 1,200 66
Stockmann AB Oy B 1,380 71
* UPM-Kymmene Oy 156,623 3,240
--------------
COUNTRY TOTAL 13,447
--------------
- --------------------------------------------------------------------------------------
FRANCE (13.2%)
AXA SA 88,693 4,851
Accor 16,118 2,254
Air Liquide 18,765 3,313
Alcatel Alsthom 70,737 6,169
BIC 14,600 2,073
BSN-Gervais Danone 32,918 4,981
Banque Nationale de Paris 78,268 2,747
Bongrain 160 77
Bouygues 9,132 1,018
Canal Plus SA 10,600 2,592
Carrefour SA 17,680 9,904
* Carrefour SA Rights Exp. 7/2/96 14,580 4,070
Casino Guichard Perrachon 27,200 1,123
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Casino Guichard Perrachon Pfd. 6,000 $ 166
Chargeurs SA 4,031 180
* Cie. Generale des Eaux 54,933 6,135
Club Mediterranee 7,560 677
Compagnie Bancaire 14,060 1,584
Compagnie Financiere de Suez 55,656 2,036
Compagnie UAP SA 127,400 2,586
Comptoirs Modernes 2,692 1,214
Credit Nationale 4,386 302
DMC (Dollfus-Mieg et Cie.) 5,900 262
Docks de France 6,730 1,634
Ecco 4,396 1,106
Eridania Beghin-Say 10,385 1,626
Essilor International 4,585 1,298
Eurafrance 2,361 913
Europe 1 1,577 342
Finextel 21,600 317
GTM Entrepose 3,800 247
* Geophysique 4,000 238
Havas 30,499 2,494
Imetal 7,632 1,082
L'Oreal 31,585 10,485
LVMH Moet-Hennessy 44,775 10,619
Lafarge 44,308 2,681
Lagardere Groupe 33,620 867
Legrande (Bearer) 8,390 1,499
Lyonnaise des Eaux 28,047 2,678
Michelin Series B (Registered) 45,360 2,217
* Moulinex 14,520 278
* Nord Est SA 27,800 766
Paribas A 57,643 3,404
Parisienne de Reescompte 8,002 619
* Pathe SA 4,031 946
Pernod-Ricard 20,313 1,302
* Peugeot SA 19,773 2,646
Pinault-Printemps SA 10,992 3,845
Primagaz Cie. 6,575 729
Promodes 9,615 2,772
Rhone-Poulenc A 99,281 2,609
Sagem 2,040 1,224
Saint-Gobain 28,610 3,829
Saint-Louis 1,824 484
Salomon 970 887
* Sanofi 34,894 2,615
Schneider SA 65,430 3,431
Seita 18,820 863
Sidel SA 3,687 937
* Simco 4,328 399
Skis Rossignol 688 254
Societe Centrale des Assurance
Generales de France 40,254 4,426
Societe Francaise d'Investissments
Immobiliers et de Gestion 9,807 663
Societe National Elf Aquitaine 131,438 9,666
Sodexho 1,550 688
Sommer Allibert 2,310 587
Technip 9,600 884
Thomson-C.S.F. 61,810 1,737
Total SA B 125,192 9,284
Unibail SA 2,180 218
Union Immobilier 5,320 435
* Usinor Sacilor 103,600 1,494
Valeo SA 28,100 1,504
--------------
COUNTRY TOTAL 169,082
--------------
- --------------------------------------------------------------------------------------
GERMANY (13.5%)
* Aachener & Muenchener
Beteiligungs (Bearer) 544 320
* Aachener & Muenchener
Beteiligungs (Registered) 1,650 1,214
AGIV AG Industrie & Verkehr 20,920 399
Allianz AG Holdings (Registered) 10,907 18,881
Asko Deutsche Kaufhaus AG 1,700 1,256
Asko Deutsche Kaufhaus AG Pfd. 110 61
BASF AG 28,150 8,045
Bayer AG 327,650 11,570
Bayerische Hypotheken und
Wechsel Bank 87,890 2,132
Bayerische Vereinsbank AG 75,530 2,119
* Beiersdorf AG 1,500 1,478
Bilfinger & Berger 912 385
Brau & Brunnen AG 2,792 292
Colonia Konzern AG 1,373 1,109
Colonia Konzern Pfd. 1,050 728
Continental AG 22,000 357
* Daimler Benz AG 24,644 13,187
* Daimler Benz AG
Rights Exp. 7/5/96 24,644 3
Degussa AG 1,692 574
Deutsche Bank AG 231,450 10,948
* Didier Werke 2,560 198
DLW 340 29
Douglas Holding AG 9,620 384
Dresdner Bank AG 179,810 4,518
Dyckerhoff AG 850 329
Dyckerhoff Pfd. 1,190 307
Escada AG 720 130
Escada Pfd. 1,140 199
Fag Kugelfischer 2,250 336
Fag Kugelfischer Pfd. 1,250 185
Heidelberger Zement 2,200 1,509
Herlitz 1,650 217
Herlitz Pfd. 1,815 221
Hochtief 6,005 2,695
Holsten-Brauerei 987 205
</TABLE>
5
<PAGE> 6
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
EUROPEAN Value
PORTFOLIO (continued) Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Industrie-Werke
Karlsruheaugsburg AG 1,450 $ 298
Karstadt AG 3,150 1,274
Kaufhof AG 2,240 847
Kaufhof AG Pfd. 1,250 339
* Klockner-Humbolt-Deutz 22,500 83
Linde AG 4,054 2,637
* Linotype AG 950 47
Lufthansa 15,937 2,251
Lufthansa Pfd. 700 99
Man AG 5,125 1,275
Man Vorzug AG 2,300 444
Mannesmann AG 17,129 5,919
Munchener Ruckversicherung 220 367
Munchener Ruckversicherung Pfd. 3,710 7,653
Preussag AG 5,930 1,500
* PWA Papierwerke Waldhof 3,300 414
Rheinisch-Westfaelisches
Elektrizitaetswerk AG 242,750 9,457
Rheinisch-Westfaelisches
Elektrizitaetswerk AG Pfd. 106,040 3,260
Rheinmetall 1,900 276
Rheinmetall Pfd. 750 92
Salamander 430 55
SAP AG 29,300 4,341
SAP AG Pfd. 15,750 2,335
Schering AG 24,950 1,815
Siemens AG 267,770 14,302
* Strabag Bau AG 1,893 163
Strabag Bau AG Pfd. 143 11
* Thyssen AG 10,966 2,004
Veba AG 253,681 13,478
Viag AG 10,156 4,050
Volkswagen AG 10,600 3,938
Volkswagen AG Pfd. 1,850 507
--------------
COUNTRY TOTAL 172,051
--------------
- --------------------------------------------------------------------------------------
HONG KONG (.3%)
HSBC Holdings PLC 220,000 3,325
- --------------------------------------------------------------------------------------
IRELAND (.6%)
Allied Irish Banks 179,900 934
Crean, James Ltd. 27,780 111
CRH PLC 163,000 1,609
FYFFES PLC 56,930 97
Greencore PLC 83,500 434
Independent News PLC 292,105 1,400
* Independent News PLC
Rights Exp. 7/10/96 58,421 9
Irish Life PLC 93,700 370
Jefferson Smurfit Group 364,400 978
Kerry Group A 21,160 217
Waterford Wedgewood 374,680 485
Woodchester Holdings 236,900 746
--------------
COUNTRY TOTAL 7,390
--------------
- --------------------------------------------------------------------------------------
ITALY (5.4%)
Assicurazioni Generali 423,678 9,811
Banca Commerciale Italiana Risp. 747,000 1,501
Banco Ambrosiano Veneto 161,255 433
Banco Ambrosiano Veneto Risp. 65,920 91
Benetton Group SPA 54,000 698
Bulgari SPA 41,000 655
Burgo (Cartiere) SPA 102,100 558
Cementir SPA 96,680 80
Credito Italiano 1,077,380 1,262
Danieli & Co. 11,090 75
Danieli & Co. Risp. 9,000 32
Edison SPA 275,000 1,659
Ente Nazionale Idrocarburi SPA 2,044,000 10,193
* Falck, Accia & Ferr 122,000 457
Fiat SPA 1,478,500 4,952
Fiat SPA Pfd. 535,000 939
Fiat SPA Risp. 255,700 437
* Impregilo SPA 213,000 226
Istituto Bancario San Paolo
De Torino 246,000 1,583
Istituto Mobiliare Italiano 220,000 1,848
Istituto Naz Delle Assicurazioni 2,131,500 3,177
Italcementi 152,057 1,221
Italcementi Risp. 69,235 219
Italgas 458,750 1,713
La Previdente 8,000 45
Lane Marzotto 11,800 74
Lane Marzotto Risp. 5,000 34
Magnetti Marelli SPA 263,500 376
Mediobanca Banca Di
Credito Finanziaria 207,000 1,310
* Montedison Risp. 465,000 279
* Montedison SPA 1,795,274 1,043
* Olivetti & Cie. SPA 1,621,250 875
* Parmalat Finanziaria SPA 233,000 313
* Pirelli SPA 776,000 1,298
Pirelli SPA Risp. 46,300 50
RAS 161,204 1,660
RAS Risp. 39,600 207
Rinascente 127,062 906
Rinascente Priv. 15,000 39
Rinascente Risp. 6,000 17
* Rinascente Warrants Exp. 11/30/99 7,403 6
* Saffa 21,790 47
SAI 59,730 571
SAI Risp. 161,000 624
Sasib 14,960 61
Sasib Risp. 24,000 48
Sirti SPA 92,690 600
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
SNIA Bpd 665,000 $ 745
Telecom Italia Mobile SPA 2,500,166 5,586
Telecom Italia Mobile SPA Risp. 576,944 787
Telecom Italia Risp. 576,944 995
Telecom Italia SPA 3,163,166 6,799
--------------
COUNTRY TOTAL 69,215
--------------
- --------------------------------------------------------------------------------------
NETHERLANDS (8.2%)
ABN AMRO Holding NV 151,932 8,153
Ahold NV 45,176 2,448
Akzo NV 24,000 2,875
Elsevier NV 309,200 4,691
Getronics NV 54,316 1,203
Heineken NV 22,476 5,022
Hollandsche Beton Groep NV 1,380 264
Hoogovens & Staalf 17,549 650
IHC Caland NV 4,660 229
Internationale Nederlanden
Groep NV 370,250 11,040
KLM Royal Dutch Airlines NV 32,247 1,031
Koninklijke KNP BT NV 41,914 1,004
Koninklijke PTT Nederland NV 214,520 8,118
Nedlloyd Group NV 15,351 353
Oce Van Der Grinten NV 10,607 1,123
Philips Electronics NV (non-voting) 138,255 4,495
Royal Dutch Petroleum 245,319 37,883
Royal Pakhoed Holdings 20,528 535
Stad Rotterdam 14,180 513
Stork VMF 15,233 437
Unilever NV 79,437 11,494
Wolters Kluwer 16,983 1,929
--------------
COUNTRY TOTAL 105,490
--------------
- --------------------------------------------------------------------------------------
NORWAY (1.0%)
Aker AS A 26,623 510
Aker AS B 11,120 199
Bergesen D.Y. AS A 31,416 653
Bergesen D.Y. AS B 18,436 372
Dyno Industrier AS 21,896 485
Elkem A 96,320 1,327
Hafslund ASA A 16,771 121
Hafslund ASA B 16,531 104
Kvaerner Industries AS A 19,600 828
Kvaerner Industries AS B 8,900 344
Lief Hoegh 18,300 318
* NCL Holdings AS 105,500 240
Norsk Hydro AS 68,994 3,377
Norske Skog Industries A 9,530 288
Norske Skog Industries B 3,140 87
* Nycomed ASA A 18,771 270
* Nycomed ASA B 16,531 229
Orkla AS A 22,100 1,163
Orkla AS B 7,880 383
* Uni-Storebrand AS A 159,600 717
* Unitor 21,900 354
--------------
COUNTRY TOTAL 12,369
--------------
- --------------------------------------------------------------------------------------
SPAIN (3.7%)
Acerinox SA 7,816 814
* Aguila (El) SA 33,558 209
Alba 7,265 604
Argentaria SA 61,100 2,664
Autopista Acesa 94,127 1,094
Banco Bilbao Vizcaya 103,921 4,207
Banco Central Hispanoamericano 94,286 1,919
* Banco Santander 68,927 3,215
Dragados y Construcciones SA 34,796 460
Ebro Agricolas 33,244 384
Empresa Nacional de
Electricidad SA 112,909 7,036
ENCE-Empresa Nacional
Celulosa SA 15,600 221
* Ercros SA 80,232 47
Fomento de Construciones y Contra 7,208 596
Gas Natural 16,552 3,447
Iberdrola SA 251,863 2,583
Inmobiliaria Metropolitana
Vasca Central SA 14,209 486
* Inmobiliaria Urbis 60,880 256
Mapfre 16,521 843
Portland Valderrivas 4,748 311
Prosegur Compania SA 14,930 524
Repsol SA 114,337 3,973
Sarrio Papelera 49,340 161
Tabacalera SA 20,206 1,017
Telefonica de Espana 425,768 7,837
Union Electrica Fenosa 27,737 178
Uralita 78,364 733
Vallehermoso SA 49,198 971
Viscofan Envolturas Celulosi SA 21,160 334
Zardoya Otis SA 2,206 211
Zardoya Otis SA Rights Exp. 7/26/96 2,206 21
--------------
COUNTRY TOTAL 47,356
--------------
- --------------------------------------------------------------------------------------
SWEDEN (4.3%)
AGA AB Series A 92,350 1,642
AGA AB Series B 35,090 603
ASEA AB Series A Free 43,168 4,573
ASEA AB Series B Free 9,500 1,004
Astra AB Series A 246,600 10,889
Astra AB Series B 38,830 1,691
Atlas Copco AB Series A Free 67,000 1,247
Atlas Copco AB Series B Free 32,090 597
Autoliv AB 20,200 615
Electrolux Series B 33,100 1,664
Esselte AB Series A 13,460 272
</TABLE>
7
<PAGE> 8
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
EUROPEAN Value
PORTFOLIO (continued) Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Esselte AB Series B 11,990 $ 245
Hennes & Mauritz AB Series B 25,288 2,344
LM Ericsson Telephone AB Series B 465,500 10,032
* Nackebro AB 9,999 124
Scanem AB 34,680 1,092
Securitas Series B 55,710 1,167
Skandia 33,072 875
Skandinaviska Enskilda Banken
AB Series B 236,453 1,889
Skanska Series B 75,458 2,667
SKF AB Series A 11,140 259
SKF AB Series B 5,400 128
Stora Kopparberg Series A 79,905 1,054
Stora Kopparberg Series B 3,550 47
Svenska Cellulosa AB Series B 61,646 1,268
Svenska Handelsbanken, Inc.
Series A 96,630 2,017
Svenska Handelsbanken, Inc.
Series B 3,360 67
* Swedish Match 180,369 560
Trelleborg AB Series B 41,898 524
Volvo AB Series A 41,000 936
Volvo AB Series B 152,169 3,463
--------------
COUNTRY TOTAL 55,555
--------------
- --------------------------------------------------------------------------------------
SWITZERLAND (11.5%)
ABB AG 620 151
ABB AG (Bearer) 2,635 3,259
Adia SA (Bearer) 3,017 757
Alusuisse-Lonza Holding
AG (Bearer) 891 733
Alusuisse-Lonza Holding
AG (Registered) 2,085 1,721
Ciba Geigy (Registered) 11,706 14,262
Ciba Geigy AG 925 1,122
CS Holdings (Registered) 88,075 8,374
Danzas Holding AG (Ptg. Ctf.) 270 55
Danzas Holding AG (Registered) 120 130
Forbo Holding AG (Registered) 380 161
Georg Fischer (Registered) 210 48
Georg Fischer AG (Bearer) 310 358
* Grands Magasins Jelmoli (Bearer) 280 159
* Grands Magasins Jelmoli (Registered) 610 67
Holderbank Financiere Glarus
AG (Bearer) 850 679
Holderbank Financiere Glarus
AG (Registered) 6,710 1,072
* Interdiscount Holding (Bearer) 1,010 7
Kuoni Reisen NB (Registered) 120 275
Moevenpick Holding (Bearer) 310 99
Moevenpick Holding (Ptg. Ctf.) 200 64
Nestle SA (Registered) 17,859 20,389
Roche Holdings AG (Bearer) 873 10,846
Roche Holdings Ltd. 3,268 24,922
Sandoz AG (Bearer) 1,680 1,910
Sandoz AG (Registered) 16,190 18,510
Schindler Holdings AG (Ptg. Ctf.) 60 64
Schindler Holdings AG (Registered) 190 200
SGS Societe Generale de
Surveillance Holdings SA (Bearer) 592 1,417
Sika Finanz B 860 210
* SMH Societe Suisse Pour la
Microelectronique et
L'Horlogerie (Bearer) 1,842 1,280
* SMH Societe Suisse Pour la
Microelectronique et
L'Horlogerie (Registered) 7,920 1,237
Societe Generale de Surveillance
Holdings SA (Registered) 120 53
Sulzer AG (Ptg. Ctf.) 50 30
Sulzer (Registered) 300 193
* Swiss Bank Corp. (Registered) 35,295 6,965
Swiss Reinsurance (Registered) 6,488 6,661
* Swissair Inhaber (Registered) 400 387
Union Bank of Switzerland (Bearer) 9,911 9,700
Union Bank of Switzerland
(Registered) 9,260 1,961
Valora Holding AG 1,471 309
Zurich Insurance (Registered) 20,930 5,702
--------------
COUNTRY TOTAL 146,499
--------------
- --------------------------------------------------------------------------------------
UNITED KINGDOM (31.7%)
Abbey National 727,757 6,140
AMEC PLC 286,602 436
Amstrad PLC 121,789 365
Anglian Water 306,102 2,806
Argos PLC 258,563 2,997
Argyll Group PLC 792,980 4,263
Arjo Wiggins Appleton PLC 275,332 749
Associated British Foods PLC 590,159 3,549
B.A.T. (British American Tobacco)
Industries 1,532,102 11,926
Barclays PLC 879,183 10,529
Barratt Development 161,350 639
Bass PLC 513,157 6,434
BBA Group 365,097 1,746
BICC PLC 234,384 1,136
Blue Circle Industries PLC 435,015 2,433
BOC Group PLC 395,259 5,668
Boots Co. PLC 595,782 5,351
Bowthorpe PLC 371,946 2,606
BPB Industries Ltd. 305,669 1,510
British Aerospace PLC 217,572 3,289
British Airways PLC 566,986 4,872
British Gas 2,227,664 6,196
British Land Co., PLC 248,724 1,615
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
British Petroleum Co., PLC 2,579,155 $ 22,642
British Sky Broadcasting 909,725 6,219
British Steel PLC 1,013,769 2,575
British Telecommunications PLC 2,969,118 15,962
BTR PLC 1,913,208 7,521
Burmah Castrol PLC 128,457 2,040
Cable and Wireless PLC 1,055,324 7,002
Cadbury Schweppes PLC 632,049 4,994
Calor Group 188,794 707
Caradon PLC 381,677 1,287
Carlton Communications PLC 361,390 2,920
Chubb Security PLC 314,463 1,583
Coats Viyella PLC 187,389 496
Cobham PLC 50,764 501
Commercial Union 410,923 3,689
* Costain Group 114,260 67
Courtalds Textiles 105,394 593
Courtaulds PLC 270,720 1,788
Dawson International PLC 449,799 559
De La Rue Co., PLC 182,898 1,685
Delta Group British 238,760 1,311
East Midlands Electric 153,136 1,247
ECC Group (English China
Clays) PLC 299,315 1,205
Electrocomponents PLC 344,060 2,047
FKI 245,961 646
General Accident PLC 114,389 1,156
General Electric PLC 1,399,022 7,532
George Wimpey PLC 148,750 343
GKN 131,159 2,007
Glaxo Wellcome PLC 1,647,216 22,190
Granada Group PLC 266,757 3,565
Grand Metropolitan PLC 761,934 5,055
Great Portland Estates 51,123 130
Great Universal Stores PLC 468,433 4,756
Guardian Royal Exchange PLC 249,316 957
Guinness PLC 935,505 6,817
Hammerson Property Investment 63,516 361
Hanson PLC 2,409,681 6,739
Harrison and Crosfield 225,273 473
Hepworth Ceramic Holdings Ltd. 50,375 226
HSBC Holdings PLC 400,277 6,250
HSBC Holdings PLC (Foreign) 594,138 9,305
Hyder PLC 25,146 277
IMI PLC 140,425 772
Imperial Chemical Industries 326,365 3,986
J. Sainsbury PLC 699,593 4,131
Johnson Matthey PLC 44,148 425
Kingfisher PLC 182,963 1,835
Ladbroke Group 487,807 1,353
Laing, John 57,357 278
Laird Group 59,150 429
Land Securities PLC 158,670 1,538
Lasmo PLC 362,571 986
Legal & General Group PLC 91,518 948
Lex Services 52,726 306
Lloyds TSB Group PLC 2,388,716 11,691
London Electricity PLC 36,427 354
Lonrho PLC 242,458 695
Lucas Industries 502,734 1,773
Marks and Spencer PLC 1,294,778 9,465
Marley 42,640 86
MEPC PLC 170,124 1,078
Mercury Asset Management
Group PLC 33,242 497
Meyer International PLC 51,941 307
National Grid Group PLC 408,964 1,083
National Power PLC 529,939 4,282
Next PLC 104,066 910
Northern Electricity PLC 46,303 409
Ocean Transportation & Trading 71,755 510
Oxford Instruments 25,820 199
Pearson, S. & Son PLC 223,978 2,307
Peninsular & Oriental Steam
Navigation Co. Pfd. 143,201 1,077
Pilkington 352,635 994
Provident Financial PLC 28,000 199
Prudential Corp. 565,968 3,570
Racal Electronics PLC 81,626 388
Rank Organisation Ltd. PLC 202,721 1,572
Redland PLC 134,287 830
Reed International PLC 220,471 3,678
Reuters Holdings PLC 768,953 9,307
Rexam PLC 379,396 1,992
RMC Group PLC 43,028 677
Rolls Royce PLC 401,498 1,391
Royal Bank of Scotland 315,413 2,416
Royal Insurance Holdings 189,775 1,174
RTZ Corp. PLC 371,732 5,510
Rugby Group 296,046 506
Schroders PLC 84,468 1,769
Scottish & Newcastle Breweries 118,531 1,216
Scottish Power 311,598 1,467
Sears PLC 613,365 939
Sedgwick Group PLC 106,450 230
Slough Estates PLC 82,589 280
SmithKline Beecham PLC
Class A 1,269,463 13,580
Smiths Industries PLC 161,923 1,774
Southern Electric PLC 48,160 533
Southern Water 36,461 566
T & N PLC 162,499 351
Tarmac PLC 539,471 922
Tate & Lyle 98,518 701
</TABLE>
9
<PAGE> 10
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
EUROPEAN Value
PORTFOLIO (continued) Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Taylor Woodrow PLC 196,099 $ 472
Tesco PLC 549,559 2,519
Thames Water PLC 121,699 1,065
Thorn EMI PLC 170,592 4,747
Transport Development 211,521 651
Tube Investment Group 76,076 634
Unigate PLC 52,393 323
Unilever PLC 375,828 7,463
United Biscuits Holdings PLC 202,267 676
United Utilities PLC 109,672 929
Vickers PLC 129,129 486
Vodafone Group PLC 1,118,425 4,171
Waterford Wedgewood (GBP) 146,200 186
Williams Holdings PLC 89,847 471
Willis Corroon PLC 89,536 219
Wilson C. Holdings 86,443 218
Wolseley PLC 168,836 1,188
Zeneca Group PLC 438,790 9,709
--------------
COUNTRY TOTAL 405,049
--------------
- --------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,007,730) 1,267,691
- --------------------------------------------------------------------------------------
BOND
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Face
Amount
(000)
---------
<S> <C> <C>
SWITZERLAND
(U.S. Dollar Denominated)
Hofi International
4.50%, 8/11/08 (Cost $613) $ 445 640
- --------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (1.0%)
- --------------------------------------------------------------------------------------
U.S. TREASURY BILL--Note E
5.02%, 7/11/96 1,900 1,898
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
5.35%, 7/1/96 10,327 10,327
- --------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $12,227) 12,225
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.2%)
(Cost $1,020,570) 1,280,556
- --------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-.2%)
- --------------------------------------------------------------------------------------
Other Assets--Notes B and G $ 298,736
Liabilities--Note G (300,908)
--------------
(2,172)
- --------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------
Applicable to 85,367,072 outstanding
$.001 par value shares
(authorized 500,000,000 shares) $1,278,384
- --------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $14.98
======================================================================================
</TABLE>
+See Note A to Financial Statements.
*Non-Income Producing Security.
(Ptg. Ctf.)--Participating Certificate.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AT JUNE 30, 1996, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
----------- ------
<S> <C> <C>
PAID IN CAPITAL $ 999,128 $11.70
UNDISTRIBUTED NET
INVESTMENT INCOME--NOTE F 18,507 .22
ACCUMULATED NET
REALIZED GAINS--NOTE F 748 .01
UNREALIZED APPRECIATION
(DEPRECIATION)--NOTE E:
INVESTMENT SECURITIES 259,986 3.05
FUTURES CONTRACTS (22) --
FOREIGN CURRENCIES AND
FORWARD CURRENCY CONTRACTS 37 --
- --------------------------------------------------------------------------------------
NET ASSETS $1,278,384 $14.98
- --------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
Market
Value
PACIFIC PORTFOLIO Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (97.2%)
- --------------------------------------------------------------------------------------
AUSTRALIA (5.4%)
Aberfoyle 141,700 $ 401
Amcor Ltd. 395,541 2,693
Ashton Mining Ltd. 191,900 272
Australia National Industries Ltd. 778,131 631
Australian Gas Light Co., Ltd. 101,300 422
Boral Ltd. 595,400 1,546
Brambles Industries, Ltd. 116,911 1,627
Broken Hill Proprietary Ltd. 699,887 9,678
Burns Phillip & Co. 207,330 392
Coca-Cola Amatil Ltd. 154,468 1,718
Coles Myer Ltd. 433,585 1,577
CRA Ltd. 195,542 3,010
* Crown Ltd. 227,095 508
CSR Ltd. 388,900 1,374
* David Jones Ltd. 140,000 194
* Delta Gold NL 78,665 201
Email Ltd. 197,883 514
F.H. Faulding & Co., Ltd. 34,000 205
Fosters Brewing Group 443,460 764
Futuris Corp., Ltd. 174,000 200
Gio Australia Holdings Ltd. 173,000 426
Gold Mines Kalgoorlie 115,673 127
Goodman Fielder Ltd. 464,800 472
* Great Central Mines NL 122,830 336
Hardie (James) Industries 172,047 348
Howard Smith 97,500 606
ICI Australia Ltd. 123,748 1,085
Leighton Holdings Ltd. 130,450 462
Metal Manufactures Ltd. 86,500 204
Mount Isa Mines Holdings Ltd. 393,144 507
National Australia Bank Ltd. 359,546 3,325
Newcrest Mining Ltd. 63,945 257
News Corp. Ltd. 702,779 3,988
News Corp. Ltd. Pfd. 398,113 1,943
Normandy Mining Ltd. 226,000 358
North Ltd. 325,613 935
Pacific Dunlop Ltd. 430,640 969
Pioneer International 367,000 1,069
Plutonic Resources Ltd. 72,250 370
QBE Insurance Group Ltd. 75,562 449
QCT Resources 107,600 142
Renison Goldfields Consolidated Ltd. 34,300 166
Resolute Samatha Ltd. 84,495 196
Rothmans Holdings 103,900 581
Santos Ltd. 290,389 1,006
Sons of Gwalia 112,944 800
Southcorp Holdings Ltd. 312,000 774
* Sydney Harbour Casino
Holdings Ltd. 264,000 366
Tabcorp Holdings Ltd. 21,992 100
* TNT Ltd. 126,000 142
Westpac Banking Ltd. 725,771 3,216
WMC Ltd. 285,887 2,048
--------------
COUNTRY TOTAL 55,700
--------------
- --------------------------------------------------------------------------------------
HONG KONG (6.6%)
The Bank of East Asia Ltd. 783,766 2,865
Cathay Pacific Air Ltd. 1,128,000 2,069
Cheung Kong Holdings Ltd. 840,000 6,050
China Light and Power Co., Ltd. 759,000 3,442
Dickson Concepts 116,000 148
Giordano International 470,000 455
Hang Seng Bank Ltd. 617,800 6,225
Hong Kong Aircraft 103,600 311
Hong Kong & China Gas Co., Ltd. 1,326,661 2,117
* Hong Kong & China Gas Co., Ltd.
Warrants Exp. 9/30/97 110,555 29
The Hong Kong and Shanghai
Hotels Ltd. 278,000 474
Hong Kong
Telecommunications Ltd. 4,446,600 7,985
Hopewell Holdings Ltd. 1,583,000 859
Hutchison Whampoa Ltd. 1,107,000 6,965
Hysan Development Co., Ltd. 447,000 1,369
* Hysan Development Co., Ltd.
Warrants Exp. 4/30/98 22,350 12
Johnson Electric Holdings 424,000 953
Kumagai Gumi (HK) 65,000 58
* Kumagai Gumi Warrants
Exp. 6/30/98 13,000 2
Lai Sun Garment International 388,000 466
Miramar Hotel & Investment 139,000 307
New World Development Co., Ltd. 640,000 2,968
Orient Press Group 1,081,000 580
Peregrine Investment Holdings 95,000 137
* Peregrine Investment Holdings
Warrants Exp. 5/15/98 9,500 1
Playmate Toys Holdings 222,900 54
Regal Hotels International 1,190,000 319
Shangri-La Asia 248,000 348
Shun Tak Enterprises 518,000 318
South China Morning Post 1,577,000 1,080
Stelux Holdings 2,414,000 540
Sun Hung Kai Properties Ltd. 905,400 9,153
Swire Pacific Ltd. A 446,500 3,821
Tai Cheung Properties 336,500 280
Television Broadcast Ltd. 236,000 886
Wharf Holdings Ltd. 794,000 2,841
Wing Lung Bank 66,240 383
Winsor Industrial Corp. 241,500 206
--------------
COUNTRY TOTAL 67,076
--------------
- --------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
PACIFIC Value
PORTFOLIO (continued) Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (76.0%)
Acom Co., Ltd. 54,000 $ 2,112
Advantest Corp. 27,500 1,091
Ajinomoto Co., Inc. 257,000 3,069
Alps Electric Co., Ltd. 196,000 2,377
Amada Co., Ltd. 274,000 2,948
Amano Corp. 148,000 2,199
* Aoki Corp. 275,000 1,020
Aoyama Trading 48,000 1,256
Arabian Oil Co., Ltd. 35,500 1,660
Asahi Bank Ltd. 840,000 9,726
Asahi Breweries Ltd. 197,000 2,299
Asahi Chemical Industries 605,000 4,313
Asahi Glass Co., Ltd. 465,000 5,554
Ashikaga Bank 289,000 1,826
Autobacs Seven Co., Ltd. 15,000 1,450
The Bank of Tokyo-
Mitsubishi Ltd. 1,169,000 27,112
Bank of Yokohama 486,000 4,409
Bridgestone Corp. 313,000 5,964
Brother Industries Ltd. 226,000 1,383
Canon, Inc. 322,000 6,693
Casio Computer Co. 123,000 1,177
Chiba Bank 297,000 2,616
Chiyoda Corp. 85,000 1,007
Chugai Pharmaceutical Ltd. 96,000 937
Citizen Watch Co. 153,000 1,274
Cosmo Oil Co., Ltd. 230,000 1,422
CSK 21,200 630
Dai-Nippon Ink & Chemicals 308,000 1,578
Dai-Nippon Printing Co., Ltd. 288,000 5,566
Dai-Nippon Screen Manufacturing 68,000 605
Daicel Chemical Industries 26,000 160
Daido Steel Co. 241,000 1,191
Daiei, Inc. 225,000 2,708
Daifuku 32,000 490
Daiichi Pharmaceutical Co., Ltd. 91,000 1,402
Daikin Industries Ltd. 57,000 624
Daikyo, Inc. 88,000 654
Daimaru, Inc. 80,000 559
Daito Trust 52,000 778
Daiwa House Industries 158,000 2,449
Daiwa Kosho Lease 66,000 704
Daiwa Securities Ltd. 499,000 6,415
Denki Kagaku Kogyo 207,000 747
East Japan Railway 1,457 7,638
Ebara Corp. 67,000 1,069
Eisai Co., Ltd. 105,150 1,984
Ezaki Glico Co. 96,000 1,068
Fanuc Co., Ltd. 73,500 2,922
Fuji Bank 1,043,000 22,441
Fuji Photo Film Co., Ltd. 191,000 6,025
Fujikura Ltd. 163,000 1,349
Fujita Corp. 272,000 1,265
Fujita Tourist Enterprises 51,000 1,023
Fujitsu Ltd. 626,000 5,707
Furukawa Electric Co. 274,000 1,636
Gakken Co. 6,000 44
Gunma Bank Ltd. 116,000 1,290
Gunze Ltd. 51,000 319
* Hankyu Corp. 310,000 1,814
Hankyu Department Stores 45,000 591
* Haseko Co. 135,000 585
Hazama Corp. 175,000 764
Higo Bank 67,000 534
Hirose Electronics Co., Ltd. 11,500 710
Hitachi Ltd. 1,237,000 11,503
Hitachi Zosen Corp. 359,000 2,033
Hokuriku Bank 252,000 1,514
Honda Motor Co., Ltd. 363,000 9,399
Honshu Paper Co., Ltd. 196,000 1,388
House Foods Industrial Co., Ltd. 67,000 1,271
Hoya Corp. 52,000 1,678
INAX 96,000 954
Industrial Bank of Japan Ltd. 856,000 21,227
Isetan Co. 79,000 1,196
* Ishihara Sangyo 108,000 429
Ito-Yokado Co. 154,000 9,281
Itochu Corp. 501,000 3,499
Itoham Food Co., Ltd. 66,000 502
Iwatani & Co. 78,000 452
* Japan Air Lines Co., Ltd. 649,000 5,248
Japan Energy Corp. 388,000 1,440
* Japan Metals & Chemicals 60,000 317
* Japan Steel Works Ltd. 99,000 325
JGC Corp. 47,000 617
Joyo Bank 204,000 1,546
Jusco Co., Ltd. 124,000 4,059
Kajima Corp. 328,000 3,379
Kaken Pharmaceutical 3,000 25
Kamigumi Co. 44,000 401
Kandenko Co. 55,000 697
* Kanebo Ltd. 117,000 349
Kaneka Corp. 78,000 524
Kansai Electric Power, Inc. 347,300 7,948
Kansai Paint Co., Ltd. 115,000 604
Kao Corp. 224,000 3,022
Katokichi Co., Ltd. 27,000 652
Kawasaki Heavy Industries 501,000 2,535
* Kawasaki Kisen Kaisha Ltd. 228,000 769
Kawasaki Steel Corp. 1,112,000 4,005
Keihin Electric Express
Railway Co. Ltd. 147,290 872
Kikkoman Shoyu Co. 57,000 465
Kinden Corp. 93,500 1,483
Kinki Nippon Railway 635,270 4,570
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Kirin Brewery Co., Ltd. 380,000 $ 4,642
Kissei Pharmaceutical 22,000 616
Kokuyo Co., Ltd. 36,000 994
Komatsu Ltd. 223,000 2,196
Komori Corp. 22,000 562
Konami Industry Co. 11,000 367
Konica Corp. 79,000 595
Koyo Seiko Co. 70,000 683
Kubota Ltd. 329,000 2,169
Kumagai Gumi Co., Ltd. 249,000 999
Kurabo Industries Ltd. 76,000 303
Kuraray Co., Ltd. 127,000 1,424
Kureha Chemical Industries 88,000 496
Kurita Water Industries 41,800 1,018
Kyocera Corp. 61,000 4,310
Kyowa Hakko Kogyo 94,000 900
Kyudenko Corp. 3,000 40
Lion Corp. 85,000 510
Maeda Road Construction Co., Ltd. 20,000 345
Makino Milling 78,000 789
Makita Corp. 40,000 649
Marubeni Corp. 434,000 2,374
* Maruha Corp. 13,000 47
Marui Co. 118,000 2,614
Matsushita Electric Industrial
Co., Ltd. 760,000 14,135
Meiji Milk Products Co. 59,000 378
Meiji Seika Kaisha Ltd. 91,000 563
Minebea Co., Ltd. 189,000 1,587
Misawa Homes Co., Ltd. 49,000 478
Mitsubishi Chemical Corp. 804,000 3,709
Mitsubishi Corp. 587,000 7,706
Mitsubishi Electric Co. 657,000 4,576
Mitsubishi Estate Co., Ltd. 473,000 6,512
Mitsubishi Gas & Chemical 107,000 471
Mitsubishi Heavy Industries Ltd. 1,212,000 10,530
Mitsubishi Material 428,000 2,326
Mitsubishi Oil 98,000 835
Mitsubishi Paper Mills 75,000 468
Mitsubishi Rayon Co. 255,000 1,132
Mitsubishi Trust & Banking Corp. 482,000 8,130
Mitsubishi Warehouse &
Transportation 35,000 625
Mitsui & Co., Ltd. 596,000 5,396
* Mitsui Engineering & Ship Building 184,000 560
Mitsui Fudosan Co. 324,000 4,372
Mitsui Marine & Fire Insurance 276,000 2,192
Mitsui Mining & Smelting Co., Ltd. 134,000 547
* Mitsui Osk Lines Ltd. 362,000 1,248
Mitsui Soko 92,000 830
Mitsui Toatsu Chemicals Inc. 337,000 1,330
Mitsui Trust & Banking Co. 452,000 5,275
Mitsukoshi Ltd. 122,000 1,301
Mori Seiki Co. 24,000 481
Murata Manufacturing Co., Ltd. 97,000 3,670
Nagase & Co. 5,000 47
Nagoya Railroad Co. 300,000 1,529
Namco Ltd. 20,000 662
Nankai Railway 120,750 765
NEC Corp. 524,000 5,685
NGK Insulators 73,000 819
NGK Spark Plug Co. 50,000 556
Nichido Fire Marine 176,550 1,363
Nichii Co., Ltd. 113,000 1,875
Nichirei 73,000 522
Nihon Cement Co. 62,000 456
* Niigata Engineering Co. 245,000 931
Nikon Corp. 130,000 1,493
Nippon Beet Sugar 10,000 55
Nippon Comsys Corp. 83,000 1,120
Nippon Denso Co., Ltd. 316,000 6,857
Nippon Express Co., Ltd. 408,000 3,980
Nippon Fire & Marine 228,000 1,486
Nippon Light Metal Co. 140,000 794
Nippon Meat Packers, Inc. 98,000 1,394
Nippon Oil Co., Ltd. 298,000 2,019
Nippon Oil Fats 8,000 50
Nippon Paper Industries Co. 347,000 2,167
Nippon Sharyo Seizo Kaisha 43,000 427
Nippon Sheet Glass Co. 176,000 862
Nippon Shinpan Co. 175,000 1,244
Nippon Shokubai 83,000 802
Nippon Steel Corp. 2,139,000 7,332
* Nippon Suisan Kaisha 110,000 468
Nippon Yusen 433,000 2,503
Nishimatsu Construction 88,000 963
Nissan Motor Co., Ltd. 770,000 6,831
Nisshinbo Industries 57,000 561
Nissin Food 34,000 871
Nitto Denko Corp. 67,000 1,179
* NKK Corp. 1,280,000 3,874
Nomura Securities Co., Ltd. 707,000 13,794
Noritake Co., Ltd. 58,000 603
NSK Ltd. 107,000 809
NTN Corp. 86,000 608
Odakyu Electric Railway 263,680 1,774
Ohbayashi-Gumi Ltd. 264,000 2,385
OJI Paper Co., Ltd. 234,000 2,018
Okamoto Industries 72,000 453
* Okuma Machinery Works 67,000 745
Okumura Corp. 78,000 651
Olympus Optical Ltd. 62,000 622
Omron Tateisi Electronics Co. 107,000 2,273
Onoda Cement 252,000 1,445
</TABLE>
13
<PAGE> 14
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
PACIFIC Value
PORTFOLIO (continued) Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Onward Kashiyama Co. 69,000 $ 1,126
Osaka Gas Co., Ltd. 863,000 3,155
Oyo Corp. 10,000 575
Penta Ocean Construction 138,000 930
Pioneer Electronic Corp. 49,000 1,166
Q.P. Corp. 107,000 1,034
* Renown, Inc. 89,000 356
Rohm Co., Ltd. 40,000 2,640
Sakura Bank 1,256,000 13,970
Sanden Corp. 35,000 267
Sankyo Aluminum 7,000 41
Sankyo Co., Ltd. 166,000 4,298
* Sanrio Co., Ltd. 40,000 463
Sanwa Shutter 100,000 939
Sanyo Electric Co., Ltd. 502,000 3,062
Sapporo Breweries 68,000 639
Sato Kogyo Co. 94,000 576
Secom Co., Ltd. 43,000 2,838
Sega Enterprises 39,000 1,820
Seino Transportation Co., Ltd. 52,000 820
Seiyu Ltd. 40,000 507
Sekisui Chemical Co. 208,000 2,541
Sekisui House Ltd. 252,000 2,872
Seventy-Seven Bank 70,000 696
Sharp Corp. 401,000 7,019
Shimachu Co. 9,000 267
Shimano Industrial 34,000 608
Shimizu Construction Corp. 272,000 3,001
Shin-Etsu Chemical Co., Ltd. 128,800 2,466
Shionogi & Co., Ltd. 94,000 807
Shiseido Co., Ltd. 183,000 2,336
Shizuoka Bank 308,000 3,959
* Showa Denko Kabushiki 464,000 1,430
Skylark Co., Ltd. 41,000 863
SMC Corp. 21,000 1,624
Snow Brand Milk Products 66,000 448
Sony Corp. 135,500 8,907
Sumitomo Bank 1,130,000 21,841
Sumitomo Cement Co. 233,000 1,134
Sumitomo Chemical Co. 602,000 2,870
Sumitomo Corp. 394,000 3,499
Sumitomo Electric Co. 230,000 3,292
Sumitomo Forestry 72,000 1,070
* Sumitomo Heavy Industries Ltd. 211,000 921
Sumitomo Marine & Fire
Insurance Co. 254,000 2,212
Sumitomo Metal Industries 1,283,000 3,930
Sumitomo Metal Mining 217,000 1,877
Taisei Construction Corp. 320,000 2,270
Taisho Pharmaceuticals 130,000 2,809
Taiyo Yuden Co. 8,000 101
Takara Shuzo Co. 69,000 705
Takara Standard 4,000 46
Takashimaya Co. 122,000 1,891
Takeda Chemical Industries 324,000 5,731
Takuma Co., Ltd. 20,000 303
Teijin Ltd. 282,000 1,530
Teikoku Oil Co., Ltd. 164,000 1,124
Toa Corp. 84,000 577
Tobu Railway Co., Ltd. 286,000 1,875
Toei Corp. 67,000 556
Toho Co., Ltd. 8,700 1,539
Tohoku Electric Power 180,300 4,027
Tokai Bank 755,000 9,774
Tokio Marine & Fire Insurance Ltd. 564,000 7,507
Tokyo Broadcasting System 48,000 849
Tokyo Dome 84,000 1,692
Tokyo Electric Power 491,700 12,462
Tokyo Electron Inc. 47,000 1,367
Tokyo Gas Co., Ltd. 918,000 3,348
Tokyo Steel Manufacturing 57,000 1,117
Tokyo Style Co. 31,000 540
* Tokyo Tatemono 113,000 730
Tokyotokeiba 132,000 591
Tokyu Corp. 393,000 2,992
Toppan Printing Co. 238,000 3,472
Toray Industries, Inc. 516,000 3,557
* Tosoh Corp. 246,000 1,092
Tostem Corp. 83,000 2,444
Toto Ltd. 130,000 1,956
Toyo Engineering Corp. 112,000 754
Toyo Exterior 12,000 280
Toyo Seikan Kaisha Ltd. 75,000 2,612
Toyobo Co. 271,000 1,015
Toyoda Automatic Loom Works 97,000 1,937
Toyota Motor Corp. 1,357,000 33,899
Trans Cosmos Inc. 8,000 365
Tsubakimoto Chain Co. 132,000 899
Ube Industries Ltd. 359,000 1,365
Uni Charm 4,000 103
Uniden 11,000 226
* Unitika 182,000 549
Uny Co. 71,000 1,405
Wacoal Corp. 63,000 856
Yamaguchi Bank 50,000 848
Yamaha Corp. 64,000 1,056
Yamaichi Securities Co. 473,000 3,243
Yamanouchi Pharmaceuticals Ltd. 129,000 2,799
Yamato Transport Co. 152,000 1,788
Yamazaki Baking Co., Ltd. 87,000 1,610
The Yasuda Trust and
Banking Co., Ltd. 435,000 2,748
Yokogawa Electric 102,000 1,023
--------------
COUNTRY TOTAL 776,503
--------------
- --------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
MALAYSIA (4.9%)
* Aluminum Co. of Malaysia Bhd. 168,000 $ 271
AMMB Holdings Bhd. 137,000 1,922
Amsteel Corp. Bhd. 1,344,800 1,013
Antah Holdings 288,000 358
Aokam Perdana Bhd. 278,000 466
Berjaya Group 131,000 89
Berjaya Leisure 77,000 73
Commerce Asset Holdings Bhd. 162,000 987
DCB Holdings Bhd. 268,000 918
Edaran Otomobil Nasional 92,000 881
Ekran Bhd. 44,000 168
Golden Hope Plantations Bhd. 388,000 603
Golden Plus Holdings Bhd. 25,000 52
Guiness Malaysia 51,000 105
Highlands & Lowlands 156,000 276
Hong Leong Industries Bhd. 24,000 116
Hong Leong Properties 514,000 597
Hume Industries Bhd. 42,000 205
IOI Corp Bhd. 112,000 155
* Johan Holdings 721,000 685
Kedah Cement Holdings Bhd. 50,000 93
* Kelanamas Industries Bhd. 19,000 30
Kemayan Corp. Bhd 113,000 177
Kian Joo Can Factory 19,000 104
Kuala Lumpur Kepong Bhd. 202,500 511
Land and General Bhd. 76,500 189
Landmarks Bhd. 159,000 214
Leader Universal Holdings Bhd. 241,666 683
Magnum Corp. Bhd. 412,500 698
Malayan Banking Bhd. 460,000 4,424
Malayan Cement Bhd. 56,000 135
Malayan United Industries Bhd. 66,000 53
Malaysia Mining Corp. 99,400 100
* Malaysia Mining Corp. Rights
Exp. 7/8/96 42,600 6
Malaysian Airlines System Bhd. 180,000 573
Malaysian International Shipping
Corp. Bhd. (Foreign) 249,333 774
Malaysian Mosaics 46,000 66
Malaysian Oxygen 26,000 141
Malaysian Pacific 226,000 942
Malaysian Resources Co. Bhd. 239,000 584
Malaywata Steel Bhd. 23,000 39
MBF Capital 133,000 183
Mulpha International 173,000 165
Nestle Malaysia Bhd. 123,000 991
New Straits Times 30,000 156
Oriental Holdings Bhd. 130,000 849
Pan Malaysia Cement Works Bhd. 105,000 116
Perlis Plantations Bhd. 50,000 192
Perusahaan Otomobil NA 107,000 583
Petaling Garden Bhd. 557,000 701
* Pilecon Engineering 414,000 514
Promet Bhd. 272,000 270
Public Bank Bhd. (Foreign) 221,000 611
Rashid Hussain Bhd. 246,000 902
Resorts World Bhd. 282,000 1,616
RJ Reynolds 309,000 910
Rothmans of Pall Mall Bhd. 74,000 778
Shell Refining Co. Bhd. 148,000 418
Sime Darby Bhd. 890,600 2,463
Sungei Way Holdings 26,000 122
TA Enterprise Bhd. 230,000 359
Tan Chong Motor Holdings Bhd. 437,000 637
Technology Resources
Industries Bhd. 161,000 561
Telekom Malaysia Bhd. 787,000 7,002
Tenaga Nasional Bhd. 1,245,000 5,239
Time Engineering 70,000 224
UMW Holdings Bhd. 44,000 157
* United Engineering Bhd. 297,000 2,059
YTL Corp. Bhd. 150,000 781
--------------
COUNTRY TOTAL 50,035
--------------
- --------------------------------------------------------------------------------------
NEW ZEALAND (.8%)
Brierley Investment 1,698,000 1,605
Carter Holt Harvey Ltd. 692,559 1,580
* Fletcher Challenge Ltd. Building 112,067 219
* Fletcher Challenge Ltd. Energy 112,067 247
Fletcher Challenge Ltd. Forest 261,603 324
* Fletcher Challenge Ltd. Paper 224,135 433
Lion Nathan 177,000 462
Telecom Corp. of New Zealand 664,900 2,788
Wilson & Horton Ltd. 10,000 66
--------------
COUNTRY TOTAL 7,724
--------------
- --------------------------------------------------------------------------------------
SINGAPORE (3.5%)
Amcol Holdings 366,000 809
Chuan Hup Holdings 186,000 142
* City Development Ltd. 310,000 2,416
Comfort Group Ltd. 211,000 209
Creative Technology Ltd. 29,000 184
Cycle & Carriage Ltd. 71,000 760
Development Bank of Singapore
Ltd. (Foreign) 189,625 2,364
Fraser & Neave Ltd. 146,000 1,510
Goldtron Ltd. 251,000 199
Hai Sun Hup Group 73,000 55
Haw Par Brothers International 411,400 939
* Haw Par Brothers International
Rights Exp 7/5/96 41,140 16
* Hotel Properties Ltd. 415,000 735
Inchcape Bhd. 28,000 89
IPC Corp., Ltd. 409,000 203
</TABLE>
15
<PAGE> 16
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
PACIFIC Value
PORTFOLIO (continued) Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Jurong Shipyard 30,000 $ 152
Keppel Corp., Ltd. 204,000 1,706
Lum Chang Holdings 55,000 50
Metro Holdings 18,000 60
Natsteel Ltd. 55,000 109
Neptune Orient Lines 560,000 587
* Overseas Chinese Banking
Corp. Rights Exp. 7/9/96 26,816 215
Overseas Chinese Banking
Corp. (Foreign) 268,166 3,135
Overseas Union Enterprise Ltd. 21,000 115
Prima Ltd. 235,000 833
Robinson & Co., Ltd. 74,000 315
Sembawang Maritime 36,000 98
Shangri-La Hotel Ltd. 25,000 88
Singapore International
Airlines Ltd. (Foreign) 431,000 4,550
Singapore Press Holdings Ltd.
(Foreign) 138,960 2,727
Singapore Technologies
Industries Corp. 327,000 867
Singapore Telecommunications 2,218,000 5,908
Straits Trading 50,000 131
United Industrial Corp. 823,000 840
United Overseas Bank (Foreign) 305,350 2,921
Van Der Horst Ltd. 42,000 196
--------------
COUNTRY TOTAL 36,233
--------------
- --------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $860,687) 993,271
- --------------------------------------------------------------------------------------
BONDS (1.3%)
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Face
Amount
(000)
---------
<S> <C> <C> <C>
JAPAN
The Bank of Tokyo-Mitsubishi
Cayman Finance Ltd. Cvt.
4.25%, 3/29/49 JPY 720,000 9,879
The Bank of Tokyo-
Mitsubishi Ltd. Cvt.
6.10%, 3/31/97 JPY 187,000 3,376
- --------------------------------------------------------------------------------------
TOTAL BONDS
(Cost $12,841) 13,255
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS (1.4%)
- --------------------------------------------------------------------------------------
U.S. TREASURY BILL--Note E
5.02%, 7/11/96 $ 4,000 $ 3,995
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account 5.35%, 7/1/96 10,078 10,078
- --------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $14,072) 14,073
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.9%)
(Cost $887,600) 1,020,599
- --------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.1%)
- --------------------------------------------------------------------------------------
Other Assets--Notes B and G 265,018
Liabilities--Note G (263,925)
--------------
1,093
- --------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------
Applicable to 86,026,848 outstanding
$.001 par value shares
(authorized 500,000,000 shares) $1,021,692
- --------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $11.88
======================================================================================
</TABLE>
+See Note A to Financial Statements.
*Non-Income Producing Security.
JPY--Japanese Yen.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AT JUNE 30, 1996, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
----------- ------
<S> <C> <C>
PAID IN CAPITAL $ 886,811 $10.31
UNDISTRIBUTED NET
INVESTMENT INCOME--NOTE F 3,782 .04
ACCUMULATED NET
REALIZED LOSSES--NOTE F (2,002) (.02)
UNREALIZED APPRECIATION
(DEPRECIATION)--NOTE E:
INVESTMENT SECURITIES 132,999 1.55
FUTURES CONTRACTS 204 --
FOREIGN CURRENCIES AND
FORWARD CURRENCY CONTRACTS (102) --
- --------------------------------------------------------------------------------------
NET ASSETS $1,021,692 $11.88
- --------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Market
EMERGING MARKETS Value
PORTFOLIO Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (94.9%)
- --------------------------------------------------------------------------------------
ARGENTINA (3.8%)
Astra Cia Argentina de Petol
B Shares 106,090 $ 252
Banco Frances Del Rio Plata 101,190 962
Banco Galicia y Buenos 173,745 1,118
Commercial de Plata 162,100 503
Compania Naviera Perez 442,639 2,901
* Interamericana Auto 92,067 640
Nobleza Piccardo Ind. 40,300 153
Telefonica Argentina 1,898,900 5,623
YPF SA 326,824 7,357
--------------
COUNTRY TOTAL 19,509
--------------
- --------------------------------------------------------------------------------------
BRAZIL (12.0%)
Aracruz Celulose Pfd. B 789,771 1,471
Banco Bradesco 372,785,308 2,670
Banco Bradesco Pfd. 337,204,197 2,754
* Banco do Brasil Pfd. 71,237,717 564
* Banco Estado Sao Paulo Pfd. 54,375,000 203
Banco Itau Pfd. 9,019,912 3,666
Brasmotor SA Pfd. 1,198,000 375
Cemig Pfd. 85,679,665 2,279
Centrais Electricas Brasileiras SA 29,366,301 7,898
Centrais Electricas Brasileiras
SA Pfd. B 5,753,118 1,645
Cervejaria Brahma 1,638,065 979
Cervejaria Brahma Pfd. 3,004,150 1,793
Ceval Pfd. 29,720,000 309
Cia Cimento Portland Pfd. 1,451,800 411
Cia Tecidos Norte De Mina Pfd. 722,300 285
Copene-Petroquimica Pfd. 981,194 473
Ericsson Telecomunicadoes Pfd. 21,379,400 321
Fosfertil Pfd. 66,300,000 283
Industrias Klabin de Papel Pfd. 403,025 510
* Iochpe-Maxion Pfd. 1,098,738 137
Lojas Americanas 14,646,000 261
Lojas Americanas Pfd. 20,557,033 405
Metalurgica Gerdau Pfd. 5,906,400 110
* Paranapanema SA Pfd. 17,416,000 139
* Paulista de Forcae Luz 13,047,300 1,196
Perdigao Pfd. 172,760,000 308
Petrobras Pfd. 29,015,500 3,569
Pirelli Pneus Pfd. 109,000 206
Refrigeracgo Parana Pfd. 88,033,000 219
* Santista Alimentos SA 187,000 294
Siderugica Nacional 48,422,400 1,235
Souza Cruz Ind. 201,600 1,757
Telecom Brasileiras SA Pfd. 199,677,600 13,943
Unipar Union Industria
Petroquim 59,645 34
Usiminas Pfd. 1,516,452,400 1,601
Vale do Rio Doce Pfd. 264,892 5,132
* Viacao Aerea
Riograndense SA Pfd. 53,000 132
Vidreas Santa Marina 155,539 612
* Votorantim Celulose E Papel SA 18,542,324 406
White Martins 771,881,600 1,084
--------------
COUNTRY TOTAL 61,669
--------------
- --------------------------------------------------------------------------------------
GREECE (1.2%)
Alpha Credit Bank 18,133 957
* Athens Medical Center 16,600 124
* Attica Enterprises SA 23,100 154
Commercial Bank of Greece 19,134 624
Elais Co. 7,270 236
Epilectos Textiles SA 58,210 227
Ergo Bank 12,700 699
Fourlis Brothers Corp. 45,010 654
Hellas Can 8,900 190
Hellenic Bottling Co. (Bearer) 37,400 1,241
Hellenic Sugar 26,090 245
Intracom (Bearer) 12,440 220
Klonatex SA Pfd. 4,400 64
Michaniki SA 15,000 174
National Bank of Greece 11,900 585
* Petzetakis SA 20,050 82
--------------
COUNTRY TOTAL 6,476
--------------
- --------------------------------------------------------------------------------------
HONG KONG (11.8%)
* Applied International 760,000 68
The Bank of East Asia Ltd. 378,848 1,385
Cathay Pacific Air Ltd. 970,000 1,779
Cheung Kong Holdings Ltd. 774,000 5,574
China Light and Power Co., Ltd. 671,000 3,043
Dickson Concepts 300,000 384
Hang Lung Development Co. 472,000 887
Hang Seng Bank Ltd. 696,700 7,020
Hong Kong & China Gas Co., Ltd. 509,760 813
* Hong Kong & China Gas Co., Ltd.
Warrants Exp. 9/30/97 42,480 11
The Hong Kong and
Shanghai Hotels Ltd. 404,000 689
Hong Kong Aircraft 76,400 229
Hong Kong
Telecommunications Ltd. 3,781,200 6,790
Hopewell Holdings Ltd. 1,591,000 863
Hutchison Whampoa Ltd. 1,292,000 8,128
Hysan Development Co., Ltd. 368,000 1,127
* Hysan Development Co., Ltd.
Warrants Exp. 4/30/98 15,400 8
Miramar Hotel & Investment 230,000 508
New World Development Co., Ltd. 833,000 3,863
Orient Press Group 640,000 343
Playmate Toys Holdings 390,000 95
</TABLE>
17
<PAGE> 18
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
EMERGING MARKETS Value
PORTFOLIO (continued) Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Sun Hung Kai Properties Ltd. 852,000 $ 8,613
Swire Pacific Ltd. A 531,500 4,549
Television Broadcast Ltd. 151,000 567
Wharf Holdings Ltd. 740,000 2,648
Wing Lung Bank 81,840 474
--------------
COUNTRY TOTAL 60,458
--------------
- --------------------------------------------------------------------------------------
INDONESIA (6.1%)
PT Astra International (Foreign) 6,000 9
PT Bank Bali (Foreign) 58,725 129
* PT Bank Bali Warrants Exp.
8/29/00 8,700 5
PT Bank Dagang Nasional
Indonesia (Foreign) 555,250 465
PT Bank Internasional Indonesia
(Foreign) 201,000 993
PT Barito Pacific Timber (Foreign) 1,018,500 667
PT Duta Anggada Realty (Foreign) 179,332 123
PT Evershine Textile Industry
(Foreign) 189,000 85
PT Gadjah Tunggal (Foreign) 616,500 305
PT Great River Ind. (Foreign) 80,000 46
PT Indah Kiat Pulp & Paper Corp.
(Foreign) 977,298 955
PT Indocement (Foreign) 884,500 3,040
PT Japfa Comfeed Indonesia
(Foreign) 259,000 150
PT Kabel Metal (Foreign) 69,000 31
PT Kalbe Farma (Foreign) 143,500 321
PT Lippo Bank (Foreign) 168,750 286
* PT Lippo Bank Rights Exp. 7/18/96 84,375 45
PT Mayora Indah (Foreign) 551,440 308
PT Modern Photo Film Co.
(Foreign) 87,500 376
PT Mulia Industrindo (Foreign) 440,900 654
PT Mulia Industrindo (Local) 176,360 261
PT Pakuwon Jati (Foreign) 329,000 120
PT Perusahaan Gudang Garam
(Foreign) 1,810,000 7,757
PT Polysindo Eka Perkas
(Foreign) 8,359,000 3,951
PT Sinar Mas Agro (Foreign) 224,500 164
PT Supreme Cable Manufacturing
Corp. (Foreign) 145,500 152
PT Telekom Unikasi Indonesia
(Foreign) 5,662,000 8,575
PT Unggul Indah Corp. (Foreign) 78,650 81
PT Unilever Indonesia (Foreign) 95,000 1,404
--------------
COUNTRY TOTAL 31,458
--------------
- --------------------------------------------------------------------------------------
ISRAEL (1.7%)
* Ackerstein 106,425 100
* Africa-Israel Investments Ltd. 257 241
Azorim Investment Development
and Construction 18,151 180
Bank Hapoalim Ltd. 816,979 1,198
Dead Sea Periclase Ltd. 15,700 88
* ECI Telecom Ltd. 49,100 1,135
First International Bank Israel 2,364 262
IDB Bank Holding Corp., Ltd. 130,952 526
Industrial Buildings Corp. 675,806 659
* The Israel Corp., Ltd. 4,136 257
* The Israel Land
Development Co., Ltd. 41,800 102
Jerusalem Economic Corp., Ltd. 69,910 141
Koor Industries Ltd. 10,412 877
Maman Cargo Terminals
& Handling 70,434 112
Mul-T-Lock Ltd. 25,386 62
Property & Building Corp. 10,484 534
Scitex Corp., Ltd. 30,300 523
Super Sol Ltd. 13,426 284
Teva Pharmaceutical Industries
Ltd. ADR 9,700 367
Teva Pharmaceutical Industries Ltd. 2,686 1,009
--------------
COUNTRY TOTAL 8,657
--------------
- --------------------------------------------------------------------------------------
MALAYSIA (16.2%)
* Aluminum Co. of Malaysia Bhd. 128,000 206
AMMB Holdings Bhd. 135,000 1,894
Amsteel Corp. Bhd. 1,149,600 866
Antah Holdings 214,000 266
Aokam Perdana Bhd. 188,000 315
Berjaya Group 511,000 348
Commerce Asset Holdings Bhd. 168,000 1,023
DCB Holdings Bhd. 610,000 2,090
Edaran Otomobil Nasional 143,000 1,370
Ekran Bhd. 104,000 396
Golden Hope Plantations Bhd. 602,000 936
Golden Plus Holdings Bhd. 112,000 231
Highlands & Lowlands 328,000 581
Hong Leong Industries Bhd. 102,000 495
Hong Leong Properties 494,000 574
Hume Industries Bhd. 95,000 464
Idris Hydraulic Bhd. 214,000 278
IOI Corp. Bhd. 594,000 824
Jia Tiasa Holdings 74,000 433
* Johan Holdings 186,000 177
Kedah Cement Holdings Bhd. 245,000 454
* Kelanamas Industries Bhd. 105,000 166
Kemayan Corp. Bhd. 222,000 347
Kuala Lumpur Kepong Bhd. 375,000 947
Land and General Bhd. 173,500 428
Landmarks Bhd. 313,000 421
Leader Universal Holdings Bhd. 293,000 828
Magnum Corp. Bhd. 853,500 1,443
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Malayan Banking Bhd. 849,000 $ 8,166
Malayan Cement Bhd. 234,000 563
Malaysia Mining Corp. 450,800 455
* Malaysia Mining Corp.
Rights Exp. 7/8/96 193,200 26
Malaysian Airlines System Bhd. 456,000 1,453
Malaysian International Shipping
Corp. Bhd. (Foreign) 207,000 643
Malaysian International Shipping
Corp. Bhd. (Local) 246,000 749
Malaysian Pacific 88,000 367
Malaysian Resources Co. Bhd. 614,000 1,501
Malaywata Steel Bhd. 122,000 209
Metroplex Bhd. 436,000 468
Mulpha International 415,000 396
* Multi-Purpose Holdings Bhd. 451,000 727
Nestle Malaysia Bhd. 281,000 2,264
Oriental Holdings Bhd. 139,000 908
Perlis Plantations Bhd. 173,000 666
Perusahaan Otomobil NA 317,000 1,728
Petaling Garden Bhd. 200,000 252
* Pilecon Engineering 192,000 239
Promet Bhd. 339,000 337
Public Bank Bhd. (Foreign) 241,000 666
Rashid Hussain Bhd. 314,000 1,151
Resorts World Bhd. 758,000 4,344
RJ Reynolds 158,000 465
Rothmans of Pall Mall Bhd. 151,000 1,588
Shell Refining Co. Bhd. 160,000 452
Sime Darby Bhd. 1,645,000 4,549
Sungei Way Holdings 111,000 520
TA Enterprise Bhd. 387,000 605
Tan Chong Motor Holdings Bhd. 483,000 705
Technology Resources
Industries Bhd. 428,000 1,492
Telekom Malaysia Bhd. 1,240,000 11,032
Tenaga Nasional Bhd. 2,012,000 8,466
Time Engineering 200,000 641
UMW Holdings Bhd. 176,000 628
* United Engineering Bhd. 396,000 2,745
YTL Corp. Bhd. 398,500 2,076
--------------
COUNTRY TOTAL 83,043
--------------
- --------------------------------------------------------------------------------------
MEXICO (8.3%)
Alfa SA A 301,992 1,363
Apasco A 221,400 1,228
Cementos Mexicanos SA Class A 353,684 1,266
Cementos Mexicanos SA Class B 247,425 966
Cementos Mexicanos SA Class C 169,000 603
* Cifra B SA 1,562,700 2,266
* Cifra C SA 608,000 872
* Consorcio G Grupo Dina 269,000 182
Cydsa SA A 86,000 215
Desc SA B 125,907 683
* Desc SA C 2,623 14
El Puerto de Liverpool SA C1 42,697 32
El Puerto de Liverpool SA 1 853,950 693
Empaques Ponderosa 65,000 156
* Empresas ICA 65,100 915
Empresas La Moderna A 256,700 1,152
Fomento Economico Mexicano SA B 150,950 430
Grupo Continental A 106,800 396
Grupo Financiero Banamex B 496,200 1,037
* Grupo Financiero Banamex L 159,910 305
* Grupo Financiero Bancomer B 1,219,050 533
* Grupo Financiero Probursa B 4,120,000 355
* Grupo Financiero Serfin L 135,000 188
Grupo Herdez SA Series A 280,000 91
Grupo Industrial Bimbo Series A 174,882 814
Grupo Industrial Maseca B 664,000 697
* Grupo Mexicano Desarrollo L 47,000 110
* Grupo Mexico SA B 408,513 1,229
Grupo Modelo SA Series C 651,700 3,067
* Grupo Simec SA B 648,000 163
* Grupo Situr B 790,000 112
* Grupo Televisa-CPO 196,400 3,052
Industrias Penoles A 247,599 1,139
Kimberly Clark Class A 182,309 3,335
Telefonos de Mexico A 1,645,000 2,791
Telefonos de Mexico L 5,241,250 8,880
Transport Maritima Mexico L 42,000 313
* Tubos de Acero de Mexico 24,000 230
Vitro 242,640 563
--------------
COUNTRY TOTAL 42,436
--------------
- --------------------------------------------------------------------------------------
PHILIPPINES (3.3%)
Ayala Land Inc. B 843,262 1,513
* Basic Petroleum and
Minerals, Inc. 139,238,900 58
* International Container
Terminal 465,025 315
Manila Electric B 133,325 1,399
* Manila Mining 103,852,140 103
Metro Pacific A Corp. 1,845,000 549
Metropolitan Bank & Trust Co. 134,196 3,765
* Oriental Petroleum and
Minerals Corp. 50,078,028 25
Petron Corp. 6,441,312 2,950
Philippine Long Distance
Telephone Co. 22,410 1,334
Philippine Long Distance
Telephone Co. GDR 13,880 465
* Philippine National Bank Class B 71,216 1,189
* Philippine Overseas Drilling
& Oil B 209,629,910 76
San Miguel Corp. B 270,070 933
</TABLE>
19
<PAGE> 20
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
EMERGING MARKETS Value
PORTFOLIO (continued) Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
SM Prime Holdings 5,548,680 $ 1,440
* Union Bank 316,000 452
Universal Robina Corp. 1,018,100 544
--------------
COUNTRY TOTAL 17,110
--------------
- --------------------------------------------------------------------------------------
PORTUGAL (2.1%)
Banco Commercial Portugal
(Registered) 73,000 862
* Banco de Fomento e Exterior 56,800 807
Banco Espirito Santo e Commercial 58,900 945
Banco Portugues Investimentos 30,800 390
Banco Totta & Acores 43,700 854
Cimentos de Portugal 77,628 1,612
Com Cel de Celulose do Caima SA 6,700 150
Corporacao Industrial do Norte 4,000 105
Corticeira Amorin (Bearer) 15,700 177
Industria Nacional Papeis 7,700 136
* Lisnave 49,100 97
Portucel Industrial 73,000 467
Portugal Telecom SA 112,347 2,935
Soares da Costa SA 25,680 218
Sonae SGPS SA Investimentos 27,500 714
* Tertir Terminai 19,200 71
--------------
COUNTRY TOTAL 10,540
--------------
- --------------------------------------------------------------------------------------
SINGAPORE (6.3%)
Chuan Hup Holdings 284,000 217
* City Development Ltd. 353,000 2,751
Cycle & Carriage Ltd. 82,000 877
Development Bank of
Singapore Ltd. (Foreign) 271,000 3,379
Fraser & Neave Ltd. 55,600 575
* Hotel Properties Ltd. 163,000 289
Jurong Shipyard 53,000 268
Keppel Corp., Ltd. 228,000 1,906
Lum Chang Holdings 169,000 153
Neptune Orient Lines 662,000 694
* Overseas Chinese Banking Corp.
Rights Exp. 7/9/96 36,600 293
Overseas Chinese
Banking Corp. (Foreign) 366,000 4,278
Parkway Holdings 272,000 809
Prima Ltd. 120,000 425
Shangri-La Hotel Ltd. 73,000 255
Singapore International
Airlines Ltd. (Foreign) 483,000 5,099
Singapore Press Holdings Ltd.
(Foreign) 139,400 2,736
Singapore
Telecommunications Ltd. 1,419,000 3,780
United Overseas Bank (Foreign) 397,600 3,803
--------------
COUNTRY TOTAL 32,587
--------------
- --------------------------------------------------------------------------------------
SOUTH AFRICA (12.3%)
Anglo American
Industrial Corp., Ltd. 53,000 2,130
Anglovaal Industries Ltd. 291,800 1,429
Barlow Ltd. 90,800 949
De Beers Centenary AG 249,500 8,469
Del Monte Royal Foods, Ltd. 102,900 124
Driefontein Consolidated Ltd. 157,700 2,112
First National Bank Holdings Ltd. 347,100 2,505
Foschini Ltd. 222,507 1,195
Hartebeesfontein Gold
Mining Co., Ltd. 82,700 279
Kinross Mines Ltd. 16,400 174
Kloof Gold Mining Co., Ltd. 95,400 903
Liberty Life Assn. of Africa Ltd. 169,500 5,431
Malbak Ltd. 312,000 1,549
Metropolitan Life Ltd. 46,660 679
Middle Witwatersrand Western
Areas Ltd. 218,900 981
MIH Holdings Ltd. 161,400 917
Murray & Roberts Holdings Ltd. 318,800 1,274
Nampak Ltd. 352,400 1,457
Nedcor Ltd. 169,000 2,556
Palabora Mining Co., Ltd. 22,200 349
Pepkor Ltd. 143,300 695
Pick'n Pay Stores Ltd. 119,800 416
Randfontein Estates Gold
Mining Co. Witwatersrand Ltd. 45,700 280
Rembrandt Group Ltd. 247,000 2,321
Rustenburg Platinum Holdings Ltd. 104,600 1,630
Safmarine & Rennies Holdings Ltd. 393,000 1,157
Samancor Ltd. 154,900 2,012
Sappi Ltd. 171,400 1,896
Sasol Ltd. 372,000 4,037
South African Breweries Ltd. 198,000 5,807
South African Iron & Steel
Industrial Corp., Ltd. 172,200 135
Sun International Ltd. 964,200 1,035
Tiger Oats Ltd. 129,300 1,814
Trencor Ltd. 103,600 550
Vaal Reefs Exploration &
Mining Ltd. 17,250 1,408
Western Area Gold Mining Co., Ltd. 64,700 1,008
Western Deep Levels Ltd. 19,500 720
Wooltru Ltd. 122,200 466
Wooltru Ltd. 'N' 143,400 546
--------------
COUNTRY TOTAL 63,395
--------------
- --------------------------------------------------------------------------------------
THAILAND (8.2%)
Asia Credit Co., Ltd. (Foreign) 44,200 282
Asia Credit Co., Ltd. (Local) 9,600 60
Asia Securities Trading (Foreign) 195,200 453
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
Ayudhua Insurance Co. (Foreign) 28,200 $ 211
Ban-Pu Coal Co., Ltd. (Foreign) 36,600 1,055
Bangkok Bank Public Co., Ltd.
(Foreign) 19,800 268
Bangkok Bank Public Co., Ltd.
(Local) 96,400 911
Bangkok Insurance Co., Ltd.
(Foreign) 3,900 73
Bangkok Land Public Co., Ltd.
(Foreign) 253,100 319
Bangkok Rubber (Foreign) 216,200 79
* Bank of Ayudhya Ltd. (Foreign) 413,250 2,278
Castle Peak Garment
Factory Co., Ltd. (Foreign) 84,200 414
CMIC Finance and
Securities Co., Ltd. (Foreign) 366,000 1,153
* Compass East Industry (Foreign) 40,200 218
Dhana Siam Finance &
Securities Co. Ltd. (Foreign) 130,100 722
Dusit Thani Public Co., Ltd.
(Foreign) 113,300 168
Finance One (Foreign) 44,100 285
First City Investment Co. (Foreign) 230,600 259
* GSS Array Technology (Foreign) 16,500 50
* GSS Array Technology (Local) 11,200 34
Industrial Finance Corp. of
Thailand (Foreign) 319,000 1,432
Industrial Finance Corp. of
Thailand (Local) 86,200 387
International Broadcasting
Corp. Ltd. (Foreign) 168,600 398
International Engineering Co.
(Foreign) 46,000 255
* International Trust and
Finance Co., Ltd. (Foreign) 509,450 281
Krisda Mahanakorn Ltd. (Foreign) 173,600 301
Land and House Public Co., Ltd.
(Foreign) 19,800 249
Land and House Public Co.,
Ltd. (Local) 2,600 30
Lee Feedmill Co. Ltd. (Foreign) 67,600 130
* Malee Sampran Factory (Foreign) 151,200 64
Modern Form Group Co., Ltd.
(Foreign) 408,200 317
Multi Credit Corp. of
Thailand (Foreign) 132,600 543
National Finance &
Securities Co., Ltd. (Foreign) 227,100 1,010
National Finance &
Securities Co., Ltd. (Local) 29,500 113
National Petrochemical (Foreign) 202,000 292
Nava Finance & Securities Co.,
Ltd. (Foreign) 536,300 1,879
* Nep Realty and Industry Public Co.,
Ltd. (Foreign) 426,200 165
* NTS Steel Groups (Foreign) 235,800 130
One Holding Public Co. Ltd.
(Foreign) 258,300 590
* Pacific Assets Public Co., Ltd.
(Foreign) 499,100 185
* Padaeng Industry (Foreign) 362,100 207
Phatra Thanakit Co., Ltd. (Foreign) 78,700 549
Phoenix Pulp & Paper (Foreign) 172,800 534
* Pranda Jewelry Co. (Foreign) 133,900 214
Premier Enterprise (Foreign) 93,600 148
PTT Exploration and Production
PLC (Foreign) 215,000 3,149
Robinson Department Store
(Foreign) 229,800 570
Saha Phatana International
(Foreign) 75,800 213
Sanyo Universal Electric Co., Ltd.
(Foreign) 38,900 135
* Shangri-la Hotel Public Co., Ltd.
(Foreign) 5,750 7
Shangri-la Hotel Public Co., Ltd.
(Local) 10,600 13
Shinawatra Computer &
Communications Co., Ltd.
(Foreign) 146,500 3,149
Siam Cement Public Co., Ltd.
(Foreign) 39,700 1,948
Siam Cement Public Co., Ltd.
(Local) 37,800 1,738
Siam City Cement Co., Ltd.
(Foreign) 132,880 1,674
Siam Commercial Bank Ltd.
(Foreign) 12,400 180
* Siam United Services (Foreign) 860,400 186
Srithai Superware Co. (Foreign) 49,600 320
* Sun Tec Group Co. Ltd. (Foreign) 85,600 121
Tanayong Public Co., Ltd. (Foreign) 320,600 458
Thai Central Chemical (Foreign) 110,900 96
Thai Farmers Bank Public Co., Ltd.
(Foreign) 10,900 119
Thai Plastic Chemical Co., Ltd.
(Foreign) 95,200 420
Thai President Foods Public
Co., Ltd. (Foreign) 16,000 110
* Thai Telephone and Telecom
(Foreign) 651,000 1,397
* Thai Telephone and Telecom
(Local) 12,300 26
Thai Wah (Foreign) 97,200 93
Thai-German Ceramic (Foreign) 133,700 311
Tipco Asphalt Co., (Foreign) 120,200 710
</TABLE>
21
<PAGE> 22
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
EMERGING MARKETS Value
PORTFOLIO (continued) Shares (000)+
- --------------------------------------------------------------------------------------
<S> <C> <C>
TPI Polene Co., Ltd. (Foreign) 246,368 $ 1,116
* Unicord Public Co., Ltd. (Foreign) 105,600 14
Union Asia Finance Co., Ltd.
(Foreign) 37,200 136
Union Asia Finance Co., Ltd.
(Local) 55,600 205
United Communication Industry
(Foreign) 248,700 3,329
* Univest Land
Public Co., Ltd. (Foreign) 338,400 190
Wattachak Public Co., Ltd. (Foreign) 153,800 327
--------------
COUNTRY TOTAL 42,155
--------------
- --------------------------------------------------------------------------------------
TURKEY (1.6%)
Adana Cimento A 1,747,834 106
Adana Cimento C 6,938,230 93
Akal Tekstil 1,000,500 62
Altinyildiz Mensucat 428,000 102
Arcelik 4,047,316 374
Bagfas 284,000 77
Brisa Bridgestone 875,000 352
Cukurova Elektrik AS 455,000 366
Doktas 911,600 74
* Eczacibasi Ilac 2,999,600 128
EGE Biracilik 1,213,820 554
* Ege Seramik 2,166,000 87
Eregli Demir Celik 5,007,250 555
Goodyear Lastikleri T.A.S. 502,000 205
* Ihlas Holdings 1,482,300 271
Kav Orman Sanayii AS 237,000 107
Konya Cimento 720,000 120
Netas 935,000 222
Otosan Otomobil SAS 1,157,500 394
Raks Elektronik Sanayi Ve
Ticaret AS 467,000 131
Sabah Yayincilik AS 4,723,000 131
Sarkuysan Elektrolitik 1,494,000 113
Sifas 1,014,000 29
T Garanti Bankasi 12,944,250 882
Tofas-Turk Otomobil Fabrikasi AS 6,462,050 311
Trakya Cam Sanayii AS 6,256,037 343
Turkiye Is Bankasi AS 64,000 77
Turkiye Is Bankasi C 7,614,900 704
Usas Ucak Servisi 95,500 140
Vestel Electronic Sanayi 576,000 107
Yapi Ve Kredi Bankasi AS 10,428,720 295
* Yapi Ve Kredi Bankasi AS--New 16,512,140 467
--------------
COUNTRY TOTAL 7,979
--------------
- --------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $462,341) 487,472
- --------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT (5.3%)
- --------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account 5.35%, 7/1/96
(Cost $27,458) $27,458 $ 27,458
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.2%)
(Cost $489,799) 514,930
- --------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-.2%)
- --------------------------------------------------------------------------------------
Other Assets--Note B 13,453
Liabilities (14,731)
--------------
(1,278)
- --------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------
Applicable to 41,657,153 outstanding
$.001 par value shares
(authorized 500,000,000 shares) $513,652
- --------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $12.33
======================================================================================
</TABLE>
+See Note A to Financial Statements.
*Non-Income Producing Security.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AT JUNE 30, 1996, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
-------- ------
<S> <C> <C>
PAID IN CAPITAL $485,956 $11.67
UNDISTRIBUTED NET
INVESTMENT INCOME--NOTE F 3,436 .08
ACCUMULATED NET
REALIZED LOSSES--NOTE F (869) (.02)
UNREALIZED APPRECIATION
(DEPRECIATION)--NOTE E:
INVESTMENT SECURITIES 25,131 .60
FOREIGN CURRENCIES (2) --
- --------------------------------------------------------------------------------------
NET ASSETS $513,652 $12.33
- --------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
Market Value
TOTAL INTERNATIONAL PORTFOLIO Shares (000)+
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS (99.8%)
- --------------------------------------------------------------------------------------------------------------
Vanguard International Equity Index Fund--
European Portfolio 3,288,178 $ 49,257
Pacific Portfolio 4,100,726 48,716
Emerging Markets Portfolio 1,113,927 13,735
- --------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $111,888) 111,708
- --------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.2%)
- --------------------------------------------------------------------------------------------------------------
Receivables for Portfolio Shares Issued 44,517
Other Assets 1,998
Payables for Investment Securities Purchased (46,292)
Other Liabilities (22)
----------
201
- --------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------------------------------
Applicable to 10,968,838 shares of beneficial
interest (unlimited authorization-no par value) $ 111,909
- --------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.20
==============================================================================================================
</TABLE>
+See Note A to Financial Statements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
AT JUNE 30, 1996, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
--------- -------
<S> <C> <C>
PAID IN CAPITAL $112,089 $10.22
UNDISTRIBUTED NET INVESTMENT INCOME -- --
ACCUMULATED NET REALIZED GAINS -- --
UNREALIZED DEPRECIATION OF INVESTMENTS--NOTE E (180) (.02)
- --------------------------------------------------------------------------------------------------------------
NET ASSETS $111,909 $10.20
- --------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 24
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
EUROPEAN PACIFIC EMERGING MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended Six Months Ended
June 30, 1996 June 30, 1996 June 30, 1996
(000) (000) (000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends(1) . . . . . . . . . . . . . . . . $20,646 $ 5,285 $ 4,998
Interest . . . . . . . . . . . . . . . . 1,203 813 656
- ---------------------------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . 21,849 6,098 5,654
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B . . . . . . . . . .
Investment Advisory Services . . . . . . . . $ 15 $ 15 $ 15
Management and Administrative . . . . . . . 1,407 1,130 295
Marketing and Distribution . . . . . . . . . 127 1,549 115 1,260 45 355
-------- -------- -----
Taxes (other than income taxes) . . . . . . . . 44 37 15
Custodian Fees . . . . . . . . . . . . . . . . 351 284 780
Auditing Fees . . . . . . . . . . . . . . . . 4 4 4
Shareholders' Reports . . . . . . . . . . . . . 43 38 17
Annual Meeting and Proxy Costs . . . . . . . . 8 7 3
Directors' Fees and Expenses . . . . . . . . . 2 2 1
- ---------------------------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . 2,001 1,632 1,175
- ---------------------------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . 19,848 4,466 4,479
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold . . . . . . . . . . 289 2,373 272
Futures Contracts . . . . . . . . . . . . . . . 1,404 79 --
Foreign Currencies and Forward
Currency Contracts . . . . . . . . . . . . . (706) (1,827) (12)
- ---------------------------------------------------------------------------------------------------------------------------------
Realized Net Gain . . . . . . . . . 987 625 260
- ---------------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION)
Investment Securities . . . . . . . . . . . . . 54,988 23,774 33,722
Futures Contracts . . . . . . . . . . . . . . . (340) (530) --
Foreign Currencies and
Forward Currency Contracts . . . . . . . . . 17 225 1
- ---------------------------------------------------------------------------------------------------------------------------------
Change in Unrealized
Appreciation (Depreciation) . . . 54,665 23,469 33,723
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations . . . . $75,500 $28,560 $38,462
=================================================================================================================================
</TABLE>
(1) Dividends are net of foreign withholding taxes of $2,913,000, $672,000, and
$668,000, respectively.
24
<PAGE> 25
<TABLE>
<CAPTION>
TOTAL INTERNATIONAL
PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------
April 29+ to
June 30, 1996
(000)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Income Distributions Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
- -------------------------------------------------------------------------------------------------------------------
Net Investment Income--Note C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
- -------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN
Capital Gain Distributions Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
Investment Securities Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
- -------------------------------------------------------------------------------------------------------------------
UNREALIZED DEPRECIATION OF INVESTMENT SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . $(180)
- -------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . . . . $(180)
===================================================================================================================
</TABLE>
+ Commencement of Operations.
25
<PAGE> 26
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EUROPEAN PACIFIC
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS Year SIX MONTHS Year
ENDED Ended ENDED Ended
JUNE 30, December 31, JUNE 30, December 31,
1996 1995 1996 1995
(000) (000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . $ 19,848 $ 22,605 $ 4,466 $ 7,054
Realized Net Gain (Loss) . . . . . . . . . . . . . . . 987 3,836 625 (1,456)
Change in Unrealized Appreciation
(Depreciation) . . . . . . . . . . . . . . . . . . 54,665 136,505 23,469 17,544
- --------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations . . . . . . . . . 75,500 162,946 28,560 23,142
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income . . . . . . . . . . . . . . . . (798) (22,611) -- (8,477)
Realized Net Gain . . . . . . . . . . . . . . . . . . (797) (2,826) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . (1,595) (25,437) -- (8,477)
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (1) . . . . . . . . . . . . .
Issued . . . . . . . . . . . . . . . . . . . . . 277,683 263,840 283,144 270,631
Issued in Lieu of Cash Distributions . . . . . . . . . 1,424 21,857 -- 7,188
Redeemed . . . . . . . . . . . . . . . . . . . . . (91,904) (120,963) (120,726) (158,876)
- --------------------------------------------------------------------------------------------------------------------------------
Net Increase from
Capital Share Transactions . . . . . . . . 187,203 164,734 162,418 118,943
- --------------------------------------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . . . . . . 261,108 302,243 190,978 133,608
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . . . . . . 1,017,276 715,033 830,714 697,106
- --------------------------------------------------------------------------------------------------------------------------------
End of Period . . . . . . . . . . . . . . . . . . . . $1,278,384 $1,017,276 $1,021,692 $ 830,714
================================================================================================================================
(1) Shares Issued and Redeemed . . . . . . . . . . .
Issued . . . . . . . . . . . . . . . . . . . . . 19,032 19,554 24,022 24,480
Issued in Lieu of Cash Distributions . . . . . . 99 1,560 -- 628
Redeemed . . . . . . . . . . . . . . . . . . . . (6,305) (9,359) (10,252) (14,514)
- --------------------------------------------------------------------------------------------------------------------------------
12,826 11,755 13,770 10,594
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
TOTAL
EMERGING MARKETS INTERNATIONAL
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------
SIX MONTHS Year
ENDED Ended APRIL 29+ TO
JUNE 30, December 31, JUNE 30,
1996 1995 1996
(000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . $ 4,479 $ 3,024 --
Realized Net Gain (Loss) . . . . . . . . . . . . . . . . 260 (713) --
Change in Unrealized Appreciation
(Depreciation) . . . . . . . . . . . . . . . . . . . 33,723 (404) $ (180)
- --------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations . . . . . . . . . . 38,462 1,907 (180)
- --------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income . . . . . . . . . . . . . . . . . (329) (3,765) --
Realized Net Gain . . . . . . . . . . . . . . . . . . . -- -- --
- --------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . . (329) (3,765) --
- --------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (1)
Issued . . . . . . . . . . . . . . . . . . . . . . 257,891 176,094 112,307
Issued in Lieu of Cash Distributions . . . . . . . . . . 302 3,292 --
Redeemed . . . . . . . . . . . . . . . . . . . . . . (16,965) (26,614) (218)
- --------------------------------------------------------------------------------------------------------------------
Net Increase from
Capital Share Transactions . . . . . . . . . 241,228 152,772 112,089
- --------------------------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . . . . . . . 279,361 150,914 111,909
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . . . . . . . 234,291 83,377 --
- --------------------------------------------------------------------------------------------------------------------
End of Period . . . . . . . . . . . . . . . . . . . . . $513,652 $234,291 $ 111,909
====================================================================================================================
(1) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . . . . . . . 21,283 16,407 10,990
Issued in Lieu of Cash Distributions . . . . . . . 25 307 --
Redeemed . . . . . . . . . . . . . . . . . . . . . (1,451) (2,580) (21)
- --------------------------------------------------------------------------------------------------------------------
19,857 14,134 10,969
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
+Commencement of Operations.
27
<PAGE> 28
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EUROPEAN PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
SIX MONTHS ENDED ----------------------------------------------------------
For a Share Outstanding Throughout Each Period JUNE 30, 1996 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . $14.02 $11.76 $11.88 $ 9.33 $9.92 $9.06
------ ------ ------ ------- ----- -----
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . .24 .32 .28 .17 .25 .26
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . . .74 2.30 (.06) 2.55 (.58) .86
------ ------ ------ ------- ----- -----
TOTAL FROM INVESTMENT OPERATIONS . . . . . . .98 2.62 .22 2.72 (.33) 1.12
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . (.01) (.32) (.28) (.17) (.26) (.26)
Distributions from Realized Capital Gains . . . . (.01) (.04) (.06) -- -- --
------ ------ ------ ------- ----- -----
TOTAL DISTRIBUTIONS . . . . . . . . . . . . (.02) (.36) (.34) (.17) (.26) (.26)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . $14.98 $14.02 $11.76 $11.88 $9.33 $9.92
================================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . +7.00% +22.28% +1.88% +29.13% -3.32% +12.40%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . . . $1,278 $1,017 $715 $601 $256 $161
Ratio of Total Expenses to Average Net Assets . . . . .35%* .35% .32% .32% .32% .33%
Ratio of Net Investment Income
to Average Net Assets . . . . . . . . . . . . . . 3.44%* 2.66% 2.41% 2.05% 3.05% 3.06%
Portfolio Turnover Rate . . . . . . . . . . . . . . . 1%* 2% 6% 4% 1% 15%+
Average Commission Rate Paid . . . . . . . . . . . . $.0414++ N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ Portfolio turnover rate for 1991, excluding in-kind redemptions, was 3%.
++ Represents total commissions paid on portfolio securities divided by the
number of shares purchased or sold on which commissions were charged. This
disclosure is required by the SEC beginning in 1996.
Note: Total return figures do not reflect the 1% transaction fee on purchases
or the annual account maintenance fee of $10.
28
<PAGE> 29
<TABLE>
<CAPTION>
PACIFIC PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
SIX MONTHS ENDED ----------------------------------------------------------
For a Share Outstanding Throughout Each Period JUNE 30, 1996 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . $11.50 $11.31 $10.13 $ 7.56 $9.42 $8.56
------ ------ ------ ------- ------- ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . .06 .10 .08 .06 .05 .05
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . . .32 .21 1.24 2.62 (1.76) .86
------ ------ ------ ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . .38 .31 1.32 2.68 (1.71) .91
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . -- (.12) (.08) (.06) (.05) (.05)
Distributions from Realized Capital Gains . . . . -- -- (.06) (.05) (.10) --
------ ------ ------ ------- ------- ------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . -- (.12) (.14) (.11) (.15) (.05)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . $11.88 $11.50 $11.31 $10.13 $7.56 $9.42
================================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . +3.30% +2.75% +13.04% +35.46% -18.17% +10.65%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------
Net Assets, End of Period (Millions) . . . . . . . . $1,022 $831 $697 $493 $207 $84
Ratio of Total Expenses to Average Net Assets . . . . .35%* .35% .32% .32% .32% .32%
Ratio of Net Investment Income
to Average Net Assets . . . . . . . . . . . . . . .95%* .97% .71% .75% .92% .70%
Portfolio Turnover Rate . . . . . . . . . . . . . . . 16%* 1% 4% 7% 3% 21%+
Average Commission Rate Paid . . . . . . . . . . . . $.0164++ N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ Portfolio turnover rate for 1991, excluding in-kind redemptions, was 1%.
++ Represents total commissions paid on portfolio securities divided by the
total number of shares purchased or sold on which commissions were charged.
This disclosure is required by the SEC beginning in 1996.
Note: Total return figures do not reflect the 1% transaction fee on purchases
or the annual account maintenance fee of $10.
29
<PAGE> 30
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
EMERGING MARKETS PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED Year Ended May 4+ to
For a Share Outstanding Throughout Each Period JUNE 30, 1996 December 31, 1995 December 31, 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . $10.75 $10.87 $10.00
------- ------- -------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . .12 .15 .06
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . . . . 1.47 (.09) .92
------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . 1.59 .06 .98
- ---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . . . (.01) (.18) (.07)
Distributions from Realized Capital Gains . . . . . . -- -- (.04)
------- ------- -------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . . (.01) (.18) (.11)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . $12.33 $10.75 $10.87
=====================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . +14.79% +0.56% +9.81%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . . . . . $514 $234 $83
Ratio of Total Expenses to Average Net Assets . . . . . . .60%* .60% .60%*
Ratio of Net Investment Income
to Average Net Assets . . . . . . . . . . . . . . . . 2.29%* 2.00% 1.32%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 1%* 3% 6%
Average Commission Rate Paid . . . . . . . . . . . . . . $.0006++ N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ Commencement of operations.
++ Represents total commissions paid on portfolio securities divided by the
total number of shares purchased or sold on which commissions were charged.
This disclosure is required by the SEC beginning in 1996.
Note: Total return figures do not reflect the 2% transaction fee on purchases,
the 1% transaction fee on redemptions, or the annual account maintenance fee of
$10.
30
<PAGE> 31
<TABLE>
<CAPTION>
TOTAL INTERNATIONAL
PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------
APRIL 29+ TO
For a Share Outstanding Throughout the Period JUNE 30, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10.26
-------
INVESTMENT OPERATIONS
Income Dividends Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
Capital Gain Distributions Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
Total Distributions Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
-------
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (.06)
-------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . (.06)
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
Distributions from Realized Capital Gains . . . . . . . . . . . . . . . . . . . . . . . . . --
-------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10.20
===================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0.58%
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $112
Ratio of Total Expenses to Average Net Assets--Note C . . . . . . . . . . . . . . . . . . . . . 0%
Ratio of Net Investment Income to Average Net Assets . . . . . . . . . . . . . . . . . . . . . 0%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Average Commission Rate Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
+Commencement of operations.
Note: Total return figures do not reflect the 1% transaction fee on purchases
or the annual account maintenance fee of $10.
31
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS
Vanguard International Equity Index Fund and Vanguard Total International
Portfolio are registered under the Investment Company Act of 1940 as open-end
investment companies. Vanguard International Equity Index Fund consists of the
European, Pacific, and Emerging Markets Portfolios, each of which seeks to
match the performance of a distinct international market index by investing in
common stocks. The Total International Portfolio, one of six independent
Portfolios of Vanguard STAR Fund, seeks to match the performance of its target
index by investing in the European, Pacific, and Emerging Markets Portfolios.
The Portfolios' direct and indirect investments in foreign securities 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 Portfolios in the preparation of
financial statements.
1. SECURITY VALUATION: European, Pacific, and Emerging Markets Portfolios:
Securities listed on foreign exchanges are valued at the latest quoted
sales prices. Securities not listed are valued at the latest quoted bid
prices. Bonds, and temporary cash investments acquired over sixty days to
maturity, are valued utilizing the latest quoted bid prices and on the
basis of a matrix system (which considers such factors as security
prices, yields, maturities, and ratings) both as furnished by independent
pricing services. Other temporary cash investments are valued at
amortized cost which approximates market value. Total International
Portfolio: Investments are valued at the price of each Vanguard Portfolio
determined as of the close of the New York Stock Exchange (generally 4:00
PM) on the valuation date.
2. FOREIGN CURRENCY: Securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollars at the bid prices
of those currencies against U.S. dollars last quoted by major banks as of
5:00 PM Geneva time on the valuation date.
The Portfolios do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on securities from the
portion arising from changes in market prices of securities. Such
fluctuations are included in realized net gains (losses) and unrealized
appreciation (depreciation) on investment securities. Changes in the
value of other assets and liabilities resulting from changes in foreign
exchange rates are recorded as unrealized foreign currency gains (losses)
until settled in cash, at which time realized foreign currency gains
(losses) are recognized.
3. FUTURES AND FORWARD CURRENCY CONTRACTS:
The European Portfolio utilizes Eurotop futures contracts and the Pacific
Portfolio utilizes Japanese-Nikkei 300 Index futures contracts 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 redeeming 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
32
<PAGE> 33
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 certain open futures and forward
currency contracts is required to be treated as realized gain (loss) for
Federal income tax purposes.
4. FEDERAL INCOME TAXES: Each Portfolio 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.
5. REPURCHASE AGREEMENTS: The European, Pacific, and Emerging Markets
Portfolios, along with other members of The Vanguard Group, transfer
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 a 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.
6. OTHER: Security transactions are accounted for on the date the
securities are purchased or sold. Costs used in determining realized
gains and losses on the sale of investment securities are those of
specific securities sold. Dividend income, capital gains distributions
received, and distributions to shareholders are recorded on the
ex-dividend date.
B. The Vanguard Group furnishes to the European, Pacific, and Emerging
Markets Portfolios at cost investment advisory, corporate management,
administrative, marketing, and distribution services. The costs of such
services are allocated to the Portfolios under methods approved by the Board of
Directors. At June 30, 1996, the Portfolios had contributed capital aggregating
$278,000 to Vanguard (included in Other Assets), representing 1.4% of
Vanguard's capitalization. The Portfolios' directors and officers are also
directors and officers of Vanguard.
C. Under a special service agreement, The Vanguard Group furnishes corporate
management, administrative, marketing, and distribution services to the Total
International Portfolio. The special service agreement provides that Vanguard
will reimburse the Portfolio's expenses to the extent of savings in
administrative and marketing costs realized by Vanguard in the operation of the
Portfolio. Accordingly, all expenses incurred by the Portfolio during the
period ended June 30, 1996, were reimbursed by Vanguard. The Portfolio's
officers and trustees are also officers and directors of Vanguard.
D. During the period ended June 30, 1996, 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 $220,514 $ 8,065
PACIFIC 239,291 73,245
EMERGING MARKETS 235,937 1,340
TOTAL INTERNATIONAL 111,888 --
- -------------------------------------------------------
</TABLE>
33
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (continued)
E. At June 30, 1996, net 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 $296,632 $(37,462) $259,170
PACIFIC 154,970 (21,971) 132,999
EMERGING MARKETS 49,627 (25,274) 24,353
TOTAL INTERNATIONAL 287 (467) (180)
- ----------------------------------------------------------------
</TABLE>
At June 30, 1996, the aggregate settlement value of open Eurotop futures
contracts (European Portfolio) and Japanese-Nikkei 300 Index futures contracts
(Pacific Portfolio) expiring in September 1996, the related unrealized
appreciation (depreciation), and the market value of U.S. Treasury bills
deposited as initial margin for those contracts were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------
(000)
----------------------------------------------
Market Value
Aggregate Unrealized of Securities
Settlement Appreciation Deposited as
Portfolio Value (Depreciation) Initial Margin
- -------------------------------------------------------------
<S> <C> <C> <C>
EUROPEAN $10,107 $(22) $1,898
PACIFIC 15,245 204 3,995
- -------------------------------------------------------------
</TABLE>
Under the terms of open forward currency exchange contracts at June 30, 1996,
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 9/25/96 ECU 8,121 $10,129 $ 10
- --------------------------------------------------------------------
PACIFIC
RECEIVE 9/18/96 JPY 1,649,819 15,296 (86)
- --------------------------------------------------------------------
</TABLE>
ECU--European Currency Units.
JPY--Japanese Yen.
At June 30, 1996, the European, Pacific, and Emerging Markets Portfolios had
net unrealized foreign currency gains (losses) of $27,000, ($16,000), and
($2,000), respectively, resulting from the translation of other assets and
liabilities.
F. Distributions are determined on a tax basis and may differ from net
investment income and realized capital gains for financial reporting purposes.
During the six months ended June 30, 1996, the European, Pacific, and Emerging
Markets Portfolios realized net foreign currency gains (losses) which increased
(decreased) distributable net income for tax purposes; accordingly such gains
(losses) have been reclassified from accumulated net realized gains (losses) to
undistributed net income as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
Increase (Decrease)
Undistributed
Net Income
Portfolio (000)
- ---------------------------------------------------------
<S> <C>
EUROPEAN $(176)
PACIFIC (192)
EMERGING MARKETS (12)
- ---------------------------------------------------------
</TABLE>
Certain of the Portfolios' investments are in securities considered to be
"passive foreign investment companies," for which any unrealized appreciation
and/or realized gains are required to be included in distributable net
investment income for tax purposes. The European and Emerging Markets
Portfolios' distributions to shareholders from passive foreign investment
company income during the six months ended June 30, 1996, were $267,000 and
$229,000, respectively; the cumulative totals of these distributions related to
passive foreign investment company holdings at June 30, 1996, were $816,000 and
$778,000, respectively. During the six months ended June 30, 1996, the Pacific
Portfolio realized gains on the sale of passive foreign investment companies of
$637,000 which had been included in prior years' distributable net income for
tax purposes; accordingly such gains have been reclassified from accumulated
net realized gains to undistributed net income.
34
<PAGE> 35
At December 31, 1995, the Portfolios had available the following realized
capital losses to offset future net capital gains:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
Expiration
Fiscal Year(s) Ending Amount
Portfolio December 31 (000)
- ---------------------------------------------------------
<S> <C> <C>
PACIFIC 2003-2004 $2,559
EMERGING MARKETS 2003-2004 1,135
- ---------------------------------------------------------
</TABLE>
G. The market values of securities on loan to broker/dealers at June 30, 1996,
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 $247,942 $261,467
PACIFIC 219,549 233,780
- ---------------------------------------------------------
</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.
35
<PAGE> 36
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 Selected Value Portfolio
Vanguard/Trustees' Equity Fund
U.S. Portfolio
Vanguard/Windsor Fund
Vanguard/Windsor II
BALANCED FUNDS
Vanguard Asset Allocation Fund
Vanguard LifeStrategy Portfolios
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 Horizon Fund
Global Equity Portfolio
Global Asset Allocation Portfolio
Capital Opportunity Portfolio
Aggressive Growth Portfolio
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.
Q722-6/96
VANGUARD
INTERNATIONAL
EQUITY INDEX
FUND
SEMI-ANNUAL REPORT
JUNE 30, 1996
