<PAGE> 1
VANGUARD INTERNATIONAL
STOCK INDEX FUNDS
VANGUARD EUROPEAN STOCK INDEX FUND
VANGUARD PACIFIC STOCK INDEX FUND
VANGUARD EMERGING MARKETS STOCK INDEX FUND
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND
[PHOTO]
SEMIANNUAL
REPORT
JUNE 30, 1999
[THE VANGUARD GROUP LOGO]
<PAGE> 2
AT VANGUARD, WE BELIEVE
THAT TRADITION MATTERS
Our 9,000 crew members embrace the traditional values on which our success is
built, including integrity, hard work, thrift, teamwork, and fair dealing on
behalf of our clients.
Our report cover pays homage to three anniversaries, each of great significance
to The Vanguard Group:
- - The 200th anniversary of the Battle of the Nile, which commenced on August 1,
1798. HMS Vanguard, the victorious British flagship at the Nile, is our
namesake. And its motto-- "Leading the way"--serves as a guiding principle
for our company.
- - The 100th birthday, on July 23, 1998, of Walter L. Morgan, founder of
Wellington Fund, the oldest member of what became The Vanguard Group. Mr.
Morgan was friend and mentor to Vanguard founder John C. Bogle, and helped to
shape the standards and business principles that Mr. Bogle laid down for
Vanguard at its beginning nearly 25 years ago: a stress on balanced,
diversified investments; insistence on fair dealing and candor with clients;
and a focus on long-term investing. To our great regret, Mr. Morgan died on
September 2, 1998.
- - The 70th anniversary, on December 28, 1998, of the incorporation of Vanguard
Wellington Fund. It is the nation's oldest balanced mutual fund, and one of
only a handful of funds created in the 1920s that are still in operation.
Although Vanguard constantly tackles new challenges, adopts new technology, and
develops new services, we treasure the traditions and values that set us apart
in a crowded, competitive industry. And we salute our shareholders, whose
support and trust we strive to earn each and every day.
[PHOTO]
CONTENTS
A MESSAGE TO
OUR SHAREHOLDERS
1
THE MARKETS IN
PERSPECTIVE
4
PERFORMANCE SUMMARIES
6
FUND PROFILES
8
FINANCIAL STATEMENTS
13
FOR AN UPDATE ON OUR YEAR 2000
PREPAREDNESS, SEE PAGE 46.
All comparative mutual fund data
are from Lipper or Morningstar,
unless otherwise noted.
<PAGE> 3
FELLOW SHAREHOLDER,
[PHOTO] [PHOTO]
JOHN J. BRENNAN JOHN C. BOGLE
CHAIRMAN & CEO SENIOR CHAIRMAN
Most of the world's major stock markets enjoyed strong gains in local currency
terms during the six months ended June 30, 1999, the first half of the fiscal
year for the Vanguard International Stock Index Funds. However, the U.S.
dollar's strong rise against other currencies crimped returns for U.S.
investors.
In this environment, the returns for our international index funds ranged
from a tremendous advance of +32.4% for the Emerging Markets Stock Index Fund to
a small decline of -1.9% for the European Stock Index Fund. A surge in Japanese
equity prices carried the Pacific Stock Index Fund to a total return of +21.0%,
while the Total International Stock Index Fund earned a solid half-year gain of
+6.4%. The table at right presents the six-month total return (capital change
plus reinvested dividends) of each fund, along with that of its comparative fund
group and its target index.
The net asset values of the funds at the beginning and end of the
half-year are presented in the table that follows this letter. None of the funds
issued income dividends during the period, and only the Total International
Stock Index Fund distributed any net realized capital gains ($0.01 per share).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
TOTAL RETURNS
SIX MONTHS ENDED
JUNE 30, 1999
- ------------------------------------------------------------------
<S> <C>
VANGUARD EUROPEAN STOCK INDEX FUND - 1.9%
Average European Fund - 1.8
MSCI Europe Index - 2.3
- ------------------------------------------------------------------
VANGUARD PACIFIC STOCK INDEX FUND +21.0%
Average Pacific Fund +36.3
MSCI Pacific Free Index +21.1
- ------------------------------------------------------------------
VANGUARD EMERGING MARKETS
STOCK INDEX FUND +32.4%
Average Emerging Markets Fund +34.6
MSCI Select Emerging Markets
Free Index +31.5
- ------------------------------------------------------------------
VANGUARD TOTAL INTERNATIONAL
STOCK INDEX FUND + 6.4%
Average International Fund + 8.6
Total International Composite Index* + 6.4
- ------------------------------------------------------------------
</TABLE>
*Consists of the MSCI EAFE Index plus the MSCI Select Emerging Markets Free
Index.
THE PERIOD IN REVIEW
Sixteen of the twenty established foreign stock markets tracked by the Morgan
Stanley Capital International Europe, Australasia, Far East (EAFE) Index
provided positive returns in local currencies during the six months ended June
30. Seven markets led the global advance, gaining +14% or more. Singapore and
Finland were like rockets, with total returns of +65.5% and +46.6%,
respectively. Hong Kong and Japan rebounded from a poor 1998 with big gains
(+31.7% and +29.6%, respectively). Sweden, France, and Norway were up +25.6%,
+15.4%, and +14.4%, respectively.
Yet the EAFE Index's overall rise of +13.6% in local currency terms was
held to a modest +4.1% for U.S. investors because a good portion of the stellar
local gain was eroded by a rise in the value of the U.S. dollar. In the United
Kingdom, the second-largest market in the EAFE Index, the relative weakness of
the pound turned a gain of +8.3% into a marginal advance of +2.6%. For U.S.
investors, a rising dollar detracts from foreign investment returns because it
diminishes the value of securities denominated in other currencies. For example,
on December 31, 1998, a U.S. dollar was worth 113 Japanese yen. By June 30, the
dollar's rise had made it worth 121 yen. So a share of Japanese stock selling
for 5,000
1
<PAGE> 4
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1999
---------------------------------
LOCAL U.S.
CURRENCY CURRENCY DOLLAR
INDEX RETURN EFFECT RETURN
- --------------------------------------------------------------------
<S> <C> <C> <C>
United States
(Wilshire 5000 Equity Index) + 11.8% -- +11.8%
- --------------------------------------------------------------------
MSCI Europe Index + 8.2% -10.5% - 2.3%
MSCI Pacific Free Index + 27.3 - 6.2 +21.1
MSCI Select Emerging
Markets Free Index + 55.3 -23.8 +31.5
- --------------------------------------------------------------------
Total International
Composite Index + 18.3% -11.9% + 6.4%
- --------------------------------------------------------------------
</TABLE>
yen was worth $44.25 on December 31, but only $41.32 on June 30.
During the half-year, the dollar gained value versus almost every major
foreign currency, including the euro--the common currency of eleven European
nations. The table at left presents the deleterious impact of currency
fluctuations on returns during the half-year. It shows the total returns of
various stock indexes in local currencies, the effect on returns of currency
fluctuations, and the net returns for dollar-based investors. Since its debut on
January 1, the euro has lost 13% of its value versus the dollar. As a result of
the greenback's rally, U.S. investors earned less than the local currency
returns in 18 of the markets tracked by the EAFE Index. (The U.S. dollar fell
against the Australian and New Zealand dollars, which boosted the returns earned
in those markets.) On balance, the European slice of the EAFE Index declined
- -2.3% in U.S.-dollar terms.
In the Pacific, gains were generally large because the region was
perceived to be recovering from a severe economic slowdown. The Pacific Rim
component of the EAFE Index gained +21.1% in U.S.-dollar terms. This turnabout
was spurred by the Japanese market, which posted a return of +29.6% in yen and
+20.8% in U.S. dollars. Investors sensed an end to Japan's recession--and indeed
its economy grew at a +7.9% annual rate in the first quarter. Outside of Japan,
Pacific region economies appeared to be snapping back from the "Asian contagion"
of 1998. The recovery in what were some of the world's most battered economies
led to improved profit prospects, greater intra-Asian trade activity, and an
increase in these nations' ability to purchase goods from other corners of the
world.
Major emerging markets leapt during the six-month period. Mexico, Hong
Kong, and South Africa, which have the largest weightings in the MSCI Select
Emerging Markets Free Index, each gained +30.0% or more in both local currency
and U.S. dollar terms. Brazil, which has the benchmark's fourth-largest
weighting, rocketed +72.3% in local currency terms. However, U.S. investors
captured barely one-quarter of that return (+18.7% in U.S. dollar terms), as
Brazil's currency, the real, plummeted in value.
In comparison, the overall U.S. stock market, as measured by the Wilshire
5000 Equity Index, gained +11.8%--more than a full year's return based on
historical norms.
PERFORMANCE OVERVIEW
As you know, Vanguard's international index funds attempt to match, as closely
as possible, the performance of their market benchmarks. Nonetheless, small
divergences occasionally arise between the returns of the funds and their target
indexes. Such was the case during the half-year. Only the TOTAL INTERNATIONAL
STOCK INDEX FUND--which is a "fund of funds" that invests in our other
international stock index funds in proportion to the weightings of the
appropriate indexes within the Total International Composite Index--precisely
matched the return of its index. At the end of the half-year, the fund had about
62% of its assets in the European Fund, 28% in the Pacific Fund, and almost 10%
in the Emerging Markets Fund. The PACIFIC STOCK INDEX FUND fell 0.1 percentage
point shy of its standard, while the EMERGING MARKETS and EUROPEAN STOCK INDEX
FUNDS managed the unusual feat of outperforming their benchmarks by 0.9 and 0.4
percentage point, respectively.
2
<PAGE> 5
There are two reasons for such performance gaps. First, the funds bear
operating expenses and transaction costs that the indexes, as theoretical
constructs, do not. Second, our funds invest in large, representative samples of
index holdings, but do not own every security in the indexes. We believe that
over the long term the funds will closely track their indexes, thanks to our low
operating costs and the skill of our adviser, Vanguard Core Management Group.
While our funds tightly tracked their indexes during the half-year, each
lagged the return earned by its average competitor. The gulf was greatest (a
whopping 15.3 percentage points) between our Pacific Fund and the average
Pacific fund. Most of the gap formed during the second quarter, when the South
Korean, Thai, and Malaysian stock markets all recorded returns in excess of 50%.
Some Pacific Rim-oriented mutual funds invest heavily in these markets, but the
MSCI Pacific Free Index excludes those countries, and Vanguard Pacific Stock
Index Fund invests only in those countries contained in the benchmark: Japan,
Hong Kong, Australia, Singapore, and New Zealand. Our other funds were much
closer to their peers. The Emerging Markets and Total International Funds
trailed their average peers by 2.2 percentage points, while our European Fund's
decline was 0.1 percentage point more than that of the average European stock
fund.
IN SUMMARY
The strength of the U.S. dollar during the first half of 1999 demonstrates the
influence that currency fluctuations can have on returns from foreign
investments. This currency risk is a fact of life for investors in international
stocks, in addition to the price volatility that all common stocks exhibit.
Of course, currency fluctuations can work the other way--a falling dollar
bolsters the returns on foreign holdings. Moreover, it is precisely because
international stocks don't always move in step with U.S. stocks that they can
add an important element of diversification to a balanced portfolio of domestic
stock funds, bond funds, and short-term reserves. For investors with sufficient
risk tolerance, the Vanguard International Stock Index Funds are a
cost-effective means of gaining exposure to international markets.
/s/ JOHN C. BOGLE /s/ JOHN J. BRENNAN
John C. Bogle John J. Brennan
Senior Chairman Chairman and
Chief Executive Officer
July 17, 1999
<TABLE>
<CAPTION>
PORTFOLIO STATISTICS
- ----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1999
NET ASSET VALUE PER SHARE ---------------------------------
----------------------------------------- DISTRIBUTIONS PER SHARE
STOCK INDEX FUND DECEMBER 31, 1998 JUNE 30, 1999 FROM NET REALIZED CAPITAL GAINS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European $25.28 $24.81 --
Pacific 7.84 9.49 --
Emerging Markets 7.91 10.47 --
Total International 11.19 11.89 $0.01
- ----------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 6
THE MARKETS IN PERSPECTIVE
SIX MONTHS ENDED JUNE 30, 1999
[PHOTO]
A markedly improved global economic outlook during the first half of 1999 led to
mostly positive stock market returns and lower bond prices.
As the year began, many observers expected that severe economic crises in
Asia, Russia, and some Latin American nations would restrain business activity
worldwide, even in the United States, which has been the world's economic
locomotive. By spring, however, a consensus emerged that global economic
activity was likely to be solid, if not robust. This change in sentiment stemmed
from several factors, including further vigorous growth in the U.S. economy, a
belief that Asia's slump had bottomed out, and moves in Europe to ease monetary
policy to encourage growth.
Interest rates rose as investors stopped wondering whether the Federal
Reserve Board would lower interest rates--as it had three times in autumn
1998--and began to wonder when the Fed would increase rates to slow growth and
thereby forestall inflation. Indeed, on the final day of the period, the Fed
boosted short-term rates by 0.25 percentage point. In the stock market, the
brighter economic outlook led to a change in leadership from glamorous
large-capitalization growth stocks to value stocks and small-cap stocks, both of
which had been among Wall Street's wallflowers in recent years.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999
--------------------------------------
6 MONTHS 1 YEAR 5 YEARS*
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
STOCKS
S&P 500 Index 12.4% 22.8% 27.9%
Russell 2000 Index 9.3 1.5 15.4
Wilshire 5000 Index 11.8 19.5 25.7
MSCI EAFE Index 4.1 7.9 8.5
- --------------------------------------------------------------------------------
BONDS
Lehman Aggregate Bond Index -1.4% 3.2% 7.8%
Lehman 10 Year Municipal Bond Index -1.7 2.3 6.8
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 2.2 4.7 5.2
- --------------------------------------------------------------------------------
OTHER
Consumer Price Index 1.4% 2.0% 2.3%
- --------------------------------------------------------------------------------
</TABLE>
*Annualized.
U.S. STOCK MARKETS
The rise in stock prices reflected the healthy domestic economy and improving
prospects for corporate earnings. The overall market, as measured by the
Wilshire 5000 Index, rose 11.8% during the period, while the S&P 500 Index, a
yardstick for large-cap stocks, gained 12.4%.
Large-cap growth stocks, which are generally perceived as less vulnerable
than other stocks to economic slowdowns, continued to lead the market's climb
during the first quarter of the year. During the second quarter, however, value
stocks--especially producers of commodity products such as oil, aluminum, and
chemicals--moved to the front of the pack. Providing support were generally
upbeat corporate profit reports. Indeed, earnings gains were sufficient to send
prices higher despite rising interest rates, which often depress stock prices as
well as bond prices. For the six months, the S&P 500 Index's value stocks posted
a 14.0% return while its growth stocks gained 11.0% as a group.
4
<PAGE> 7
Small-cap stocks, as measured by the Russell 2000 Index, gained 9.3%,
although that fact masks a remarkable turnaround: Small-caps declined 5.4%
during the first quarter of 1999, then advanced 15.6% during the second quarter.
Even so, the cumulative return of the Russell 2000 over the past three years
lags the S&P 500 Index by nearly 80 percentage points (+37.6% for the Russell
2000 versus +115.2% for the S&P 500).
Four of the top-performing sectors within the S&P 500 Index during the
half-year were solidly in the value camp--the "other energy" group (+40%);
producer durables (+26%); materials & processing (+25%); and integrated-oils
(+17%). The strongest growth-oriented sector was the irrepressible technology
group (+24%). The poor performance of the consumer staples sector (-8%) was due
in part to the gains of the U.S. dollar against most foreign currencies, which
reduced the value of earnings from overseas operations.
U.S. BOND MARKETS
The powerful economic expansion that buoyed corporate profits and stock prices
was too much of a good thing for the bond market. Inflation was well
behaved--consumer prices rose 1.4% for the six months and 2.0% for the twelve
months ended June 30--but investors and Fed policymakers clearly were concerned
that an overheated economy might yet trigger significant increases in wages and
overall prices. Certainly, there was no evidence of the "natural slowing" that
many analysts expected for the economy, which is in the longest peacetime
expansion ever.
Yields on U.S. Treasury bonds rose by approximately 1 percentage point--a
significant rise for a six-month period. The yield of the 30-year Treasury bond
rose 86 basis points, to 5.96% on June 30 from 5.10% on December 31, 1998. The
yield of the 10-year Treasury rose 113 basis points, to 5.78% from 4.65%. Money
market rates didn't rise as far: Yields on 3-month T-bills increased on balance
by only 33 basis points, to 4.78% on June 30. Bond prices, which move in the
opposite direction from interest rates, fell. The Lehman Aggregate Bond Index, a
benchmark for investment-grade taxable bonds, declined 1.4% on a total-return
basis, as bond prices declined an average of 4.4%, outweighing the 3.0% in
interest income for the period.
INTERNATIONAL STOCK MARKETS
Led by sharp recoveries in stock prices in Japan and many emerging markets,
international stock prices generated positive returns in local currencies during
the six months. However, a pervasive rise in the value of the U.S. dollar
against other currencies reduced returns for U.S. investors (returns from abroad
are augmented when the dollar falls in value against other currencies).
Overall, the developed markets outside the United States gained 4.1% in
U.S.-dollar terms, as measured by the Morgan Stanley Capital International
Europe, Australasia, Far East (EAFE) Index. The biggest increases were in the
Pacific region--up 27.3% in local-currency terms and 21.1% when measured in U.S.
dollars. Europe, which accounts for the lion's share of EAFE's market
capitalization, was up 8.2% in local currencies. But in U.S. dollars, the return
from European stocks was a negative 2.3%, as weakness in European
currencies--notably in the euro, the new 11-nation common currency--lopped more
than 10 percentage points from the local-currency returns. The MSCI Select
Emerging Markets Free Index shot up 31.5% in dollar terms, led by Asian markets
that rebounded from severe losses suffered in 1997 and 1998.
5
<PAGE> 8
PERFORMANCE SUMMARIES
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the funds. Note, too, that both
share price and return can fluctuate widely, so an investment in the funds could
lose money.
EUROPEAN STOCK INDEX FUND
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: JUNE 18, 1990-JUNE 30, 1999
- -------------------------------------------------------------
EUROPEAN STOCK INDEX FUND MSCI EUROPE
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
1990 -8.7% 1.5% -7.2% -6.4%
1991 9.5 2.9 12.4 14.1
1992 -5.9 2.6 -3.3 -3.9
1993 27.3 1.8 29.1 29.3
1994 -0.5 2.4 1.9 2.8
1995 19.6 2.7 22.3 22.1
1996 18.6 2.7 21.3 21.4
1997 22.0 2.2 24.2 23.7
1998 26.3 2.6 28.9 28.7
1999* -1.9 0.0 -1.9 -2.3
- -------------------------------------------------------------
</TABLE>
*Six months ended June 30, 1999.
See Financial Highlights table on page 38 for dividend and capital gains
information for the past five years.
PACIFIC STOCK INDEX FUND
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: JUNE 18, 1990-JUNE 30, 1999
- ---------------------------------------------------------------
PACIFIC STOCK INDEX FUND MSCI PACIFIC
FREE
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
1990 -14.3% 0.3% -14.0% -15.0%
1991 10.0 0.7 10.7 11.5
1992 -18.7 0.5 -18.2 -18.5
1993 34.7 0.8 35.5 36.1
1994 12.2 0.8 13.0 12.8
1995 1.7 1.0 2.7 2.9
1996 -8.6 0.8 -7.8 -8.2
1997 -26.5 0.8 -25.7 -25.7
1998 1.6 0.8 2.4 2.6
1999* 21.0 0.0 21.0 21.1
- ---------------------------------------------------------------
</TABLE>
*Six months ended June 30, 1999.
See Financial Highlights table on page 39 for dividend and capital gains
information for the past five years.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION ----------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
European Stock Index Fund* 6/18/1990 -1.03% 19.38% 10.88% 2.36% 13.24%
Pacific Stock Index Fund* 6/18/1990 31.52 -3.82 -0.37 0.75 0.38
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Performance figures are adjusted for the 0.5% transaction fee on purchases.
The figures do not reflect the $10 annual account maintenance fee applied on
balances under $10,000.
6
<PAGE> 9
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the funds. Note, too, that both
share price and return can fluctuate widely, so an investment in the funds could
lose money.
EMERGING MARKETS STOCK INDEX FUND
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: MAY 4, 1994-JUNE 30, 1999
- -------------------------------------------------------------
EMERGING MARKETS STOCK INDEX FUND MSCI*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 9.1% 0.7% 9.8% 3.8%
1995 -1.1 1.7 0.6 0.0
1996 14.2 1.6 15.8 15.2
1997 -18.7 1.9 -16.8 -16.4
1998 -20.7 2.6 -18.1 -18.4
1999** 32.4 0.0 32.4 31.5
- -------------------------------------------------------------
</TABLE>
* MSCI Select Emerging Markets Free Index.
**Six months ended June 30, 1999.
See Financial Highlights table on page 39 for dividend and ca information for
the past five years.
TOTAL INTERNATIONAL STOCK INDEX FUND
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: APRIL 29, 1996-JUNE 30, 1999
- ---------------------------------------------------------------
TOTAL INTERNATIONAL STOCK INDEX FUND COMPOSITE*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 -1.0% 1.6% 0.6% 0.6%
1997 -2.5 1.7 -0.8 -0.8
1998 13.5 2.1 15.6 15.9
1999** 6.4 0.0 6.4 6.4
- ---------------------------------------------------------------
</TABLE>
* Total International Composite Index consists of the MSCI EAFE Index plus the
MSCI Select Emerging Markets Free Index.
**Six months ended June 30, 1999.
See Financial Highlights table on page 40 for dividend and capital gains
information since the fund's inception.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED JUNE 30, 1999
- ---------------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION -----------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets Stock Index Fund* 5/4/1994 26.95% 1.34% 0.57% 1.83% 2.40%
Total International Stock Index Fund** 4/29/1996 8.97 -- 4.77 1.72 6.49
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Performance figures are adjusted for the 1% transaction fee on purchases and
redemptions. The figures do not reflect the $10 annual account maintenance
fee applied on balances under $10,000.
** Performance figures are adjusted for the 0.5% transaction fee on purchases.
The figures do not reflect the $10 annual account maintenance fee applied on
balances under $10,000.
7
<PAGE> 10
FUND PROFILE
EUROPEAN STOCK INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of June 30,
1999, compared where appropriate to its unmanaged target index. Key elements of
this Profile are defined on page 9.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
- ---------------------------------------------------------------
EUROPEAN MSCI
STOCK INDEX EUROPE
- ---------------------------------------------------------------
<S> <C> <C>
Number of Stocks 586 575
Turnover Rate 3%* --
Expense Ratio 0.30%* --
Cash Reserves 0.1% --
</TABLE>
*Annualized.
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS (% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
BP Amoco PLC 3.1%
Royal Dutch Petroleum Co. 2.3
Vodafone AirTouch PLC 2.0
Nokia Oyj 2.0
British Telecommunications PLC 1.9
Deutsche Telekom AG 1.9
Novartis AG (Registered) 1.9
Roche Holdings AG 1.8
HSBC Holdings PLC 1.8
Glaxo Wellcome PLC 1.8
- -------------------------------------------------------
Top Ten 20.5%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ------------------------------------------------------------
EUROPEAN MSCI
STOCK INDEX EAFE
- ------------------------------------------------------------
<S> <C> <C>
R-Squared 0.83 1.00
Beta 0.88 1.00
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COUNTRY DIVERSIFICATION (% OF COMMON STOCKS)
- -----------------------------------------------------------------------------------------------
JUNE 30, 1998 JUNE 30, 1999
---------------------------------------------------------
EUROPEAN EUROPEAN MSCI
STOCK INDEX STOCK INDEX EUROPE
---------------------------------------------------------
<S> <C> <C> <C>
Austria 0.5% 0.4% 0.4%
Belgium 2.2 2.2 1.9
Denmark 1.3 1.1 1.1
Finland 1.4 2.7 2.7
France 13.1 13.8 13.9
Germany 15.5 14.3 14.2
Ireland 0.7 0.6 0.6
Italy 6.1 6.4 6.3
Netherlands 7.9 8.3 8.1
Norway 0.7 0.6 0.6
Portugal 0.9 0.8 0.7
Spain 4.5 4.3 4.3
Sweden 4.4 3.5 3.3
Switzerland 10.7 9.7 9.8
United Kingdom 30.1 31.3 32.1
- -----------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
ALLOCATION TO UNDERLYING VANGUARD FUNDS. This table shows the distribution of a
fund's assets in underlying funds.
AVERAGE WEIGHTED EXPENSE RATIO. Funds that invest in other Vanguard funds incur
no direct expenses, but do bear proportionate shares of the operating,
administrative, and advisory expenses of the underlying funds. The average
weighted expense ratio is the average of these expense ratios, weighted in
proportion to the amount of the fund invested in each underlying fund.
BETA. A measure of the magnitude of a fund's past share-price fluctuations in
relation to the ups and downs of the overall market (or appropriate market
index). The market (or index) is assigned a beta of 1.00, so a fund with a beta
of 1.20 would have seen its share price rise or fall by 12% when the overall
market rose or fell by 10%.
CASH RESERVES. The percentage of a fund's net assets invested in "cash
equivalents"--highly liquid, short-term, interest-bearing securities. This
figure does not include cash invested in futures contracts to simulate stock
investment.
COUNTRY DIVERSIFICATION. The percentages of a fund's common stock invested in
securities of various countries.
EXPENSE RATIO. The percentage of a fund's average net assets used to pay its
annual administrative and advisory expenses. These expenses directly reduce
returns to investors.
NUMBER OF STOCKS. An indicator of diversification. The more stocks a fund holds,
the more diversified it is and the more likely to perform in line with the
overall stock market.
R-SQUARED. A measure of how much of a fund's past returns can be explained by
the returns from the overall market (or its benchmark index). If a fund's total
return were precisely synchronized with the overall market's return, its
R-squared would be 1.00. If a fund's returns bore no relationship to the
market's returns, its R-squared would be 0.
TEN LARGEST HOLDINGS. The percentage of net assets that a fund has invested in
its ten largest holdings. (The average for stock mutual funds is about 30%.) As
this percentage rises, a fund's returns are likely to be more volatile because
they are more dependent on the fortunes of a few companies.
TURNOVER RATE. An indication of trading activity during the period. Funds with
high turnover rates incur higher transaction costs and are more likely to
distribute capital gains (which are taxable to investors).
9
<PAGE> 12
FUND PROFILE
PACIFIC STOCK INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of June 30,
1999, compared where appropriate to its unmanaged target index. Key elements of
this Profile are defined on page 9.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
- ------------------------------------------------------------
MSCI
PACIFIC PACIFIC
STOCK INDEX FREE
- ------------------------------------------------------------
<S> <C> <C>
Number of Stocks 425 432
Turnover Rate 5%* --
Expense Ratio 0.38%* --
Cash Reserves 0.1% --
</TABLE>
*Annualized.
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS (% OF TOTAL NET ASSETS)
- --------------------------------------------------------
<S> <C>
Nippon Telegraph and Telephone Corp. 6.1%
Toyota Motor Corp. 4.9
The Bank of Tokyo-Mitsubishi Ltd. 2.7
Honda Motor Co., Ltd. 1.7
Takeda Chemical Industries Ltd. 1.7
Matsushita Electric Industrial Co., Ltd. 1.6
Fujitsu Ltd. 1.5
Hutchison Whampoa Ltd. 1.5
Hong Kong Telecommunications Ltd. 1.3
News Corp. Ltd. 1.3
- --------------------------------------------------------
Top Ten 24.3%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ------------------------------------------------------------
PACIFIC MSCI
STOCK INDEX EAFE
- ------------------------------------------------------------
<S> <C> <C>
R-Squared 0.73 1.00
Beta 1.23 1.00
</TABLE>
<TABLE>
<CAPTION>
COUNTRY DIVERSIFICATION (% OF COMMON STOCKS)
- --------------------------------------------------------------------------------------------------
JUNE 30, 1998 JUNE 30, 1999
------------------------------------------------------------
PACIFIC PACIFIC MSCI
STOCK INDEX STOCK INDEX PACIFIC FREE
------------------------------------------------------------
<S> <C> <C> <C>
Australia 9.1% 9.6% 9.4%
Hong Kong 6.6 8.5 8.3
Japan 79.5 78.0 78.6
Malaysia 1.9 0.0 0.0
New Zealand 0.8 0.7 0.6
Singapore 2.1 3.2 3.1
- --------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
FUND PROFILE
EMERGING MARKETS STOCK INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of June 30,
1999, compared where appropriate to its unmanaged target index. Key elements of
this Profile are defined on page 9.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
- -------------------------------------------------------------
EMERGING MARKETS MSCI
STOCK INDEX SELECT*
- -------------------------------------------------------------
<S> <C> <C>
Number of Stocks 519 507
Turnover Rate 39%** --
Expense Ratio 0.58%** --
Cash Reserves 5.5% --
</TABLE>
*MSCI Select Emerging Markets Free Index.
**Annualized.
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS (% OF TOTAL NET ASSETS)
- -------------------------------------------------------------
<S> <C>
Telefonos de Mexico SA 5.0%
Hutchison Whampoa Ltd. 2.2
Hong Kong Telecommunications Ltd. 2.0
Hellenic Telecommunication
Organization SA 1.6
National Bank of Greece SA 1.5
Centrais Electricas Brasileiras SA 1.5
Sun Hung Kai Properties Ltd. 1.5
Grupo Modelo SA de CV Series C 1.4
Hang Seng Bank Ltd. 1.4
De Beers Centenary AG 1.4
- -------------------------------------------------------------
Top Ten 19.5%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ------------------------------------------------------------
EMERGING MARKETS MSCI
STOCK INDEX EAFE
- ------------------------------------------------------------
<S> <C> <C>
R-Squared 0.58 1.00
Beta 1.54 1.00
</TABLE>
<TABLE>
<CAPTION>
COUNTRY DIVERSIFICATION (% OF COMMON STOCKS)
- --------------------------------------------------------------------------------------
JUNE 30, 1998 JUNE 30, 1999
------------------------------------------------------------
EMERGING MARKETS EMERGING MARKETS MSCI
STOCK INDEX STOCK INDEX SELECT*
------------------------------------------------------------
<S> <C> <C> <C>
Argentina 5.5% 3.4% 3.4%
Brazil 18.8 12.3 12.3
Czech Republic 1.5 1.0 1.1
Greece 5.8 8.8 8.8
Hong Kong 15.4 13.8 14.5
Hungary 1.9 1.7 1.7
Indonesia 1.0 3.4 3.3
Israel 4.1 4.1 4.1
Malaysia 5.8 0.0 0.0
Mexico 14.0 17.2 16.8
Philippines 1.9 2.7 2.6
Poland 0.8 1.8 1.8
Singapore 4.8 5.7 5.5
South Africa 13.2 15.8 15.7
Thailand 1.8 5.4 5.5
Turkey 3.7 2.9 2.9
- --------------------------------------------------------------------------------------
</TABLE>
*MSCI Select Emerging Markets Free Index.
11
<PAGE> 14
FUND PROFILE
TOTAL INTERNATIONAL STOCK INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of June 30,
1999. Key elements of this Profile are defined on page 9.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
- ---------------------------------------------------------------
<S> <C>
Expense Ratio 0%
Average Weighted Expense Ratio* 0.35%
</TABLE>
*For underlying funds; annualized.
<TABLE>
<CAPTION>
ALLOCATION TO UNDERLYING VANGUARD FUNDS
- -------------------------------------------------------
<S> <C>
European Stock Index Fund 62.6%
Pacific Stock Index Fund 27.6
Emerging Markets Stock Index Fund 9.8
- -------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ------------------------------------------------------------
TOTAL INTERNATIONAL MSCI
STOCK INDEX EAFE
- ------------------------------------------------------------
<S> <C> <C>
R-Squared 0.98 1.00
Beta 1.06 1.00
</TABLE>
12
<PAGE> 15
FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
[PHOTO]
STATEMENT OF NET ASSETS
This Statement provides a detailed list of each fund's holdings, including each
security's market value on the last day of the reporting period. European,
Pacific, and Emerging Markets Stock Index Fund securities are grouped and
subtotaled by asset type (common stocks, bonds, etc.) and by country; the Total
International Stock Index Fund lists investments in shares of each Vanguard
International Stock Index fund. Other assets are added to, and liabilities are
subtracted from, the value of Total Investments to calculate the fund's Net
Assets. Finally, Net Assets are divided by the outstanding shares of the fund to
arrive at its share price, or Net Asset Value (NAV) Per Share.
At the end of the Statement of Net Assets, you will find a table
displaying the composition of the fund's net assets on both a dollar and
per-share basis. Because all income and any realized gains must be distributed
to shareholders each year, the bulk of net assets consists of Paid in Capital
(money invested by shareholders). The amounts shown for Undistributed Net
Investment Income and Accumulated Net Realized Gains usually approximate the
sums the fund had available to distribute to shareholders as income dividends or
capital gains as of the statement date, but may differ because certain
investments or transactions may be treated differently for financial statement
and tax purposes. Any Accumulated Net Realized Losses, and any cumulative excess
of distributions over net income or net realized gains, will appear as negative
balances. Unrealized Appreciation (Depreciation) is the difference between the
market value of the fund's investments and their cost, and reflects the gains
(losses) that would be realized if the fund were to sell all of its investments
at their statement-date values.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
COMMON STOCKS (99.5%)(1)
- ----------------------------------------------------------------------
<S> <C> <C>
AUSTRIA (0.4%)
- - Bank Austria AG 112,554 $ 5,920
- - Oesterreichische
Elektrizitaetswirtschafts AG
Class A 27,097 3,946
OMV AG 20,037 1,787
Wienerberger
Baustoffindustrie AG 68,950 1,785
EA-Generali AG 7,605 1,396
VA Technologies AG 12,630 1,144
Austria Tabak AG 16,016 933
Flughafen Wien AG 19,150 804
Austrian Airlines AG 24,800 598
Boehler-Uddeholm AG 11,441 566
Mayr-Melnhof Karton AG 10,510 477
Oesterreichische Brau-
Beteiligungs AG 9,710 431
RHI AG 12,947 350
BWT Best Water Technology AG 1,760 333
Universale-Bau AG 7,730 259
Lenzing AG 4,490 255
Bau Holding AG 5,860 187
- - Austria Mikro Systeme
International AG 3,631 133
Bau Holding AG Pfd. 3,234 96
-----------
21,400
-----------
BELGIUM (2.2%)
- - Fortis AG B Shares 703,623 22,095
Electrabel SA 52,162 16,838
- - Total Fina SA B Shares 105,404 13,620
Tractebel SA 90,430 12,683
- - UCB SA 164,750 7,051
Solvay SA 99,712 6,617
Groupe Bruxelles Lambert SA 33,655 5,689
Delhaize-Le Lion SA 64,832 5,519
CBR Cimenteries SA 40,542 3,729
Colruyt NV 4,296 2,827
Barco NV 16,942 2,727
D'Ieteren SA 5,760 2,661
Bekaert SA 3,586 1,535
Union Miniere SA 35,481 1,464
Glaverbel SA 11,604 1,091
Compagnie Maritime Belge
SA (CMB) 16,238 687
Petrofina SA 23,423 1
-----------
106,834
-----------
DENMARK (1.1%)
- - Tele Danmark A/S 190,090 9,357
D/S 1912 B Shares 983 8,720
D/S Svendborg B Shares 684 8,474
Novo Nordisk A/S B Shares 64,577 6,977
Den Danske Bank A/S 61,245 6,642
Unidanmark A/S A Shares 58,806 3,925
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Danisco A/S 51,005 $ 2,305
- - ISS International Service
Systems A/S B Shares 26,377 1,412
Carlsberg A/S A Shares 30,780 1,241
GN Store Nord A/S 33,468 1,131
FLS Industries A/S B Shares 41,442 1,078
Carlsberg A/S B Shares 19,632 819
Bang & Olufsen Holding A/S
B Shares 12,715 808
NKT Holding A/S 7,935 618
Radiometer A/S B Shares 11,097 540
SAS Danmark A/S 40,085 418
Superfos A/S 27,867 378
- - J. Lauritzen Holding A/S B Shares 3,547 377
- - East Asiatic Co. A/S 34,135 354
- - Korn Og Foderstof
Kompagniet A/S 14,815 330
Aarhus Oliefabrik A/S A Shares 5,048 133
Aarhus Oliefabrik A/S B Shares 3,246 88
-----------
56,125
-----------
FINLAND (2.7%)
Nokia Oyj 1,108,349 97,156
Sonera Group Oyj 392,539 8,582
UPM-Kymmene Oyj 235,693 6,758
Merita PLC 778,299 4,423
Tieto Corp. B Shares 44,210 1,842
Sampo Insurance Co., Ltd.
A Shares 52,224 1,513
Raisio Group PLC 149,164 1,384
Outokumpu Oyj A Shares 114,550 1,288
Pohjola Group Insurance Corp.
B Shares 19,700 1,011
Kesko Oyj 73,528 990
Pohjola Group Insurance Corp.
A Shares 19,588 960
Hartwall Oyj Abp 63,602 941
Kone Oyj B Shares 6,348 792
Metra Oyj B Shares 36,726 776
Valmet Oyj 48,763 553
Rautaruuki Oyj 88,959 539
Stockmann AB Oyj A Shares 24,500 497
Kemira Oyj 74,630 451
Stockmann AB Oyj B Shares 26,530 404
Instrumentarium Group A Shares 9,808 400
Asko Oyj 20,965 342
Finnlines Oyj 13,079 340
Metra Oyj A Shares 12,470 279
Amer Group Ltd. 19,220 277
Instrumentarium Group B Shares 6,040 246
-----------
132,744
-----------
FRANCE (13.7%)
France Telecom SA 931,956 70,401
L'Oreal SA 62,569 42,297
Vivendi 494,318 40,043
Axa 322,643 39,362
Elf Aquitaine SA 250,217 36,719
- - Carrefour SA 211,034 31,013
- - Total SA B Shares 217,981 28,122
- - Sanofi-Synthelabo SA 660,260 28,019
Suez Lyonnaise des Eaux 139,455 25,153
Alcatel 177,502 24,987
- - LVMH Moet Hennessy Louis
Vuitton SA 81,830 23,958
- - Pinault-Printemps-Redoute SA 108,600 18,636
Groupe Danone SA 72,055 18,577
Banque Nationale de Paris SA 207,737 17,310
Paribas 150,928 16,919
Societe Generale SA 95,044 16,751
Rhone-Poulenc SA Series A 346,358 15,827
Compagnie de Saint-Gobain SA 83,398 13,288
L'Air Liquide SA (Registered) 75,945 11,944
Promodes SA 17,645 11,582
Cap Gemini SA 63,661 10,005
Lafarge SA 94,876 9,021
Accor SA 33,936 8,522
Schneider Electric SA 143,441 8,055
Canal Plus SA 28,292 7,939
PSA Peugeot Citroen SA 44,724 7,057
Bouygues SA 24,286 6,484
- - Valeo SA 73,465 6,061
Etablissements Economiques du
Casino Guichard-Perrachon SA 66,679 5,845
Thomson-CSF SA 155,977 5,421
Sodexho Alliance SA 30,463 5,246
Legrand SA 25,563 5,204
Compagnie Generale des
Etablissements Michelin SCA
B Shares 118,573 4,851
Lagardere SCA 108,806 4,051
Sidel SA 29,442 3,580
Dassault Systemes SA 103,114 3,408
Pernod Ricard SA 50,618 3,393
Usinor Sacilor SA 226,258 3,372
Eridania Beghin-Say SA 22,748 3,261
Pechiney SA A Shares 71,173 3,059
Essilor International SA 9,276 2,899
Societe BIC SA 49,221 2,596
Societe National d'Exploitation
Industrielle de Tabacs
et Allumettes SA 44,723 2,583
Pathe SA 20,574 2,470
LVMH Moet Hennessy
Rights Exp. 9/21/1999 81,380 2,379
Sagem SA 3,412 2,280
Imetal SA 13,777 2,046
Simco SA 20,587 1,741
Compagnie Francaise d'Etudes
et de Construction SA 14,415 1,617
- - Club Mediterranee SA 14,610 1,550
Groupe GTM 13,763 1,476
Coflexip SA 14,018 1,203
Zodiac SA 4,735 1,033
Groupe SEB SA 13,427 1,004
Societe Francaise
d'Investissements Immobiliers
et de Gestion SA 14,293 995
Etablissements Economiques du
Casino Guichard-Perrachon
SA Pfd. 16,668 913
- - Compagnie Parisienne de
Reescompte SA 17,033 760
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Bongrain SA 1,643 $ 620
Sommer Allibert SA 17,886 491
Nord-Est SA 16,628 456
- - Chargeurs SA 7,855 437
- - Compagnie Generale de
Geophysique SA 4,333 230
Skis Rossignol SA 4,370 59
-----------
676,581
-----------
GERMANY (14.2%)
Deutsche Telekom AG 2,201,340 91,942
Allianz AG 224,039 62,440
Mannesmann AG 348,171 52,315
DaimlerChrysler AG 567,604 49,404
Siemens AG 515,593 39,873
Deutsche Bank AG 579,874 35,294
DaimlerChrysler AG ADR 327,337 29,092
Bayer AG 669,805 27,941
Veba AG 457,069 26,962
BASF AG 566,263 25,228
Bayerische Hypo- und
Vereinsbank AG 387,664 25,179
RWE AG 429,914 19,902
Dresdner Bank AG 485,290 18,993
SAP AG 55,889 18,905
Volkswagen AG 275,671 17,768
SAP AG Pfd. 39,703 16,054
Muenchener
Rueckversicherungs-
Gesellschaft AG (Registered) 85,328 15,804
Metro AG 244,736 15,421
- - Muenchener
Rueckversicherungs-
Gesellschaft AG 75,377 13,759
Viag AG 23,878 11,342
- - Thyssen Krupp AG 475,890 10,468
- - Preussag AG 147,426 7,921
Schering AG 60,294 6,358
Deutsche Lufthansa AG 341,411 6,221
Beiersdorf AG 73,106 4,863
Merck KGaA 147,731 4,805
Linde AG 7,502 4,503
Adidas-Salomon AG 41,191 4,072
Karstadt AG 7,468 3,558
Aachener & Muenchener
Beteiligungs AG (Registered) 34,578 3,530
Heidelberger Zement AG 41,594 3,432
Man AG 97,767 3,337
Volkswagen AG Pfd. 82,291 3,042
Hochtief AG 62,078 2,855
Continental AG 98,788 2,343
RWE AG Pfd. 64,071 2,227
Axa Colonia Konzern AG 22,507 2,159
- - SGL Carbon AG 18,041 1,395
Douglas Holding AG 29,289 1,314
Dyckerhoff AG Pfd. 2,606 787
Aachener & Muenchener
Beteiligungs AG (Bearer) 7,319 743
Man AG Pfd. 32,392 735
AGIV AG 31,794 721
Bilfinger & Berger Bau AG 28,568 706
Metro AG Pfd. 1 20,068 683
Buderus AG 1,607 645
Friederich Grohe AG Pfd. 1,971 557
CKAG Colonia Konzern AG Pfd. 5,141 429
- - Kloeckner-Humbolt-Deutz AG 58,773 400
Rheinmetall AG 18,384 398
Fag Kugelfischer Georg
Schaefer AG 38,118 387
Rheinmetall AG Pfd. 19,831 356
Salamander AG 2,153 324
- - Brau und Brunnen AG 4,531 299
IWKA AG 8,400 191
- - Strabag Bau AG 3,011 160
Escada AG Pfd. 930 125
Escada AG 865 117
- - Herlitz AG 2,068 62
- - Herlitz AG Pfd. 2,880 62
Holsten-Brauerei AG 260 46
-----------
700,954
-----------
IRELAND (0.6%)
Allied Irish Banks PLC 829,649 10,909
CRH PLC 346,806 6,152
Irish Life & Permanent PLC 279,997 2,960
Jefferson Smurfit Group PLC 919,816 2,158
Kerry Group PLC A Shares 147,784 1,753
- - Ryanair Holdings PLC 145,972 1,513
Independent Newspapers PLC 202,781 972
DCC PLC 85,354 695
FYFFES PLC 316,015 684
Waterford Wedgewood PLC 632,017 652
Greencore Group PLC 170,670 528
Jurys Hotel Group PLC 49,372 392
Irish Continental Group PLC 28,736 367
Clondalkin Group PLC 49,471 332
- - Tullow Oil PLC 247,565 197
James Crean PLC 47,365 56
-----------
30,320
-----------
ITALY (6.4%)
Ente Nazionale
Idrocarburi SpA 7,293,085 43,548
Telecom Italia Mobile SpA 6,126,314 36,581
- - Telecom Italia SpA 3,437,468 35,733
Assicurazioni Generali SpA 966,469 33,489
San Paolo-IMI SpA 1,485,582 20,223
Banca Commerciale
Italiana SpA 1,869,424 13,649
Fiat SpA 3,574,284 11,316
Banco Intesa SpA 2,337,363 11,233
Mediaset SpA 1,070,368 9,515
Istituto Nazionale Delle
Assicurazioni SpA 4,068,131 9,440
- - Olivetti SpA 2,742,236 6,589
Telecom Italia Mobile
SpA Risp. 1,624,577 5,981
Pirelli SpA 2,165,288 5,895
Edison SpA 672,412 5,825
- - Telecom Italia SpA Risp. 945,255 5,128
Riunione Adriatica di
Sicurta SpA 497,382 4,832
Montedison SpA 2,765,677 4,506
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Alitalia SpA 1,444,087 $ 3,753
- - Benetton Group SpA 1,884,116 3,711
Banco Popolare Di Milano SpA 412,100 3,183
Italgas SpA 732,619 3,075
Parmalat Finanziaria SpA 1,987,326 2,603
Banca Intesa Non-Conv Risp. 1,115,820 2,497
Fiat SpA Pfd. 1,538,894 2,468
Italcementi SpA 192,220 2,438
- - Unione Immobiliare SpA 5,262,541 2,334
Mondadori (Arnoldo)
Editore SpA 123,266 2,136
Riunione Adriatica di Sicurta
SpA Risp. 250,081 2,110
Fiat SpA Risp. 1,217,182 2,077
La Rinascente SpA 269,122 2,037
Bulgari SpA 276,435 1,859
Societa Assicuratrice
Industriale SpA 156,288 1,612
Sirti SpA 327,500 1,581
Societa Assicuratrice
Industriale SpA Risp. 229,627 1,208
Magneti Marelli SpA 890,806 1,180
SNIA BPD SpA 931,348 1,167
Burgo (Cartiere) SpA 179,400 1,151
- - Impregilo SpA 1,186,584 1,002
Italcementi SpA Risp. 179,875 902
Montedison SpA Risp. 696,644 808
La Rinascente SpA Pfd. 161,797 669
Marzotto & Figli SpA 83,628 650
Cementir SpA 512,983 545
La Rinascente SpA Risp. 147,493 532
Reno De Medici SpA 219,226 522
Pirelli SpA Risp. 214,300 424
- - Olivetti SpA
Rights Exp. 7/9/1999 2,769,236 373
SNIA SpA 469,220 368
Danieli & Co. SpA 54,090 329
Danieli & Co. SpA Risp. 75,500 212
Marzotto & Figli SpA Risp. 15,000 127
-----------
315,126
-----------
NETHERLANDS (8.2%)
Royal Dutch Petroleum Co. 1,948,697 114,148
ING Groep NV 881,788 47,742
Aegon NV 529,628 38,425
Unilever NV 518,406 34,937
Royal Philips Electronics NV 308,028 30,384
ABN-AMRO Holding NV 1,373,110 29,737
Koninklijke KPN NV 427,928 20,080
Koninklijke Ahold NV 568,378 19,578
- - Heineken NV 281,965 14,437
Akzo Nobel NV 268,912 11,315
TNT Post Group NV 432,892 10,335
Wolters Kluwer NV 240,324 9,567
Elsevier NV 583,955 6,775
Getronics NV 79,350 3,052
Hagemeyer NV 91,166 2,980
KLM Royal Dutch Airlines NV 70,625 1,999
Koninklijke Hoogovens NV 35,345 1,844
Oce NV 67,724 1,725
Vedior NV 79,752 1,357
Buhrmann NV 70,829 1,143
Koninklijke Pakhoed NV 31,794 754
IHC Caland NV 18,925 742
Stork NV 29,150 664
Nedlloyd Groep NV 25,199 624
Hollandsche Beton Groep NV 29,230 374
-----------
404,718
-----------
NORWAY (0.6%)
Norsk Hydro ASA 194,826 7,350
Den Norske Bank ASA 656,925 2,170
Christiania Bank Og
Kreditkasse ASA 599,210 2,154
Orkla ASA A Shares 136,704 2,127
- - Storebrand ASA 231,551 1,559
Tomra Systems ASA 37,880 1,424
- - Petro Geo-Services ASA 82,813 1,247
Norske Skogindustrier ASA
A Shares 27,148 1,000
Elkem ASA 51,066 908
- - Kvaerner ASA 43,313 891
Merkantildata ASA 90,413 873
Bergesen D.Y. ASA A Shares 50,294 741
Schibsted ASA 64,468 725
- - NCL Holdings ASA 216,265 723
Orkla ASA B Shares 37,722 513
Dyno Industrier ASA 28,316 511
Hafslund ASA A Shares 75,421 503
Aker ASA A Shares 29,442 400
Bergesen D.Y. ASA B Shares 27,292 387
SAS Norge ASA B Shares 41,605 378
Norske Skogindustrier ASA
B Shares 12,321 373
Lief Hoegh & Co. ASA 24,729 314
Hafslund ASA B Shares 67,658 280
- - ASK Proxima ASA 45,955 246
Smedvig ASA A Shares 22,638 210
- - Helikopter Services Group ASA 25,827 192
Unitor ASA 20,218 175
- - Kvaerner ASA B Shares 10,773 170
Smedvig ASA B Shares 19,806 164
Aker ASA B Shares 2,190 27
-----------
28,735
-----------
PORTUGAL (0.8%)
Electricidade de Portugal SA 511,053 9,202
Portugal Telecom SA
(Registered) 182,511 7,425
Banco Espirito Santo e
Comercial de Lisboa SA
(Registered) 155,913 3,627
Banco Comercial Portugues SA
(Registered) 126,259 3,272
Jeronimo Martins & Filho,
SGPS, SA 89,171 2,945
Banco Comercial Portugues
8% Cvt. Pfd. 27,639 2,709
Cimpor-Cimento de Portugal SA 84,982 2,191
Brisa-Auto Estradas de
Portugal, SA 52,065 2,148
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Sonae Investimentos-Sociedade
Gestora de Participacoes SA 37,627 $ 1,280
Companhia de
Seguros Tranquilidade 20,264 510
Portucel Industrial-Empresa
Productora de Cellulosa SA 90,092 495
Unicer-Uniao Cervejeira SA 22,018 431
Inapa-Investimentos
Participacoes e Gestao SA 26,269 211
Corticeira Amorin SA 18,233 181
Efacec-Empresa Fabrilde
Maquinas Electricas SA 22,617 173
Cin-Corporacao Industrial do
Norte SA 4,821 124
- - Colep-Companhia Portuguesa
de Embalagens 18,884 104
- - Somague-Sociedade Gestora de
Participacoes, SA 27,347 81
Engil-SGPS 13,150 71
Sociedade Construcoes Soares
da Costa SA 15,933 50
- - Portugal Telecom SA
Rights Exp. 7/8/1999 183,741 2
-----------
37,232
-----------
SPAIN (4.3%)
- - Telefonica de Espana SA 965,659 46,517
Banco Santander Central
Hispano, SA 3,425,348 35,678
- - Banco Bilbao Vizcaya SA 1,954,466 28,238
Endesa SA 850,980 18,149
Repsol SA 757,071 15,459
Iberdrola SA 794,203 12,097
Argentaria SA 491,932 11,207
Gas Natural SDG SA 134,795 9,800
Union Electrica Fenosa SA 259,757 3,397
Tabacalera SA A Shares 161,417 3,263
Fomento de Construcciones y
Contratas SA 53,132 3,041
Autopista Concesionaria
Espanola SA 212,257 2,607
Corporacion Financiera Alba SA 12,315 1,994
Sociedade General de Aguas de
Barcelona SA 34,700 1,807
Grupo Dragados SA 139,638 1,637
Acerinox SA 52,530 1,536
Sol Melia, SA 33,740 1,425
Corporacion Mapfre SA 69,687 1,419
Vallehermoso SA 116,541 1,129
Zardoya Otis SA 44,130 1,108
- - ACS, Actividades de
Construccion y Servicios, SA 38,297 1,096
- - TelePizza, SA 192,950 999
Metrovacesa SA 45,343 889
Azucarera Ebro Agricolas 54,094 828
Portland Valderrivas SA 21,444 675
Cortefiel, SA 24,300 639
Prosegur Cia de Seguridad SA
(Registered) 54,600 609
- - Inmobiliaria Urbis SA 43,680 604
Viscofan Industria Navarra De
Envolturas Celulosicas SA 42,520 482
Empresa Nacional Compania de
Celulosas SA 25,050 447
Uralita SA 47,564 400
- - Asturiana de Zinc, SA 31,700 386
- - El Aguila SA 38,608 369
- - Puleva, SA 564,259 291
Fabrica Espanola de Productos
Quimicos y Farmaceuticos, SA 23,400 288
- - Ercros SA 233,502 190
- - Metrovacesa SA
Rights Exp. 7/26/1999 45,343 44
-----------
210,744
-----------
SWEDEN (3.5%)
LM Ericsson Telephone AB
B Shares 1,769,232 56,708
Hennes & Mauritz AB 742,664 18,344
ABB AB A Shares 599,182 8,961
Skandia Forsakrings AB 457,841 8,563
Volvo AB B Shares 260,105 7,542
ForeningsSparbanken AB 497,463 7,022
Electrolux AB Series B 323,213 6,767
Skandinaviska Eeskilda Banken
AB B Shares 567,369 6,607
Svenska Handelsbanken
A Shares 434,775 5,216
Svenska Cellulosa AB B Shares 174,871 4,525
Securitas AB B shares 281,561 4,206
Skanska AB B Shares 97,418 3,672
Sandvik AB A Shares 167,415 3,653
ABB AB B Shares 236,241 3,533
Volvo AB A Shares 110,380 3,181
- - NetCom AB Shares 89,678 3,017
Atlas Copco AB A Shares 105,090 2,862
WM-Data AB B Shares 65,884 2,511
AGA AB A Shares 116,769 1,456
Swedish Match AB 382,202 1,362
Atlas Copco AB B Shares 49,190 1,319
Sandvik AB B Shares 59,013 1,305
AGA AB B Shares 96,430 1,191
Svenska Handelsbanken AB
B Shares 102,000 1,128
OM Gruppen AB 97,925 1,106
SKF AB B Shares 59,388 1,097
Svenskt Stal AB (SSAB)-
Series A 75,609 947
Trelleborg AB B Shares 105,198 928
Drott AB B Shares 108,358 879
SKF AB A Shares 41,840 738
Granges AB 36,646 620
Diligentia AB 64,385 500
Svenskt Stal AB (SSAB) 29,833 370
Esselte AB A Shares 17,160 172
Esselte AB B Shares 16,290 169
- - Meto AG 33,450 166
-----------
172,343
-----------
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
SWITZERLAND (9.6%)
Novartis AG (Registered) 62,501 $ 91,264
Roche Holdings AG
(Dividend-Right Certificates) 6,405 65,839
Nestle SA (Registered) 35,864 64,618
UBS AG 197,864 59,057
Credit Suisse Group AG
(Registered) 245,151 42,420
Zurich Allied AG 44,812 25,482
Swisscom AG 66,839 25,152
Schweizerische
Rueckversicherungs-
Gesellschaft 13,012 24,775
Roche Holding AG (Bearer) 1,457 23,993
ABB AG (Bearer) 7,328 11,194
Adecco SA (Bearer) 15,290 8,193
- - Alusuisse-Lonza Group AG
(Registered) 5,548 6,467
- - Holderbank Financiere Glarus AG
(Bearer) 4,540 5,359
- - Holderbank Financiere Glarus AG
(Registered) 9,875 3,144
The Swatch Group AG 3,129 2,105
- - Sairgroup AG 9,289 1,945
- - Sulzer AG (Registered) 3,065 1,863
SMH AG (Registered) 12,486 1,783
ABB AG (Registered) 4,591 1,403
Kuoni Reisen Holding AG
(Registered) 290 1,118
- - Georg Fischer AG (Registered) 3,043 992
Schindler Holding AG (Registered) 636 982
- - SGS Societe Generale de
Surveillance Holding SA (Bearer) 870 901
Valora Holding AG 3,767 867
Schindler Holding AG (Ptg. Ctf.) 443 678
Sika Finanz AG (Bearer) 2,261 675
Forbo Holding AG (Registered) 1,423 566
Moevenpick Holding AG (Bearer) 1,100 476
Grands Magasins Jelmoli SA
(Bearer) 503 466
- - SGS Societe Generale de
Surveillance Holding SA
(Registered) 1,617 400
Grands Magasins Jelmoli SA
(Registered) 1,663 304
-----------
474,481
-----------
UNITED KINGDOM (31.2%)
BP Amoco PLC 8,408,993 150,710
British Telecommunications
PLC 5,652,120 94,707
Glaxo Wellcome PLC 3,194,155 88,766
Lloyds TSB Group PLC 4,858,666 65,865
SmithKline Beecham PLC 4,943,342 64,247
AstraZeneca Group PLC 1,573,358 60,861
HSBC Holdings PLC (Foreign) 1,683,023 59,585
Vodafone AirTouch PLC 2,726,602 53,724
Vodafone AirTouch PLC ADR 235,450 46,389
Barclays PLC 1,348,238 39,232
Diageo PLC 3,066,851 32,027
HSBC Holdings PLC (Local) 827,534 29,311
Cable and Wireless PLC 2,111,560 26,910
Halifax PLC 2,127,171 25,382
Prudential Corp. PLC 1,707,718 25,142
General Electric Co., PLC 2,380,528 24,278
Abbey National PLC 1,286,597 24,154
Unilever PLC 2,605,807 23,187
BG PLC 3,453,797 21,096
British American Tobacco PLC 1,939,446 18,236
Allied Zurich PLC 1,364,100 17,148
CGU PLC 1,152,815 16,654
Reuters Group PLC 1,262,591 16,608
Royal Bank of Scotland
Group PLC 798,039 16,253
Invensys PLC 3,373,793 15,968
Rio Tinto PLC 924,389 15,496
Granada Group PLC 815,823 15,136
Tesco PLC 5,785,877 14,889
Marks & Spencer PLC 2,477,023 14,330
British Sky Broadcasting
Group PLC 1,504,469 13,956
Kingfisher PLC 1,192,491 13,722
- - Cadbury Schweppes PLC 1,823,234 11,611
Royal & Sun Alliance
Insurance Group PLC 1,259,923 11,300
Legal & General Group PLC 4,351,646 11,078
Pearson PLC 532,630 10,822
GKN PLC 621,220 10,605
Bass PLC 718,333 10,423
J. Sainsbury PLC 1,627,662 10,263
British Aerospace PLC 1,541,648 10,006
Rentokil Initial PLC 2,538,215 9,902
Great Universal Stores PLC 873,240 9,677
Boots Co., PLC 785,102 9,325
Railtrack Group PLC 444,883 9,095
BAA PLC 933,844 8,979
Scottish Power PLC 1,032,784 8,921
National Grid Group PLC 1,263,070 8,790
Centrica PLC 3,578,207 8,404
Peninsular & Oriental Steam
Navigation Co. 555,130 8,335
BOC Group PLC 420,914 8,227
Scottish & Southern
Energy PLC 753,541 7,709
National Power PLC 1,049,168 7,641
Land Securities PLC 487,524 6,555
Reed International PLC 978,004 6,525
Imperial Chemical
Industries PLC 639,198 6,317
British Airways PLC 913,728 6,305
Compass Group PLC 593,331 5,883
Scottish & Newcastle PLC 555,871 5,787
Rolls-Royce PLC 1,311,300 5,550
United Utilities PLC 456,403 5,547
Schroders PLC 270,583 5,528
EMI Group PLC 687,248 5,514
Hilton Group PLC 1,314,810 5,212
Hanson PLC 567,374 5,040
Blue Circle Industries PLC 698,791 4,648
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Thames Water PLC 292,909 $ 4,645
Carlton Communications PLC 559,495 4,639
British Steel PLC 1,763,138 4,565
Associated British Foods PLC 682,658 4,514
Misys PLC 497,249 4,256
Stagecoach Holdings PLC 1,149,805 4,119
British Land Co., PLC 471,093 3,939
Williams PLC 595,916 3,936
Next PLC 322,242 3,914
Wolseley PLC 502,833 3,785
Safeway PLC 938,684 3,762
RMC Group PLC 230,019 3,704
Smiths Industries PLC 267,557 3,534
BP Amoco PLC ADR 26,100 2,832
BBA Group PLC 364,443 2,798
TI Group PLC 408,676 2,738
Electrocomponents PLC 367,235 2,712
Rank Group PLC 677,956 2,696
BPB PLC 426,327 2,526
Arjo Wiggins Appleton PLC 719,307 2,494
MEPC PLC 303,931 2,472
- - Burmah Castrol PLC 127,098 2,412
Tate & Lyle PLC 377,437 2,365
Anglian Water PLC 212,295 2,348
Ocean Group PLC 125,712 2,081
Slough Estates PLC 359,557 2,039
Hammerson PLC 266,706 1,997
Bunzl PLC 362,193 1,804
Lasmo PLC 775,758 1,773
Lonmin PLC 183,490 1,706
Johnson Matthey PLC 167,326 1,635
FKI PLC 523,008 1,625
Tarmac PLC 836,586 1,569
Racal Electronics PLC 254,549 1,555
St. James's Place Capital PLC 415,468 1,539
Bowthorpe PLC 170,691 1,499
Hyder PLC 121,145 1,442
Sun Life Provincial Holdings PLC 192,487 1,375
Rexam PLC 335,875 1,361
Cobham PLC 81,650 1,300
The Berkeley Group PLC 104,265 1,254
IMI PLC 308,224 1,249
Unigate PLC 195,802 1,248
Pilkington PLC 842,860 1,227
Barratt Developments PLC 200,814 1,133
United Biscuits Holdings PLC 363,959 1,094
De La Rue PLC 179,877 1,086
Caradon PLC 450,793 1,066
Taylor Woodrow PLC 346,239 993
Lex Service PLC 98,971 913
Rugby Group PLC 488,448 878
Meyer International PLC 123,843 812
Amec PLC 169,227 686
Elementis 1998 PLC 391,639 642
George Wimpey PLC 267,413 637
Jarvis PLC 118,931 553
Laird Group PLC 110,070 462
Hepworth PLC 135,402 423
BICC PLC 278,447 402
Wilson Connolly Holdings PLC 129,932 363
Vickers PLC 123,276 317
Coats Viyella PLC 388,312 312
Delta PLC 113,167 264
Courtaulds Textiles PLC 60,490 155
Transport Development
Group PLC 14,017 50
-----------
1,535,717
-----------
- ----------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $3,623,144) 4,904,054
- ----------------------------------------------------------------------
FACE
AMOUNT
(000)
- ----------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (12.4%)(1)
- ----------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
(2) 4.77%, 7/28/1999 $ 2,000 1,992
FEDERAL NATIONAL MORTGAGE ASSN.
(2) 4.75%, 7/22/1999 2,500 2,492
REPURCHASE AGREEMENTS
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
4.87%, 7/1/1999 54,712 54,712
4.96%, 7/1/1999--Note G 549,495 549,495
- ----------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $608,693) 608,691
- ----------------------------------------------------------------------
TOTAL INVESTMENTS (111.9%)
(COST $4,231,837) 5,512,745
- ----------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-11.9%)
- ----------------------------------------------------------------------
Other Assets--Note B 35,964
Security Lending Collateral Payable
to Brokers--Note G (549,495)
Other Liabilities (74,188)
-----------
(587,719)
- ----------------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------------
Applicable to 198,527,890 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization) $4,925,026
======================================================================
NET ASSET VALUE PER SHARE $24.81
======================================================================
</TABLE>
* See Note A in Notes to Financial Statements.
- Non-Income-Producing Security.
(1)The fund invests a portion of its cash reserves in equity markets through the
use of index futures contracts. After giving effect to futures investments,
the fund's effective common stock and temporary cash investment positions
represent 100.0% and 12.0%, respectively, of net assets. See Note E in Notes
to Financial Statements.
(2)Securities with an aggregate value of $4,484,000 have been segregated as
initial margin for open futures contracts.
ADR--American Depositary Receipt.
(Ptg. Ctf.)--Participating Certificate.
19
<PAGE> 22
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
AMOUNT PER
EUROPEAN STOCK INDEX FUND (000) SHARE
- ----------------------------------------------------------------------
<S> <C> <C>
AT JUNE 30, 1999, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------------
Paid in Capital $3,580,048 $18.03
Undistributed Net Investment
Income--Note F 52,623 .27
Accumulated Net Realized
Gains--Note F 12,492 .06
Unrealized Appreciation
(Depreciation)--Note E
Investment Securities 1,280,908 6.45
Futures Contracts (456) --
Foreign Currencies and
Forward Currency Contracts (589) --
- ----------------------------------------------------------------------
NET ASSETS $4,925,026 $24.81
======================================================================
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (97.1%)(1)
- ----------------------------------------------------------------------
AUSTRALIA (9.4%)
Telstra Corp. Ltd. 3,415,448 $ 19,571
National Australia Bank Ltd. 993,548 16,441
Broken Hill Proprietary Ltd. 1,138,559 13,189
News Corp. Ltd. 1,342,605 11,455
News Corp. Ltd. Pfd. 1,169,565 8,911
Westpac Banking Corp., Ltd. 1,277,060 8,284
AMP Ltd. 745,562 8,151
Westfield Trust (Units) 2,286,809 4,628
Coles Myer Ltd. 728,508 4,239
Brambles Industries Ltd. 135,597 3,572
Colonial Ltd. 932,042 3,301
WMC Ltd. 746,138 3,205
Rio Tinto Ltd. 194,393 3,187
Foster's Brewing Group Ltd. 1,088,190 3,067
Coca-Cola Amatil Ltd. 653,856 2,635
Woolworths Ltd. 709,834 2,361
Amcor Ltd. 413,346 2,298
CSR Ltd. 665,930 1,904
Suncorp-Metway Ltd. 303,611 1,809
Southcorp Ltd. 399,239 1,612
Stockland Trust Group Ltd. 665,682 1,520
Wesfarmers Ltd. 165,461 1,490
Pioneer International Ltd. 577,620 1,472
Tabcorp Holdings Ltd. 197,493 1,331
Boral Ltd. 745,036 1,262
Santos Ltd. 368,219 1,206
Australian Gas Light Co., Ltd. 191,059 1,162
Gio Australia Holdings Ltd. 438,280 1,068
QBE Insurance Group Ltd. 278,619 1,060
North Ltd. 509,536 1,032
Orica Ltd. 187,982 1,027
Pacific Dunlop Ltd. 680,830 982
Howard Smith Ltd. 111,620 853
Rothmans Holdings Ltd. 83,140 791
Mount Isa Mines Holdings Ltd. 1,056,992 749
Mayne Nickless Ltd. 205,384 703
Goodman Fielder Ltd. 760,571 678
CSL Ltd. 75,830 655
Hardie (James) Industries Ltd. 243,724 645
Normandy Mining Ltd. 968,423 645
Leighton Holdings Ltd. 159,000 621
F.H. Faulding & Co., Ltd. 86,337 526
Westralian Sands Ltd. 220,483 477
Futuris Corp., Ltd. 315,139 459
Email Ltd. 215,823 415
- - Publishing & Broadcasting Ltd. 56,987 377
Star City Holdings Ltd. 338,210 329
- - Newcrest Mining Ltd. 121,382 273
David Jones Ltd. 252,932 248
Delta Gold NL 165,500 236
Sons of Gwalia Ltd. 72,089 190
Metal Manufactures Ltd. 141,300 173
Resolute Ltd. 111,700 56
RGC Gold Unsecured Notes 145,141 45
-----------
148,576
-----------
HONG KONG (8.3%)
Hutchison Whampoa Ltd. 2,546,000 23,053
Hong Kong
Telecommunications Ltd. 7,883,593 20,475
Sun Hung Kai Properties Ltd. 1,596,400 14,557
Hang Seng Bank Ltd. 1,268,200 14,180
Cheung Kong Holdings Ltd. 1,555,000 13,829
CLP Holdings Limited 1,609,500 7,821
Swire Pacific Ltd. A Shares 983,000 4,865
Wharf Holdings Ltd. 1,545,000 4,819
Hong Kong & China Gas
Co., Ltd. 3,021,311 4,381
New World Development
Co., Ltd. 1,397,797 4,189
Cathay Pacific Airways Ltd. 2,226,000 3,414
Johnson Electric Holdings Ltd. 610,000 2,516
Bank of East Asia Ltd. 917,733 2,324
Shangri-La Asia Ltd. 1,168,000 1,445
Television Broadcasts Ltd. 303,000 1,422
Hang Lung Development
Co., Ltd. 1,113,000 1,377
Hysan Development Co., Ltd. 744,211 1,122
South China Morning Post Ltd. 1,133,000 635
Hong Kong and Shanghai
Hotels Ltd. 699,000 595
Wing Lung Bank Ltd. 151,128 588
Miramar Hotel & Investment Ltd. 428,000 521
Varitronix International Ltd. 199,000 414
Hopewell Holdings Ltd. 536,400 408
- - Regal Hotels International
Holdings Ltd. 2,668,800 323
Hong Kong Aircraft &
Engineering Co., Ltd. 157,600 305
Giordano International Ltd. 416,000 295
Shun Tak Holdings Ltd. 1,046,000 280
Tai Cheung Holdings Ltd. 839,000 249
Oriental Press Group Ltd. 1,238,000 199
Hong Kong Construction
Holdings Ltd. 277,000 179
Dickson Concepts
International Ltd. 213,899 152
Elec & Eltek International
Holdings Ltd. 717,000 128
- - Peregrine Investment
Holdings Ltd. 293,200 0
-----------
131,060
-----------
JAPAN (75.6%)
Nippon Telegraph and
Telephone Corp. 8,309 96,795
Toyota Motor Corp. 2,431,000 76,925
The Bank of Tokyo-
Mitsubishi Ltd. 3,019,000 42,977
Honda Motor Co., Ltd. 630,000 26,702
Takeda Chemical Industries Ltd. 576,000 26,697
Matsushita Electric Industrial
Co., Ltd. 1,337,000 25,959
Fujitsu Ltd. 1,210,000 24,343
</TABLE>
21
<PAGE> 24
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Hitachi Ltd. 2,153,000 $ 20,189
Tokyo Electric Power Co. 886,100 18,705
Ito-Yokado Co., Ltd. 269,000 18,002
Sony Corp. 165,300 17,822
Bridgestone Corp. 549,500 16,616
Canon, Inc. 559,000 16,072
Nomura Securities Co., Ltd. 1,341,000 15,699
Fuji Bank Ltd. 2,220,000 15,480
Sumitomo Bank Ltd. 1,203,000 14,919
East Japan Railway Co. 2,590 13,909
Industrial Bank of Japan Ltd. 1,704,000 13,515
NEC Corp. 1,052,000 13,081
Fuji Photo Film Co., Ltd. 333,000 12,601
Kansai Electric Power Co., Inc. 658,800 12,519
Rohm Co., Ltd. 78,000 12,212
Denso Corp. 586,000 11,910
Kao Corp. 404,000 11,349
Tokio Marine & Fire
Insurance Co. 1,011,000 10,984
Murata Manufacturing Co., Ltd. 156,000 10,259
Sony Music Entertainment 119,800 10,195
Nippon Steel Corp. 4,381,000 10,171
Sakura Bank Ltd. 2,641,681 10,018
Mitsubishi Heavy
Industries Ltd. 2,186,000 8,868
Shin-Etsu Chemical Co., Ltd. 264,000 8,834
Yamanouchi Pharmaceuticals
Co., Ltd. 227,000 8,683
Sharp Corp. 734,000 8,672
Asahi Bank Ltd. 1,807,000 8,659
Mitsubishi Estate Co., Ltd. 862,000 8,410
Tokai Bank Ltd. 1,460,000 8,323
Fanuc Co., Ltd. 154,700 8,308
Mitsubishi Trust &
Banking Corp. 841,000 8,171
Kirin Brewery Co., Ltd. 662,000 7,931
Secom Co., Ltd. 75,000 7,808
Nissan Motor Co., Ltd. 1,611,000 7,693
Tokyo Electron Ltd. 112,630 7,640
Dai-Nippon Printing Co., Ltd. 476,000 7,610
Taisho Pharmaceutical Co. 226,000 7,469
Sankyo Co., Ltd. 295,000 7,434
Mitsui & Co., Ltd. 1,035,000 7,217
Advantest Corp. 65,500 7,197
Kyocera Corp. 122,000 7,157
Mitsubishi Corp. 1,010,000 6,842
Daiwa Securities Group Inc. 922,000 6,094
Osaka Gas Co., Ltd. 1,645,000 5,586
Mitsubishi Electric Corp. 1,401,000 5,382
Shizuoka Bank Ltd. 539,000 5,371
Sumitomo Electric
Industries Ltd. 469,000 5,332
Kinki Nippon Railway Co. 1,079,000 5,304
Tohoku Electric Power Co. 347,000 5,252
Sekisui House Ltd. 485,000 5,233
Asahi Chemical Industry
Co., Ltd. 932,000 5,167
Sumitomo Corp. 695,000 5,082
Sanyo Electric Co., Ltd. 1,240,000 5,040
Yamato Transport Co., Ltd. 289,000 5,038
Asahi Glass Co., Ltd. 759,000 4,923
Toppan Printing Co., Ltd. 440,000 4,911
Sumitomo Chemical Co. 1,044,000 4,787
SMC Corp. 42,000 4,702
Ajinomoto Co., Inc. 411,000 4,686
Mitsubishi Chemical Corp. 1,353,000 4,684
Tokyo Gas Co., Ltd. 1,866,000 4,594
Mitsui Fudosan Co., Ltd. 552,000 4,469
Toray Industries, Inc. 888,000 4,446
Hoya Corp. 76,000 4,289
Nippon Express Co., Ltd. 684,000 4,097
Komatsu Ltd. 630,000 4,024
Shiseido Co., Ltd. 266,000 3,987
OJI Paper Co., Ltd. 684,000 3,956
Nippon Mitsubishi Oil Corp. 933,600 3,934
Nikon Corp. 239,000 3,910
Asahi Breweries Ltd. 314,000 3,907
Kawasaki Steel Corp. 2,075,000 3,874
Japan Air Lines Co., Ltd. 1,166,000 3,853
Marui Co., Ltd. 231,000 3,817
Eisai Co., Ltd. 192,000 3,783
Jusco Co., Ltd. 205,000 3,726
Daiwa House Industry Co., Ltd. 339,000 3,565
Toyo Seikan Kaisha Ltd. 144,000 3,236
Nippon Paper Industries Co. 617,000 3,217
Nippon Yusen Kabushiki
Kaisha Co. 791,000 3,045
Toyoda Automatic Loom
Works Ltd. 174,000 2,954
Omron Corp. 168,000 2,915
Kuraray Co., Ltd. 239,000 2,875
Minebea Co., Ltd. 254,000 2,833
- - Sumitomo Metal Industries Ltd. 2,258,000 2,817
Sumitomo Marine & Fire
Insurance Co. 465,000 2,805
Alps Electric Co., Ltd. 119,000 2,787
Daiichi Pharmaceutical Co., Ltd. 178,000 2,762
Kubota Corp. 914,000 2,734
Hirose Electric Co., Ltd. 26,200 2,719
Tostem Corp. 141,000 2,708
77 Bank Ltd. 293,000 2,566
Mitsui Marine & Fire
Insurance Co. 518,000 2,546
Olympus Optical Co., Ltd. 170,000 2,513
NGK Insulators Ltd. 233,000 2,433
Gunma Bank Ltd. 384,000 2,411
Kawasaki Heavy Industries Ltd. 882,000 2,390
Joyo Bank Ltd. 613,000 2,385
Teijin Ltd. 578,000 2,340
Ohbayashi Corp. 463,000 2,330
Kajima Corp. 636,000 2,312
Itochu Corp. 921,000 2,290
Hankyu Corp. 569,000 2,257
Pioneer Electronic Corp. 112,000 2,179
Kaneka Corp. 231,000 2,176
Shimano, Inc. 88,000 2,083
Ebara Corp. 174,000 2,069
Marubeni Corp. 977,000 2,042
Kinden Corp. 188,000 2,027
Sekisui Chemical Co. 348,000 2,018
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Shimizu Corp. 515,000 $ 2,008
Bank of Yokohama Ltd. 775,000 1,991
NSK Ltd. 360,000 1,975
Daikin Industries Ltd. 169,000 1,962
Chiba Bank Ltd. 531,000 1,961
Uni-Charm Corp. 45,000 1,952
Nissin Food Products Co., Ltd. 80,000 1,950
Nagoya Railroad Co., Ltd. 588,000 1,934
Shionogi & Co., Ltd. 242,000 1,913
Furukawa Electric Co. 411,000 1,885
Toho Co., Ltd. 12,800 1,872
Nippon Meat Packers, Inc. 142,000 1,854
Uny Co., Ltd. 121,000 1,819
Takashimaya Co. 190,000 1,816
Taiheiyo Cement Corp. 630,000 1,806
Nankai Electric Railway Co. 388,000 1,798
Chugai Pharmaceutical Co., Ltd. 165,000 1,778
Sanrio Co., Ltd. 52,000 1,770
Toto Ltd. 229,000 1,769
- - NKK Corp. 2,124,000 1,737
Tokyu Corp. 685,000 1,726
Mitsui Osk Lines Ltd. 802,000 1,723
Yamazaki Baking Co., Ltd. 138,000 1,712
Citizen Watch Co., Ltd. 195,000 1,692
Dai-Nippon Ink &
Chemicals, Inc. 493,000 1,678
Nichido Fire & Marine
Insurance Co., Ltd. 325,000 1,673
Tokyo Broadcasting System, Inc. 115,000 1,663
Mitsui Mining & Smelting
Co., Ltd. 321,000 1,657
Tobu Railway Co., Ltd. 555,000 1,573
Kyowa Hakko Kogyo Co. 273,000 1,563
Mitsubishi Materials Corp. 697,000 1,561
Odakyu Electric Railway Co. 466,000 1,559
Yamaha Corp. 128,000 1,539
NGK Spark Plug Co. 149,000 1,533
Nippon Comsys Corp. 94,000 1,526
Skylark Co., Ltd. 71,000 1,525
Daiei, Inc. 442,000 1,512
Kurita Water Industries Ltd. 84,000 1,506
Konami Co., Ltd. 35,600 1,471
Sumitomo Metal Mining Co. 355,000 1,467
Aoyama Trading Co., Ltd. 46,200 1,458
Meiji Seika Kaisha Ltd. 245,000 1,370
Yamaguchi Bank Ltd. 151,000 1,366
Casio Computer Co. 175,000 1,330
Taisei Corp. 596,000 1,310
Nippon Fire & Marine
Insurance Co., Ltd. 382,000 1,294
Mitsui Trust & Banking Co. 806,000 1,285
Onward Kashiyama Co., Ltd. 116,000 1,275
Mitsukoshi Ltd. 293,000 1,273
Amada Co., Ltd. 179,000 1,264
Mycal Corp. 201,000 1,262
Makita Corp. 111,000 1,255
Taiyo Yuden Co., Ltd. 75,000 1,231
Isetan Co. 139,000 1,198
Kokuyo Co., Ltd. 74,000 1,192
Wacoal Corp. 117,000 1,191
Autobacs Seven Co., Ltd. 24,500 1,190
Daito Trust Construction Co., Ltd. 104,800 1,169
Mitsubishi Rayon Co., Ltd. 408,000 1,163
Takara Shuzo Co. 141,000 1,150
Ube Industries Ltd. 533,000 1,149
Keihin Electric Express Railway
Co., Ltd. 341,000 1,127
Koyo Seiko Co., Ltd. 129,000 1,124
Nishimatsu Construction Co. 194,000 1,112
Fujikura Ltd. 230,000 1,098
Nitto Denko Corp. 52,000 1,091
Mitsubishi Logistics Corp. 96,000 1,079
Tosoh Corp. 379,000 1,058
Nippon Sheet Glass Co., Ltd. 293,000 1,043
House Foods Industry Corp. 69,000 1,017
NTN Corp. 298,000 1,017
Trans Cosmos, Inc. 13,900 1,011
Snow Brand Milk Products Co. 206,000 1,006
Namco Ltd. 36,600 983
Kikkoman Corp. 116,000 982
Nippon Shinpan Co. 292,000 970
Yokogawa Electric Corp. 163,000 963
Hokuriku Bank Ltd. 481,000 954
Mitsubishi Gas Chemical Co. 298,000 941
INAX Corp. 154,000 940
Konica Corp. 228,000 940
Kandenko Co., Ltd. 153,000 938
Sapparo Breweries Ltd. 204,000 905
Higo Bank Ltd. 221,000 904
Daicel Chemical Industries Ltd. 236,000 868
Ashikaga Bank Ltd. 443,000 864
Sumitomo Forestry Co. 111,000 864
Kamigumi Co., Ltd. 167,000 857
Lion Corp. 207,000 855
Tokyo Style Co. 79,000 849
Daimaru, Inc. 173,000 846
Sega Enterprises Ltd. 63,900 845
CSK Corp. 37,000 841
Komori Corp. 46,000 829
Showa Denko K.K. 641,000 821
Kawasaki Kisen Kaisha Ltd. 377,000 813
- - Seiyu Ltd. 145,000 803
Japan Energy Corp. 673,000 790
Kissei Pharmaceutical Co. 39,000 775
Fujita Kanko, Inc. 81,000 770
Sumitomo Heavy Industries Ltd. 341,000 761
Hitachi Zosen Corp. 630,000 760
Hankyu Department Stores, Inc. 114,000 756
Mori Seiki Co. 55,000 750
Toyobo Ltd. 493,000 745
Sanden Corp. 93,000 741
Sanwa Shutter Corp. 135,000 732
Daiwa Kosho Lease Co., Ltd. 166,000 727
Shimachu Co. 32,500 720
Nippon Shokubai K.K. 117,000 696
Cosmo Oil Co., Ltd. 378,000 693
Nisshinbo Industries, Inc. 150,000 683
Takara Standard Co. 105,000 659
Denki Kagaku Kogyo K.K. 297,000 650
Seino Transportation Co., Ltd. 106,000 631
</TABLE>
23
<PAGE> 26
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Q.P. Corp. 87,000 $ 625
Brother Industries Ltd. 177,000 610
Meiji Milk Products Co., Ltd. 167,000 597
Tokyo Dome Corp. 99,000 574
Okumura Corp. 154,000 573
Maeda Road Construction
Co., Ltd. 84,000 566
Itoham Foods, Inc. 139,000 565
- - Dai-Nippon Screen
Manufacturing Co., Ltd. 109,000 563
Kansai Paint Co., Ltd. 182,000 558
Katokichi Co., Ltd. 32,000 553
Arabian Oil Co., Ltd. 30,400 541
- - Kanebo Ltd. 331,000 541
- - Mitsui Engineering &
Shipbuilding Co., Ltd. 470,000 532
Okuma Corp. 114,000 529
Sumitomo Osaka Cement
Co., Ltd. 265,000 515
- - Kumagai Gumi Co., Ltd. 460,000 513
Kaken Pharmaceutical Co. 71,000 508
Gunze Ltd. 190,000 502
Amano Corp. 60,000 495
Takuma Co., Ltd. 53,000 489
Ezaki Glico Co. 81,000 485
Daifuku Co., Ltd. 68,000 475
Noritake Co., Ltd. 91,000 474
Tokyo Steel Manufacturing Co. 88,000 462
Nippon Light Metal Co. 308,000 461
Nagase & Co., Ltd. 96,000 456
- - Daikyo, Inc. 126,000 448
Nichirei Corp. 168,000 444
Teikoku Oil Co., Ltd. 134,000 434
Uniden Corp. 42,000 427
Mitsubishi Paper Mills Ltd. 218,000 409
Makino Milling Machine Co. 59,000 404
Misawa Homes Co., Ltd. 94,000 395
Tsubakimoto Chain Co. 111,000 395
Tokyo Tatemono Co., Ltd. 170,000 393
- - Penta-Ocean Construction Co. 221,000 385
Daido Steel Co., Ltd. 242,000 384
Kyudenko Corp. 67,000 383
Toei Co. 90,000 368
- - Ishihara Sangyo Kaisha Ltd. 188,000 356
Iwatani International Corp. 149,000 355
NOF Corp. 137,000 353
Kureha Chemical Industry Co. 131,000 349
Oyo Corp. 18,000 336
Toyo Exterior Co. 28,000 324
Mitsui Soko Co., Ltd. 92,000 306
- - Chiyoda Corp. 147,000 304
Tokyotokeiba Co. 179,000 293
JGC Corp. 105,000 278
Nippon Sharyo Ltd. 84,000 271
- - Japan Steel Works Ltd. 216,000 269
Nippon Suisan Kaisha Ltd. 162,000 256
- - Unitika Ltd. 273,000 248
- - Niigata Engineering Co., Ltd. 246,000 236
Okamoto Industries, Inc. 92,000 236
- - Renown, Inc. 160,000 225
Toa Corp. 116,000 216
- - Japan Metals & Chemicals Co. 123,000 209
Kurabo Industries Ltd. 154,000 206
- - Fujita Corp. 273,000 203
- - Haseko Corp. 236,000 201
Maruha Corp. 154,000 192
Nippon Beet Sugar
Manufacturing Co. 79,000 163
- - Hazama Corp. 177,000 148
- - Aoki Corp. 216,000 137
- - Sankyo Aluminum Industry Co. 110,000 126
Toyo Engineering Corp. 111,000 126
- - Sato Kogyo Co. 148,000 124
- - Gakken Co. 27,000 49
- - The Yasuda Trust and Banking
Co., Ltd. 3,000 4
-----------
1,199,241
-----------
MALAYSIA
- - Aokam Perdana Bhd. 337,000 0
- - Promet Bhd. 765,000 0
-----------
0
-----------
NEW ZEALAND (0.7%)
Telecom Corp. of
New Zealand Ltd. 1,253,116 5,379
Carter Holt Harvey Ltd. 1,271,523 1,523
Lion Nathan Ltd. 351,630 842
- - Brierley Investments Ltd. 2,202,450 619
- - Fletcher Challenge Ltd. Energy 223,042 605
- - Contact Energy Ltd. 372,109 603
Fisher & Paykel Industries Ltd. 134,905 429
Fletcher Challenge Ltd. Building 246,111 359
Fletcher Challenge Ltd. Paper 477,675 357
- - Fletcher Challenge Ltd. Forest 530,737 298
-----------
11,014
-----------
SINGAPORE (3.1%)
Singapore
Telecommunications Ltd. 4,031,000 6,914
Oversea-Chinese Banking
Corp., Ltd. (Foreign) 703,527 5,868
Singapore Airlines Ltd. (Foreign) 601,000 5,719
Development Bank of Singapore
Ltd. (Foreign) 454,712 5,555
Singapore Press Holdings Ltd. 250,855 4,273
City Developments Ltd. 581,000 3,720
United Overseas Bank Ltd.
(Foreign) 475,350 3,323
Singapore Technologies
Engineering Ltd. 2,262,000 2,564
Keppel Corp., Ltd. 522,750 1,781
Sembcorp Industries Ltd. 1,049,203 1,664
Venture Manufacturing
(Singapore) Ltd. 135,000 1,039
United Industrial Corp., Ltd. 1,475,000 996
Cycle & Carriage Ltd. 164,651 948
Fraser & Neave Ltd. 191,000 847
Creative Technology Ltd. 58,750 766
- - Neptune Orient Lines Ltd. 477,000 583
Parkway Holdings Ltd. 210,000 518
First Capital Corp., Ltd. 288,000 448
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Natsteel Ltd. 245,071 $ 429
Overseas Union Enterprise Ltd. 128,000 406
Hotel Properties Ltd. 312,000 326
Shangri-La Hotel Ltd. 122,000 294
Inchcape Bhd. 172,000 277
Haw Par Brothers
International Ltd. 162,000 276
Comfort Group Ltd. 363,000 224
Robinson & Co., Ltd. 49,000 148
-----------
49,906
-----------
- ----------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $1,458,842) 1,539,797
- ----------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
(000)
- ----------------------------------------------------------------------
CONVERTIBLE BONDS (0.7%)
- ----------------------------------------------------------------------
<S> <C> <C>
Nitto Denko
3.90%, 3/30/2001 JPY 67,000 1,074
Sumitomo Bank
International
0.75%, 5/31/2001 JPY 1,022,000 10,365
- ----------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS
(COST $11,846) 11,439
- ----------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (6.3%)(1)
- ----------------------------------------------------------------------
TIME DEPOSITS
HSBC Malaysia
2.70%, 7/27/1999 MYR 457 120
3.20%, 7/25/1999 MYR 32,441 8,537
FEDERAL NATIONAL
MORTGAGE ASSN.
(2) 4.75%, 7/22/1999 $ 3,000 2,991
REPURCHASE AGREEMENTS
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
4.87%, 7/1/1999 25,112 25,112
4.96%, 7/1/1999--Note G 62,382 62,382
- ----------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $99,144) 99,142
- ----------------------------------------------------------------------
TOTAL INVESTMENTS (104.1%)
(COST $1,569,832) 1,650,378
- ----------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-4.1%)
- ----------------------------------------------------------------------
Other Assets--Note B 6,738
Security Lending Collateral Payable
to Brokers--Note G (62,382)
Other Liabilities--Note E (8,849)
-----------
(64,493)
- ----------------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------------
Applicable to 167,033,651 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization) $1,585,885
======================================================================
NET ASSET VALUE PER SHARE $9.49
======================================================================
</TABLE>
* See Note A in Notes to Financial Statements.
- Non-Income-Producing Security.
(1)The fund invests a portion of its cash reserves in equity markets through the
use of index futures contracts. After giving effect to futures investments,
the fund's effective common stock and temporary cash investment positions
represent 99.2% and 4.2%, respectively, of net assets.
See Note E in Notes to Financial Statements.
(2)Security segregated as initial margin for open futures contracts.
JPY--Japanese Yen.
MYR--Malaysian Ringgit.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
AT JUNE 30, 1999, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- ----------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $1,617,786 $9.68
Undistributed Net Investment
Income--Note F 8,577 .05
Accumulated Net Realized
Losses--Note F (121,009) (.72)
Unrealized Appreciation
(Depreciation)--Note E
Investment Securities 80,546 .48
Futures Contracts 1,170 .01
Foreign Currencies and
Forward Currency Contracts (1,185) (.01)
- ----------------------------------------------------------------------
NET ASSETS $1,585,885 $9.49
======================================================================
</TABLE>
25
<PAGE> 28
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (92.8%)(1)
- ----------------------------------------------------------------------
ARGENTINA (3.1%)
Telefonica Argentina SA
Class B 2,853,100 $ 8,846
Perez Companc SA 1,100,046 6,326
Banco Galicia y Buenos Aires
SA de CV 545,085 2,797
Transportadora de Gas Sur SA 990,370 1,862
Siderca SA Class A 1,348,649 1,767
Banco Frances Del Rio de la
Plata SA 243,168 1,581
- - Astra Cia Argentina de
Petroleum SA 722,010 1,321
Irsa Inversiones y
Representaciones SA 265,960 819
Acindar Industria Argentina de
Aceros SA 353,800 382
- - Molinos Rio de la Plata SA 227,200 382
Central Puerto SA 154,783 348
Ciadea SA 221,848 300
Corp Cementera Argentina SA 45,100 213
- - Solvay Indupa S.A.I.C. 296,438 175
Nobleza Piccardo SA 50,724 167
- - Polledo SA 136,900 163
Cresud SA 139,825 151
Ledesma SA 271,743 148
- - Sociedad Comercial de Plata SA 369,433 142
- - Alpargatas S.A.I.C. 354,200 32
-----------
27,922
-----------
BRAZIL (11.4%)
Centrais Electricas
Brasileiras SA 581,249,488 11,062
Cia Vale Do Rio Pfd. A 511,390 10,140
Petroleo Brasileiro SA Pfd. 56,302,677 8,822
Telesp Participacoes SA Pfd. 277,337,222 6,400
Tele Norte Leste
Participacoes SA Pfd. 277,249,150 4,897
Companhia Energetica de
Minas Gerais Pfd. 212,094,329 4,496
- - Embratel Participacoes
SA Pfd. 276,983,150 3,883
Banco Itau SA Pfd. 6,780,242 3,496
Companhia Cervejaria
Brahma Pfd. 6,039,150 3,434
Banco Bradesco SA Pfd. 676,510,430 3,415
Aracruz Celulose SA Pfd.
B Shares 1,427,671 3,164
Tele Centro Sul
Participacoes SA Pfd. 280,361,150 3,131
Souza Cruz SA 406,600 2,884
Telesp Celular Participacoes
SA Pfd. 275,520,150 2,873
Companhia
Siderurgica Nacional 93,482,500 2,464
Centrais Electricas
Brasileiras SA Pfd.
B Shares 103,539,124 2,100
Telesp Participacoes SA 162,050,560 2,096
Tele Sudeste Celular
Participacoes SA Pfd. 280,414,150 1,598
Companhia Paulista de
Forca e Luz 24,700,400 1,576
Tele Norte Leste
Participacoes SA 164,244,560 1,497
Votorantim Celulose e Papel
SA Pfd. 51,466,831 1,496
Companhia
Cervejaria Brahma 3,468,265 1,371
Embratel Participacoes SA 163,583,560 1,221
Unibanco-Uniao de Bancos
Brasileiros SA Pfd. 66,971,300 1,145
Banco do Estado de Sao
Paulo SA Pfd. 24,615,800 1,055
- - Usiminas-Usinas
Siderurgicas de Minas
Gerais SA Pfd. Class A 300,069 1,019
Telesp Celular
Participacoes SA 170,035,589 920
- - Tele Centro Sul
Participacoes SA 165,644,560 882
White Martins SA 1,319,365 616
- - Centrais Geradoras do Sul
do Brasil SA 632,835,377 505
- - Industrias Klabin de Papel e
Celulose SA Pfd. 969,025 497
Tele Sudeste Celular
Participacoes SA 175,605,560 490
Fertilizantes Fosfatados
SA Pfd. 139,730,000 462
Companhia Brasileira de
Petroleo Ipiranga Pfd. 60,420,000 430
Perdigao Agroindustrial SA 302,024,000 430
Pirelli Pneus SA Pfd. 178,400 386
Metalurgica Gerdau SA Pfd. 12,666,400 383
Weg SA Pfd. 903,508 368
Copene-Petroquimica SA
Pfd. A Shares 2,269,194 356
Pirelli Cabos SA Pfd. 170,000 339
Companhia de Tecidos Norte
de Minas Pfd. 3,962,289 334
Companhia Vidreas
Santa Marina 261,768 313
Companhia Cimento Portland
Itau Pfd. 3,150,800 305
Duratex SA Pfd. 10,698,367 287
Confeccoes Guararapes SA 139,191 256
Brasmotor SA Pfd. 2,946,000 225
Lojas Americanas SA Pfd. 48,304,033 178
Bombril SA Pfd. 52,068,031 151
Caemi Mineracao e
Metalurgia SA Pfd. 4,363,501 149
- - Ceval SA Pfd. 95,531,000 147
San Paulo Alpargatas SA Pfd. 3,462,533 142
Bardella SA Industrias
Mecanicas Pfd. 4,704 133
- - Centrais Geradoras do Sul
do Brasil SA Pfd. 144,644,711 120
- - Paranapanema SA Pfd. 71,981,000 119
Lojas Renner SA Pfd. 5,033,282 103
- - Metal Leve SA Industria e
Comercio Pfd. 9,773,000 102
</TABLE>
26
<PAGE> 29
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
- - Iochpe-Maxion SA Pfd. 8,889,738 $ 81
Lojas Americanas SA 24,182,000 76
Unipar-Uniao de Industrias
Petroquimicas SA Pfd.
B Shares 323,645 76
Companhia Siderurgica
Belgo-Mineira 2,724,549 73
- - Mannesmann SA 827,181 61
- - Santista Alimentos SA 226,346 61
- - Varig-Viacao Aerea Rio-
Grandense SA Pfd. 76,000 58
Companhia Siderurgica
Belgo-Mineira Pfd. 2,035,000 56
Marcopolo SA Pfd. 43,900 53
- - Banco HSBC Bamerindus SA 52,300 0
-----------
101,458
-----------
CZECH REPUBLIC (0.9%)
- - SPT Telecom a.s. 242,353 3,920
- - Ceske Energeticke Zavody a.s. 861,320 1,766
Tabak a.s. 3,215 766
Unipetrol a.s. 319,770 606
- - Ceska Sporitelna a.s. 88,880 370
- - Komercni Banka a.s. 19,120 361
Severoceske Doly a.s. 8,280 193
- - Skoda Plzen a.s. 35,490 150
Inzenyrske a Prumyslove
Stavby (IPS) a.s. 22,030 93
- - Podnik Vypocetni Techniky a.s. 692 75
- - Nova Hut a.s. 12,132 59
- - Synthesia a.s. 14,820 38
Deza Valasske Mezirici a.s. 3,138 32
-----------
8,429
-----------
GREECE (8.2%)
Hellenic Telecommunication
Organization SA 655,919 14,059
National Bank of Greece SA 208,063 13,611
Alpha Credit Bank SA 115,682 7,457
Commercial Bank of Greece SA 86,450 6,184
Ergo Bank SA 52,548 5,623
Hellenic Bottling Co. SA (Bearer) 189,340 4,576
Intracom SA 54,488 3,512
Titan Cement Co. SA 26,930 2,480
Heracles General Cement SA 63,700 1,706
Aluminum of Greece SA 27,660 1,094
Attica Enterprises SA 94,680 1,082
Michaniki SA 56,320 970
Papastratos Cigarettes SA 32,278 783
Athens Medical Center SA 30,220 753
Inform P. Lykos SA 28,000 671
- - Aspis Pronoia SA 33,010 660
Fourlis Brothers SA 31,752 642
- - Hellenic Technodomiki SA 28,330 576
Silver & Baryte Ores Mining 15,690 548
- - Hellenic Sugar Industry SA 44,884 527
Elais SA 17,540 465
Aegek SA 44,060 462
Aktor SA 18,020 458
Klonatex ICST & TSA SA 10,100 452
Epilectos SA 52,870 422
- - Atti-Kat 19,000 385
Hellas Can Packaging SA 10,200 366
- - Delta Dairy SA 18,450 360
- - Aegek SA Rights Exp. 7/22/1999 44,060 294
Alte SA 21,346 294
Klonatex ICST & TSA SA Pfd. 6,170 234
- - Parnassos Enterprises ABE SA 15,930 212
- - Petzetakis SA 13,328 186
Atti-Kat Rights Exp. 7/28/1999 19,000 123
- - Alte Technical Co.
Rights Exp. 7/17/1999 16,420 111
El. D. Mouzakis SA 11,130 96
- - Delta Dairy SA Pfd. 3,400 54
-----------
72,488
-----------
HONG KONG (12.8%)
Hutchison Whampoa Ltd. 2,133,000 19,313
Hong Kong
Telecommunications Ltd. 6,976,958 18,120
Sun Hung Kai Properties Ltd. 1,424,000 12,985
Hang Seng Bank Ltd. 1,094,900 12,242
Cheung Kong Holdings Ltd. 1,355,000 12,050
CLP Holdings Limited 1,416,500 6,883
Swire Pacific Ltd. A Shares 888,000 4,395
Wharf Holdings Ltd. 1,404,000 4,379
New World Development
Co., Ltd. 1,420,963 4,258
Hong Kong & China Gas
Co., Ltd. 2,551,997 3,700
Cathay Pacific Airways Ltd. 1,934,000 2,966
Johnson Electric Holdings Ltd. 546,500 2,254
Bank of East Asia Ltd. 788,381 1,997
Hang Lung Development
Co., Ltd. 877,000 1,085
Television Broadcasts Ltd. 223,000 1,046
Shangri-La Asia Ltd. 842,000 1,042
Hysan Development Co., Ltd. 566,754 855
Hong Kong and Shanghai
Hotels Ltd. 651,500 554
South China Morning Post Ltd. 974,000 546
Wing Lung Bank Ltd. 119,208 464
Miramar Hotel & Investment Ltd. 324,000 395
Hopewell Holdings Ltd. 353,000 268
Giordano International Ltd. 358,000 254
Hong Kong Aircraft &
Engineering Co., Ltd. 128,000 247
Oriental Press Group Ltd. 1,378,000 222
Hong Kong Construction
Holdings Ltd. 337,000 217
- - Regal Hotels International
Holdings Ltd. 1,576,000 191
Varitronix International Ltd. 87,000 181
Shun Tak Holdings Ltd. 608,000 163
Dickson Concepts
International Ltd. 196,500 139
Elec & Eltek International
Holdings Ltd. 650,000 116
Tai Cheung Holdings Ltd. 290,000 86
- - Peregrine Investment
Holdings Ltd. 459,000 0
-----------
113,613
-----------
</TABLE>
27
<PAGE> 30
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
HUNGARY (1.5%)
Magyar Tavkozlesi Rt 1,264,100 $ 6,841
MOL Magyar Olaj-es
Gazipari Rt. 130,042 3,134
OTB Bank Rt. 37,462 1,563
Richter Gedeon Rt. 23,270 1,011
Demasz Rt. 4,030 297
Raba Rt. 25,075 216
- - Danubius Hotel and Spa Rt. 7,840 142
Tisza Vegyi Kombinat Rt 13,070 137
Pick Szeged Rt. 4,290 120
Pannonplast Rt. 4,590 89
- - Fotex Rt. 145,830 56
- - Zalakeramia Rt. 5,730 45
- - Graboplast Rt. 6,490 39
-----------
13,690
-----------
INDONESIA (3.2%)
PT Telekomunikasi Indonesia 13,080,420 7,600
- - PT Indofood Sukses Makmur 2,447,500 3,342
- - PT Indah Kiat Pulp &
Paper Corp. 6,876,122 3,196
PT Gudang Garam 998,000 2,711
PT Semen Gresik TbK 739,500 1,611
- - PT Astra International 2,786,000 1,275
- - PT Polysindo Eka Perkasa 7,358,000 803
- - PT Bimantara Citra 3,290,500 717
PT Timah TbK 611,500 533
- - PT Gadjah Tunggal 3,682,000 508
- - PT Matahari Putra Prima 3,178,000 416
- - PT Medco Energi Corp. 810,000 415
PT Citra Marga
Nusaphala Persada 3,425,500 373
- - PT Sinar Mas Argo 405,000 362
- - PT Darya Varia Laboratoria 1,218,000 349
PT Daya Guna Samudera 571,200 330
PT Pan Indonesia Bank
(PANIN Bank) (Foreign) 1,082,000 314
- - PT Barito Pacific Timber 2,710,500 295
- - PT Great River International 1,657,000 241
PT Bank Negra Indonesia
(Foreign) 4,253,000 232
- - PT Mulia Industrindo 1,867,520 231
- - PT Budi Acid Jaya 646,875 179
- - PT Semen Cibinong TbK 1,219,000 168
PT London Sumatra Indonesia 499,100 156
- - PT Hero Supermarket 422,500 153
- - PT Kalbe Farma 501,500 153
- - PT Modern Photo Film Co. 394,500 142
- - PT Apac Centertex Corp. 1,065,500 139
- - PT Jakarta International
Hotel & Development 1,406,500 138
- - PT Indorama Synthetics 567,000 124
- - PT Dharmala Intiland 2,154,200 117
PT Mayora Indah 785,940 111
- - PT Trias Sentosa 1,097,000 100
- - PT Duta Anggada Realty 1,392,664 96
- - PT Pakuwon Jati 1,286,500 84
- - PT Japfa Comfeed Indonesia 605,500 62
- - PT Kabel Indonesia 791,500 60
- - PT Fisk Aragung Perkasa 945,100 55
- - PT Asahimas Flat Glass 292,000 52
- - PT Putra Surya Perkasa 976,000 39
- - PT Ciputra Development 367,000 35
- - PT Charoen Pokphand
Indonesia TbK 100,500 26
- - PT Argha Karya Prima Industry 365,500 25
- - PT Sierad Produca 322,500 16
- - PT Bank Dagang Nasional
Indonesia (Foreign) 2,906,374 0
-----------
28,084
-----------
ISRAEL (3.8%)
Bank Hapoalim Ltd. 1,571,857 4,033
ECI Telecom Ltd. 119,000 3,949
Teva Pharmaceutical
Industries Ltd. 79,913 3,799
- - Bezeq Israeli
Telecommunication Corp., Ltd. 941,653 3,792
Koor Industries Ltd. 20,170 2,326
Israel Chemicals Ltd. 1,496,770 1,825
IDB Holding Corp., Ltd. 46,860 1,425
Gilat Satellite Networks 25,309 1,329
- - Makhteshim-Agan
Industries Ltd. 423,883 952
Osem Investment Ltd. 147,870 876
- - The Israel Corp. Ltd.-ILS 1 Par 6,276 771
Super Sol Ltd. 261,425 768
Industrial Buildings Corp. 375,083 706
CLAL Insurance Enterprise
Holdings Ltd. 51,648 702
Property & Building Corp. 5,641 620
- - Scitex Corp., Ltd. 55,800 558
Azorim Investment Development
& Construction Ltd. 33,327 408
Elite Industries Ltd. 8,665 407
First International Bank of Israel
Ltd.-ILS 5 Par 64,220 401
Jerusalem Economic Corp., Ltd. 62,379 374
Delek Israel Fuel Corp., Ltd. 9,964 335
- - Elco Holdings Ltd. 34,292 323
The Israel Land Development
Co., Ltd. 41,800 298
First International Bank of Israel
Ltd.-ILS 1 Par 236,400 286
American Israeli Paper Mills Ltd. 4,562 251
- - Ormat Industries Ltd. 133,074 241
Agis Industries Ltd. 29,800 209
Cvalim - The Electric Wire and
Cable Co. of Israel Ltd. 51,535 190
Africa-Israel Investments Ltd. 2,570 184
Elite Industries Ltd. 17,960 175
Africa-Israel Investments
(1985) Ltd. 255 165
- - Tempo Beer Industries Ltd. 28,127 151
- - Israel Petrochemical
Enterprises Ltd. 25,056 148
Israel Cold Storage & Supply
Co. Ltd. 16,300 133
Maman Cargo Terminals &
Handling Ltd. 70,434 129
Mehadrin Ltd. 3,280 128
- - Polgat Ltd. 18,506 114
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
- - Dead Sea Periclase Ltd. 31,547 $ 103
- - Meir Ezra & Son Co. 18,556 95
- - Packer Plada Ltd. 3,450 94
Ackerstein Industries Ltd. 49,709 66
- - Mul-T-Lock Ltd. 25,386 60
- - Electrochemical Industries
1952, Ltd. 24,100 26
- - The Israel Corp. Ltd.-ILS 5 Par 314 20
- - Kitan Consolidated Ltd. 7,122 14
-----------
33,959
-----------
MALAYSIA
- - Aokam Perdana Bhd. 241,000 0
- - Promet Bhd. 386,000 0
-----------
0
-----------
MEXICO (16.1%)
Telefonos de Mexico SA
Series L 8,583,529 34,571
Grupo Modelo SA de CV
Series C 4,307,507 12,281
- - Cifra SA Series V 5,228,175 10,418
Telefonos de Mexico SA
Series A 2,394,050 9,528
- - Grupo Televisa SA (CPO) 407,602 9,115
Kimberly Clark de Mexico SA
de CV Series A 1,814,518 7,462
Fomento Economico
Mexica UBD 1,441,420 5,760
- - Grupo Carso SA de CV
Series A1 1,202,280 5,569
- - Grupo Financiero Banamex
Accival, SA de CV (Banacci) 1,891,570 4,812
Grupo Industrial Herdez Bimbo
SA de CV Series A 1,800,888 4,008
Grupo Mexico SA Series B 900,293 3,826
Cemex SA de CV Series A 765,994 3,791
- - Savia SA de CV 613,470 3,492
Alfa SA de CV Series A 778,812 3,232
Cemex SA de CV Series B 581,395 2,878
Apasco SA de CV 371,444 2,425
- - Grupo Financiero Bancomer,
SA de CV 6,517,790 2,356
Desc SA de CV Series B 2,001,575 2,185
Cemex SA de CV (CPO) 375,922 1,851
- - Cifra SA de CV Series C 879,470 1,609
- - Grupo Continental SA 981,642 1,538
Controladora Comercial
Mexicana SA de CV (Units) 1,444,070 1,506
Industrias Penoles SA
Series CP 519,759 1,504
Tubos de Acero de Mexico SA 90,270 976
Empresas ICA Sociedad
Controladora SA de CV 867,040 956
Groupo Elektra, SA de CV 1,549,730 903
Vitro SA 451,770 774
- - Grupo Financiero Banamex
Accival SA de CV Series L 309,000 753
Grupo Industrial Maseca SA
de CV Series B 1,160,440 689
- - Grupo Financiero Probursa SA
de CV Series B 4,843,356 652
- - Corporacion GEO, SA de CV 139,000 589
- - Grupo Financiero Banorte SA
de CV 331,000 484
- - Empaques Ponderosa SA
Series B 621,000 448
- - Consorcio G Grupo Dina SA 909,000 345
Cydsa SA Series A 138,000 197
- - Grupo Herdez SA Series B 424,000 139
-----------
143,622
-----------
PHILIPPINES (2.5%)
Philippine Long Distance
Telephone Co. 157,549 4,803
Metropolitan Bank & Trust Co. 347,758 3,473
SM Prime Holdings, Inc. 12,905,420 2,917
San Miguel Corp. Class B 951,694 2,076
Manila Electric Co. Class B 417,008 1,501
Petron Corp. 12,853,654 1,368
Ayala Land, Inc. 4,055,099 1,279
- - Filinvest Land, Inc. 5,302,620 599
Union Bank of the
Philippines Corp. 681,200 483
- - Philippine National Bank Corp. 162,204 439
- - International Container
Terminal Services, Inc. 3,186,532 415
Universal Robina Corp. 1,878,400 400
- - Security Bank Corp. 347,318 301
RFM CORP. 1,952,400 249
- - Ionics Circuit, Inc. 630,150 236
- - EEI Corp. 5,388,400 232
- - Southeast Asia Cement
Holdings Inc. 13,616,591 197
- - Manila Mining Corp. Class B 804,936,629 185
- - DMCI Holdings, Inc. 3,118,800 184
- - Mondragon International
Philippines, Inc. 3,683,680 161
- - C&P Homes, Inc. 4,775,008 153
- - Guoco Holdings
Philippines, Inc. 3,781,800 87
- - Keppel Philippines Marine Inc. 4,377,371 82
Bacnotan
Consolidated Industries 138,000 73
- - Alsons Cement Corp. 965,000 65
Robinson's Land Co. Class B 760,200 64
- - Philex Mining Corp. Class B 5,930,750 59
- - Republic Glass Holdings Corp. 770,000 16
-----------
22,097
-----------
POLAND (1.7%)
Telekomunikacja Polska SA 732,710 5,136
- - KGHM Polska Miedz SA 254,380 1,601
Elektrim Spolka Akcyjna SA 93,700 1,325
- - Bank Handlowy W Warszawie SA 83,560 1,161
Bank Rozwoju Eksportu SA 30,390 957
BIG Bank Gdanski SA 380,010 843
- - Bank Slaski SA 11,440 560
Prokom Software SA 15,650 521
Wielkopolski Bank Kredytowy SA 85,620 502
- - Orbis SA 57,980 500
- - Exbud SA 31,400 245
- - Fabryka Kotlow Rafako SA 135,439 236
Mostostal-Export SA 136,318 172
</TABLE>
29
<PAGE> 32
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
- - Budimex SA 25,600 $ 150
- - Celuloza Zaklady Celulozy i
Papieru w Swieciu SA 46,562 146
Stomil Olsztyn SA 26,000 146
- - Stalexport SA 15,800 121
- - Okocimskie Zaklady
Piwowarskie SA 24,600 120
- - Agros Holding SA 13,600 92
Przedsiebiorstwo
Farmaceutyczne JELFA SA 8,600 76
Optimus SA 6,200 75
Mostostal Zabrze-Holding SA 22,454 71
-----------
14,756
-----------
SINGAPORE (5.3%)
Singapore
Telecommunications Ltd. 3,797,000 6,512
Singapore Airlines Ltd.
(Foreign) 573,000 5,452
Oversea-Chinese Banking
Corp., Ltd. (Foreign) 645,342 5,383
Development Bank of
Singapore Ltd. (Foreign) 414,100 5,059
Singapore Press Holdings Ltd. 231,451 3,943
City Developments Ltd. 516,000 3,304
United Overseas Bank Ltd.
(Foreign) 412,600 2,884
Keppel Corp., Ltd. 509,000 1,734
Singapore Technologies
Engineering Ltd. 1,500,000 1,700
Sembcorp Industries Ltd. 1,004,006 1,592
Cycle & Carriage Ltd. 228,000 1,312
Venture Manufacturing
(Singapore) Ltd. 144,000 1,108
Fraser & Neave Ltd. 225,600 1,000
United Industrial Corp., Ltd. 1,352,000 913
Creative Technology Ltd. 53,300 695
Parkway Holdings Ltd. 257,000 634
Inchcape Bhd. 282,000 454
First Capital Corp., Ltd. 284,000 442
Natsteel Ltd. 246,000 431
- - Neptune Orient Lines Ltd. 348,000 425
Comfort Group Ltd. 634,000 391
Shangri-La Hotel Ltd. 157,300 379
Overseas Union Enterprise Ltd. 102,000 324
Haw Par Brothers
International Ltd. 167,000 284
Hotel Properties Ltd. 264,000 276
Robinson & Co., Ltd. 73,600 223
-----------
46,854
-----------
SOUTH AFRICA (14.6%)
De Beers Centenary AG 506,410 12,135
South African Breweries Ltd. 940,892 8,170
Firstrand Ltd. 7,107,835 8,128
Nedcor Ltd. 302,461 6,847
Anglo American Platinum Corp. 278,175 6,491
Rembrandt Group Ltd. 693,010 5,777
Sasol Ltd. 787,940 5,621
Anglogold Ltd. 129,085 5,562
Amalgamated Banks of
South Africa Group Ltd. 837,216 4,738
Liberty Life Assn. of Africa Ltd. 357,153 4,575
Investec Bank Ltd. 100,000 4,193
- - Sanlam Ltd. 3,248,640 3,849
- - Dimension Data Holdings Ltd. 843,713 3,733
Imperial Holdings Ltd. 359,444 3,574
BOE Ltd. 3,404,210 3,385
Bidvest Group Ltd. 350,780 2,930
Gold Fields Ltd. 795,301 2,728
Coronation Holdings Ltd. 124,300 2,591
Comparex Holdings Ltd. 397,590 2,504
- - Theta Group Ltd. 617,860 2,227
Impala Platinum Holdings Ltd. 86,261 2,170
Fedsure Holdings Ltd. 205,130 2,155
Sappi Ltd. 286,837 2,101
Tiger Oats Ltd. 208,900 1,904
Nampak Ltd. 671,580 1,859
Barlow Ltd. 271,475 1,566
- - M-Web Holdings Ltd. 325,230 1,347
M-Cell Ltd. 786,159 1,329
Metropolitan Life Ltd. 855,300 1,269
African Life Assurance
Company Ltd. 130,090 1,207
Metro Cash & Carry Ltd. 1,390,457 1,152
- - Liberty International PLC 166,520 1,102
Pepkor Ltd. 266,070 1,071
South African Iron & Steel
Industrial Corp., Ltd. 3,368,701 1,055
Omni Media Corporation Ltd. 84,740 924
JD Group Ltd. 150,872 923
Naspers Ltd. 147,590 887
Profurn Ltd. 1,112,120 853
Tongaat-Hulett Group Ltd. 127,127 777
Woolworths Holdings Ltd. 912,130 671
Anglovaal Industries Ltd. 480,060 652
Foschini Ltd. 267,502 563
Pick'n Pay Stores Ltd. N Shares 381,290 534
Wooltru Ltd. N Shares 313,083 508
Reunert Ltd. 339,540 478
Wooltru Ltd. 215,719 368
Primedia Ltd. 219,410 327
Safmarine & Rennies
Holdings Ltd. 538,000 308
Pick'n Pay Stores Ltd. 186,400 275
-----------
130,093
-----------
THAILAND (5.0%)
- - Bangkok Bank PLC (Foreign) 1,230,510 4,605
- - Siam Commercial Bank
Cvt. Pfd. (Foreign) 3,084,500 4,392
- - Thai Farmers Bank PLC
(Foreign) 1,326,010 4,100
- - Advanced Information
Services (Foreign) 282,200 3,827
- - PTT Exploration & Production
PLC (Foreign) 424,800 3,249
- - Siam Cement PLC (Foreign) 102,881 3,125
- - TelecomAsia PLC (Foreign) 2,983,800 3,014
- - Siam Commercial Bank PLC
(Foreign) 1,172,133 1,621
- - Siam City Cement PLC
(Foreign) 390,506 1,610
- - Thai Petrochemical Industry
PLC (Foreign) 2,338,800 1,522
</TABLE>
30
<PAGE> 33
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ----------------------------------------------------------------------
<S> <C> <C>
BEC World PLC 206,400 $ 1,276
Electricity Generating PLC
(Foreign) 527,300 1,008
- - Bank of Ayudhya PLC (Foreign) 1,407,900 964
- - ABN AMRO Asia Securities
Co. Ltd. (Foreign) 269,320 957
- - Italian-Thai Development PLC
(Foreign) 347,000 838
- - United Broadcasting Corp. PLC
(Foreign) 927,876 730
- - Land & House PLC (Foreign) 363,102 660
Delta Electronics (Thailand) PLC 75,700 632
- - Siam Cement PLC (Local) 32,819 616
- - United Communication Industry
PLC (Foreign) 540,500 592
- - Bangkok Expressway PLC
(Foreign) 883,200 581
- - Tanayong PLC (Foreign) 944,845 391
- - Banpu PLC (Foreign) 187,200 373
- - Hana Microelectronics Co.
(Foreign) 119,800 361
- - Advance Agro PLC (Foreign) 473,540 347
Pizza PLC (Foreign) 97,100 341
- - National Petrochemical PLC
(Foreign) 349,700 322
- - Securities One PLC 953,100 288
- - Regional Container Lines PLC
(Foreign) 146,400 238
Thai Union Frozen Products PLC 66,800 236
- - Bangkok Bank PLC (Local) 96,400 210
- - Nation Multimedia Group PLC
(Foreign) 345,400 194
Ayudhya Insurance PLC
(Foreign) 59,200 191
- - Thai Petrochemical Industry
PLC (Local) 286,600 187
- - Tuntex (Thailand) PLC (Foreign) 277,700 158
Delta Electronics (Thailand) PLC 14,000 118
- - Bangkok Land PLC (Foreign) 288,100 100
- - Bangkok Land PLC 337,400 94
Saha-Union PLC (Foreign) 186,200 83
ICC International PLC (Foreign) 39,200 82
Sermsuk PLC (Foreign) 13,800 73
Saha-Union PLC (Local) 75,000 33
- - CMIC Finance & Securities PLC
(Foreign) 366,000 0
-----------
44,339
-----------
TURKEY (2.7%)
- - Turkiye Is Bankasi AS
C Shares 360,161,546 6,401
Yapi ve Kredi Bankasi AS 257,776,484 3,726
- - Turkiye Garanti Bankasi AS 342,032,475 2,553
Migros Turk AS 1,310,825 1,631
- - Arcelik AS 26,584,948 945
- - Eregli Demir ve Celik
Fabrikalari AS 57,278,750 801
Yapi ve Kredi Bankasi AS
Receipt Shares 51,972,989 751
Ford Otomotiv Sanayi AS 37,250,000 600
- - Vestel Elektronik Sanayi ve
Ticaret AS 5,230,281 570
Aygaz AS 6,255,438 556
Akcansa Cimento AS 46,875,920 478
Aksigorta AS 14,614,000 407
Cukurova Elektrik AS 624,100 399
Ege Biracilik ve Malt
Sanayii AS 5,315,314 397
- - Alarko Holdings 19,011,064 347
Brisa Bridgestone Sabanci
Lastik San. ve Tic AS 13,944,000 321
Sarkuysan Elektrolitik Bakir
Sanayi ve Ticaret AS 29,399,839 303
- - Ihlas Holding AS 8,810,287 235
Kordsa Kord Bezi Sanayi ve
Ticaret AS 19,876,510 221
Goodyear Lastikleri TAS 16,202,375 215
- - Eczacibasi Ilac Sanayi ve
Ticaret AS 17,442,400 209
Adana Cimento Sanayii Turk
Anonim Sirketi 12,846,248 204
Cisma Cemento 21,374,992 200
- - Aksa Akrilik Kimya Sanayii AS 10,841,083 193
Netas-Northern Elektrik
Telekomunikasyon AS 8,507,000 179
- - Tofas Turk Otomobil
Fabrikasi AS 38,745,183 154
- - Tat Konserve 4,926,900 143
Trakya Cam Sanayii AS 17,944,192 140
Bagfas Bandirma Gubre
Fabrikalari AS 4,034,000 117
- - Efes Sinai Yatirim Holding AS 12,498,000 116
Doktas Dokumculuk Ticaret
ve Sanayi AS 11,990,000 109
Kartonsan Karton Sanayi ve
Ticaret AS 2,579,650 107
- - Turcas Petroculuk AS 5,858,774 106
- - Turkiye Is Bankasi AS
B Shares 41,900 72
Kav Orman Sanayii AS 9,776,250 66
- - Cimentas Izmir Cimento
Fabrikasi T.A.S. 2,599,000 62
Turk Demir Dokum
Fabrikalari SA 14,899,256 62
Sabah Yayincilik AS 24,498,000 60
Adana Cimento Sanayii AS
C Shares 25,562,974 53
Usas Ucak Servisi AS 51,500 48
- - Raks Elektronik Sanayi ve
Ticaret AS 9,014,607 26
- - Sifas Sentetik Iplik
Fabrikalari AS 2,534,898 0
-----------
24,283
-----------
- ----------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $798,084) 825,687
- ----------------------------------------------------------------------
</TABLE>
31
<PAGE> 34
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
FACE MARKET
EMERGING MARKETS AMOUNT VALUE*
STOCK INDEX FUND (000) (000)
- ----------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS (10.5%)(1)
- ----------------------------------------------------------------------
TIME DEPOSIT
HSBC Malaysia
3.00%, 7/3/1999 MYR 134,270 $ 35,334
FEDERAL HOME LOAN MORTGAGE
CORP.
(2) 4.77%, 7/28/1999 $ 2,500 2,491
REPURCHASE AGREEMENTS
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
4.87%, 7/1/1999 23,344 23,344
4.96%, 7/1/1999--Note G 32,402 32,402
- ----------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $93,571) 93,571
- ----------------------------------------------------------------------
TOTAL INVESTMENTS (103.3%)
(COST $891,655) 919,258
- ----------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-3.3%)
- ----------------------------------------------------------------------
Other Assets--Note B 9,935
Security Lending Collateral Payable
to Brokers--Note G (32,402)
Other Liabilities--Note E (7,020)
-----------
(29,487)
-----------
- ----------------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------------
Applicable to 84,953,367 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization) $889,771
======================================================================
NET ASSET VALUE PER SHARE $10.47
======================================================================
</TABLE>
* See Note A in Notes to Financial Statements.
- Non-Income-Producing Security.
(1)The fund invests a portion of its cash reserves in equity markets through the
use of index futures contracts. After giving effect to futures investments,
the fund's effective common stock and temporary cash investment positions
represent 94.5% and 8.8%, respectively, of net assets.
See Note E in Notes to Financial Statements.
(2)Security segregated as initial margin for open futures contracts.
ILS--Israeli Shekel.
MYR--Malaysian Ringgit.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- ----------------------------------------------------------------------
AT JUNE 30, 1999, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $996,593 $11.73
Undistributed Net Investment
Income--Note F 15,753 .18
Accumulated Net Realized
Losses--Note F (148,063) (1.74)
Unrealized Appreciation
(Depreciation)--Note E
Investment Securities 27,603 .32
Futures Contracts (237) --
Foreign Currencies and
Forward Currency Contracts (1,878) (.02)
- ----------------------------------------------------------------------
NET ASSETS $889,771 $10.47
======================================================================
</TABLE>
32
<PAGE> 35
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
TOTAL INTERNATIONAL STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT COMPANIES (99.9%)
- --------------------------------------------------------------------------------------------------------------------------
Vanguard European Stock Index Fund 44,594,539 $1,106,391
Vanguard Pacific Stock Index Fund 51,380,032 487,596
Vanguard Emerging Markets Stock Index Fund 16,526,064 173,028
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT COMPANIES
(COST $1,576,989) 1,767,015
- --------------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government Obligations in a Pooled Cash Account
4.87%, 7/1/1999
(COST $1,365) $1,365 1,365
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(COST $1,578,354) 1,768,380
- --------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------------------------------------------------
Other Assets 5,896
Liabilities (4,939)
-----------
957
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------------------------------------------
Applicable to 148,799,133 outstanding $.001 par value shares of
beneficial interest (unlimited authorization) $1,769,337
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $11.89
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*See Note A in Notes to Financial Statements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
AT JUNE 30, 1999, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $1,580,885 $10.62
Overdistributed Net Investment Income (334) --
Accumulated Net Realized Losses (1,240) (.01)
Unrealized Appreciation--Note E 190,026 1.28
--------
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,769,337 $11.89
=========================================================================================================================
</TABLE>
33
<PAGE> 36
STATEMENT OF OPERATIONS
This Statement shows dividend and interest income earned by each fund during
the reporting period, and details the operating expenses charged to the fund.
These expenses directly reduce the amount of investment income available to pay
to shareholders as dividends. The Total International Stock Index Fund's Income
Distributions Received from the other funds' net income have been reduced by
its share of the other funds' expenses.
This Statement also shows any Net Gain (Loss) realized on the sale of
investments, and the increase or decrease in the Unrealized Appreciation
(Depreciation) on investments during the period--these amounts include the
effect of foreign currency movements on the value of a fund's securities.
Currency gains (losses) on the translation of other assets and liabilities,
combined with the results of any investments in forward currency contracts
during the period, are shown separately. If a fund invested in futures
contracts during the period, the results of these investments are also shown
separately. The Total International Stock Index Fund's Capital Gain
Distributions Received from the other funds' realized net gains are shown
separately from the Net Gain (Loss) realized on the sale of investments in the
other funds.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
EMERGING
EUROPEAN PACIFIC MARKETS
STOCK INDEX STOCK INDEX STOCK INDEX
FUND FUND FUND
--------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1999
--------------------------------------------------
(000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends* $ 75,487 $ 8,368 $ 11,111
Interest 1,606 575 1,075
Security Lending 1,604 614 432
--------------------------------------------------
Total Income 78,697 9,557 12,618
--------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 52 51 52
Management and Administrative 5,121 1,852 1,127
Marketing and Distribution 452 119 74
Custodian Fees 1,303 350 755
Auditing Fees 4 4 4
Shareholders' Reports 88 29 22
Trustees' Fees and Expenses 4 1 1
--------------------------------------------------
Total Expenses 7,024 2,406 2,035
- --------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 71,673 7,151 10,583
- --------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold 11,725 (8,292) (56,675)
Futures Contracts 6,283 7,641 3,884
Foreign Currencies and Forward Currency Contracts (2,507) (488) 5,685
- --------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) 15,501 (1,139) (47,106)
- --------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities (181,326) 233,646 233,312
Futures Contracts (1,954) 2,616 (237)
Foreign Currencies and Forward Currency Contracts (906) (2,245) (1,809)
- --------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) (184,186) 234,017 231,266
- --------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ (97,012) $240,029 $194,743
==========================================================================================================================
</TABLE>
* Dividends are net of foreign withholding taxes of $9,091,000, $861,000, and
$181,000, respectively.
34
<PAGE> 37
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INTERNATIONAL STOCK INDEX FUND
SIX MONTHS ENDED JUNE 30, 1999
(000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Interest $ 106
- --------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME--Note C 106
- --------------------------------------------------------------------------------------------------------------------------
REALIZED NET LOSS
Capital Gain Distributions Received --
Investment Securities Sold (782)
- --------------------------------------------------------------------------------------------------------------------------
REALIZED NET LOSS (782)
- --------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES 97,215
- --------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $96,539
==========================================================================================================================
</TABLE>
35
<PAGE> 38
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how each fund's total net assets changed during the two
most recent reporting periods. The Operations section summarizes information
detailed in the Statement of Operations. The amounts shown as Distributions to
shareholders from the fund's net income and capital gains may not match the
amounts shown in the Operations section, because distributions are determined
on a tax basis and may be made in a period different from the one in which the
income was earned or the gains were realized on the financial statements. The
Capital Share Transactions section shows the amount shareholders invested in
the fund, either by purchasing shares or by reinvesting distributions, as well
as the amounts redeemed. The corresponding numbers of Shares Issued and
Redeemed are shown at the end of the Statement.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
EUROPEAN STOCK PACIFIC STOCK
INDEX FUND INDEX FUND
----------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUN. 30, 1999 DEC. 31, 1998 JUN. 30, 1999 DEC. 31, 1998
(000) (000) (000) (000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 71,673 $ 70,308 $ 7,151 $ 10,542
Realized Net Gain (Loss) 15,501 13,446 (1,139) (81,819)
Change in Unrealized Appreciation (Depreciation) (184,186) 670,223 234,017 96,076
----------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (97,012) 753,977 240,029 24,799
----------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income -- (88,786) -- (8,350)
Realized Capital Gain -- (21,542) -- --
----------------------------------------------------------------------
Total Distributions -- (110,328) -- (8,350)
----------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 1,002,743 1,842,080 386,960 355,601
Issued in Lieu of Cash Distributions -- 101,520 -- 7,588
Redeemed (460,011) (540,369) (73,936) (174,046)
----------------------------------------------------------------------
Net Increase from Capital Share Transactions 542,732 1,403,231 313,024 189,143
- ---------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) 445,720 2,046,880 553,053 205,592
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 4,479,306 2,432,426 1,032,832 827,240
----------------------------------------------------------------------
End of Period $4,925,026 $4,479,306 $1,585,885 $1,032,832
=================================================================================================================================
(1) Shares Issued (Redeemed)
Issued 39,802 75,396 43,937 47,512
Issued in Lieu of Cash Distributions -- 4,001 -- 982
Redeemed (18,439) (23,075) (8,705) (23,899)
----------------------------------------------------------------------
Net Increase in Shares Outstanding 21,363 56,322 35,232 24,595
=================================================================================================================================
</TABLE>
36
<PAGE> 39
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS TOTAL INTERNATIONAL
STOCK INDEX FUND STOCK INDEX FUND
-----------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUN. 30, 1999 DEC. 31, 1998 JUN. 30, 1999 DEC. 31, 1998
(000) (000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 10,583 $ 18,473 $ 106 $ 24,942
Realized Net Gain (Loss) (47,106) (69,804) (782) 2,035
Change in Unrealized Appreciation (Depreciation) 231,266 (79,610) 97,215 134,333
------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 194,743 (130,941) 96,539 161,310
------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income -- (18,432) -- (25,233)
Realized Capital Gain -- -- (1,331) (1,202)
------------------------------------------------------------------
Total Distributions -- (18,432) (1,331) (26,435)
------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 179,324 210,263 368,338 478,309
Issued in Lieu of Cash Distributions -- 17,230 1,289 24,857
Redeemed* (61,284) (161,424) (70,980) (165,541)
------------------------------------------------------------------
Net Increase from Capital Share Transactions 118,040 66,069 298,647 337,625
- --------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) 312,783 (83,304) 393,855 472,500
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 576,988 660,292 1,375,482 902,982
------------------------------------------------------------------
End of Period $889,771 $576,988 $1,769,337 $1,375,482
==========================================================================================================================
(1) Shares Issued (Redeemed)
Issued 18,933 24,196 31,945 44,998
Issued in Lieu of Cash Distributions -- 2,190 115 2,221
Redeemed (6,914) (19,600) (6,211) (15,789)
------------------------------------------------------------------
Net Increase (Decrease) in
Shares Outstanding 12,019 6,786 25,849 31,430
==========================================================================================================================
</TABLE>
* Emerging Markets Stock Index Fund amounts are net of redemption fees of
$561,000 and $1,517,000, respectively.
37
<PAGE> 40
FINANCIAL HIGHLIGHTS
This table summarizes each fund's investment results and distributions to
shareholders on a per-share basis; investment results for the Total
International Stock Index Fund include both income and capital gain
distributions received from the other funds. The table also presents the fund's
Total Return and shows net investment income and expenses as percentages of
average net assets. These data will help you assess: the variability of the
fund's net income and total returns from year to year; the relative
contributions of net income and capital gains to the fund's total return; how
much it costs to operate the fund; and the extent to which the fund tends to
distribute capital gains. The table also shows the Portfolio Turnover Rate, a
measure of trading activity. A turnover rate of 100% means that the average
security is held in the fund for one year.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
EUROPEAN STOCK INDEX FUND
YEAR ENDED DECEMBER 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED -----------------------------------------------------------
THROUGHOUT EACH PERIOD JUNE 30, 1999 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $25.28 $20.13 $16.57 $14.02 $11.76 $11.88
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .38 .41 .38 .34 .32 .28
Net Realized and Unrealized Gain (Loss)
on Investments (.85) 5.40 3.63 2.63 2.30 (.06)
------------------------------------------------------------------------
Total from Investment Operations (.47) 5.81 4.01 2.97 2.62 .22
------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income -- (.52) (.37) (.36) (.32) (.28)
Distributions from Realized Capital Gains -- (.14) (.08) (.06) (.04) (.06)
------------------------------------------------------------------------
Total Distributions -- (.66) (.45) (.42) (.36) (.34)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $24.81 $25.28 $20.13 $16.57 $14.02 $11.76
==================================================================================================================================
TOTAL RETURN* -1.86% 28.86% 24.23% 21.26% 22.28% 1.88%
==================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $4,925 $4,479 $2,432 $1,595 $1,017 $715
Ratio of Total Expenses to
Average Net Assets 0.30%+ 0.29% 0.31% 0.35% 0.35% 0.32%
Ratio of Net Investment Income to
Average Net Assets 3.02%+ 1.97% 2.19% 2.45% 2.66% 2.41%
Portfolio Turnover Rate 3%+ 7% 3% 4% 2% 6%
==================================================================================================================================
</TABLE>
*Total return figures do not reflect the transaction fee on purchases (0.5%
beginning 11/3/1997, 1.0% from 1994 through 11/2/1997) or the annual account
maintenance fee of $10.
+Annualized.
38
<PAGE> 41
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PACIFIC STOCK INDEX FUND
YEAR ENDED DECEMBER 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED -----------------------------------------------------------
THROUGHOUT EACH PERIOD JUNE 30, 1999 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $7.84 $7.72 $10.51 $11.50 $11.31 $10.13
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .04 .085 .09 .10 .10 .08
Net Realized and Unrealized Gain (Loss)
on Investments 1.61 .100 (2.79) (1.00) .21 1.24
------------------------------------------------------------------------
Total from Investment Operations 1.65 .185 (2.70) (.90) .31 1.32
------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income -- (.065) (.09) (.09) (.12) (.08)
Distributions from Realized Capital Gains -- -- -- -- -- (.06)
------------------------------------------------------------------------
Total Distributions -- (.065) (.09) (.09) (.12) (.14)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.49 $7.84 $ 7.72 $10.51 $11.50 $11.31
=========================================================================================================================
TOTAL RETURN* 21.05% 2.41% -25.67% -7.82% 2.75% 13.04%
=========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,586 $1,033 $827 $978 $831 $697
Ratio of Total Expenses to
Average Net Assets 0.38%+ 0.40% 0.35% 0.35% 0.35% 0.32%
Ratio of Net Investment Income to
Average Net Assets 1.14%+ 1.17% 1.03% 0.89% 0.97% 0.71%
Portfolio Turnover Rate 5%+ 4% 8% 9% 1% 4%
=========================================================================================================================
</TABLE>
*Total return figures do not reflect the transaction fee on purchases (0.5%
beginning 1/1/1997, 1.0% in 1994 through 1996) or the annual account
maintenance fee of $10.
+Annualized.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS STOCK INDEX FUND
YEAR ENDED DECEMBER 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED -------------------------------------------- MAY 4* TO
THROUGHOUT EACH PERIOD JUNE 30, 1999 1998 1997 1996 1995 DEC. 31, 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.91 $9.98 $12.28 $10.75 $10.87 $10.00
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .13 .27 .24 .18 .15 .06
Net Realized and Unrealized Gain (Loss)
on Investments 2.43 (2.08) (2.31) 1.52 (.09) .92
-----------------------------------------------------------------------------
Total from Investment Operations 2.56 (1.81) (2.07) 1.70 .06 .98
-----------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income -- (.26) (.23) (.17) (.18) (.07)
Distributions from Realized Capital Gains -- -- -- -- -- (.04)
-----------------------------------------------------------------------------
Total Distributions -- (.26) (.23) (.17) (.18) (.11)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.47 $7.91 $ 9.98 $12.28 $10.75 $10.87
==============================================================================================================================
TOTAL RETURN** 32.36% -18.12% -16.82% 15.83% 0.56% 9.81%
==============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $890 $577 $660 $637 $234 $83
Ratio of Total Expenses to
Average Net Assets 0.58%+ 0.61% 0.57% 0.60% 0.60% 0.60%+
Ratio of Net Investment Income to
Average Net Assets 3.04%+ 2.99% 1.96% 1.69% 2.00% 1.32%+
Portfolio Turnover Rate 39%+ 22% 19% 1% 3% 6%
==============================================================================================================================
</TABLE>
* Inception.
** Total return figures do not reflect the transaction fee on purchases (1.0%
beginning 11/3/1997, 1.5% from 1/1/1997 to 11/2/1997, 2.0% in 1994 through
1996), the 1.0% transaction fee on redemptions, or the annual account
maintenance fee of $10.
+ Annualized.
39
<PAGE> 42
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INTERNATIONAL STOCK INDEX FUND
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ----------------------- APR. 29* TO
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD JUNE 30, 1999 1998 1997 DEC. 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.19 $ 9.87 $10.14 $10.26
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income -- .21 .18 .150
Capital Gain Distributions Received -- .02 .02 .015
Net Realized and Unrealized Gain (Loss) on Investments .71 1.31 (.28) (.110)
-------------------------------------------------------------
Total from Investment Operations .71 1.54 (.08) .055
DISTRIBUTIONS
Dividends from Net Investment Income -- (.21) (.17) (.160)
Distributions from Realized Capital Gains (.01) (.01) (.02) (.015)
-------------------------------------------------------------
Total Distributions (.01) (.22) (.19) (.175)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.89 $11.19 $ 9.87 $10.14
================================================================================================================================
TOTAL RETURN** 6.35% 15.60% -0.77% 0.55%
================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,769 $1,375 $903 $280
Ratio of Expenses to Average Net Assets--Note C 0% 0% 0% 0%
Ratio of Net Investment Income to Average Net Assets .01%+ 2.18% 2.19% 1.51%+
Portfolio Turnover Rate 1%+ 2% 0% 0%
================================================================================================================================
</TABLE>
*Inception.
** Total return figures do not reflect the transaction fee on purchases (0.5%
beginning 11/3/1997, 0.75% from 1/1/1997 to 11/2/1997, 1.0% in 1996) or the
annual account maintenance fee of $10.
+Annualized.
40
<PAGE> 43
NOTES TO FINANCIAL STATEMENTS
Vanguard International Stock Index Funds comprise the European, Pacific,
Emerging Markets, and Total International Stock Index Funds, each of which is
registered under the Investment Company Act of 1940 as an open-end investment
company, or mutual fund. The European, Pacific, and Emerging Markets Stock
Index Funds each seek to match the performance of a distinct international
market index by investing in common stocks. The Total International Stock Index
Fund seeks to match the performance of its target index by investing in the
European, Pacific, and Emerging Markets Stock Index Funds. The funds' 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 conform to generally accepted
accounting principles for mutual funds. The funds consistently follow such
policies in preparing their financial statements.
1. SECURITY VALUATION: European, Pacific, and Emerging Markets Stock
Index Funds: Equity securities are valued at the latest quoted sales prices as
of the close of trading on the New York Stock Exchange (generally 4:00 p.m.
Eastern time) on the valuation date; such securities not traded on the
valuation date are valued at the mean of the latest quoted bid and asked
prices. Prices are taken from the primary market in which each security trades.
Bonds, and temporary cash investments acquired over 60 days to maturity, are
valued using the latest bid prices or using valuations based on 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.
Securities for which market quotations are not readily available are valued by
methods deemed by the Board of Trustees to represent fair value. Total
International Stock Index Fund: Investments are valued at the net asset value
of each Vanguard fund determined as of the close of the New York Stock Exchange
on the valuation date. Temporary cash investments are valued at cost, which
approximates market value.
2. FOREIGN CURRENCY: Securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollars at the
exchange rates on the valuation date as employed by Morgan Stanley Capital
International in the calculation of its indexes.
Realized gains (losses) and unrealized appreciation (depreciation) on
investment securities include the effects of changes in exchange rates since
the securities were purchased, combined with the effects of changes in security
prices. Fluctuations in the value of other assets and liabilities resulting
from changes in exchange rates are recorded as unrealized foreign currency
gains (losses) until the asset or liability is settled in cash, when they are
recorded as realized foreign currency gains (losses).
3. FUTURES AND FORWARD CURRENCY CONTRACTS: The European Stock Index Fund
uses FTSE 100 Index futures contracts, the Pacific Stock Index Fund uses Nikkei
300 Index futures contracts, the Emerging Markets Stock Index Fund uses Hang
Seng Index futures contracts, to a limited extent, with the objectives of
maintaining full exposure to the stock market, enhancing returns, maintaining
liquidity, and minimizing transaction costs. The funds may purchase futures
contracts to immediately invest incoming cash in the market, or sell futures in
response to cash outflows, thereby simulating a fully invested position in the
underlying index while maintaining a cash balance for liquidity. The funds may
seek to enhance returns by using 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
held by the funds and the prices of futures contracts, and the possibility of
an illiquid market.
The European, Pacific, and Emerging Markets Stock Index Funds enter into
forward currency contracts to maintain the same currency exposure as their
respective indexes. The funds' risks in
41
<PAGE> 44
NOTES TO FINANCIAL STATEMENTS (continued)
using these contracts include movement in the values of the foreign currencies
relative to the U.S. dollar and the ability of the counterparties to fulfill
their obligations under the contracts.
Futures and forward currency contracts are valued at their quoted daily
settlement prices. The aggregate principal amounts of the contracts are not
recorded in the financial statements. Fluctuations in the value of the
contracts are recorded in the Statement of Net Assets as an asset (liability)
and in the Statement of Operations as unrealized appreciation (depreciation)
until the contracts are closed, when they are recorded as realized gains
(losses) on futures or forward currency contracts.
4. FEDERAL INCOME TAXES: Each fund intends to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for federal income taxes is required in the financial
statements.
5. REPURCHASE AGREEMENTS: Each fund, along with other members of The
Vanguard Group, transfers uninvested cash balances to a Pooled Cash Account,
which is invested in repurchase agreements secured by U.S. government
securities. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal; however, in the event of default or bankruptcy by the other
party to the agreement, retention of the collateral may be subject to legal
proceedings.
6. DISTRIBUTIONS: Distributions to shareholders are recorded on the
ex-dividend date.
7. OTHER: Dividend income is recorded on the ex-dividend date. Security
transactions are accounted for on the date securities are bought or sold. Costs
used to determine realized gains (losses) on the sale of investment securities
are those of the specific securities sold. Fees assessed on capital share
transactions are credited to paid in capital.
B. The Vanguard Group furnishes to the European, Pacific, and Emerging Markets
Stock Index Funds at cost investment advisory, corporate management,
administrative, marketing, and distribution services. The costs of such services
are allocated to the funds under methods approved by the Board of Trustees. Each
fund has committed to provide up to 0.40% of its net assets in capital
contributions to Vanguard. At June 30, 1999, the funds had contributed capital
to Vanguard (included in Other Assets) of:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
CAPITAL CONTRIBUTED PERCENTAGE PERCENTAGE
TO VANGUARD OF FUND OF VANGUARD'S
STOCK INDEX FUND (000) NET ASSETS CAPITALIZATION
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European $735 0.01% 1.0%
Pacific 217 0.01 0.3
Emerging Markets 126 0.01 0.2
------------------------------------------------------------------------------------------------
</TABLE>
The funds' Trustees 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 Stock Index Fund. The special service agreement provides that
Vanguard will reimburse the fund's expenses to the extent of savings in
administrative and marketing costs realized by Vanguard in the operation of the
fund. Accordingly, all expenses incurred by the fund during the six months
ended June 30, 1999, were reimbursed by Vanguard.
42
<PAGE> 45
D. During the six months ended June 30, 1999, purchases and sales of investment
securities other than temporary cash investments were:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
(000)
----------------------------------
STOCK INDEX FUND PURCHASES SALES
---------------------------------------------------------------------------------------------
<S> <C> <C>
European $763,299 $71,927
Pacific 354,276 31,856
Emerging Markets 235,273 124,393
Total International 301,412 5,365
---------------------------------------------------------------------------------------------
</TABLE>
E. At June 30, 1999, net unrealized appreciation of investment securities for
federal income tax purposes was:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
(000)
-----------------------------------------------------------
APPRECIATED DEPRECIATED NET UNREALIZED
STOCK INDEX FUND SECURITIES SECURITIES APPRECIATION
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European* $1,385,734 $(122,919) $1,262,815
Pacific 264,464 (183,918) 80,546
Emerging Markets 153,409 (125,806) 27,603
Total International 204,962 (14,936) 190,026
-----------------------------------------------------------------------------------------------
</TABLE>
*See Note F.
At June 30, 1999, the aggregate settlement value of open futures
contracts and the related unrealized appreciation (depreciation) were:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
(000)
--------------------------------------
AGGREGATE UNREALIZED
STOCK INDEX FUND/ NUMBER OF SETTLEMENT APPRECIATION
FUTURES CONTRACTS LONG CONTRACTS VALUE (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European/
FTSE 100 Index, exp. 9/1999 158 $15,821 $ (456)
Pacific/
Nikkei 300 Index, exp. 9/1999 1,434 32,826 1,170
Emerging Markets/
Hang Seng Index, exp. 7/1999 169 14,757 (237)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 46
NOTES TO FINANCIAL STATEMENTS (continued)
At June 30, 1999, the European, Pacific, and Emerging Markets Stock Index
Funds had open forward currency contracts to receive foreign currency in
exchange for U.S. dollars as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
(000)
--------------------------------------------------------------
CONTRACT AMOUNT
---------------------
STOCK INDEX FUND/ FOREIGN U.S. MARKET VALUE IN UNREALIZED
CONTRACT SETTLEMENT DATE CURRENCY DOLLARS U.S. DOLLARS DEPRECIATION
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
European/
Receive:
9/24/1999 GBP 16,442 $26,206 $25,937 $(269)
Pacific/
Receive:
9/16/1999 JPY 3,832,037 32,488 32,011 (477)
Emerging Markets/
Receive:
8/2/1999 HKD 116,341 14,990 14,986 (4)
-------------------------------------------------------------------------------------------------
</TABLE>
GBP--Great Britain Pound.
HKD--Hong Kong Dollar.
JPY--Japanese Yen.
In September 1998, the Malaysian government fixed the ringgit exchange
rate at 3.8 per U.S. dollar and suspended investors' ability to convert
proceeds from the sale of Malaysian securities from ringgits into other
currencies. Effective February 1999, investors may convert proceeds from
ringgits, but such currency conversions are subject to a repatriation levy that
will be in effect until September 1, 1999. As of June 30, 1999, the Pacific and
Emerging Markets Stock Index Funds have recorded liabilities (included in
unrealized foreign currency losses) of $724,000 and $1,894,000, respectively,
representing the levy that would be assessed on repatriation of all holdings
denominated in Malaysian ringgits.
The European, Pacific, and Emerging Markets Stock Index Funds had net
unrealized foreign currency gains (losses) of $(320,000), $16,000, and $20,000,
respectively, resulting from the translation of other assets and liabilities at
June 30, 1999.
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, 1999, the European, Pacific, and
Emerging Markets Stock Index Funds realized net foreign currency gains (losses)
of $(130,000), $1,665,000, and $5,674,000, respectively, 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 investment income.
During 1998, the European Stock Index Fund received securities with a
value of $18,093,000 in a corporate spinoff that increased taxable income and
the tax basis cost of investments, but had no effect on net investment income
or the cost of investments for financial statement purposes. The required
distribution of this taxable income is reflected in the balance of
undistributed net investment income, and the difference between the securities'
cost for financial statement and tax purposes is reflected in unrealized
appreciation, at June 30, 1999.
44
<PAGE> 47
For federal income tax purposes, at December 31, 1998, the Pacific and
Emerging Markets Stock Index Funds had the following capital losses available
to offset future capital gains:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
CAPITAL LOSS
----------------------------------
EXPIRATION
FISCAL
YEAR(S)
AMOUNT ENDING
STOCK INDEX FUND (000) DECEMBER 31
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Pacific $117,334 2003-2006
Emerging Markets 95,277 2003-2007
-----------------------------------------------------------------------------------------------
</TABLE>
G. The market value of securities on loan to broker/dealers at June 30, 1999,
and collateral received with respect to such loans were:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
(000)
---------------------------------------
MARKET VALUE CASH
OF LOANED COLLATERAL
STOCK INDEX FUND SECURITIES RECEIVED
-----------------------------------------------------------------------------------------------
<S> <C> <C>
European $516,603 $549,495
Pacific 58,745 62,382
Emerging Markets 20,334 32,402
-----------------------------------------------------------------------------------------------
</TABLE>
Cash collateral received is invested in repurchase agreements.
45
<PAGE> 48
NOTICE TO SHAREHOLDERS ABOUT Y2K
As is well known by now, the approaching calendar change to 2000 has posed a
challenge to many computer systems worldwide. Computers that are not modified
could interpret "00" as 1900 rather than 2000 and produce errors in
date-dependent calculations, including bond interest payments, stock trade
settlements, retirement benefits, and other financial transactions.
OUR APPROACH
Vanguard has taken this challenge seriously. We have had a Year 2000 Project
under way since 1996 to fulfill our responsibility to safeguard our business
relationships and the security of our investors' accounts.
Our internal systems are Year 2000-compliant. They have been renovated and
thoroughly tested and are ready for the date change. As for the external systems
that connect with ours, we have been working for many months with clients,
business partners, and providers of products and services to assess their
compliance. We have analyzed the external services we require and have developed
contingency plans-- including provision for alternative providers where
appropriate.
On New Year's Day, our telephone centers will be staffed and ready for
shareholder calls. However, we expect the volume of inquiries over the New
Year's weekend to be high, and we encourage shareholders to check their
accounts via our website or automated telephone systems, which offer much
greater service capacity and efficiency. This will also help our live
representatives to provide a higher level of service to those with specific
transaction or other service-related needs.
WHAT YOU CAN DO
We assure you we will protect our shareholders' records, so account records
will not be lost. Nevertheless, keeping copies of current records is always
advisable. You should keep at least your third-quarter statement and any
confirmations you receive from us between October 1, 1999, and year-end.
If you are a registered user of Access Vanguard(TM) (www.vanguard.com), you
can retrieve this information through the secure "Your Accounts" section and
print copies for your files. If you are not registered for Access Vanguard and
wish to have this flexibility, you should register as soon as possible so that
you can receive your password and become familiar with this service before the
New Year's weekend. Likewise, you may need personal identification numbers to
use our automated telephone services: Vanguard Tele-Account(R) for individual
investors (1-800-662-6273) and The VOICE(TM) Network for participants in
employer-sponsored retirement plans (1-800-523-1188).
Our Year 2000 Project's primary goal from the start has been to prepare our
systems for business as usual on behalf of our shareholders into 2000 and
beyond. We remain confident we will meet that goal, and we look forward to
serving you in the years to come.
46
<PAGE> 49
TRUSTEES AND OFFICERS
JOHN C. BOGLE
Founder, Senior Chairman of the Board, and Director/Trustee of The Vanguard
Group, Inc., and each of the investment companies in The Vanguard Group.
JOHN J. BRENNAN
Chairman of the Board, Chief Executive Officer, and Director/Trustee of The
Vanguard Group, Inc., and each of the investment companies in The Vanguard
Group.
JoANN HEFFERNAN HEISEN
Vice President, Chief Information Officer, and a member of the Executive
Committee of Johnson & Johnson; Director of Johnson & Johnson-Merck Consumer
Pharmaceuticals Co., Women First HealthCare, Inc., Recording for the Blind and
Dyslexic, The Medical Center at Princeton, and Women's Research and Education
Institute.
BRUCE K. MacLAURY
President Emeritus of The Brookings Institution; Director of American Express
Bank Ltd., The St. Paul Companies, Inc., and National Steel Corp.
BURTON G. MALKIEL
Chemical Bank Chairman's Professor of Economics, Princeton University; Director
of Prudential Insurance Co. of America, Banco Bilbao Gestinova, Baker Fentress &
Co., The Jeffrey Co., and Southern New England Telecommunications Co.
ALFRED M. RANKIN, JR.
Chairman, President, and Chief Executive Officer of NACCO Industries, Inc.;
Director of NACCO Industries, The BFGoodrich Co., and The Standard Products Co.
JOHN C. SAWHILL
President and Chief Executive Officer of The Nature Conservancy; formerly,
Director and Senior Partner of McKinsey & Co. and President of New York
University; Director of Pacific Gas and Electric Co., Procter & Gamble Co.,
NACCO Industries, and Newfield Exploration Co.
JAMES O. WELCH, JR.
Retired Chairman of Nabisco Brands, Inc.; retired Vice Chairman and Director of
RJR Nabisco; Director of TECO Energy, Inc., and Kmart Corp.
J. LAWRENCE WILSON
Chairman and Chief Executive Officer of Rohm & Haas Co.; Director of Cummins
Engine Co. and The Mead Corp.; Trustee of Vanderbilt University.
OTHER FUND OFFICERS
RAYMOND J. KLAPINSKY
Secretary; Managing Director and Secretary of The Vanguard Group, Inc.;
Secretary of each of the investment companies in The Vanguard Group.
THOMAS J. HIGGINS
Treasurer; Principal of The Vanguard Group, Inc.; Treasurer of each of the
investment companies in The Vanguard Group.
OTHER VANGUARD OFFICERS
R. GREGORY BARTON
Managing Director, Legal Department.
ROBERT A. DiSTEFANO
Managing Director, Information Technology.
JAMES H. GATELY
Managing Director, Individual Investor Group.
KATHLEEN C. GUBANICH
Managing Director, Human Resources.
IAN A. MacKINNON
Managing Director, Fixed Income Group.
F. WILLIAM McNABB, III
Managing Director, Institutional Investor Group.
MICHAEL S. MILLER
Managing Director, Planning and Development.
RALPH K. PACKARD
Managing Director and Chief Financial Officer.
GEORGE U. SAUTER
Managing Director, Core Management Group.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc. Frank Russell Company is
the owner of trademarks and copyrights relating to the Russell Indexes.
"Wilshire 4500" and "Wilshire 5000" are trademarks of Wilshire Associates.
47
<PAGE> 50
VANGUARD
MILESTONES
[GRAPHIC]
The Vanguard Group is
named for HMS Vanguard,
Admiral Horatio Nelson's flagship
at the Battle of the Nile on
August 1, 1798. Our founder,
John C. Bogle, chose the name
after reading Nelson's inspiring
tribute to his fleet: "Nothing could
withstand the squadron . . .
with the judgment of the captains,
together with their valour, and that
of the officers and men of every
description, it was absolutely irresistible."
[GRAPHIC]
Walter L. Morgan, founder of
Wellington Fund, the nation's
oldest balanced mutual fund
and forerunner of today's family
of some 100 Vanguard funds,
celebrated his 100th birthday on
July 23, 1998. Mr. Morgan,
a true investment pioneer, died
six weeks later on September 2.
[GRAPHIC]
Wellington Fund,
The Vanguard Group's oldest fund,
was incorporated by Mr. Morgan
70 years ago, on December 28, 1928.
The fund was named after
the Duke of Wellington,
whose forces defeated
Napoleon Bonaparte at the
Battle of Waterloo in 1815.
[THE VANGUARD GROUP LOGO]
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
WORLD WIDE WEB
www.vanguard.com
FUND INFORMATION
1-800-662-7447
INDIVIDUAL ACCOUNT SERVICES
1-800-662-2739
INSTITUTIONAL INVESTOR SERVICES
1-800-523-1036
This report is intended for the funds' shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus.
Q722-08/25/1999
(C) 1999 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing
Corporation, Distributor.
