<PAGE> 1
VANGUARD(R) INTERNATIONAL
STOCK INDEX FUNDS
June 30, 2000
semiannual
[PHOTO]
VANGUARD EUROPEAN
STOCK INDEX FUND
VANGUARD PACIFIC
STOCK INDEX FUND
VANGUARD EMERGING MARKETS
STOCK INDEX FUND
VANGUARD TOTAL INTERNATIONAL
STOCK INDEX FUND
VANGUARD DEVELOPED
MARKETS INDEX FUND
VANGUARD INSTITUTIONAL DEVELOPED
MARKETS INDEX FUND
[THE VANGUARD GROUP LOGO]
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HAVE THE PRINCIPLES OF INVESTING CHANGED?
In a world of frenetic change in business, technology, and the financial
markets, it is natural to wonder whether the basic principles of investing have
changed.
We don't think so.
The most successful investors over the coming decade will be those who
began the new century with a fundamental understanding of risk and who had the
discipline to stick with long-term investment programs.
Certainly, investors today confront a challenging, even unprecedented,
environment. Valuations of market indexes are at or near historic highs. The
strength and duration of the bull market in U.S. stocks have inflated people's
expectations and diminished their recognition of the market's considerable
risks. And the incredible divergence in stock returns--many technology-related
stocks gained 100% or more in 1999, yet prices fell for more than half of all
stocks--has made some investors question the idea of diversification.
And then there is the Internet. Undeniably, it is a powerful medium for
communications and transacting business. For investors, the Internet is a vast
source of information about investments, and online trading has made it
inexpensive and convenient to trade stocks and invest in mutual funds.
However, new tools do not guarantee good workmanship. Information is not
the same as wisdom. Indeed, much of the information, opinion, and rumor that
swirl about financial markets each day amounts to "noise" of no lasting
significance. And the fact that rapid-fire trading is easy does not make it
beneficial. Frequent trading is almost always counterpro-ductive because
costs--even at low commission rates--and taxes detract from the returns that the
markets provide. Sadly, many investors jump into a "hot" mutual fund just in
time to see it cool off. Meanwhile, long-term fund investors are hurt by
speculative trading activity because they bear part of the costs involved in
accommodating purchases and redemptions.
Vanguard believes that intelligent investors should resist short-term
thinking and focus instead on a few time-tested principles:
- Invest for the long term. Pursuing your long-term investment goals is
more like a marathon than a sprint.
- Diversify your investments with holdings in stocks, bonds, and cash
investments. Remember that, at any moment, some part of a diversified portfolio
will lag other parts, and be wary of taking on more risk by "piling onto" the
best-performing part of your holdings. Today's leader could well be tomorrow's
laggard.
- Step back from the daily frenzy of the markets; focus on your overall
asset allocation.
- Capture as much of the market's return as possible by minimizing costs
and taxes. Costs and taxes diminish long-term returns while doing nothing to
reduce the risks you incur as an investor.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
REPORT FROM THE CHAIRMAN....................................1
THE MARKETS IN PERSPECTIVE..................................6
FUND PROFILES...............................................8
PERFORMANCE SUMMARIES......................................15
FINANCIAL STATEMENTS.......................................19
</TABLE>
All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc.,
unless otherwise noted.
"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 5000(R)" and "Wilshire 4500" are trademarks of Wilshire
Associates Incorporated.
<PAGE> 3
REPORT FROM THE CHAIRMAN
Stocks around the world posted mostly weak results during the six months ended
June 30, 2000, the first half of the fiscal year for the Vanguard International
Stock Index Funds. A rise in the value of the dollar versus other currencies
also hurt U.S. investors in foreign stocks.
Four of the six Vanguard international index funds were in operation
throughout the half-year. Each of those four posted a negative return, although
each did a good job of tracking its unmanaged benchmark. Our six-month total
returns (capital change plus reinvested dividends) ranged from -2.6% for the
European Stock Index Fund to -9.1% for the Emerging Markets Stock Index Fund.
Japanese equity prices moved slightly lower, leading the Pacific Stock Index
Fund to a return of -5.8%, while the Total International Stock Index Fund
declined -4.2%. The table at right presents the total return of each fund along
with that of its average peer and target index.
<TABLE>
<CAPTION>
---------------------------------------------------
TOTAL RETURNS
SIX MONTHS ENDED
JUNE 30, 2000
---------------------------------------------------
<S> <C>
VANGUARD EUROPEAN STOCK INDEX FUND -2.6%
Average European Region Fund* -0.2
MSCI Europe Index -3.0
---------------------------------------------------
VANGUARD PACIFIC STOCK INDEX FUND -5.8%
Average Pacific Region Fund* -12.0
MSCI Pacific Free Index -5.9
---------------------------------------------------
VANGUARD EMERGING MARKETS
STOCK INDEX FUND -9.1%
Average Emerging Markets Fund* -8.7
Select Emerging Markets Free Index** -9.6
---------------------------------------------------
VANGUARD TOTAL INTERNATIONAL
STOCK INDEX FUND -4.2%
Average International Fund* -4.6
Total International Composite Index+ -4.3
---------------------------------------------------
</TABLE>
*Derived from data provided by Lipper Inc.
**Consists of stocks that can be bought free of restrictions in 14 emerging
markets of Europe, Asia, Africa, and Latin America.
+Consists of the MSCI EAFE Index plus the Select Emerging Markets Free Index.
Late this spring, Vanguard introduced two new international index funds
and Institutional Shares for three existing funds. Vanguard Developed Markets
Index Fund is a "fund of funds" that invests in our European and Pacific Stock
Index Funds in an effort to track the returns of the Morgan Stanley Capital
International Europe, Australasia, Far East (MSCI EAFE) Index. This new fund and
its sister, Vanguard Institutional Developed Markets Index Fund, had total
returns of 3.4% and 2.7%, respectively. The Institutional Shares of the
European, Pacific, and Emerging Markets Stock Index Funds gained 3.0%, 3.7%, and
1.7%, respectively. These returns were earned over periods no longer than two
months, so they are not useful performance indicators. They are presented merely
"for the record."
Per-share figures for each fund, including its net asset value at the
beginning and end of the half-year, any dividends paid from net investment
income, and any distributions of net realized capital gains, are presented in
the table that follows this letter.
THE PERIOD IN REVIEW
During the six months ended June 30, a complex set of factors tugged at world
economies and financial markets. A quickening in the pace of economic growth in
many countries
1
<PAGE> 4
and regions--typically good news for corporate earnings and equity
prices--brought with it signs of an acceleration in inflation--bad news for
bonds and stocks of growth-oriented companies. A steep rise in energy prices,
for example, kept consumers and investors around the world fixated on the
potential for higher prices across a broad range of products. Uncertainty about
the valuation of technology companies further complicated the financial scene.
Economic growth in the United States continued at an extraordinary pace.
In an effort to head off inflation, the Federal Reserve Board boosted the
federal funds rate--its target for short-term interest rates--three times
during the half-year, by a total of 1.0 percentage point (100 basis points).
Policymakers have now raised the target interest rate by 175 basis points in the
past 12 months. In Europe, new signs of economic growth also triggered concern
about higher prices, which, in turn, resulted in several rate increases by the
European Central Bank, including a surprising hike of 0.5 percentage point in
early June.
Japan, the Pacific region's dominant market, showed some signs of recovery
during the six months: Unemployment dipped from record highs, first-quarter
economic growth was solid, and both consumer spending and corporate investment
registered small upticks. However, big questions remain for Japan. Corporate
bankruptcies are on the rise, the government's budget shortfall is enormous, and
any slowdown in the United States will hurt Japanese exporters.
As noted, stocks produced lackluster results during the period. The Total
International Composite Index, a measure of both developed and emerging markets
outside the United States, had a total return in U.S. dollars of -4.3%. The
index was virtually flat in local currency terms, but the strength of the dollar
acted as a drag on the return to U.S. investors. Developed markets, as measured
by the EAFE Index, returned -4.0% in dollars (+0.4% in local currencies). Within
the 20 EAFE markets, value stocks--whose low prices in relation to earnings,
book value, and dividends reflect lower expectations by the market--outperformed
growth stocks, whose prices reflect high expectations for future profitability.
Still, both segments posted losses in U.S.-dollar terms (value stocks: -0.4%;
growth stocks: -7.9%).
Major emerging markets also slumped during the six-month period. South
Korean, Mexican, and Brazilian stocks, which together accounted for half of the
Select Emerging Markets Free Index as of June 30, delivered returns ranging from
-0.2% to -6.0% to U.S. investors (-0.1% to -4.4% in local-currency terms). South
Africa, which has the benchmark's fourth-largest weighting, sank -15.3% in U.S.
dollars (-6.7% in rand). Seven of the ten smaller markets in the index also
declined in U.S.-dollar terms.
Looking at stock returns on a regional basis, Europe was generally
stronger than Asia. Exchanges in France, Italy, and Sweden registered returns of
9% or higher in local-currency terms during the six months. Hong Kong and
Singapore went the other way, returning -12.8% and -19.7% in local dollars,
respectively. Canada was a big winner, returning more than 23% in both U.S. and
Canadian dollars for the half-year.
Overall, European stocks returned 1.3% in euro terms during the half-year,
but declined -3.0% in U.S. dollars, as measured by the MSCI Europe Index. The
common currency of 11 European nations declined to a low of about $0.90 during
the period and has fallen in value by some 20% against the dollar since it was
introduced in January 1999. The impact of currency fluctuations on the returns
of various broad market indexes is shown in the table on page 3.
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<PAGE> 5
Overall, the Pacific Rim component of the EAFE Index returned -2.6% in
local-currency terms, and -5.9% in dollars. The Japanese market--by far the
largest market in the index--returned -2.1% in yen and -5.3% in dollars. The yen
fell in value by more than 3% versus the dollar during the six months.
In comparison, the overall U.S. stock market, as measured by the Wilshire
5000 Total Market Index, declined -0.7% during the six months.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
TOTAL RETURNS
SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------
LOCAL
CURRENCY CURRENCY U.S. DOLLAR
INDEX RETURN IMPACT RETURN
-------------------------------------------------------------------------
<S> <C> <C> <C>
Total International Composite Index -0.1% -4.2% -4.3%
-------------------------------------------------------------------------
MSCI Europe Index 1.7% -4.7% -3.0%
MSCI Pacific Free Index -2.6 -3.3 -5.9
Select Emerging Markets Free Index -3.5 -6.1 -9.6
-------------------------------------------------------------------------
Wilshire 5000 Index (United States) -0.7% -- -0.7%
-------------------------------------------------------------------------
</TABLE>
PERFORMANCE
OVERVIEW
The results from our international index funds during the semiannual period
demonstrate an elemental fact about index funds: They are designed to track the
performance of some slice (large or small) of the financial markets. The
strategy succeeds over the long haul by keeping the divergence between the
returns of an index fund and its target index to a minimum, so that investors
earn, as nearly as possible, the market return. On this score, the four Vanguard
international index funds that operated throughout the half-year performed
admirably: Each fund did slightly better than its unmanaged benchmark.
With a total return of -2.6%, the EUROPEAN STOCK INDEX FUND outpaced the
MSCI Europe Index by 0.4 percentage point. The EMERGING MARKETS STOCK INDEX FUND
returned -9.1%, half a percentage point better than the Select Emerging Markets
Free Index. The PACIFIC and TOTAL INTERNATIONAL STOCK INDEX FUNDS, which
returned -5.8% and -4.2%, respectively, each edged their index standards by 0.1
percentage point. As of June 30, Total International--a fund of funds that
invests in our European, Pacific, and Emerging Markets Stock Index Funds in
proportion to the weightings of their target indexes within the Total
International Composite Index--had about 60% of its assets in the European fund,
30% in the Pacific fund, and 10% in the Emerging Markets fund.
Our results versus competing funds--the majority of which are actively
managed--were mixed. The Pacific and Total International Funds outperformed the
average returns of their peers by 6.2 and 0.4 percentage points, respectively.
But the European and Emerging Markets Funds trailed the average return from
competing funds by 2.4 and 0.4 percentage points, respectively.
Our expense ratios--0.29% of average net assets for the European Stock
Index Fund, 0.37% for the Pacific Stock Index Fund, and 0.58% for the Emerging
Markets Stock Index Fund--continue to be far lower than those of typical mutual
funds. (Unlike many funds of funds, the Total International Stock Index Fund
does not charge a special fee for wrapping together shares in other funds. Its
investors simply bear the expenses of the underlying funds--0.34% at present.)
As of June 30, the average expense ratios of competing funds were 1.73% for
European funds, 2.72% for Pacific funds, 2.19% for emerging-market funds, and
1.72% for diversified international funds. We believe that our low costs provide
our funds--and thus our shareholders--with a powerful advantage over long
periods, but they do not guarantee superior performance over the short run.
3
<PAGE> 6
IN SUMMARY
During the first half of 2000, we witnessed significant price fluctuations in
the world's stock and currency markets, significant swings in investor
sentiment, and sudden shifts in market leadership. All of this volatility,
squeezed into a mere six months, underscored the fact that unpredictability is
par for the course in the global financial markets. The timing, extent, and
duration of such episodes are impossible to foretell with precision, but
investors must be willing to endure them to reap the long-term rewards of
investing.
At Vanguard, we maintain our long-standing recommendation for navigating
stormy seas toward long-term financial goals. First, create an investment plan
with a balance of low-cost domestic and international stock funds, bond funds,
and money market funds suited to your time horizon, investment objectives, and
tolerance for market fluctuations. Then, once you have such a diversified plan
in place, stick with it. Avoid the impulse to alter it based on short-term
events--whether those be unsettling turbulence in the market or glittery returns
from some particular corner of the market. "Stay the course" is timeless
investment wisdom.
/s/ JOHN J. BRENNAN
John J. Brennan
Chairman and Chief Executive Officer
July 27, 2000
IN MEMORY
It is with great sadness that I report the death of John C. Sawhill, an
independent trustee of the funds and a member of The Vanguard Group's board of
directors since 1991. John, an economist who was president and chief executive
officer of The Nature Conservancy, died on May 18 at age 63. He was a senior
lecturer at the Harvard Business School and had formerly served as president of
New York University and as deputy secretary of the U.S. Department of Energy
under President Jimmy Carter. John was a remarkable man who was full of energy,
vigor, and life. His experience and wisdom added a great deal to Vanguard, and
his death is a blow to everyone who knew and loved him. Though John's work on
behalf of our funds was often carried on behind the scenes, he was a dedicated
advocate for the best interests of our shareholders. He will be missed.
4
<PAGE> 7
FUND STATISTICS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------------
NET ASSET VALUE PER SHARE DISTRIBUTIONS PER SHARE DIVIDENDS PER SHARE
----------------------------- FROM NET REALIZED FROM NET
INDEX FUND DEC. 31, 1999* JUNE 30, 2000 CAPITAL GAINS INVESTMENT INCOME
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
European $28.82 $28.03 $0.05 --
Pacific 12.22 11.51 -- --
Emerging Markets 12.50 11.35 -- $0.01
Total International 14.31 13.67 0.04 --
Developed Markets 10.00 10.34 -- --
Institutional Developed Markets 10.00 10.27 -- --
------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
------------------------------------------------------------------------------------------------------------
European $27.22 $28.03 -- --
Pacific 11.10 11.51 -- --
Emerging Markets 11.16 11.35 -- --
------------------------------------------------------------------------------------------------------------
</TABLE>
*Net asset values are as of the inception date for the Developed Markets Index
Fund (May 8, 2000), Institutional Developed Markets Index Fund (June 1, 2000),
and the Institutional Shares of the European, Pacific, and Emerging Markets
Stock Index Funds (May 15, 2000, for European and Pacific; June 22, 2000, for
Emerging Markets).
5
<PAGE> 8
THE MARKETS IN PERSPECTIVE
SIX MONTHS ENDED JUNE 30, 2000
The perpetual tug-of-war in the financial markets ended in a near stalemate
during the first half of 2000, despite lots of back-and-forth movement. On
average, neither stock nor bond prices ended the period far from where they
began it. However, bonds, thanks to their superior income, outpaced stocks in
total return.
Economic signals were conflicting. Growth continued at a rapid pace, and
corporate profits rose smartly. On the other hand, stock prices as the year
began already reflected high levels of optimism, and the market administered
severe punishment to companies that failed to live up to earnings expectations.
Also weighing on the market were concerns that the economy's vigor at a time of
low unemployment would inevitably push labor costs and other prices higher.
Indeed, higher costs for oil and natural gas pushed broad gauges of inflation
higher (the Consumer Price Index gained 2.4% for the six months and 3.7% for the
twelve months ended June 30). Yet core inflation, which excludes energy and food
items, registered a moderate 2.4% gain during the 12 months ended June 30.
<TABLE>
<CAPTION>
----------------------------------------------------------------------
TOTAL RETURNS
PERIODS ENDED JUNE 30, 2000
--------------------------------
6 MONTHS 1 YEAR 5 YEARS*
----------------------------------------------------------------------
STOCKS
<S> <C> <C> <C>
S&P 500 Index -0.4% 7.2% 23.8%
Russell 2000 Index 3.0 14.3 14.3
Wilshire 5000 Index -0.7 10.0 22.6
MSCI EAFE Index -4.0 17.4 11.6
----------------------------------------------------------------------
BONDS
Lehman Aggregate Bond Index 4.0% 4.6% 6.3%
Lehman 10 Year Municipal Bond Index 4.0 4.5 6.0
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 2.8 5.3 5.2
----------------------------------------------------------------------
OTHER
Consumer Price Index 2.4% 3.7% 2.5%
----------------------------------------------------------------------
</TABLE>
*Annualized.
The Federal Reserve Board raised short-term interest rates by 0.25
percentage point in February and again in March, before adding a half-point
boost in May. These steps, which followed three quarter-percentage-point
increases in 1999, took the Fed's target for short-term rates to 6.5%.
Thereafter, signs of a slowing in economic activity cropped up, although it was
not certain that the Fed was done trying to throttle down the economic engine.
U.S. STOCK MARKETS
Stock prices were quite volatile during the half-year, and large day-to-day
price fluctuations in market averages were commonplace. There also were two
swift shifts in market leadership. The year began with a continuance in the
rapid rise for the "TMT" stocks (technology, media, telecommunications) that
were the market's darlings during 1999. Through mid-March, the surge in these
"new economy" groups left "old economy" stocks far behind. For example, the
Nasdaq Composite Index, which is dominated by tech-related stocks, gained 15.6%
and the Russell 1000 Value Index fell -10.4% during January and February. But in
mid-March, value stocks took charge and TMT stocks slumped. The Russell 1000
Value Index returned 12.1% while the Nasdaq plummeted to a -27.4% return in the
March-May period. But June brought another flip-flop: The value index declined
-4.6%, while the Nasdaq rebounded with a 14.5% return.
6
<PAGE> 9
When the half-year was over, most broad market indexes had modest
declines. The all-market Wilshire 5000 Index returned -0.7%, the
large-capitalization S&P 500 Index slipped -0.4%, and the Nasdaq fell -3.9%.
Small- and mid-cap stocks did better: The small-cap Russell 2000 Index gained
3.0% and the Wilshire 4500 Completion Index, comprising virtually all the U.S.
stocks outside of the S&P 500, eked out a 0.3% return.
U.S. BOND MARKETS
The Federal Reserve most directly influences interest rates of short-term
securities. The Fed pushed up its target federal funds rate (charged on
overnight loans between banks) by 1 percentage point to 6.5%. But yields of
3-month U.S. Treasury bills rose only half as far (0.52 percentage point, or 52
basis points to 5.85%). And yields actually declined on long-term Treasury
securities, whose prices rose. Big federal budget surpluses are causing a
shrinking supply of Treasury bonds. The 10-year Treasury note's yield fell 41
basis points to 6.03% as of June 30, and the yield of the 30-year Treasury
declined 58 basis points--from 6.48% to 5.90%--during the half-year.
The upshot was an unusual "inversion" in the yield curve. Instead of
sloping upward--with yields increasing along with the maturity of Treasury
securities--the curve descended. The 5.90% yield of 30-year Treasuries on June
30 was 49 basis points below the 6.39% yield on 3-year Treasury notes.
Corporate bonds did not perform as well as Treasuries for two main
reasons: a record level of new offerings and investors' concern that credit
quality might be declining. The rise in yields (and fall in prices) was slight
for higher-quality corporate bonds but more severe for high-yield "junk" bonds.
Investors grew wary of riskier bonds due to an increase in defaults. The Lehman
High Yield Bond Index saw a price decline of -5.7% during the first half of
2000, more than offsetting its six-month income of 4.5%. Tax-exempt municipal
bonds generally outperformed corporates but did not do as well as Treasury
securities. The overall taxable bond market, as measured by the Lehman Aggregate
Bond Index, returned 4.0%, as a price gain of 0.4% augmented a 3.6% income
return.
INTERNATIONAL STOCK MARKETS
International stock markets were generally unprofitable for U.S. investors due
to lack-luster local market performances and a stronger U.S. dollar during the
half-year. Although economic growth in most of Europe appeared to be
strengthening, stocks were hurt by continued economic weakness in Japan and from
expectations of higher interest rates. On the other hand, European stock prices
got some support from an increase in corporate takeovers.
In local currencies, European stocks posted a 1.7% return in the aggregate
and stocks from the Pacific region recorded a modest decline of -2.6%. However,
the dollar's strength diminished those results for U.S. investors, for whom the
Morgan Stanley Capital International (MSCI) Europe Index returned -3.0% and the
MSCI Pacific Free Index returned -5.9%. The MSCI Europe, Australasia, Far East
(EAFE) Index of developed foreign markets registered a -4.0% return for U.S.
investors.
The Select Emerging Markets Free Index fell -9.6% in U.S. dollars, having
declined -3.5% in local currencies. The index was hit by weakness in South
Africa (-15%) and several emerging Asian markets, including Indonesia (-44%),
Thailand (-36%), and the Philippines (-36%). The biggest gains among emerging
markets were in Israel (+27%) and Venezuela (+19%).
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FUND PROFILE
EUROPEAN STOCK INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of June 30,
2000, 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 542 529
Turnover Rate 8%* --
Expense Ratio 0.29%* --
Expense Ratio--
Institutional Shares 0.20%* --
Cash Investments 0.0% --
</TABLE>
*Annualized.
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS
(% OF TOTAL NET ASSETS)
---------------------------------------------------
<S> <C>
Nokia Oyj 3.7%
Vodafone Airtouch PLC 3.7
BP Amoco PLC 3.3
Deutsche Telekom AG 2.6
Telefonaktiebolaget
LM Ericsson AB Class B 2.3
France Telecom SA 2.2
Royal Dutch Petroleum Co. 2.0
Novartis AG (Registered) 1.7
TotalFinaElf 1.7
Glaxo Wellcome PLC 1.6
---------------------------------------------------
Top Ten 24.8%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
---------------------------------------------------
EUROPEAN MSCI
STOCK INDEX EAFE
---------------------------------------------------
<S> <C> <C>
R-Squared 0.87 1.00
Beta 0.93 1.00
</TABLE>
<TABLE>
<CAPTION>
COUNTRY DIVERSIFICATION (% OF COMMON STOCKS)
-------------------------------------------------------------------------------------------------------
JUNE 30, 1999 JUNE 30, 2000
-------------------------------------------------------------------------------------------------------
EUROPEAN EUROPEAN MSCI
STOCK INDEX STOCK INDEX EUROPE
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Austria............................................ 0.4% 0.3% 0.3%
Belgium............................................ 2.2 1.2 1.2
Denmark............................................ 1.1 1.1 1.2
Finland............................................ 2.7 4.6 4.6
France............................................. 13.8 16.2 17.0
Germany............................................ 14.3 12.7 12.7
Ireland............................................ 0.6 0.5 0.5
Italy.............................................. 6.4 6.6 6.6
Netherlands........................................ 8.2 8.9 8.1
Norway............................................. 0.6 0.6 0.6
Portugal........................................... 0.8 0.7 0.7
Spain.............................................. 4.3 4.1 3.9
Sweden............................................. 3.5 5.0 5.0
Switzerland........................................ 9.7 8.6 8.6
United Kingdom..................................... 30.4 28.9 29.0
United States...................................... 1.0 0.0 0.0
-------------------------------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
</TABLE>
8
<PAGE> 11
ALLOCATION TO UNDERLYING VANGUARD FUNDS. This table shows the distribution of a
fund's assets in underlying Vanguard 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 INVESTMENTS. 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 35%.) 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,
2000, 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 423 424
Turnover Rate 3%* --
Expense Ratio 0.37%* --
Expense Ratio--
Institutional Shares 0.29%* --
Cash Investments 0.2% --
</TABLE>
*Annualized.
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS
(% OF TOTAL NET ASSETS)
---------------------------------------------------
<S> <C>
Toyota Motor Corp. 5.3%
Nippon Telegraph and Telephone Corp. 5.2
Sony Corp. 2.6
Fujitsu Ltd. 2.1
Takeda Chemical Industries Ltd. 1.8
The Bank of Tokyo-Mitsubishi Ltd. 1.7
Hutchison Whampoa Ltd. 1.6
Matsushita Electric Industrial Co., Ltd. 1.6
NEC Corp. 1.6
Hitachi Ltd. 1.5
---------------------------------------------------
Top Ten 25.0%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
---------------------------------------------------
PACIFIC MSCI
STOCK INDEX EAFE
---------------------------------------------------
<S> <C> <C>
R-Squared 0.69 1.00
Beta 1.15 1.00
</TABLE>
<TABLE>
<CAPTION>
COUNTRY DIVERSIFICATION (% OF COMMON STOCKS)
----------------------------------------------------------------------------------------------------------
JUNE 30, 1999 JUNE 30, 2000
--------------------------------------------------------
PACIFIC PACIFIC MSCI
STOCK INDEX STOCK INDEX PACIFIC FREE
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Australia....................................... 9.6% 8.3% 8.4%
Hong Kong....................................... 8.5 6.3 6.3
Japan........................................... 78.0 81.9 81.9
Malaysia........................................ 0.0 0.0 0.0
New Zealand..................................... 0.7 0.5 0.4
Singapore....................................... 3.2 3.0 3.0
----------------------------------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
</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,
2000, compared where appropriate to its unmanaged target index. Key elements of
this Profile are defined on page 9.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
---------------------------------------------------
EMERGING MARKETS
STOCK INDEX INDEX*
---------------------------------------------------
<S> <C> <C>
Number of Stocks 495 473
Turnover Rate 40%** --
Expense Ratio 0.58%** --
Expense Ratio--
Institutional Shares 0.45%** --
Cash Investments 4.1% --
</TABLE>
*Select Emerging Markets Free Index.
**Annualized.
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS
(% OF TOTAL NET ASSETS)
---------------------------------------------------
<S> <C>
Samsung Electronics 6.7%
Telefonos de Mexico SA 5.5
SK Telecom Co., Ltd. 3.4
Korea Electric Power Corp. 2.3
Check Point Software Technologies Ltd. 2.0
Petroleo Brasileiro SA Pfd. 1.8
Hellenic Telecommunication
Organization SA 1.6
Turkiye Is Bankasi A.S. 1.5
Cia Vale Do Rio Pfd. A 1.4
Wal-Mart de Mexico SA 1.4
---------------------------------------------------
Top Ten 27.6%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
---------------------------------------------------
EMERGING MARKETS MSCI
STOCK INDEX EAFE
---------------------------------------------------
<S> <C> <C>
R-Squared 0.63 1.00
Beta 1.58 1.00
</TABLE>
<TABLE>
<CAPTION>
COUNTRY DIVERSIFICATION (% OF COMMON STOCKS)
----------------------------------------------------------------------------------------------------------
JUNE 30, 1999 JUNE 30, 2000
--------------------------------------------------------
EMERGING MARKETS EMERGING MARKETS
STOCK INDEX STOCK INDEX INDEX*
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Argentina........................................ 3.4% 3.0% 3.0%
Brazil ........................................ 12.3 15.1 14.8
Czech Republic................................... 1.1 1.0 1.0
Greece........................................... 8.8 7.3 7.4
Hong Kong........................................ 13.8 0.0 0.0
Hungary.......................................... 1.7 1.7 1.7
Indonesia........................................ 3.4 1.6 1.7
Israel........................................... 4.1 7.6 8.0
Malaysia......................................... 0.0 0.0 0.0
Mexico........................................... 17.2 15.8 16.2
Philippines...................................... 2.7 1.3 1.4
Poland........................................... 1.8 1.9 2.1
Singapore........................................ 5.7 0.0 0.0
South Africa..................................... 15.7 13.7 13.9
South Korea...................................... 0.0 21.1 19.9
Thailand......................................... 5.4 3.1 3.0
Turkey........................................... 2.9 5.8 5.9
----------------------------------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
</TABLE>
*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,
2000, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 9.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
---------------------------------------------------
<S> <C>
Expense Ratio 0%
Average Weighted Expense Ratio* 0.34%
</TABLE>
*For underlying funds; annualized.
<TABLE>
<CAPTION>
ALLOCATION TO UNDERLYING
VANGUARD FUNDS
---------------------------------------------------
<S> <C>
European Stock Index Fund 60.6%
Pacific Stock Index Fund 29.7
Emerging Markets Stock Index Fund 9.7
---------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
----------------------------------------------------
TOTAL INTERNATIONAL MSCI
STOCK INDEX EAFE
----------------------------------------------------
<S> <C> <C>
R-Squared 0.99 1.00
Beta 1.06 1.00
</TABLE>
12
<PAGE> 15
FUND PROFILE
DEVELOPED MARKETS INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of June 30,
2000. Key elements of this Profile are defined on page 9.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
---------------------------------------------------
<S> <C>
Expense Ratio 0%
Average Weighted Expense Ratio* 0.32%
</TABLE>
*For underlying funds; annualized.
<TABLE>
<CAPTION>
ALLOCATION TO UNDERLYING
VANGUARD FUNDS
---------------------------------------------------
<S> <C>
European Stock Index Fund 67.1%
Pacific Stock Index Fund 32.9
---------------------------------------------------
Total 100.0%
</TABLE>
13
<PAGE> 16
FUND PROFILE
INSTITUTIONAL DEVELOPED MARKETS INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of June 30,
2000. Key elements of this Profile are defined on page 9.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
---------------------------------------------------
<S> <C>
Expense Ratio 0%
Average Weighted Expense Ratio* 0.23%
</TABLE>
*For underlying funds; annualized.
<TABLE>
<CAPTION>
ALLOCATION TO UNDERLYING
VANGUARD FUNDS
---------------------------------------------------
<S> <C>
European Stock Index Fund 67.4%
Pacific Stock Index Fund 32.6
---------------------------------------------------
Total 100.0%
</TABLE>
14
<PAGE> 17
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 fund. Note, too, that both
share price and return can fluctuate widely. An investor's shares, when
redeemed, could be worth more or less than their original cost.
<TABLE>
<CAPTION>
EUROPEAN STOCK INDEX FUND
TOTAL INVESTMENT RETURNS: JUNE 18, 1990-JUNE 30, 2000
------------------------------------------------------
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 14.6 2.0 16.6 15.8
2000* -2.6 0.0 -2.6 -3.0
------------------------------------------------------
</TABLE>
*Six months ended June 30, 2000.
See Financial Highlights table on page 46 for dividend and capital gains
information for the past five years.
<TABLE>
<CAPTION>
EUROPEAN STOCK INDEX FUND
INSTITUTIONAL SHARES
TOTAL INVESTMENT RETURNS:
MAY 15, 2000-JUNE 30, 2000
-----------------------------------------------------
EUROPEAN STOCK INDEX FUND
INSTITUTIONAL SHARES MSCI EUROPE
FISCAL CAPITAL INCOME TOTAL TOTAL
PERIOD RETURN RETURN RETURN RETURN
<S> <C> <C> <C> <C>
-----------------------------------------------------
2000 3.0% 0.0% 3.0% 3.7%
-----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED JUNE 30, 2000
---------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION -----------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
European Stock Index Fund* 6/18/1990 15.76% 18.80% 10.91% 2.32% 13.23%
European Stock Index Fund
Institutional Shares 5/15/2000 -- -- 2.98** 0.00** 2.98**
---------------------------------------------------------------------------------------------------------
</TABLE>
*Performance figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
**Since inception.
15
<PAGE> 18
PERFORMANCE SUMMARIES (continued)
All of the data on this page represent past performance, which cannot be used
to predict future returns that may be achieved by the fund. Note, too, that
both share price and return can fluctuate widely. An investor's shares, when
redeemed, could be worth more or less than their original cost.
<TABLE>
<CAPTION>
PACIFIC STOCK INDEX FUND
TOTAL INVESTMENT RETURNS: JUNE 18, 1990-JUNE 30, 2000
------------------------------------------------------
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 55.9 1.2 57.1 56.4
2000* -5.8 0.0 -5.8 -5.9
------------------------------------------------------
</TABLE>
*Six months ended June 30, 2000.
See Financial Highlights table on page 47 for dividend information for the past
five years.
<TABLE>
<CAPTION>
PACIFIC STOCK INDEX FUND
INSTITUTIONAL SHARES
TOTAL INVESTMENT RETURNS:
MAY 15, 2000-JUNE 30, 2000
-----------------------------------------------------
PACIFIC STOCK INDEX FUND MSCI PACIFIC
INSTITUTIONAL SHARES FREE
FISCAL CAPITAL INCOME TOTAL TOTAL
PERIOD RETURN RETURN RETURN RETURN
-----------------------------------------------------
<S> <C> <C> <C> <C>
2000 3.7% 0.0% 3.7% 4.2%
-----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED JUNE 30, 2000
---------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION -----------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pacific Stock Index Fund* 6/18/1990 22.21% 2.50% 1.71% 0.77% 2.48%
Pacific Stock Index Fund
Institutional Shares 5/15/2000 -- -- 3.69** 0.00** 3.69**
---------------------------------------------------------------------------------------------------------
</TABLE>
*Performance figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
**Since inception.
16
<PAGE> 19
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely. An investor's shares, when
redeemed, could be worth more or less than their original cost.
<TABLE>
<CAPTION>
EMERGING MARKETS STOCK INDEX FUND
TOTAL INVESTMENT RETURNS: MAY 4, 1994-JUNE 30, 2000
------------------------------------------------------
EMERGING MARKETS STOCK INDEX FUND INDEX*
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 58.0 3.6 61.6 60.9
2000** -9.2 0.1 -9.1 -9.6
------------------------------------------------------
</TABLE>
*Select Emerging Markets Free Index consists of stocks that can be bought free
of restrictions in 14 emerging markets of Europe, Asia, Africa, and Latin
America.
**Six months ended June 30, 2000.
See Financial Highlights table on page 48 for dividend information for the past
five years.
<TABLE>
<CAPTION>
EMERGING MARKETS STOCK INDEX
FUND INSTITUTIONAL SHARES
TOTAL INVESTMENT RETURNS:
JUNE 22, 2000-JUNE 30, 2000
-----------------------------------------------------
EMERGING MARKETS STOCK INDEX FUND
INSTITUTIONAL SHARES INDEX*
FISCAL CAPITAL INCOME TOTAL TOTAL
PERIOD RETURN RETURN RETURN RETURN
-----------------------------------------------------
<S> <C> <C> <C> <C>
2000 1.7% 0.0% 1.7% 1.7%
-----------------------------------------------------
</TABLE>
*Select Emerging Markets Free Index consists of stocks that can be bought free
of restrictions in 14 emerging markets of Europe, Asia, Africa, and Latin
America.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED JUNE 30, 2000
---------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION -----------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets Stock Index Fund* 5/4/1994 9.82% 2.89% 1.97% 1.94% 3.91%
Emerging Markets Stock Index Fund
Institutional Shares** 6/22/2000 -- -- 0.69 0.00 0.69
---------------------------------------------------------------------------------------------------------
</TABLE>
*Performance figures are adjusted for the 0.5% 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
and redemptions.
17
<PAGE> 20
PERFORMANCE SUMMARIES (continued)
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. An investor's shares, when
redeemed, could be worth more or less than their original cost.
<TABLE>
<CAPTION>
TOTAL INTERNATIONAL STOCK INDEX FUND
TOTAL INVESTMENT RETURNS: APRIL 29, 1996-JUNE 30, 2000
----------------------------------------------------------
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 28.0 1.9 29.9 28.1
2000** -4.2 0.0 -4.2 -4.3
----------------------------------------------------------
</TABLE>
*Total International Composite Index consists of the MSCI EAFE Index plus the
Select Emerging Markets Free Index.
**Six months ended June 30, 2000.
See Financial Highlights table on page 49 for dividend and capital gains
information since inception.
<TABLE>
<CAPTION>
DEVELOPED MARKETS INDEX FUND
TOTAL INVESTMENT RETURNS:
MAY 8, 2000-JUNE 30, 2000
-----------------------------------------------------
DEVELOPED MARKETS INDEX FUND MSCI EAFE
FISCAL CAPITAL INCOME TOTAL TOTAL
PERIOD RETURN RETURN RETURN RETURN
-----------------------------------------------------
<S> <C> <C> <C> <C>
2000 3.4% 0.0% 3.4% 3.6%
-----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL DEVELOPED
MARKETS INDEX FUND
TOTAL INVESTMENT RETURNS:
JUNE 1, 2000-JUNE 30, 2000
-----------------------------------------------------
INSTITUTIONAL DEVELOPED
MARKETS INDEX FUND MSCI EAFE
FISCAL CAPITAL INCOME TOTAL TOTAL
PERIOD RETURN RETURN RETURN RETURN
-----------------------------------------------------
<S> <C> <C> <C> <C>
2000 2.7% 0.0% 2.7% 4.1%
-----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION -----------------------------
DATE 1 YEAR CAPITAL INCOME TOTAL
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total International Stock Index Fund* 4/29/1996 17.02% 7.33% 1.73% 9.06%
Developed Markets Index Fund* 5/8/2000 -- 3.40 0.00 3.40
Institutional Developed Markets Index Fund 6/1/2000 -- 2.70 0.00 2.70
--------------------------------------------------------------------------------------------------------
</TABLE>
*Performance figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
18
<PAGE> 21
FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
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; for the
Total International Stock, Developed Markets, and Institutional Developed
Markets Index Funds, the Statement 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. 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)
---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (99.8%)(1)
---------------------------------------------------------------------------
AUSTRIA (0.3%)
Bank Austria AG 112,375 $ 5,496
Oesterreichische
Elektrizitaetswirtschafts AG
Class A 27,330 2,816
OMV AG 21,487 1,874
Wienerberger
Baustoffindustrie AG 67,767 1,545
EA-Generali AG 7,474 1,207
Flughafen Wien AG 18,792 672
Austria Tabak AG 17,652 656
VA Technologies AG 12,374 655
BWT Best Water Technology AG 1,732 612
Mayr-Melnhof Karton AG 10,306 490
Oesterreichische Brau-
Beteiligungs AG 9,557 435
Austrian Airlines AG 29,501 428
Boehler-Uddeholm AG 11,254 395
RHI AG 16,068 393
Lenzing AG 4,427 263
Bau Holding AG 5,783 243
Bau Holding AG Pfd. 3,205 132
----------
18,312
----------
BELGIUM (1.2%)
Fortis AG (B) 671,748 19,627
Electrabel SA 52,058 12,920
Kredietbank NPV 251,460 11,112
Groupe Bruxelles Lambert SA 22,435 5,624
Solvay SA 76,971 5,202
UCB SA 133,448 4,922
Delhaize-Le Lion SA 48,018 2,884
Colruyt NV 47,234 2,009
Barco NV 15,898 1,791
D'Ieteren SA 6,100 1,550
Bekaert NV 29,159 1,512
Union Miniere SA 29,739 1,083
Glaverbel SA 12,436 930
Compagnie Maritime Belge
SA (CMB) 16,085 848
----------
72,014
----------
DENMARK (1.1%)
Tele Danmark A/S 199,545 13,487
Novo Nordisk A/S B Shares 67,398 11,519
D/S 1912 B Shares 982 10,473
D/S Svendborg B Shares 680 10,092
Den Danske Bank A/S 48,274 5,831
Vestas Wind Systems A/S 78,750 2,904
- ISS A/S 34,813 2,662
William Demant A/S 61,765 1,833
Danisco A/S 51,913 1,741
Group 4 Falck A/S 10,194 1,643
Carlsberg A/S A Shares 40,252 1,190
NKT Holding A/S 6,284 1,050
- Navision Software A/S 22,876 955
Carlsberg A/S B Shares 23,536 717
</TABLE>
19
<PAGE> 22
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
FLS Industries A/S B Shares 44,850 $ 692
- Topdanmark A/S 29,239 481
Bang & Olufsen Holding A/S
B Shares 12,487 427
SAS Danmark A/S 39,284 331
- East Asiatic Co. A/S 18,994 283
Radiometer A/S B Shares 6,516 206
----------
68,517
----------
FINLAND (4.6%)
Nokia Oyj 4,451,844 228,097
Sonera Oyj 679,654 31,110
UPM-Kymmene Oyj 239,652 5,973
Tieto Corp. B Shares 69,100 2,315
Sampo Insurance Co., Ltd.
A Shares 53,088 2,163
Metso Oyj 116,674 1,409
Hartwall Oyj Abp 62,571 1,260
Kone Corp. Oyj B shares 18,701 1,129
Outokumpu Oyj A Shares 112,629 1,080
Pohjola Group Insurance 25,834 917
Kesko Oyj 79,945 816
Instrumentarium Corp. 28,173 675
Metra Oyj B Shares 36,040 624
Uponor Oyj 31,205 591
Kemira Oyj 113,066 553
Rautaruuki Oyj 115,965 550
Amer Group Ltd. 18,806 519
Pohjola Group Insurance Corp. 13,919 487
Stockmann AB Oyj B Shares 26,078 399
Stockmann AB Oyj A Shares 24,076 381
Finnlines Oyj 16,979 369
Raisio Group PLC 147,711 293
Metra Oyj A Shares 12,233 235
----------
281,945
----------
FRANCE (16.2%)
France Telecom SA 942,903 132,325
Total Fina Elf 682,016 104,996
Alcatel 1,087,257 71,601
AXA 355,913 56,294
L'Oreal SA 62,058 53,956
Aventis SA 713,098 52,259
Vivendi 548,862 48,641
Carrefour SA 635,825 43,640
BNP Paribas 414,883 40,088
LVMH Moet Hennessy Louis
Vuitton SA 90,291 37,382
Sanofi-Synthelabo SA 666,924 31,901
Suez Lyonnaise des Eaux 181,359 31,901
Pinault-Printemps-Redoute SA 108,658 24,238
Societe Generale Class A 382,328 23,089
Bouygues SA 29,699 19,928
Cap Gemini SA 111,514 19,722
Canal Plus SA 115,728 19,525
Groupe Danone 137,960 18,382
Sagem SA 9,667 11,379
L'Air Liquide SA (Registered) 82,784 10,840
- Cie. de St. Gobain SA 79,753 10,825
Schneider Electric SA 147,908 10,350
Dassault Systemes SA 103,696 9,711
Lagardere SCA 125,553 9,628
PSA Peugeot Citroen SA 40,733 8,208
Lafarge SA 96,093 7,498
Accor SA 173,859 7,155
Etablissements Economiques du
Casino Guichard-Perrachon SA 72,048 6,699
Thomson-CSF SA 153,207 6,060
Sodexho Alliance SA 30,498 5,555
Valeo SA 75,020 4,027
Compagnie Generale des
Etablissements Michelin SA
B Shares 118,223 3,809
Publicis SA 8,371 3,298
Pechiney SA A Shares 72,851 3,052
Essilor International SA 9,836 2,830
Usinor Sacilor SA 226,199 2,771
Pernod Ricard SA 49,657 2,713
Sidel SA 30,501 2,484
Societe BIC SA 49,675 2,443
Eridania Beghin-Say SA 23,437 2,305
Coflexip SA 16,795 2,045
- Club Mediterranee SA 14,832 2,018
Gecina 16,900 1,816
Cie. Francaise d'Etudes
et de Construction SA 14,421 1,751
- Imerys 14,587 1,700
Eurafrance 3,111 1,496
Simco SA 20,260 1,486
Union du Credit-Bail
Immobilier (Bearer) 9,653 1,342
Groupe GTM 14,279 1,341
Etablissements Economiques du
Casino Guichard-Perrachon
SA Pfd. 16,369 1,010
Zodiac SA 4,650 950
Groupe SEB SA 13,164 774
Cie. Parisienne de
Reescompte SA 19,073 704
Nord-Est SA 16,405 397
Chargeurs SA 5,369 309
----------
982,647
----------
GERMANY (12.7%)
Deutsche Telekom AG 2,775,762 159,117
Siemens AG 547,745 82,960
Allianz AG 224,273 80,899
Muenchener
Rueckversicherungs-
Gesellschaft AG (Registered) 162,236 51,165
Deutsche Bank AG 565,670 46,742
DaimlerChrysler AG 588,127 30,799
Bayer AG 673,417 26,389
SAP AG 168,435 25,268
Bayerische Hypo-und
Vereinsbank AG 385,183 24,982
BASF AG 563,945 22,759
SAP AG Pfd. 120,420 22,359
E.On AG 438,988 21,251
Dresdner Bank AG 480,772 19,863
DaimlerChrysler AG 327,337 17,042
RWE AG 436,470 14,853
E.On AG Fractions 250,295 12,116
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
Volkswagen AG 286,783 $ 10,911
Schering AG 184,833 10,170
Metro AG 248,319 8,805
Deutsche Lufthansa AG New 341,561 7,927
Thyssen Krupp AG 471,505 7,706
EM.TV & Merchandising AG 112,238 6,638
Fresenius Medical Care AG 80,104 6,413
Beiersdorf AG 74,875 6,316
Preussag AG 146,994 4,770
Merck KGaA 152,401 4,646
Linde AG 98,541 3,977
WCM Beteiligungs-und
Grundbesitz AG 160,409 3,736
Heidelberger Zement AG 56,838 3,520
Man AG 100,938 3,063
Karstadt Quelle AG 105,031 2,749
Kamps AG 73,124 2,348
Adidas-Salomon AG 41,718 2,317
Volkswagen AG Pfd. 90,879 2,139
Gehe AG 63,554 2,041
Continental AG 115,890 1,944
RWE AG Pfd. 68,644 1,872
Hochtief AG 60,886 1,841
- SGL Carbon AG 18,784 1,255
Douglas Holding AG 29,552 878
Dyckerhoff AG Pfd. 30,502 775
Man AG Pfd. 31,644 655
Buderus AG 40,658 643
Metro AG Pfd. 19,676 460
Bilfinger & Berger Bau AG 27,953 378
AGIV AG 31,143 336
Fag Kugelfischer Georg
Schaefer AG 37,080 277
Rheinmetall AG 21,596 275
- Kloeckner-Humbolt-Deutz AG 57,724 263
- Brau und Brunnen AG 5,621 241
IWKA AG 11,818 187
Rheinmetall AG Pfd. 19,524 183
Escada AG 851 100
Escada AG Pfd. 918 92
Holsten-Brauerei AG 2,413 42
- Holsten-Brauerei AG
Rights Exp. 7/12/2000 2,413 2
----------
771,455
----------
IRELAND (0.5%)
Allied Irish Banks PLC 791,336 7,108
CRH PLC 343,023 6,215
Eircom PLC 1,999,790 5,367
Irish Life & Permanent PLC 302,133 2,557
- Ryanair Holdings PLC 316,160 2,303
Kerry Group PLC A Shares 144,857 1,901
Jefferson Smurfit Group PLC 969,928 1,674
Independent News & Media PLC 454,768 1,657
DCC PLC 83,852 745
Waterford Wedgewood PLC 619,439 677
Greencore Group PLC 167,404 449
Jurys Hotel Group PLC 48,362 290
Fyffes PLC 257,355 266
Irish Continental Group PLC 28,291 231
- Tullow Oil PLC 254,138 195
----------
31,635
----------
ITALY (6.6%)
Telecom Italia Mobile SpA 6,003,181 61,574
Telecom Italia SpA 3,346,611 46,196
Ente Nazionale
Idrocarburi SpA 7,412,371 42,988
Assicurazioni Generali SpA 1,147,923 39,504
Enel SpA 6,711,050 29,850
San Paolo-IMI SpA 1,282,446 22,853
Credito Italiano SpA 4,304,951 20,675
Banca Intesa SpA 4,284,960 19,264
Mediaset SpA 1,069,793 16,408
- Olivetti SpA 4,398,946 16,066
Fiat SpA 345,969 9,014
Telecom Italia Mobile
SpA Risp. 1,509,034 7,623
Riunione Adriatica di
Sicurta SpA 666,453 7,347
Banca di Roma SpA 4,883,150 6,020
Telecom Italia SpA Risp. 870,614 5,800
Pirelli SpA 1,732,435 4,575
Mediobanca Banca Di
Credito Finanziaria SpA 386,000 3,996
Benetton Group SpA 1,853,188 3,890
Bulgari SpA 278,505 3,738
Italgas SpA 731,147 3,245
- Alitalia SpA 1,485,717 3,076
Mondadori (Arnoldo)
Editore SpA 118,063 2,705
Autogrill SpA 246,266 2,637
Italcementi SpA 234,124 2,211
Parmalat Finanziaria SpA 1,407,280 1,994
Banca Intesa SpA
Non-Convertible Risp. 833,794 1,982
- La Rinascente SpA 320,287 1,824
Magneti Marelli SpA 336,804 1,763
Banco Popolare di Milano SpA 243,508 1,762
Fiat SpA Risp. 120,357 1,663
Fiat SpA Pfd. 91,575 1,496
Societa Assicuratrice
Industriale SpA 77,098 1,371
SNIA BPD SpA 1,122,206 1,123
Marzotto & Figli SpA 113,083 927
Cementir SpA 507,771 801
Impregilo SpA 1,319,009 754
Sirti SpA 448,752 751
Pirelli SpA Risp. 290,801 641
Italcementi Risp. SpA 177,474 599
Societa Assicuratrice
Industriale Risp. SpA 67,437 524
- La Rinascente SpA Risp. 133,495 468
Reno De Medici SpA 216,866 441
Danieli & Co. SpA 67,471 314
Danieli & Co. Risp. SpA 101,881 227
Marzotto & Figli SpA Risp. 24,066 217
----------
402,897
----------
NETHERLANDS (8.9%)
Royal Dutch Petroleum Co. 1,962,466 122,466
ING Groep NV 892,213 60,553
Koninklijke (Royal)
Philips Electronics NV 1,243,216 58,872
STMicroelectronics NV 795,789 50,347
</TABLE>
21
<PAGE> 24
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
Koninklijke KPN NV 873,598 $ 39,233
Aegon NV 1,062,796 37,970
ABN-AMRO Holding NV 1,345,510 33,096
Unilever NV 517,300 23,827
Koninklijke Ahold NV 668,801 19,765
Heineken NV 282,687 17,275
- ASM Lithography Holdings NV 382,457 16,505
TNT Post Group NV 433,897 11,750
Akzo Nobel NV 265,496 11,325
Elsevier NV 604,873 7,358
Wolters Kluwer NV 252,910 6,764
Aegon NV ARS 161,826 5,765
Getronics NV 303,039 4,691
Hagemeyer NV 99,241 2,747
Buhrmann NV 85,244 2,447
KLM Royal Dutch Airlines NV 52,023 1,406
Oce NV 70,751 1,163
IHC Caland NV 21,904 1,071
Vedior NV 84,993 1,055
Koninklijke Vopak NV 46,986 1,036
- Baan Co. NV 194,618 532
Stork NV 28,623 390
Nedlloyd Groep NV 19,279 375
Hollandsche Beton Groep NV 28,641 339
----------
540,123
----------
NORWAY (0.5%)
Norsk Hydro ASA 248,992 10,487
Orkla ASA 193,219 3,685
DNB Holding ASA 806,994 3,361
Christiania Bank Og
Kreditkasse ASA 599,210 3,232
Tomra Systems ASA 74,355 1,979
- Petro Geo-Services ASA 96,418 1,653
Storebrand ASA 226,830 1,645
Schibsted ASA 64,488 1,200
Bergesen D.Y. ASA A Shares 49,389 1,017
Norske Skogindustrier ASA
A Shares 26,657 764
- Merkantildata ASA 140,671 726
Elkem ASA 36,126 680
- Kvaerner ASA 50,504 532
Bergesen D.Y. ASA B Shares 26,906 518
Smedvig ASA A Shares 22,172 401
SAS Norge ASA B Shares 40,804 344
Hafslund ASA A Shares 74,258 343
Smedvig ASA B Shares 19,570 321
Norske Skogindustrier ASA
B Shares 9,561 230
- Lief Hoegh & Co. ASA 24,218 224
- Unitor ASA 19,885 147
- Kvaerner ASA B Shares 14,740 129
Hafslund ASA B Shares 38,454 126
- Kvaerner ASA A Rights
Exp. 7/12/2000 45,004 25
- Kvaerner ASA B Rights
Exp. 7/12/2000 14,740 5
----------
33,774
----------
PORTUGAL (0.7%)
Portugal Telecom SA
(Registered) 939,519 10,591
Electricidade de Portugal SA 539,843 9,843
Banco Comercial Portugues SA 549,510 2,871
- Sonae SGPS SA 1,599,440 2,821
Banco Espirito Santo SA 108,909 2,683
Banco Comercial Portugues SA
8.00% Cvt. Pfd. 27,639 2,667
Brisa-Auto Estradas de
Portugal SA 265,409 2,295
Cimpor-Cimento de Portugal SA 118,350 2,269
Jeronimo Martins & Filho
SGPS SA 90,148 1,492
BPI-SGPS SA 299,355 1,062
Portucel Industrial-Empresa
Productora de Cellulosa SA 111,970 682
Companhia de
Seguros Tranquilidade SA 14,140 447
CIN Corporacao Industrial SA 69,390 388
- Sonae SGPS SA Rights
Exp. 7/19/2000 399,860 382
Corticeira Amorin SA 23,869 207
- Efacec-Empresa Fabrilde
Maquinas Electricas SA 31,229 198
Inapa-Investimentos
Participacoes e Gestao SA 25,758 165
- Sociedade Construcoes Soares
da Costa SA 15,562 46
----------
41,109
----------
SPAIN (4.0%)
- Telefonica SA 3,368,831 72,660
Banco Bilbao Vizcaya
Argentaria SA 2,849,074 42,742
Banco Santander Central
Hispano SA 3,743,463 39,652
Repsol SA 1,082,165 21,629
Endesa SA 961,123 18,694
Iberdrola SA 807,909 10,455
Gas Natural SDG SA 410,861 7,404
Altadis SA 344,937 5,320
Union Electrica Fenosa SA 274,465 4,986
Fomento de Construc y Contra SA 106,976 2,030
Autopista Concesionaria
Espanola SA 207,743 1,814
Corporacion Financiera Alba SA 67,891 1,796
- Sol Melia SA 149,043 1,672
Sociedad General de Aguas de
Barcelona SA 117,049 1,571
ACS, Actividades de
Construccion y Servicios, SA 53,568 1,515
Acerinox SA 51,534 1,497
Grupo Dragados SA 178,014 1,281
- TelePizza SA 202,793 1,147
Zardoya Otis SA 114,572 1,019
Corporacion Mapfre SA 63,484 808
Metrovacesa SA 44,457 750
Azucarera Ebro Agricolas SA 62,364 747
Vallehermoso SA 123,858 742
Cortefiel SA 29,299 638
Prosegur Cia de Seguridad SA
(Registered) 53,578 629
Portland Valderrivas SA 28,614 535
- Puleva SA 253,169 415
Immobiliaria Urbis SA 85,951 395
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
- El Aguila SA 46,711 $ 333
Viscofan Industria Navarra de
Envolturas Celulosicas SA 49,788 327
Grupo Empresarial Ence SA 19,788 324
- Asturiana de Zinc SA 31,013 297
Uralita SA 46,699 282
Fabrica Espanola de Productos
Quimicos y Farmaceuticos SA 25,176 270
- Ercros SA 229,697 121
- Autopista Concesionaria
Espanola SA Rights
Exp. 7/5/2000 207,743 90
----------
246,587
----------
SWEDEN (5.0%)
Telefonaktiebolaget
LM Ericsson AB Class B 7,154,028 142,335
Skandia Forsakrings AB 931,446 24,744
Nordic Baltic Holding (NBH) AB 2,873,076 21,784
Hennes & Mauritz AB B Shares 757,244 15,886
- Telia AB 1,390,738 13,161
Svenska Handelsbanken AB
A Shares 628,580 9,172
Skandinaviska Eeskilda Banken
AB A Shares 674,179 8,033
ForeningsSparbanken AB 504,162 7,415
- NetCom AB B Shares 97,323 7,224
Securitas AB B Shares 327,082 6,974
Volvo AB B Shares 271,325 5,924
Electrolux AB Series B 335,295 5,218
- Sandvik AB 229,921 4,850
Svenska Cellulosa AB B Shares 207,274 3,958
Skanska AB B Shares 100,408 3,578
OM Gruppen AB 77,271 3,471
Volvo AB A Shares 119,999 2,531
Atlas Copco AB A Shares 124,340 2,410
WM-Data AB Class B 331,240 1,832
Gambro AB 220,032 1,806
Svenska Handelsbanken AB
B Shares 100,896 1,461
Assidoman AB 101,917 1,458
Atlas Copco AB B Shares 63,561 1,196
Swedish Match AB 374,854 1,163
Drott AB B Shares 106,418 1,153
SKF AB B Shares 58,288 980
Svenskt Stal AB (SSAB)-
Series A 74,214 740
Trelleborg AB B Shares 103,199 724
Gambro AB B Shares 84,897 678
SKF AB A Shares 41,001 654
SAPA AB 31,322 553
Svenskt Stal AB (SSAB) 29,319 282
Esselte AB B Shares 19,423 114
Esselte AB A Shares 16,834 99
----------
303,561
----------
SWITZERLAND (8.6%)
Novartis AG (Registered) 66,170 105,152
Nestle SA (Registered) 35,964 72,213
Roche Holding AG 6,452 63,010
UBS AG (Registered) 394,996 58,057
Credit Suisse Group AG
(Registered) 251,229 50,136
ABB Ltd. 275,349 33,063
Schweizerische
Rueckversicherungs-
Gesellschaft 13,003 26,589
Swisscom AG 67,811 23,562
Zurich Allied AG 44,961 22,286
Roche Holding AG (Bearer) 1,459 15,482
Adecco SA (Bearer) 16,625 14,171
Holderbank Financiere Glarus AG
(Bearer) 5,148 6,332
The Swatch Group AG (Bearer) 3,418 4,360
- Alusuisse Group AG (Registered) 5,441 3,557
The Swatch Group AG
(Registered) 12,962 3,392
Lonza AG 5,804 3,034
Holderbank Financiere Glarus AG
(Registered) 8,253 2,705
- Givaudan 7,911 2,415
Sulzer AG (Registered) 3,173 2,117
SGS Societe Generale de
Surveillance Holding SA (Bearer) 982 1,703
Sairgroup 9,464 1,583
Kuoni Reisen Holding AG
(Registered) 2,504 1,163
Valora Holding AG 3,697 1,030
Schindler Holding AG (Registered) 663 1,019
Georg Fischer AG (Registered) 2,988 932
SGS Societe Generale de
Surveillance Holding SA
(Registered) 2,112 890
Sika Finanz AG (Bearer) 2,221 746
Schindler Holding AG (Ptg. Ctf.) 473 710
Grands Magasins Jelmoli SA
(Bearer) 476 600
Forbo Holding AG (Registered) 1,398 585
Moevenpick Holding AG (Bearer) 1,081 485
Grands Magasins Jelmoli SA
(Registered) 771 197
----------
523,276
----------
UNITED KINGDOM (28.9%)
Vodafone Airtouch PLC 43,996,624 177,839
BP Amoco PLC 17,410,514 167,108
Glaxo Wellcome PLC 3,303,996 96,387
HSBC Holdings PLC 7,728,736 88,398
British Telecommunications
PLC 5,926,825 76,626
AstraZeneca Group PLC 1,629,130 76,087
SmithKline Beecham PLC 5,138,145 67,285
Vodafone Airtouch PLC ADR 1,177,400 48,789
Lloyds TSB Group PLC 4,999,467 47,229
Royal Bank of Scotland
Group PLC 2,391,400 40,041
- British Sky Broadcasting
Group PLC 1,741,559 34,064
Barclays PLC 1,362,444 33,889
CGNU PLC 2,031,232 33,826
BP Amoco PLC ADR 575,360 32,544
Marconi PLC 2,448,563 31,879
Diageo PLC 3,137,554 28,167
Prudential PLC 1,760,484 25,799
Reuters Group PLC 1,294,415 22,085
</TABLE>
23
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<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
BG PLC 3,193,098 $ 20,641
Halifax PLC 2,046,460 19,642
Tesco PLC 6,137,973 19,096
Pearson PLC 571,738 18,177
Granada Group PLC 1,697,593 16,962
Allied Zurich PLC 1,432,537 16,949
British Aerospace PLC 2,643,744 16,490
Unilever PLC 2,643,413 16,007
Abbey National PLC 1,329,502 15,901
Rio Tinto PLC 969,955 15,859
British American Tobacco PLC 1,985,781 13,258
Invensys PLC 3,319,178 12,462
Cadbury Schweppes PLC 1,846,910 12,135
Centrica PLC 3,634,240 12,132
3i Group PLC 555,947 11,438
Kingfisher PLC 1,240,265 11,294
Legal & General Group PLC 4,618,215 10,802
National Grid Group PLC 1,334,820 10,528
WPP Group PLC 701,641 10,250
Amvesco PLC 615,586 9,879
The Sage Group PLC 1,178,879 9,548
- ARM Holdings PLC 860,871 9,227
Marks & Spencer PLC 2,615,809 9,197
Reed International PLC 1,050,672 9,146
Bass PLC 803,702 9,040
Hays PLC 1,579,639 8,812
Logica PLC 371,226 8,790
Scottish Power PLC 1,033,667 8,763
GKN PLC 647,338 8,261
Compass Group PLC 619,358 8,162
J. Sainsbury PLC 1,722,312 7,822
BAA PLC 961,644 7,716
Railtrack Group PLC 465,929 7,241
Carlton Communications PLC 554,922 7,141
National Power PLC 1,065,262 6,789
EMI Group PLC 723,560 6,572
BOC Group PLC 442,179 6,359
Boots Co. PLC 824,318 6,277
New Dixons Group PLC 1,540,092 6,272
Sema Group PLC 421,420 5,997
Land Securities PLC 497,354 5,948
Great Universal Stores PLC 909,853 5,854
Nycomed Amersham PLC 572,166 5,682
British Airways PLC 985,022 5,667
Imperial Chemical
Industries PLC 673,507 5,348
ScottishPower PLC ADR 154,280 5,159
Rentokil Initial PLC 2,237,511 5,081
Hanson PLC 707,952 5,005
The Peninsular & Oriental Steam
Navigation Co. 578,659 4,958
Capita Group PLC 202,161 4,949
Schroders PLC 272,543 4,902
United Utilities PLC 486,527 4,817
Hilton Group PLC 1,355,495 4,761
Blue Circle Industries PLC 712,904 4,603
- Celltech Group PLC 236,968 4,592
Misys PLC 521,367 4,404
Ocean Group PLC 264,119 4,358
- Canary Wharf Finance PLC 754,592 4,233
- Corus Group PLC 2,811,947 4,108
Thames Water PLC 308,513 3,993
Electrocomponents PLC 385,807 3,942
Williams PLC 655,600 3,821
Burmah Castrol PLC 146,888 3,705
Smiths Industries PLC 282,766 3,681
Smith & Nephew PLC 993,089 3,668
Psion PLC 354,760 3,432
RMC Group PLC 235,159 3,062
Arjo Wiggins Appleton PLC 772,919 3,007
British Land Co., PLC 481,351 2,951
Wolseley PLC 535,075 2,876
Johnson Matthey PLC 190,864 2,687
MEPC PLC 322,602 2,657
Lasmo PLC 1,225,914 2,608
BBA Group PLC 391,933 2,569
TI Group PLC 443,450 2,417
Provident Financial PLC 223,701 2,354
Airtours PLC 426,400 2,240
- Anglian Water PLC 238,523 2,203
Bunzl PLC 402,857 2,159
Tate & Lyle PLC 416,409 2,080
Slough Estates PLC 371,631 2,059
FKI PLC 513,297 1,826
SSL International PLC 162,206 1,756
Hammerson PLC 261,796 1,752
Stagecoach Holdings PLC 1,496,423 1,654
Rank Group PLC 683,288 1,583
Pilkington PLC 991,898 1,412
Rexam PLC 345,455 1,344
IMI PLC 302,258 1,295
London Bridge Software
Holdings PLC 147,300 1,093
The Berkeley Group PLC 112,629 1,071
Caradon PLC 442,846 1,012
Great Portland Estates 255,737 903
New Unigate PLC 205,586 903
Barratt Developments PLC 223,746 887
De La Rue PLC Group 168,736 884
Taylor Woodrow PLC 339,633 787
- Eidos PLC 95,350 700
Amec PLC 189,724 539
Lex Service PLC 106,048 535
George Wimpey PLC 296,888 520
Hepworth PLC 172,332 492
Coats Viyella PLC 532,945 444
BICC PLC 336,289 389
Jarvis PLC 129,992 354
- GKN PLC Class B 10,571 1
----------
1,757,812
----------
UNITED STATES
- InFocus Corp. 16,358 527
----------
---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $4,117,492) 6,076,191
---------------------------------------------------------------------------
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
FACE MARKET
AMOUNT VALUE*
(000) (000)
----------------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS (11.6%)(1)
----------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSN.
(2) 6.06%, 7/13/2000 $ 2,000 $ 1,996
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
6.71%, 7/3/2000--Note H 702,560 702,560
----------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $704,556) 704,556
----------------------------------------------------------------------------
TOTAL INVESTMENTS (111.4%)
(COST $4,822,048) 6,780,747
----------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-11.4%)
----------------------------------------------------------------------------
Other Assets--Note B 56,658
Security Lending Collateral Payable
to Brokers--Note H (702,560)
Other Liabilities (49,913)
-----------
(695,815)
----------------------------------------------------------------------------
NET ASSETS (100%) $6,084,932
============================================================================
</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 99.9% and 11.5%, respectively, of net assets. See Note F
in Notes to Financial Statements.
(2) Security segregated as initial margin for open futures contracts.
ADR--American Depositary Receipt.
ARS--American Registered Share.
(Ptg. Ctf.)--Participating Certificate.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
AMOUNT
(000)
----------------------------------------------------------------------------
<S> <C>
AT JUNE 30, 2000, NET ASSETS CONSISTED OF:
----------------------------------------------------------------------------
Paid in Capital $4,094,700
Undistributed Net Investment
Income--Note G 42,208
Accumulated Net Realized
Losses--Note G (10,369)
Unrealized Appreciation
(Depreciation)--Note F
Investment Securities 1,958,699
Futures Contracts (222)
Foreign Currencies and
Forward Currency Contracts (84)
----------------------------------------------------------------------------
NET ASSETS $6,084,932
============================================================================
Investor Shares--Net Assets
Applicable to 212,130,577 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $5,945,768
----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--
INVESTOR SHARES $28.03
============================================================================
Institutional Shares--Net Assets
Applicable to 4,964,324 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $139,164
----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--
INSTITUTIONAL SHARES $28.03
============================================================================
</TABLE>
25
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<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (98.8%)(1)
---------------------------------------------------------------------------
AUSTRALIA (8.2%)
News Corp. Ltd. 1,576,739 $ 21,774
News Corp. Ltd. Pfd. 1,663,784 20,144
Telstra Corp. Ltd. 4,792,444 19,509
National Australia Bank Ltd. 1,156,533 19,373
Broken Hill Proprietary Co. Ltd. 1,346,610 15,969
Commonwealth Bank
of Australia 909,287 15,117
Westpac Banking Corp., Ltd. 1,489,996 10,780
AMP Ltd. 925,691 9,449
Brambles Industries Ltd. 169,164 5,214
Rio Tinto Ltd. 256,641 4,256
Westfield Trust (Units) 2,173,103 4,229
WMC Ltd. 887,978 3,984
Lend Lease Corp. 293,818 3,759
Foster's Brewing Group Ltd. 1,275,060 3,598
Coles Myer Ltd. 876,130 3,374
Woolworths Ltd. 858,214 3,177
Telstra Corp. Insurance Receipt 1,104,000 2,519
Suncorp-Metway Ltd. 476,851 2,469
CSR Ltd. 770,373 2,146
CSL Ltd. 108,036 2,143
Stockland Trust Group Ltd. 924,268 1,956
Amcor Ltd. 486,166 1,705
Wesfarmers Ltd. 212,661 1,698
QBE Insurance Group Ltd. 336,327 1,650
Coca-Cola Amatil Ltd. 804,629 1,570
Australian Gas Light Co., Ltd. 254,172 1,518
Computershare Ltd. 285,000 1,470
Southcorp Ltd. 490,691 1,420
Tabcorp Holdings Ltd. 241,125 1,390
North Ltd. 574,375 1,362
Santos Ltd. 418,889 1,280
Erg Ltd. 120,000 934
Orica Ltd. 203,871 928
Hardie (James) Industries Ltd. 301,691 795
Howard Smith Ltd. 162,140 794
Transurban Group 335,680 757
Normandy Mining Ltd. 1,383,457 748
Aristocrat Leisure Ltd. 220,000 746
Pacific Dunlop Ltd. 814,807 729
M.I.M. Holdings Ltd. 1,320,014 713
British American Tobacco
Australasia Ltd. 107,107 675
Leighton Holdings Ltd. 196,234 634
Westralian Sands Ltd. 220,483 633
Goodman Fielder Ltd. 761,745 567
F.H. Faulding & Co., Ltd. 107,541 528
- Boral Ltd. 396,835 500
- Newcrest Mining Ltd. 185,214 500
Futuris Corp., Ltd. 443,640 487
Mayne Nickless Ltd. 212,081 437
Cochlear Ltd. 20,000 345
- Paperlinx Ltd. 162,055 308
Sons of Gwalia Ltd. 76,165 240
Gandel Retail Trust 325,000 211
Mirvac Group 100,000 204
David Jones Ltd. 252,932 189
Delta Gold Ltd. 165,500 123
----------
203,727
----------
HONG KONG (6.2%)
Hutchison Whampoa Ltd. 3,253,100 40,898
Cable & Wireless HKT Ltd. 9,380,431 20,638
Hang Seng Bank Ltd. 1,491,400 14,158
Sun Hung Kai Properties Ltd. 1,879,400 13,502
CLP Holdings Ltd. 1,752,500 8,161
- Pacific Century Cyberworks Ltd. 3,790,000 7,488
Swire Pacific Ltd. A Shares 1,164,000 6,809
Johnson Electric Holdings Ltd. 713,000 6,746
Cathay Pacific Airways Ltd. 2,597,000 4,814
Henderson Land Development
Co. Ltd. 1,053,000 4,633
Hong Kong & China Gas
Co., Ltd. 3,943,842 4,427
Li & Fung Ltd. 791,000 3,958
Wharf Holdings Ltd. 1,851,314 3,313
Bank of East Asia Ltd. 1,076,133 2,513
Television Broadcasts Ltd. 339,000 2,261
Shangri-La Asia Ltd. 1,599,744 1,888
New World Development
Co., Ltd. 1,675,797 1,870
Hang Lung Development
Co., Ltd. 1,428,000 1,108
ASM Pacific Technology Ltd. 288,000 1,079
South China Morning Post Ltd. 1,293,000 1,004
Hysan Development Co., Ltd. 902,211 949
Giordano International Ltd. 530,000 806
Sino Land Co. 1,800,000 635
- QPL International Holdings Ltd. 428,000 615
Esprit Holdings Ltd. 415,000 431
Hong Kong and Shanghai
Hotels Ltd. 699,000 406
Varitronix International Ltd. 213,000 370
Hopewell Holdings Ltd. 551,400 230
- Oriental Press Group Ltd. 1,352,000 217
----------
155,927
----------
JAPAN (80.9%)
Toyota Motor Corp. 2,876,000 131,294
Nippon Telegraph and
Telephone Corp. 9,736 129,750
Sony Corp. 683,838 63,988
Fujitsu Ltd. 1,506,000 52,240
Takeda Chemical Industries Ltd. 676,000 44,470
The Bank of Tokyo-
Mitsubishi Ltd. 3,551,000 42,994
Matsushita Electric Industrial
Co., Ltd. 1,568,000 40,756
NEC Corp. 1,239,000 38,996
- Hitachi Ltd. 2,563,000 37,064
Nomura Securities Co., Ltd. 1,498,000 36,742
Softbank Corp. 255,400 34,761
Canon, Inc. 668,000 33,336
Toshiba Corp. 2,474,000 27,990
Murata Manufacturing Co., Ltd. 184,000 26,469
Rohm Co., Ltd. 89,600 26,253
Honda Motor Co., Ltd. 749,000 25,556
Tokyo Electric Power Co. 1,033,300 25,246
Kyocera Corp. 145,500 24,740
Sakura Bank Ltd. 3,134,681 21,717
Fuji Bank Ltd. 2,638,000 20,096
Sumitomo Bank Ltd. 1,591,000 19,549
</TABLE>
26
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<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
Ito-Yokado Co., Ltd. 319,000 $ 19,236
Nintendo Co. 108,700 19,027
Fanuc Co., Ltd. 183,300 18,694
Tokyo Electron Ltd. 134,630 18,476
- Nissan Motor Co., Ltd. 3,064,000 18,100
East Japan Railway Co. 3,108 18,095
Mitsubishi Electric Corp. 1,651,000 17,914
Advantest Corp. 76,900 17,190
Denso Corp. 690,000 16,826
Fuji Photo Film Co., Ltd. 397,000 16,285
Shin-Etsu Chemical Co., Ltd. 319,000 16,221
Industrial Bank of Japan Ltd. 2,030,000 15,426
Sharp Corp. 865,000 15,329
Yamanouchi Pharmaceuticals
Co., Ltd. 277,000 15,159
Takefuji Corp. 121,100 14,662
Kao Corp. 476,000 14,577
Tokio Marine & Fire
Insurance Co. 1,207,000 13,964
Bridgestone Corp. 653,500 13,867
Kansai Electric Power Co., Inc. 767,700 13,772
Japan Tobacco, Inc. 1,562 13,745
Daiwa Securities Group Inc. 1,037,000 13,722
Sanyo Electric Co., Ltd. 1,469,000 13,246
Secom Co., Ltd. 178,000 13,039
Mitsubishi Estate Co., Ltd. 1,037,000 12,232
Mitsubishi Heavy
Industries Ltd. 2,597,000 11,537
Mitsubishi Corp. 1,231,000 11,158
Nippon Steel Corp. 5,207,000 10,975
Nikon Corp. 284,000 10,549
Furukawa Electric Co. 493,000 10,321
Central Japan Railway Co. 1,795 10,179
Asahi Glass Co., Ltd. 908,000 10,170
- Dai-Nippon Printing Co., Ltd. 575,000 10,157
SMC Corp. 53,700 10,126
Kirin Brewery Co., Ltd. 794,000 9,944
Sumitomo Electric
Industries Ltd. 566,000 9,726
Taisho Pharmaceutical Co. 269,000 9,662
Mitsui & Co., Ltd. 1,259,000 9,639
Sumitomo Corp. 838,000 9,449
Asahi Bank Ltd. 2,171,000 9,152
Tokai Bank Ltd. 1,745,000 8,626
Acom Co., Ltd. 101,000 8,515
Yamato Transport Co., Ltd. 340,000 8,468
Hoya Corp. 89,000 7,991
Sankyo Co., Ltd. 353,000 7,991
Oriental Land Co.,Ltd. 77,900 7,974
Promise Co.,Ltd. 100,400 7,952
Orix Corp. 53,300 7,884
Asahi Chemical Industry
Co., Ltd. 1,102,000 7,812
Mitsubishi Trust &
Banking Corp. 1,003,000 7,802
Sumitomo Chemical Co. 1,238,000 7,465
Eisai Co., Ltd. 231,000 7,423
Mitsui Fudosan Co., Ltd. 670,000 7,283
Mitsubishi Chemical Corp. 1,597,000 6,566
Tokyo Gas Co., Ltd. 2,239,000 6,306
Ajinomoto Co., Inc. 486,000 6,247
Tokyo Broadcasting System, Inc. 142,000 6,147
Taiyo Yuden Co., Ltd. 93,000 5,837
Benesse Corp. 82,200 5,710
- Itochu Corp. 1,124,000 5,684
Osaka Gas Co., Ltd. 1,970,000 5,679
Terumo Corp. 166,000 5,633
Toppan Printing Co., Ltd. 531,000 5,631
Tohoku Electric Power Co. 411,400 5,560
OJI Paper Co., Ltd. 802,000 5,534
Daiichi Pharmaceutical Co., Ltd. 215,000 5,466
Shizuoka Bank Ltd. 640,000 5,444
Marui Co., Ltd. 283,000 5,430
Omron Corp. 199,000 5,417
Kinki Nippon Railway Co. 1,317,000 5,353
Shionogi & Co., Ltd. 281,000 5,352
Pioneer Corporation 137,000 5,348
Komatsu Ltd. 740,000 5,218
Japan Air Lines Co., Ltd. 1,365,000 5,199
Sekisui House Ltd. 559,000 5,183
Shiseido Co., Ltd. 331,000 5,131
Konami Co., Ltd. 80,800 5,117
Nippon Mitsubishi Oil Corp. 1,112,600 5,111
Nippon Express Co., Ltd. 827,000 5,089
Nippon Paper Industries Co. 731,000 5,002
Hirose Electric Co., Ltd. 30,500 4,759
Jusco Co., Ltd. 250,000 4,749
Nippon Sheet Glass Co., Ltd. 340,000 4,737
Asahi Breweries Ltd. 391,000 4,690
Daikin Industries Ltd. 201,000 4,683
Nippon Yusen Kabushiki
Kaisha Co. 955,000 4,603
Toray Industries, Inc. 1,078,000 4,381
Takara Shuzo Co. 171,000 4,275
Nidec Corp. 48,600 4,226
- Marubeni Corp. 1,205,000 4,157
Daiwa Bank, Ltd. 1,582,000 4,112
Bank of Yokohama Ltd. 910,000 4,085
Tokyu Corp. 823,000 4,076
Kubota Corp. 1,082,000 3,937
Minebea Co., Ltd. 308,000 3,872
NSK Ltd. 429,000 3,771
Chugai Pharmaceutical Co., Ltd. 196,000 3,714
Uni-Charm Corp. 60,100 3,647
Olympus Optical Co., Ltd. 201,000 3,611
- Kawasaki Steel Corp. 2,494,000 3,583
NGK Insulators Ltd. 287,000 3,564
Skylark Co., Ltd. 90,000 3,564
Bank of Fukuoka, Ltd. 522,000 3,562
Mitsubishi Materials Corp. 835,000 3,425
Teijin Ltd. 689,000 3,367
Kyowa Hakko Kogyo Co. 339,000 3,323
Shimamura Co., Ltd. 27,500 3,220
Toyo Seikan Kaisha Ltd. 172,000 3,219
Kuraray Co., Ltd. 280,000 3,218
Sumitomo Marine & Fire
Insurance Co. 549,000 3,202
Mitsui Marine & Fire
Insurance Co. 631,000 3,042
Kaneka Corp. 269,000 2,972
</TABLE>
27
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<TABLE>
<CAPTION>
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MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
Daiwa House Industry Co., Ltd. 405,000 $ 2,963
Ebara Corp. 215,000 2,920
Mitsui Mining & Smelting
Co., Ltd. 378,000 2,876
Nitto Denko Corp. 73,000 2,822
Joyo Bank Ltd. 730,000 2,815
Trans Cosmos, Inc. 18,700 2,814
Dai-Nippon Ink &
Chemicals, Inc. 596,000 2,811
77 Bank Ltd. 346,000 2,773
Toho Co., Ltd. 16,200 2,765
Tostem Corp. 168,000 2,747
NGK Spark Plug Co. 177,000 2,745
The Chuo Mitsui Trust and
Banking Co., Ltd. 609,400 2,661
Alps Electric Co., Ltd. 140,000 2,607
Shimano, Inc. 106,800 2,574
Ohbayashi Corp. 580,000 2,571
Nippon Meat Packers, Inc. 172,000 2,520
Gunma Bank Ltd. 485,000 2,507
Nissin Food Products Co., Ltd. 95,500 2,437
Kajima Corp. 744,000 2,377
Casio Computer Co. 209,000 2,351
Tosoh Corp. 459,000 2,321
Konica Corp. 271,000 2,305
Citizen Watch Co., Ltd. 237,000 2,294
Nippon Comsys Corp. 107,000 2,281
Kurita Water Industries Ltd. 101,000 2,229
Toto Ltd. 278,000 2,139
Takashimaya Co. 226,000 2,110
- Daiei, Inc. 543,000 2,043
Isetan Co. 166,000 2,040
Ube Industries Ltd. 647,000 2,030
- Sumitomo Metal Mining Co. 429,000 2,027
Uny Co., Ltd. 145,000 2,008
Fuji Machine Manufacturing
Co., Ltd. 38,100 2,006
Tobu Railway Co., Ltd. 680,000 1,947
Fujikura Ltd. 288,000 1,919
Onward Kashiyama Co., Ltd. 139,000 1,892
Sumitomo Metal Industries Ltd. 2,718,000 1,875
Sumitomo Osaka Cement
Co., Ltd. 315,000 1,870
Amada Co., Ltd. 219,000 1,863
Yokogawa Electric Corp. 185,000 1,853
Meiji Seika Kaisha Ltd. 275,000 1,825
Daito Trust Construction Co., Ltd. 107,900 1,785
- Ishikawajima-Harima Heavy
Industries Co. 977,000 1,773
Nisshin Flour Milling Co., Ltd. 174,000 1,743
Shimizu Corp. 608,000 1,741
Yakult Honsha Co., Ltd. 130,000 1,731
Yamaha Corp. 158,000 1,731
Toyo Information
Systems Co., Ltd. 31,000 1,726
Namco Ltd. 46,800 1,690
World Co., Ltd. 38,700 1,683
Keihin Electric Express Railway
Co., Ltd. 438,000 1,652
Sekisui Chemical Co. 417,000 1,608
Kawasaki Heavy Industries Ltd. 1,048,000 1,605
Sanrio Co., Ltd. 60,000 1,602
- Mitsukoshi Ltd. 351,000 1,559
Credit Saison 67,000 1,558
Yamazaki Baking Co., Ltd. 158,000 1,553
Taiheiyo Cement Corp 732,000 1,536
Kokuyo Co., Ltd. 93,000 1,529
Sumitomo Heavy Industries Ltd. 448,000 1,503
CSK Corp. 48,300 1,497
Fuji Soft ABC Inc. 25,100 1,492
Denki Kagaku Kogyo K.K. 334,000 1,484
Mitsubishi Rayon Co., Ltd. 478,000 1,459
NTN Corp. 339,000 1,452
Showa Shell Sekiyu K.K. 280,000 1,387
Wacoal Corp. 135,000 1,378
Meitec Corp. 34,600 1,374
- Kanebo Ltd. 442,000 1,370
Kinden Corp. 215,000 1,353
Asatsu-DK Inc. 32,700 1,344
- Hokuriku Bank Ltd. 570,000 1,325
Koyo Seiko Co., Ltd. 152,000 1,323
Nichiei Co., Ltd. 77,200 1,270
Snow Brand Milk Products Co. 233,000 1,255
Dai-Nippon Screen
Manufacturing Co., Ltd. 131,000 1,249
House Foods Industry Corp. 80,000 1,240
- Sega Enterprises Ltd. 80,200 1,236
Makita Corp. 129,000 1,233
Mitsubishi Gas Chemical Co. 363,000 1,218
Taisei Corp. 748,000 1,202
- Showa Denko K.K. 783,000 1,155
Toda Corp. 239,000 1,141
- Ashikaga Bank Ltd. 537,000 1,117
INAX Corp. 180,000 1,111
Mori Seiki Co. 71,000 1,101
Mitsubishi Logistics Corp. 119,000 1,080
Toyobo Ltd. 543,000 1,073
Meiji Milk Products Co., Ltd. 196,000 1,056
Kamigumi Co., Ltd. 198,000 1,046
Sapparo Breweries Ltd. 254,000 1,040
Nisshinbo Industries, Inc. 196,000 1,037
Kikkoman Corp. 133,000 1,027
Kadokawa Shoten Publishing
Co., Ltd. 9,900 1,001
Komori Corp. 57,000 999
Toei Co. 131,000 960
Kyowa Exeo Corp. 95,000 956
Nippon Shinpan Co. 386,000 945
Autobacs Seven Co., Ltd. 28,200 941
Daifuku Co., Ltd. 84,000 934
Sumitomo Forestry Co. 136,000 917
Sanden Corp. 117,000 911
Nippon Shokubai K.K. 142,000 907
Daicel Chemical Industries Ltd. 279,000 902
Kawasaki Kisen Kaisha Ltd. 444,000 894
Nishimatsu Construction Co. 222,000 877
Nichirei Corp. 202,000 863
Katokichi Co., Ltd. 33,000 837
</TABLE>
28
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<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
- Seiyu Ltd. 196,000 $ 834
Cosmo Oil Co., Ltd. 443,000 817
Tokyo Style Co. 86,000 813
Mycal Corp. 234,000 803
- Japan Energy Corp. 729,000 785
Aoyama Trading Co., Ltd. 53,100 768
Gunze Ltd. 190,000 740
Daimaru, Inc. 208,000 731
Amano Corp. 65,000 727
Shimachu Co. 33,600 715
Daiwa Kosho Lease Co., Ltd. 213,000 701
Hankyu Department Stores, Inc. 131,000 701
Tsubakimoto Chain Co. 134,000 684
Makino Milling Machine Co. 68,000 668
Okumura Corp. 181,000 657
Hitachi Zosen Corp. 700,000 635
Noritake Co., Ltd. 110,000 614
JGC Corp. 150,000 607
Teikoku Oil Co., Ltd. 176,000 572
- Tokyo Dome Corp. 125,000 568
Seino Transportation Co., Ltd. 112,000 565
Brother Industries Ltd. 197,000 564
- Orient Corp. 100,000 564
Kaken Pharmaceutical Co. 71,000 551
- Mitsui Engineering &
Shipbuilding Co., Ltd. 558,000 533
Mitsubishi Paper Mills Ltd. 227,000 528
Takara Standard Co. 120,000 524
Takuma Co., Ltd. 57,000 507
Sanwa Shutter Corp. 155,000 504
Okuma Corp. 114,000 500
Tokyo Tatemono Co., Ltd. 222,000 474
Kureha Chemical Industry Co. 151,000 454
NOF Corp. 148,000 434
- Daikyo, Inc. 158,000 414
Penta-Ocean Construction Co. 266,000 405
Maeda Road Construction
Co., Ltd. 84,000 395
Nippon Light Metal Co. 396,000 393
Sho-Bond Corp. 25,800 385
- Japan Steel Works Ltd. 266,000 360
- Ishihara Sangyo Kaisha Ltd. 204,000 343
Nippon Suisan Kaisha Ltd. 175,000 321
Tokyotokeiba Co. 246,000 316
Iwatani International Corp. 169,000 310
- Renown, Inc. 207,000 303
- Kumagai Gumi Co., Ltd. 488,000 295
Nitto Boseki Co., Ltd. 158,000 276
- Unitika Ltd. 326,000 256
Oyo Corp. 18,000 253
Mitsui Soko Co., Ltd. 92,000 201
Toa Corp. 145,000 182
- Chiyoda Corp. 174,000 181
Nippon Sharyo Ltd. 84,000 176
- Fujita Corp. 356,000 175
- Haseko Corp. 305,000 118
- Arabian Oil Co., Ltd. 33,700 115
----------
2,021,306
----------
MALAYSIA
- Aokam Perdana Bhd. 11,233 14
----------
NEW ZEALAND (0.5%)
Telecom Corp. of
New Zealand Ltd. 1,466,198 5,142
Carter Holt Harvey Ltd. 1,454,583 1,267
Lion Nathan Ltd. 450,813 1,008
- Fletcher Challenge Ltd. Energy 266,305 871
Contact Energy Ltd. 499,175 670
Fletcher Challenge Ltd. Paper 575,882 661
Fisher & Paykel Industries Ltd. 151,795 479
Brierley Investments Ltd. 2,427,154 377
The Warehouse Group Ltd. 150,000 365
Auckland International
Airport Ltd. 300,000 356
Fletcher Challenge Ltd. Building 288,958 307
Fletcher Challenge Ltd. Forest 764,561 277
----------
11,780
----------
SINGAPORE (3.0%)
DBS Group Holdings Ltd. 1,081,027 13,880
Singapore Airlines Ltd. 989,833 9,790
Oversea-Chinese Banking
Corp., Ltd. 1,032,410 7,106
Singapore
Telecommunications Ltd. 4,841,212 7,084
- Chartered Semiconductor
Manufacturing Ltd. 762,000 6,655
United Overseas Bank Ltd. 844,767 5,521
Singapore Press Holdings Ltd. 290,155 4,531
Singapore Technologies
Engineering Ltd. 2,408,000 3,538
City Developments Ltd. 689,312 2,671
Venture Manufacturing
(Singapore) Ltd. 178,000 1,812
Creative Technology Ltd. 70,050 1,689
Sembcorp Industries Ltd. 1,284,419 1,397
Keppel Corp., Ltd. 633,750 1,371
United Industrial Corp., Ltd. 2,011,000 948
- Neptune Orient Lines Ltd. 949,000 878
DBS Land Ltd. 649,000 841
Fraser & Neave Ltd. 236,000 839
Parkway Holdings Ltd. 264,320 676
Natsteel Electronics Ltd. 200,000 613
Cycle & Carriage Ltd. 190,651 448
First Capital Corp., Ltd. 386,000 368
Overseas Union Enterprise Ltd. 148,000 360
Haw Par Brothers
International Ltd. 220,000 356
Hotel Properties Ltd. 362,000 322
Comfort Group Ltd. 413,000 205
Wing Tai Holdings Ltd. 265,000 189
Omni Industries Ltd. 100,000 165
Singapore Computer
Systems Ltd. 40,000 87
----------
74,340
----------
---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $2,049,367) 2,467,094
---------------------------------------------------------------------------
</TABLE>
29
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<TABLE>
<CAPTION>
----------------------------------------------------------------------------
FACE MARKET
AMOUNT VALUE*
PACIFIC STOCK INDEX FUND (000) (000)
----------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDs (0.5%)
----------------------------------------------------------------------------
Nitto Denko
3.90%, 3/30/2001 JPY 67,000 $ 1,963
Sumitomo Bank
International
0.75%, 5/31/2001 JPY 1,022,000 10,626
----------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS
(COST $12,227) 12,589
----------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (5.0%)(1)
----------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSN.
(2) 6.09%, 7/20/2000 $ 2,500 2,492
REPURCHASE AGREEMENTS
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
6.71%, 7/3/2000 10,284 10,284
6.71%, 7/3/2000--Note H 113,212 113,212
----------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $125,988) 125,988
----------------------------------------------------------------------------
TOTAL INVESTMENTS (104.3%)
(COST $2,187,582) 2,605,671
----------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-4.3%)
----------------------------------------------------------------------------
Other Assets--Note B 32,267
Security Lending Collateral Payable
to Brokers--Note H (113,212)
Other Liabilities (27,364)
-----------
(108,309)
----------------------------------------------------------------------------
NET ASSETS (100%) $2,497,362
============================================================================
</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 99.3% and 4.5%, respectively, of net assets. See Note F
in Notes to Financial Statements.
(2) Security segregated as initial margin for open futures contracts.
JPY--Japanese Yen.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
AMOUNT
(000)
----------------------------------------------------------------------------
<S> <C>
AT JUNE 30, 2000, NET ASSETS CONSISTED OF:
----------------------------------------------------------------------------
Paid in Capital $2,169,919
Undistributed Net Investment
Income--Note G 7,479
Accumulated Net Realized
Losses--Note G (98,012)
Unrealized Appreciation
(Depreciation)--Note F
Investment Securities 418,089
Futures Contracts 152
Foreign Currencies and
Forward Currency Contracts (265)
----------------------------------------------------------------------------
NET ASSETS $2,497,362
============================================================================
Investor Shares--Net Assets
Applicable to 210,357,775 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $2,420,325
----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--
INVESTOR SHARES $11.51
============================================================================
Institutional Shares--Net Assets
Applicable to 6,694,062 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $77,037
----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--
INSTITUTIONAL SHARES $11.51
============================================================================
</TABLE>
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<CAPTION>
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MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (95.9%)
---------------------------------------------------------------------------
ARGENTINA (2.9%)
Telefonica Argentina SA
Class B 3,146,800 $ 11,200
PC Holdings SA Class B 3,182,394 5,827
Siderca SA Class A 1,460,549 3,361
Banco Galicia y Buenos Aires
SA de CV 691,478 2,594
Banco Frances Del Rio de la
Plata SA 305,468 2,246
- Astra Cia Argentina de
Petroleum SA 836,110 2,158
Transportadora de Gas Sur SA 1,136,770 2,047
- Molinos Rio de la Plata SA 359,500 683
Irsa Inversiones y
Representaciones SA 285,347 657
- Juan Minetti SA 284,234 321
- Solvay Indupa S.A.I.C. 367,438 270
- Renault Argentina SA 379,649 254
- Central Puerto SA 154,783 240
- Acindar Industria Argentina
de Aceros SA 320,300 232
- Ledesma SA 316,743 206
Cresud SA 167,825 144
- Polledo SA 215,900 137
- Sociedad Comercial de Plata SA 462,430 57
- Alpargatas S.A.I.C. 2,547 21
----------
32,655
----------
BRAZIL (14.5%)
Petroleo Brasileiro SA Pfd. 661,240 19,999
Cia Vale Do Rio Pfd. A 570,290 16,109
Centrais Electricas
Brasileiras SA 661,259,788 13,577
Telesp Celular
Participacoes SA Pfd. 610,421,938 11,043
Telesp Participacoes SA Pfd. 472,788,022 8,886
Tele Norte Leste
Participacoes SA Pfd. 345,001,445 8,089
Embratel Participacoes
SA Pfd. 308,391,824 7,376
Banco Bradesco SA Pfd. 796,052,587 6,936
Banco Itau SA Pfd. 75,441,620 6,636
Petroleo Brasileiro SA 185,000 5,443
Companhia Cervejaria
Brahma Pfd. 6,272,250 5,325
Companhia Brasileira de
Distribuicao Grupo Pao
de Acucar 142,785,659 4,635
Tele Centro Sul
Participacoes SA Pfd. 307,225,150 4,450
Companhia Energetica de
Minas Gerais Pfd. 232,254,229 4,060
Tele Norte Leste
Participacoes SA 198,694,814 3,859
Embratel Participacoes SA 183,400,329 3,420
Companhia
Siderurgica Nacional 105,558,200 3,314
Aracruz Celulose SA Pfd.
B Shares 1,570,271 2,989
Centrais Electricas
Brasileiras SA Pfd.
B Shares 126,878,624 2,809
Telesp Participacoes SA 243,459,360 2,662
Souza Cruz SA 442,600 2,650
Companhia Cervejaria
Brahma 3,815,265 2,466
Votorantim Celulose e Papel
SA Pfd. 56,113,931 2,070
Tele Sudeste Celular
Participacoes SA Pfd. 307,631,050 1,886
Brasil Telecom
Participacoes SA 183,498,260 1,863
Usiminas-Usinas
Siderurgicas de Minas
Gerais SA Pfd. Class A 328,869 1,522
Copene-Petroquimica
SA Pfd. A Shares 2,569,194 958
Banco do Estado de
Sao Paulo SA Pfd. 26,927,600 807
- Centrais Geradoras do Sul
do Brasil SA 655,562,377 797
Companhia Brasileira de
Petroleo Ipiranga Pfd. 77,718,600 775
Metalurgica Gerdau SA Pfd. 30,268,800 655
Sadia SA Pfd. 959,400 575
Tele Sudeste Celular
Participacoes SA 183,636,160 562
Companhia de Tecidos
Norte de Minas Pfd. 5,954,089 507
Companhia Cimento Portland
Itau Pfd. 3,558,200 494
- Companhia Paulista de
Forca e Luz 12,671,975 481
Bombril SA Pfd. 57,647,231 474
Fertilizantes Fosfatados
SA Pfd. 153,140,000 459
Perdigao Agroindustrial SA 63,738 396
Duratex SA Pfd. 11,870,567 379
Metal Leve SA Industria
e Comercio Pfd. 13,773,000 222
- Lojas Americanas SA Pfd. 64,583,796 214
- Centrais Geradoras do Sul
do Brasil SA 144,644,711 183
Marcopolo SA Pfd. 100,900 153
- Inepar SA Industria
e Construcoes 71,342,500 152
- Lojas Americanas SA 38,689,008 105
Tele Norte Leste Pfd. Receipts 460,738 11
----------
163,433
----------
CZECH REPUBLIC (0.9%)
- Cesky Telecom a.s. 281,563 4,737
- Ceske Energeticke Zavody a.s. 861,320 2,277
- Ceska Sporitelna a.s. 222,586 1,204
- Komercni Banka a.s. 55,840 1,132
Tabak a.s. 4,515 705
- Unipetrol a.s. 319,770 453
Inzenyrske a Prumyslove
Stavby (IPS) a.s. 22,030 100
</TABLE>
31
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<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
Severoceske Doly a.s. 8,280 $ 98
Podnik Vypocetni Techniky a.s. 600 59
----------
10,765
----------
GREECE (7.0%)
Hellenic Telecommunication
Organization SA 739,669 18,122
National Bank of Greece SA 328,576 13,081
Alpha Credit Bank SA 236,273 9,376
Commercial Bank of Greece SA 125,468 5,441
Intracom SA 143,232 5,370
Ergo Bank SA 178,964 3,425
Hellenic Bottling Co. SA (Bearer) 206,386 3,292
Titan Cement Co. SA 59,460 2,267
Attica Enterprises SA 155,016 1,685
- Heracles General Cement SA 72,000 1,578
Athens Medical Center SA 110,575 1,462
Hellenic Technodomiki SA 58,610 1,301
Aluminum of Greece SA 31,100 1,178
Delta Dairy SA 53,017 851
Inform P. Lykos SA 30,090 837
- Atti-Kat SA 88,145 752
- Papastratos Cigarettes SA 38,738 712
Michaniki SA 83,860 692
- Aspis Pronoia SA 47,762 676
Silver & Baryte Ores Mining SA 21,828 658
Aktor SA 79,599 651
- Hellenic Sugar Industry SA 44,884 638
Fourlis SA 30,992 606
Klonatex Group SA 44,400 541
Aegek SA 61,380 501
Elais SA 20,540 466
Hellas Can Packaging SA 14,520 438
- Alte SA 31,480 390
- Petzetakis SA 41,624 379
Epilectos SA 58,470 309
El. D. Mouzakis SA 47,840 290
Delta Dairy SA Pfd. 20,984 289
Klonatex ICST & TSA SA Pfd. 25,850 275
- Parnassos Enterprises ABE SA 19,140 125
----------
78,654
----------
HUNGARY (1.6%)
Magyar Tavkozlesi Rt. 1,529,170 10,682
OTB Bank Rt. 41,262 2,160
MOL Magyar Olaj-es
Gazipari Rt. 139,242 1,927
Richter Gedeon Rt. 28,260 1,530
Tisza Vegyi Kombinat Rt. 34,710 481
Demasz Rt. 5,030 289
Danubius Hotel and Spa Rt. 10,660 206
Raba Rt. 25,075 205
- Fotex Rt. 145,830 170
- Pick Szeged Rt. 4,290 159
Pannonplast Rt. 5,590 121
- Graboplast Rt. 6,490 66
- Zalakeramia Rt. 5,730 51
----------
18,047
----------
INDONESIA (1.6%)
PT Telekomunikasi Indonesia 14,648,120 5,146
PT Gudang Garam 1,143,000 1,848
- PT Indah Kiat Pulp &
Paper Corp. 7,648,622 1,551
- PT Indofood Sukses Makmur 2,704,900 1,476
- PT Astra International 3,375,000 1,061
PT Semen Gresik Tbk 839,000 762
- PT Medco Energi International 5,934,900 746
- PT Ramayana Lestari
Sentosa Tbk 1,011,500 647
PT Makindo Tbk 1,174,904 420
- PT Bank Pan Indonesia 9,033,000 387
- PT Matahari Putra Prima 4,234,000 363
- PT Gadjah Tunggal 4,315,000 284
PT Pabrik Kertas Tjiwi Kimia 1,662,000 275
- PT Tempo Scan Pacific Tbk 625,000 254
- PT Polysindo Eka Perkasa 7,358,000 252
- PT Kalbe Farma 2,999,600 223
- PT Bimantara Citra 1,516,300 212
PT Timah Tbk 659,500 196
- PT Citra Marga
Nusaphala Persada 3,309,500 189
- PT Sinar Mas Argo 405,000 177
PT Aneka Tambang Tbk 1,218,500 153
PT Budi Acid Jaya 2,462,500 148
- PT Duta Pertiwi Tbk 1,847,500 137
- PT Charoen Pokphand
Indonesia Tbk 393,000 130
- PT Barito Pacific Timber 2,710,500 116
- PT Jakarta International
Hotel & Development 1,406,500 105
- PT Indorama Synthetics 886,500 86
- PT Mulia Industrindo 1,867,520 85
- PT Hero Supermarket 422,500 84
- PT Modern Photo Film Co. 394,500 72
- PT London Sumatra Indonesia 664,100 55
- PT Mayora Indah 863,440 52
PT Asahimas Flat Glass 513,500 48
- PT Ciputra Development 917,000 47
- PT Daya Guna Samudera 628,320 41
----------
17,828
----------
ISRAEL (7.3%)
- Check Point Software
Technologies Ltd. 105,900 22,424
Teva Pharmaceutical
Industries Ltd. 187,346 10,182
Bezeq Israeli
Telecommunication Corp., Ltd. 1,091,443 6,082
Bank Hapoalim Ltd. 1,799,297 5,218
ECI Telecom Ltd. 131,110 4,687
Bank Leumi Le-Israel 2,032,290 4,196
- Orbotech Ltd. 28,250 2,624
Koor Industries Ltd. 23,610 2,540
Israel Chemicals Ltd. 1,728,880 2,113
- Gilat Satellite Networks Ltd. 30,009 2,082
IDB Holding Corp., Ltd. 53,160 2,042
The Israel Corp. Ltd.-ILS 1 Par 7,476 1,520
- Galileo Technology Ltd. 58,200 1,251
- CLAL Insurance Enterprise
Holdings Ltd. 73,238 1,222
- Makhteshim-Agan
Industries Ltd. 505,493 1,130
</TABLE>
32
<PAGE> 35
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
Super Sol Ltd. 294,525 $ 1,067
Osem Investment Ltd. 147,870 1,028
Matav-Cable Systems Media Ltd. 38,490 775
- Formula Systems (1985) Ltd. 13,180 712
- Scitex Corp., Ltd. 62,800 695
First International Bank
of Israel Ltd. 81,800 595
Industrial Buildings Corp. 403,883 594
Delta-Galil Industries Ltd. 24,930 540
Elbit Systems Ltd. 36,090 533
Elite Industries Ltd. 9,165 515
Property & Building Corp. 5,841 511
- Fundtech Ltd. 19,200 499
First International Bank
of Israel Ltd. 314,400 458
Elco Holdings Ltd. 48,986 453
Azorim Investment Development
& Construction Ltd. 48,327 446
The Israel Land Development
Co., Ltd. 41,800 431
Africa-Israel Investments Ltd. 3,854 425
- Ormat Industries Ltd. 133,074 390
- Agis Industries Ltd. 41,730 385
American Israeli Paper Mills Ltd. 5,262 342
Jerusalem Economic Corp., Ltd. 64,479 305
- Elbit Medical Imaging Ltd. 32,110 287
- Africa-Israel Investments
(1985) Ltd. 255 269
Israel Petrochemical
Enterprises Ltd. 46,056 256
Elite Industries Ltd. 20,960 223
- Ofer Development &
Investment Ltd. 51,535 207
Mehadrin Ltd. 4,480 136
- Polgat Ltd. 21,506 93
Israel Cold Storage &
Supply Company Ltd. 16,300 71
Ackerstein Industries Ltd. 49,710 69
The Israel Corp. Ltd.-ILS 5 Par 314 26
----------
82,649
----------
MALAYSIA
- Aokam Perdana Bhd. 8,033 10
----------
MEXICO (15.2%)
Telefonos de Mexico SA
Series L 16,153,898 46,210
- Grupo Televisa SA (CPO) 4,529,220 15,585
Telefonos de Mexico SA
Series A 5,321,880 15,441
- Wal-Mart de Mexico SA 5,773,755 13,578
Grupo Modelo SA de CV
Series C 4,760,487 11,074
Cemex CPO 2,160,567 10,151
- Grupo Financiero Banamex
Accival, SA de CV 2,056,160 8,666
- Fomento Economico
Mexica UBD 1,580,730 6,759
Kimberly Clark de Mexico SA
de CV Series A 1,868,338 5,326
- Grupo Carso SA de CV
Series A1 1,317,680 4,682
- Grupo Financiero Bancomer,
SA de CV 8,854,950 4,507
Grupo Bimbo SA 2,062,498 3,254
- Savia SA de CV 676,810 3,238
- Grupo Mexico SA Series B 1,012,834 2,856
- Wal-Mart De Mexico SA de CV 1,019,490 2,356
Apasco SA de CV 391,344 2,251
Alfa SA de CV Series A 859,124 1,968
Groupo Elektra, SA de CV 1,777,410 1,791
Controladora Comercial
Mexicana SA de CV (Units) 1,571,570 1,472
Desc SA de CV Series B 2,199,675 1,411
Tubos de Acero de Mexico SA 99,890 1,383
- Grupo Financiero Banamex
Accival SA de CV Series L 293,510 1,189
Grupo Continental SA 1,058,442 1,078
Industrias Penoles SA Series CP 590,959 957
- Grupo Financiero Banorte SA
de CV 685,260 949
Grupo Industrial Maseca SA
de CV Series B 1,323,960 620
Vitro SA 545,860 611
Grupo Financiero Probursa SA
de CV Series B 5,166,556 552
- Empaques Ponderosa SA
Series B 711,600 404
- Empresas ICA Sociedad
Controladora SA de CV 1,118,040 316
- Corporacion GEO, SA de CV 139,000 228
Grupo Herdez SA Series B 518,600 190
Cydsa SA Series A 138,000 100
- Consorcio G Grupo Dina SA 649,000 56
----------
171,209
----------
PHILIPPINES (1.2%)
Philippine Long Distance
Telephone Co. 243,479 4,365
Metropolitan Bank & Trust Co. 435,374 2,034
SM Prime Holdings, Inc. 14,253,420 1,715
San Miguel Corp. Class B 1,037,594 1,284
Manila Electric Co. 596,493 876
Ayala Land, Inc. 6,388,600 813
- Union Bank of the
Philippines Corp. 739,000 496
- Petron Corp. 13,242,654 435
- Philippine National Bank Corp. 292,424 382
- Security Bank Corp. 430,218 274
- Filinvest Land, Inc. 6,281,720 273
Universal Robina Corp. 2,169,700 266
Ionics Circuit, Inc. 630,150 138
- Southeast Asia Cement
Holdings Inc. 13,742,899 107
RFM Corp. 1,952,400 104
- International Container
Terminal Services, Inc. 3,186,532 94
- Union Cement Corp. 2,300,000 43
- DMCI Holdings, Inc. 3,118,800 42
- Guoco Holdings
Philippines, Inc. 3,781,800 42
</TABLE>
33
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<CAPTION>
---------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
- Metropolitan Bank & Trust Co.
Rights Exp. 7/28/2000 430,574 $ 42
- Music Corp. 202,077 23
- Solid Group, Inc. 566,000 18
----------
13,866
----------
POLAND (1.9%)
- Telekomunikacja Polska SA 812,613 5,822
Polski Koncern Naftowy SA 604,951 2,917
KGHM Polska Miedz SA 286,561 2,145
Bank Handlowy W Warszawie 97,820 1,543
- Elektrim Spolka Akcyjna SA 110,985 1,274
Bank Rozwoju Eksportu SA 32,790 1,016
Prokom Software SA 18,850 987
BIG Bank Gdanski SA 437,861 890
- Bank Slaski SA w Katowicach 13,450 724
- Agora SA 20,130 532
- Orbis SA 63,480 496
Softbank SA 8,918 463
- Optimus SA 9,500 441
Celuloza Zaklady Celulozy i
Papieru w Swieciu SA 71,602 378
Stomil Olsztyn SA 48,000 313
- Bank Polska Kasa Opieki Grupa
Pekao SA 25,250 304
- Budimex SA 25,600 165
Mostostal-Export SA 136,318 148
- Agros Holding SA 16,600 135
- Okocimskie Zaklady
Piwowarskie SA 29,600 121
Przedsiebiorstwo
Farmaceutyczne JELFA SA 13,410 115
Mostostal Zabrze-Holding SA 22,454 70
- Stalexport SA 15,800 64
----------
21,063
----------
SOUTH AFRICA (13.1%)
De Beers Centenary AG 574,733 13,988
- Dimension Data Holdings Ltd. 1,387,451 11,482
Anglo American Platinum Corp. 315,265 9,087
South African Breweries Ltd. 1,126,253 8,406
M-Cell Ltd. 1,718,879 8,328
Firstrand Ltd. 8,002,195 8,262
Rembrandt Group Ltd. 760,810 7,339
Nedcor Ltd. 347,001 7,288
Anglogold Ltd. 155,785 6,365
Sasol Ltd. 884,010 5,933
Sanlam Ltd. 3,898,220 4,606
Investec Bank Ltd. 116,765 3,934
Liberty Group Ltd. 394,033 3,749
Amalgamated Banks of
South Africa Group Ltd. 954,476 3,618
Impala Platinum Holdings Ltd. 94,161 3,503
Bidvest Group Ltd. 412,189 2,845
Johnnic Communications Ltd. 116,070 2,818
Sappi Ltd. 347,317 2,613
Gold Fields Ltd. 658,042 2,582
Imperial Holdings Ltd. 301,481 2,455
BOE Ltd. 4,093,310 2,325
Tiger Brands Ltd. 240,190 2,154
Coronation Holdings Ltd. 137,730 2,153
Barlow Ltd. 311,515 1,875
Naspers Ltd. 214,160 1,785
Nampak Ltd. 744,960 1,610
- MIH Holdings Ltd. 387,590 1,578
Metropolitan Life Ltd. 1,021,070 1,333
Fedsure Holdings Ltd. 247,780 1,206
Pepkor Ltd. 320,070 1,152
Pick'n Pay Stores Ltd. 713,360 1,147
- African Bank Investments Ltd. 838,524 1,096
Metro Cash & Carry Ltd. 1,750,107 1,084
JD Group Ltd. 153,872 1,021
Profurn Ltd. 1,554,340 917
Comparex Holdings Ltd. 477,720 842
Woolworths Holdings Ltd. 1,255,400 639
Tongaat-Hulett Group Ltd. 142,377 625
African Life Assurance
Company Ltd. 163,746 623
Iscor Ltd. 365,606 623
Foschini Ltd. 327,932 554
Reunert Ltd. 314,540 464
Safmarine & Rennies
Holdings Ltd. 915,480 439
RMB Holdings Ltd. 281,819 420
Wooltru Ltd. N Shares 361,763 419
Wooltru Ltd. 279,029 321
Primedia Ltd. 304,750 227
Mobile Industries Ltd. Class N 220,658 10
Mobile Industries Ltd. 109,028 5
----------
147,848
----------
SOUTH KOREA (20.1%)
Samsung Electronics 226,760 75,045
SK Telecom Co., Ltd. 116,240 38,052
Korea Electric Power Corp. 833,920 25,878
Korea Telecom Corp. 79,840 7,032
- Samsung Electro-Mechanics Co. 100,610 6,307
Pohang Iron & Steel Co. Ltd. ADR 225,000 5,400
Kookmin Bank 384,480 4,897
Hyundai Motor Co. Ltd. 360,550 4,624
LG Electronics, Inc. 158,280 4,429
H&CB 138,980 3,253
Samsung SDI Co. Ltd. 64,460 3,093
Shinhan Bank 313,000 2,948
LG Chemical Ltd. 134,060 2,681
LG Investment & Securities
Co. Ltd. 194,270 2,526
Samsung Securities Co. Ltd. 111,570 2,452
Samsung Fire & Marine
Insurance Co. 72,150 2,006
Samsung Corp. 230,090 1,983
- Anam Semiconductor Inc. 132,760 1,786
- Korea Exchange Bank 663,280 1,719
Hyundai Securities Co. 161,310 1,606
- Korea Information &
Communications Co. Ltd. 24,896 1,596
Shinsegae Department Store Co. 35,830 1,575
Cheil Jedang Corp. 31,170 1,429
- Samsung Heavy Industries 293,360 1,371
Serome Technology Inc. 31,212 1,263
- Hyundai Engineering &
Construction Co. 330,050 1,234
</TABLE>
34
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<TABLE>
<CAPTION>
---------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
- Daewoo Securities 186,020 $ 998
- Daum Communications Corp. 10,338 983
Hana Bank 150,270 937
SK Global 76,000 910
Hite Brewery Co. 20,370 895
Daishin Securities Co. 97,100 862
KTBNetwork 75,320 811
Dongwon Securities Co. 111,150 802
Korean Air 93,650 777
Trigem Computer, Inc. 37,240 746
- Haansoft Inc. 42,090 683
S1 Corp. 43,680 646
Cheil Communications Inc. 4,470 583
Pohang Iron & Steel Co. Ltd. 6,310 553
- Hanwha Chemical Corp. 151,890 541
Hyundai Merchant Marine
Co., Ltd. 125,270 526
Dae Duck Electronics Co. 51,160 518
- Doosan Corp. 25,190 472
Daou Technology Inc. 45,670 442
Daelim Industrial Co. 92,080 439
Kumkang Korea Chemical
Co., Ltd. 12,190 424
Hankook Tire Co. Ltd. 201,620 409
LG Cable Ltd. 30,180 409
Samsung Fine Chemicals Co., Ltd. 30,130 403
Medison Co. 35,560 388
Cheil Industrial, Inc. 60,410 370
- Handysoft Corp. 11,522 340
Mdisae Chemical Corp. 108,560 320
Hyosung Corp. 41,160 312
- Ssangyong Cement Industrial 207,600 295
Hansol Paper 59,550 281
Hanjin Heavy Industries 85,280 245
Korea Green Cross Corp. 5,470 243
- Korea Express Co. 48,270 234
Dong-A Pharmaceutical Co. Ltd. 12,150 215
Honam Petrochemical Corp. 31,530 211
Korea Zinc Co. 16,260 206
Daesang Corp. 116,550 191
LG Insurance 70,540 191
Kukdo Chemical Co. Ltd. 5,000 186
Hyundai Department Store
Co., Ltd. 32,010 178
- Hotel Shilla Co. 34,500 154
- Samyang Corp. 10,430 109
Isu Chemical Co. Ltd. 8,240 54
----------
226,677
----------
THAILAND (3.0%)
- TelecomAsia PLC (Foreign) 4,107,400 4,555
- Advanced Information
Services (Foreign) 337,200 4,195
- Thai Farmers Bank PLC
(Foreign) 3,058,520 2,573
PTT Exploration & Production
PLC (Foreign) 469,000 2,272
Bangkok Bank PLC (Foreign) 1,568,710 1,920
- Siam Commercial Bank
5.25% Cvt. Pfd. 3,700,580 1,887
BEC World Public
Co. Ltd. (Foreign) 287,123 1,684
- Siam Cement PLC (Foreign) 86,221 1,618
- Siam City Cement PLC (Foreign) 373,426 1,409
Delta Electronics (Thailand)
Public Company Ltd. 151,754 1,006
Hana Microelectronics Co.
(Foreign) 117,700 894
- Charoen Pokphand Foods
Public Co., Ltd 554,400 827
- TelecomAsia Corp. Public
Co. Ltd. (Foreign) Warrants
Exp. 4/3/2010 1,020,789 824
Electricity Generating PLC
(Foreign) 527,300 565
- United Broadcasting Corp. PLC
(Foreign) 1,108,376 551
- Bank of Ayudhya PLC (Foreign) 2,946,400 526
- Siam Commercial Bank PLC
(Foreign) 908,983 510
- United Communication Industry
PLC (Foreign) 538,500 463
- Thai Petrochemical Industry
PLC (Foreign) 3,001,900 375
- Siam Cement PLC (Local) 32,819 363
National Petrochemical PLC
(Foreign) 473,700 356
- Land & House PLC (Foreign) 677,902 354
- Advance Agro PLC (Foreign) 790,740 348
Charoen Pokphand Feedmill
Public Company Ltd. 202,800 302
- Bangkok Expressway PLC
(Foreign) 1,115,200 284
- Securities One Public Co. Ltd.
(Foreign) 2,563,190 255
Thai Union Frozen Products
Public Company Ltd. 115,500 246
Banpu PLC (Foreign) 408,300 198
- Italian-Thai Development PLC
(Foreign) 400,500 191
- Nation Multimedia Group PLC
(Foreign) 313,195 156
- Industrial Finance Corp. of
Thailand PLC (Foreign) 701,400 147
Saha-Union PLC (Foreign) 524,600 144
Ayudhya Insurance PLC (Foreign) 59,200 140
Regional Container Lines PLC
(Foreign) 146,400 129
Pizza PLC (Foreign) 97,100 123
- National Finance & Securities
PLC (Foreign) 852,962 122
ABN AMRO Asia Securities
Co. Ltd. (Foreign) 233,640 104
- Tuntex (Thailand) PLC (Foreign) 439,300 97
Sermsuk Public Co. Ltd. 35,900 90
- Bangkok Bank PLC (Local) 96,400 75
- Tipco Asphalt PLC (Foreign) 156,100 75
- Bangkok Land Public
Co. Ltd. (Foreign) 479,100 73
ICC International PLC (Foreign) 39,200 67
</TABLE>
35
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<CAPTION>
---------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
---------------------------------------------------------------------------
<S> <C> <C>
- Bangkok Land Public
Company Ltd. 814,800 $ 60
Sermsuk PLC (Foreign) 13,800 47
- Tanayong PLC (Foreign) 908,045 42
Thai Reinsurance Public Co. Ltd. 41,900 36
----------
33,278
----------
TURKEY (5.6%)
Turkiye Is Bankasi A.S.
C Shares 786,383,653 16,820
- Yapi ve Kredi Bankasi A.S. 732,246,073 8,156
Arcelik A.S. 101,944,974 5,019
- Turkiye Garanti Bankasi A.S. 379,094,675 4,590
Tupras-Turkiye Petrol
Rafinerileri A.S. 63,540,600 3,334
- Eregli Demir ve Celik
Fabrikalari A.S. 64,638,650 2,609
Migros Turk A.S. 13,214,625 2,453
- Ford Otomotiv Sanayii A.S. 42,434,000 2,260
- Vestel Elektronik Sanayi ve
Ticaret A.S. 5,879,981 1,780
- Tofas Turk Otomobil
Fabrikasi A.S. 91,987,583 1,596
Ege Biracilik ve Malt
Sanayii A.S. 18,430,442 1,205
Aygaz A.S. 29,481,352 1,178
Netas-Northern Elektrik
Telekomunikasyon A.S. 9,447,500 1,052
- Aksigorta A.S. 48,247,400 954
Alarko Holdings 19,770,564 941
Aksa Akrilik Kimya Sanayii A.S. 23,810,295 865
Akcansa Cimento A.S. 54,517,920 854
Trakya Cam Sanayii A.S. 68,303,669 783
Brisa Bridgestone Sabanci
Lastik San. ve Tic A.S. 12,029,100 748
Kordsa Kord Bezi Sanayi ve
Ticaret A.S. 23,521,710 721
- Cukurova Elektrik A.S. 712,000 557
- Ihlas Holding A.S. 20,579,974 498
Cisma Cemento A.S. 25,710,292 488
- Goodyear Lastikleri T.A.S. 14,565,875 470
- Eczacibasi Ilac Sanayi ve
Ticaret A.S. 17,415,000 351
Adana Cimento Sanayii Turk
Anonim Sirketi 21,267,675 326
- Efes Sinai Yatirim Holding A.S. 22,568,200 251
- Sabah Yayincilik A.S. 48,996,000 206
Sarkuysan Elektrolitik Bakir
Sanayi ve Ticaret A.S. 7,482,739 205
- Doktas Dokumculuk Ticaret
ve Sanayii A.S. 14,143,350 199
- Turk Demir Dokum
Fabrikalari A.S. 14,899,256 185
Kartonsan Karton Sanayi ve
Ticaret A.S. 2,936,650 173
Cimentas Izmir Cimento
Fabrikasi T.A.S. 3,802,900 163
Bagfas Bandirma Gubre
Fabrikalari A.S. 4,034,000 161
Tat Konserve A.S. 9,853,800 145
Usas Ucak Servisi A.S. 60,500 125
Kav Danismanlik Pazarlama
ve Ticaret A.S. 9,776,250 123
Adana Cimento Sanayii A.S.
C Shares 38,088,831 112
Turkiye Is Bankasi A.S. 41,900 101
- Doktas Dokumculuk Ticaret
ve Sanayi A.S. Rights
Exp. 7/10/2000 9,428,900 59
- Raks Elektronik Sanayi ve
Ticaret A.S. 9,014,607 56
----------
62,872
----------
---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $1,008,469) 1,080,854
---------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
(000)
----------------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS (5.9%)
----------------------------------------------------------------------------
REPURCHASE AGREEMENTS
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
6.71%, 7/3/2000 $55,601 55,601
6.71%, 7/3/2000--Note H 10,529 10,529
----------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $66,130) 66,130
----------------------------------------------------------------------------
TOTAL INVESTMENTS (101.8%)
(COST $1,074,599) 1,146,984
----------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-1.8%)
----------------------------------------------------------------------------
Other Assets--Note B 8,812
Liabilities--Note H (29,255)
-----------
(20,443)
----------------------------------------------------------------------------
NET ASSETS (100%) $1,126,541
============================================================================
</TABLE>
* See Note A in Notes to Financial Statements.
- Non-income-producing security.
ADR--American Depositary Receipt.
ILS--Israeli Shekel.
36
<PAGE> 39
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
AMOUNT
(000)
----------------------------------------------------------------------------
<S> <C>
----------------------------------------------------------------------------
AT JUNE 30, 2000, NET ASSETS CONSISTED OF:
----------------------------------------------------------------------------
Paid in Capital $1,175,639
Undistributed Net Investment
Income--Note G 10,120
Accumulated Net Realized
Losses--Note G (131,543)
Unrealized Appreciation
(Depreciation)--Note F
Investment Securities 72,385
Foreign Currencies (60)
----------------------------------------------------------------------------
NET ASSETS $1,126,541
============================================================================
Investor Shares--Net Assets
Applicable to 97,159,191 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $1,102,407
----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--
INVESTOR SHARES $11.35
============================================================================
Institutional Shares--Net Assets
Applicable to 2,126,956 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $24,134
----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--
INSTITUTIONAL SHARES $11.35
============================================================================
</TABLE>
37
<PAGE> 40
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
TOTAL INTERNATIONAL STOCK INDEX FUND SHARES (000)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT COMPANIES (100.0%)
------------------------------------------------------------------------------------------------------------
Vanguard European Stock Index Fund Investor Shares 62,091,151 $1,740,415
Vanguard Pacific Stock Index Fund Investor Shares 73,946,856 851,128
Vanguard Emerging Markets Stock Index Fund Investor Shares 24,562,942 278,544
------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT COMPANIES
(COST $2,398,631) 2,870,087
------------------------------------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
(000)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT
------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government Obligations in a Pooled Cash Account
6.71%, 7/3/2000
(COST $896) $896 896
------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(COST $2,399,527) 2,870,983
------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES
------------------------------------------------------------------------------------------------------------
Other Assets 10,118
Liabilities (10,674)
-----------
(556)
------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
------------------------------------------------------------------------------------------------------------
Applicable to 210,044,017 outstanding $.001 par value shares of
beneficial interest (unlimited authorization) $2,870,427
============================================================================================================
NET ASSET VALUE PER SHARE $13.67
============================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
AT JUNE 30, 2000, NET ASSETS CONSISTED OF:
------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $2,401,377 $11.43
Undistributed Net Investment Income 265 --
Accumulated Net Realized Losses (2,671) (.01)
Unrealized Appreciation--Note F 471,456 2.25
------------------------------------------------------------------------------------------------------------
NET ASSETS $2,870,427 $13.67
============================================================================================================
</TABLE>
38
<PAGE> 41
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
MARKET
VALUE*
DEVELOPED MARKETS INDEX FUND SHARES (000)
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT COMPANIES (100.1%)
---------------------------------------------------------------------------------------------------------
Vanguard European Stock Index Fund Investor Shares 667,991 $18,724
Vanguard Pacific Stock Index Fund Investor Shares 798,424 9,190
---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT COMPANIES
(COST $27,390) 27,914
---------------------------------------------------------------------------------------------------------
FACE
AMOUNT
(000)
---------------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT (21.5%)
---------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government Obligations in a Pooled Cash Account
6.71%, 7/3/2000
(COST $6,000) $6,000 6,000
---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (121.6%)
(COST $33,390) 33,914
---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--NET (-21.6%) (6,041)
---------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
---------------------------------------------------------------------------------------------------------
Applicable to 2,696,593 outstanding $.001 par value shares of
beneficial interest (unlimited authorization) $27,873
=========================================================================================================
NET ASSET VALUE PER SHARE $10.34
=========================================================================================================
*See Note A in Notes to Financial Statements.
---------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
---------------------------------------------------------------------------------------------------------
ASSETS
Investments in Securities, at Value $33,914
Receivables for Capital Shares Issued 2,758
Other Assets 1
----------
Total Assets 36,673
----------
LIABILITIES
Payables for Investment Securities Purchased 8,800
----------
---------------------------------------------------------------------------------------------------------
Net Assets $27,873
=========================================================================================================
---------------------------------------------------------------------------------------------------------
AT JUNE 30, 2000, NET ASSETS CONSISTED OF:
---------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
---------------------------------------------------------------------------------------------------------
Paid in Capital $27,341 $10.14
Undistributed Net Investment Income 8 --
Accumulated Net Realized Gains -- --
Unrealized Appreciation--Note F 524 .20
---------------------------------------------------------------------------------------------------------
NET ASSETS $27,873 $10.34
=========================================================================================================
</TABLE>
39
<PAGE> 42
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
MARKET
VALUE*
INSTITUTIONAL DEVELOPED MARKETS INDEX FUND SHARES (000)
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT COMPANIES (100.0%)
---------------------------------------------------------------------------------------------------------
Vanguard European Stock Index Fund Institutional Shares 273,183 $ 7,658
Vanguard Pacific Stock Index Fund Institutional Shares 321,845 3,704
---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT COMPANIES
(COST $11,113) 11,362
---------------------------------------------------------------------------------------------------------
FACE
AMOUNT
(000)
---------------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT
---------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government Obligations in a Pooled Cash Account
6.71%, 7/3/2000
(COST $2) $2 2
---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(COST $11,115) 11,364
---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES
---------------------------------------------------------------------------------------------------------
Other Assets --
Liabilities --
----------
--
---------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
---------------------------------------------------------------------------------------------------------
Applicable to 1,106,794 outstanding $.001 par value shares of
beneficial interest (unlimited authorization) $11,364
=========================================================================================================
NET ASSET VALUE PER SHARE $10.27
=========================================================================================================
*See Note A in Notes to Financial Statements.
---------------------------------------------------------------------------------------------------------
AT JUNE 30, 2000, NET ASSETS CONSISTED OF:
---------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
---------------------------------------------------------------------------------------------------------
Paid in Capital $11,102 $10.03
Undistributed Net Investment Income 8 .01
Accumulated Net Realized Gains 5 --
Unrealized Appreciation--Note F 249 .23
---------------------------------------------------------------------------------------------------------
NET ASSETS $11,364 $10.27
=========================================================================================================
</TABLE>
40
<PAGE> 43
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 each class of
its shares. These expenses directly reduce the amount of investment income
available to pay to shareholders as dividends. The Total International Stock,
Developed Markets, and Institutional Developed Markets Index Funds' Income
Distributions Received from the other funds' net income have been reduced by
their 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, Developed Markets, and Institutional Developed
Markets Index Funds' 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, 2000
-------------------------------------------------------------------------------------------------------------------------
(000) (000) (000)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends* $ 71,081 $ 12,381 $ 13,976
Interest 846 685 1,653
Security Lending 2,017 259 89
-----------------------------------------------
Total Income 73,944 13,325 15,718
-----------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 25 25 25
Management and Administrative--Investor Shares 6,485 3,514 1,946
Management and Administrative--Institutional Shares 19 16 2
Marketing and Distribution--Investor Shares 463 177 80
Marketing and Distribution--Institutional Shares -- -- --
Custodian Fees 1,530 705 1,216
Auditing Fees 5 5 4
Shareholders' Reports--Investor Shares 84 31 22
Shareholders' Reports--Institutional Shares -- -- --
Trustees' Fees and Expenses 4 2 1
-----------------------------------------------
Total Expenses 8,615 4,475 3,296
-------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 65,329 8,850 12,422
-------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold (2,101) 8,340 11,616
Futures Contracts (3,391) (1,005) --
Foreign Currencies and Forward Currency Contracts (2,716) (1,069) (924)
-------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) (8,208) 6,266 10,692
-------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities (216,466) (165,701) (140,159)
Futures Contracts (1,389) (911) --
Foreign Currencies and Forward Currency Contracts 9 (259) 88
-------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) (217,846) (166,871) (140,071)
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(160,725) $(151,755) $(116,957)
=========================================================================================================================
</TABLE>
*Dividends are net of foreign withholding taxes of $2,280,000, $1,313,000, and
$775,000, respectively.
41
<PAGE> 44
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (continued)
-------------------------------------------------------------------------------------------------------------------------
TOTAL INSTITUTIONAL
INTERNATIONAL DEVELOPED DEVELOPED
STOCK INDEX MARKETS INDEX MARKETS INDEX
FUND FUND FUND
---------------------------------------------------
SIX MONTHS
ENDED MAY 8* TO JUN. 1* TO
JUN. 30, 2000 JUN. 30, 2000 JUN. 30, 2000
------------- ------------- --------------
(000) (000) (000)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Income Distributions Received $ 232 $ -- $ --
Interest 226 8 8
-------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME--Note C 458 8 8
-------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Capital Gain Distributions Received 2,954 -- --
Investment Securities Sold (4,925) -- 5
-------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) (1,971) -- 5
-------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
OF INVESTMENT SECURITIES (113,207) 524 249
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(114,720) $532 $262
=========================================================================================================================
</TABLE>
*Inception.
42
<PAGE> 45
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. Distributions, Capital Share
Transactions, and Shares Issued and Redeemed are shown separately for each class
of shares.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
EUROPEAN STOCK PACIFIC STOCK
INDEX FUND INDEX FUND
----------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUN. 30, 2000 DEC. 31, 1999 JUN. 30, 2000 DEC. 31, 1999
(000) (000) (000) (000)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 65,329 $ 99,720 $ 8,850 $ 15,626
Realized Net Gain (Loss) (8,208) 41,918 6,266 15,375
Change in Unrealized Appreciation (Depreciation) (217,846) 712,190 (166,871) 738,333
-------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (160,725) 853,828 (151,755) 769,334
-------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income
Investor Shares -- (103,284) -- (18,206)
Institutional Shares -- -- -- --
Realized Capital Gain
Investor Shares (10,625) (30,952) -- --
Institutional Shares -- -- -- --
-------------------------------------------------------------------
Total Distributions (10,625) (134,236) -- (18,206)
-------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS--INVESTOR SHARES(1)
Issued 795,847 1,625,077 433,421 937,319
Issued in Lieu of Cash Distributions 9,880 123,576 -- 16,672
Redeemed (791,576) (841,311) (384,903) (211,622)
-------------------------------------------------------------------
Net Increase--Investor Shares 14,151 907,342 48,518 742,369
-------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS--INSTITUTIONAL SHARES(2)
Issued 135,925 -- 74,328 --
Issued in Lieu of Cash Distributions -- -- -- --
Redeemed (34) -- (58) --
-------------------------------------------------------------------
Net Increase--Institutional Shares 135,891 -- 74,270 --
-------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) (21,308) 1,626,934 (28,967) 1,493,497
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 6,106,240 4,479,306 2,526,329 1,032,832
-------------------------------------------------------------------
End of Period $6,084,932 $6,106,240 $2,497,362 $2,526,329
=========================================================================================================================
(1)Shares Issued (Redeemed)--Investor Shares
Issued 28,230 63,521 37,648 94,959
Issued in Lieu of Cash Distributions 331 4,357 -- 1,411
Redeemed (28,269) (33,203) (34,009) (21,453)
-------------------------------------------------------------------
Net Increase in Shares Outstanding 292 34,675 3,639 74,917
=========================================================================================================================
(2)Shares Issued (Redeemed)--Institutional Shares
Issued 4,965 -- 6,699 --
Issued in Lieu of Cash Distributions -- -- -- --
Redeemed (1) -- (5) --
-------------------------------------------------------------------
Net Increase in Shares Outstanding 4,964 -- 6,694 --
=========================================================================================================================
</TABLE>
43
<PAGE> 46
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS (continued)
-------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS TOTAL INTERNATIONAL
STOCK INDEX FUND STOCK INDEX FUND
----------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUN. 30, 2000 DEC. 31, 1999 JUN. 30, 2000 DEC. 31, 1999
(000) (000) (000) (000)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 12,422 $ 20,534 $ 458 $ 36,952
Realized Net Gain (Loss) 10,692 (44,358) (1,971) 7,734
Change in Unrealized Appreciation (Depreciation) (140,071) 418,174 (113,207) 491,852
-------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (116,957) 394,350 (114,720) 536,538
-------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income
Investor Shares (983) (23,915) -- (36,705)
Institutional Shares** -- -- -- --
Realized Capital Gain
Investor Shares -- -- (7,975) (1,332)
Institutional Shares** -- -- -- --
-------------------------------------------------------------------
Total Distributions (983) (23,915) (7,975) (38,037)
-------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS--INVESTOR SHARES(1)
Issued 222,620 343,122 643,482 808,009
Issued in Lieu of Cash Distributions 916 22,320 7,625 35,237
Redeemed* (140,439) (175,220) (227,564) (147,650)
-------------------------------------------------------------------
Net Increase--Investor Shares 83,097 190,222 423,543 695,596
-------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS--INSTITUTIONAL SHARES(2)
Issued 23,739 -- -- --
Issued in Lieu of Cash Distributions -- -- -- --
Redeemed* -- -- -- --
-------------------------------------------------------------------
Net Increase--Institutional Shares** 23,739 -- -- --
-------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) (11,104) 560,657 300,848 1,194,097
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 1,137,645 576,988 2,569,579 1,375,482
-------------------------------------------------------------------
End of Period $1,126,541 $1,137,645 $2,870,427 $2,569,579
=========================================================================================================================
(1)Shares Issued (Redeemed)--Investor Shares
Issued 18,154 34,157 46,634 66,288
Issued in Lieu of Cash Distributions 72 1,856 533 2,544
Redeemed (12,062) (17,953) (16,653) (12,252)
-------------------------------------------------------------------
Net Increase in Shares Outstanding 6,164 18,060 30,514 56,580
=========================================================================================================================
(2)Shares Issued (Redeemed)--Institutional Shares
Issued 2,127 -- -- --
Issued in Lieu of Cash Distributions -- -- -- --
Redeemed -- -- -- --
-------------------------------------------------------------------
Net Increase in Shares Outstanding** 2,127 -- -- --
=========================================================================================================================
</TABLE>
*Emerging Markets Stock Index Fund amounts are net of redemption fees of
$767,000 and $1,092,000, respectively.
**The Total International Stock Index Fund does not offer institutional shares.
44
<PAGE> 47
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
DEVELOPED INSTITUTIONAL DEVELOPED
MARKETS INDEX FUND MARKETS INDEX FUND
----------------------------- ------------------------------
MAY 8* TO JUN. 1* TO
JUN. 30, 2000 JUN. 30, 2000
(000) (000)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 8 $ 8
Realized Net Gain -- 5
Change in Unrealized Appreciation (Depreciation) 524 249
-------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations 532 262
-------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income -- --
Realized Capital Gain -- --
-------------------------------------------------------------------
Total Distributions -- --
-------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 27,956 11,102
Issued in Lieu of Cash Distributions -- --
Redeemed (615) --
-------------------------------------------------------------------
Net Increase from Capital Share Transactions 27,341 11,102
-------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) 27,873 11,364
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period -- --
-------------------------------------------------------------------
End of Period $27,873 $11,364
=========================================================================================================================
(1)Shares Issued (Redeemed)
Issued 2,757 1,107
Issued in Lieu of Cash Distributions -- --
Redeemed (60) --
-------------------------------------------------------------------
Net Increase in Shares Outstanding 2,697 1,107
=========================================================================================================================
</TABLE>
*Inception.
45
<PAGE> 48
FINANCIAL HIGHLIGHTS
This table summarizes each fund's investment results and distributions to
shareholders on a per-share basis for each class of shares; investment results
for the Total International Stock, Developed Markets, and Institutional
Developed Markets Index Funds 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 INVESTOR SHARES
YEAR ENDED DECEMBER 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED ------------------------------------------------------------
THROUGHOUT EACH PERIOD JUNE 30, 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $28.82 $25.28 $20.13 $16.57 $14.02 $11.76
==========================================================================================================================
INVESTMENT OPERATIONS
Net Investment Income .30 .50 .41 .38 .34 .32
Net Realized and Unrealized Gain (Loss)
on Investments (1.04) 3.69 5.40 3.63 2.63 2.30
----------------------------------------------------------------------------
Total from Investment Operations (.74) 4.19 5.81 4.01 2.97 2.62
----------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income -- (.50) (.52) (.37) (.36) (.32)
Distributions from Realized Capital Gains (.05) (.15) (.14) (.08) (.06) (.04)
----------------------------------------------------------------------------
Total Distributions (.05) (.65) (.66) (.45) (.42) (.36)
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $28.03 $28.82 $25.28 $20.13 $16.57 $14.02
==========================================================================================================================
TOTAL RETURN* -2.58% 16.62% 28.86% 24.23% 21.26% 22.28%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $5,946 $6,106 $4,479 $2,432 $1,595 $1,017
Ratio of Total Expenses to
Average Net Assets 0.29%** 0.29% 0.29% 0.31% 0.35% 0.35%
Ratio of Net Investment Income to
Average Net Assets 2.19%** 1.99% 1.97% 2.19% 2.45% 2.66%
Portfolio Turnover Rate 8%** 7% 7% 3% 4% 2%
==========================================================================================================================
</TABLE>
*Total return figures do not reflect the transaction fee on purchases (0.5%
from 11/3/1997 through 3/31/2000, 1.0% from 1995 through 11/2/1997) or the
$10 annual account maintenance fee applied on balances under $10,000.
**Annualized.
46
<PAGE> 49
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
EUROPEAN STOCK INDEX FUND INSTITUTIONAL SHARES
MAY 15* TO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD JUNE 30, 2000
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $27.22
--------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .12
Net Realized and Unrealized Gain (Loss) on Investments .69
---------------
Total from Investment Operations .81
DISTRIBUTIONS
Dividends from Net Investment Income --
Distributions from Realized Capital Gains --
Total Distributions --
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $28.03
==========================================================================================================================
TOTAL RETURN 2.98%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $139
Ratio of Total Expenses to Average Net Assets 0.20%**
Ratio of Net Investment Income to Average Net Assets 2.30%**
Portfolio Turnover Rate 8%**
==========================================================================================================================
</TABLE>
*Inception.
**Annualized.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
PACIFIC STOCK INDEX FUND INVESTOR SHARES
YEAR ENDED DECEMBER 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED -------------------------------------------------------------
THROUGHOUT EACH PERIOD JUNE 30, 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.22 $ 7.84 $7.72 $10.51 $11.50 $11.31
==========================================================================================================================
INVESTMENT OPERATIONS
Net Investment Income .04 .08 .085 .09 .10 .10
Net Realized and Unrealized Gain (Loss)
on Investments (.75) 4.39 .100 (2.79) (1.00) .21
----------------------------------------------------------------------------
Total from Investment Operations (.71) 4.47 .185 (2.70) (.90) .31
----------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income -- (.09) (.065) (.09) (.09) (.12)
Distributions from Realized Capital Gains -- -- -- -- -- --
----------------------------------------------------------------------------
Total Distributions -- (.09) (.065) (.09) (.09) (.12)
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.51 $12.22 $7.84 $ 7.72 $10.51 $11.50
==========================================================================================================================
TOTAL RETURN* -5.81% 57.05% 2.41% -25.67% -7.82% 2.75%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $2,420 $2,526 $1,033 $827 $978 $831
Ratio of Total Expenses to
Average Net Assets 0.37%** 0.37% 0.40% 0.35% 0.35% 0.35%
Ratio of Net Investment Income to
Average Net Assets 0.73%** 0.95% 1.17% 1.03% 0.89% 0.97%
Portfolio Turnover Rate 3%** 6% 4% 8% 9% 1%
==========================================================================================================================
</TABLE>
*Total return figures do not reflect the transaction fee on purchases (0.5%
from 1/1/1997 through 3/31/2000, 1.0% in 1995 through 1996) or the $10 annual
account maintenance fee applied on balances under $10,000.
**Annualized.
47
<PAGE> 50
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
-------------------------------------------------------------------------------------------------------------------------
PACIFIC STOCK INDEX FUND INSTITUTIONAL SHARES
MAY 15* TO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD JUNE 30, 2000
-------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.10
-------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .01
Net Realized and Unrealized Gain (Loss) on Investments .40
--------------
Total from Investment Operations .41
--------------
DISTRIBUTIONS
Dividends from Net Investment Income --
Distributions from Realized Capital Gains --
--------------
Total Distributions --
-------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.51
=========================================================================================================================
TOTAL RETURN 3.69%
=========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $77
Ratio of Total Expenses to Average Net Assets 0.29%**
Ratio of Net Investment Income to Average Net Assets 0.88%**
Portfolio Turnover Rate 3%**
=========================================================================================================================
</TABLE>
*Inception.
**Annualized.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS STOCK INDEX FUND INVESTOR SHARES
YEAR ENDED DECEMBER 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED -------------------------------------------------------------
THROUGHOUT EACH PERIOD JUNE 30, 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.50 $ 7.91 $9.98 $12.28 $10.75 $10.87
--------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .12 .24 .27 .24 .18 .15
Net Realized and Unrealized Gain (Loss)
on Investments (1.26) 4.62 (2.08) (2.31) 1.52 (.09)
--------------------------------------------------------------------------
Total from Investment Operations (1.14) 4.86 (1.81) (2.07) 1.70 .06
--------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.01) (.27) (.26) (.23) (.17) (.18)
Distributions from Realized Capital Gains -- -- -- -- -- --
--------------------------------------------------------------------------
Total Distributions (.01) (.27) (.26) (.23) (.17) (.18)
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.35 $12.50 $7.91 $ 9.98 $12.28 $10.75
==========================================================================================================================
TOTAL RETURN* -9.13% 61.57% -18.12% -16.82% 15.83% 0.56%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,102 $1,138 $577 $660 $637 $234
Ratio of Total Expenses to
Average Net Assets 0.58%** 0.58% 0.61% 0.57% 0.60% 0.60%
Ratio of Net Investment Income to
Average Net Assets 1.98%** 2.55% 2.99% 1.96% 1.69% 2.00%
Portfolio Turnover Rate 40%** 22% 22% 19% 1% 3%
==========================================================================================================================
</TABLE>
*Total return figures do not reflect the transaction fee on purchases (0.5%
beginning 4/1/2000, 1.0% from 11/3/1997 through 3/31/2000, 1.5% from 1/1/1997
to 11/2/1997, 2.0% in 1995 through 1996), the transaction fee on redemptions
(0.5% beginning 4/1/2000, 1.0% through 3/31/2000), or the $10 annual account
maintenance fee applied on balances under $10,000.
**Annualized.
48
<PAGE> 51
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS STOCK INDEX FUND INSTITUTIONAL SHARES
JUNE 22* TO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD JUNE 30, 2000
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.16
--------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income --
Net Realized and Unrealized Gain (Loss) on Investments .19
--------------
Total from Investment Operations .19
--------------
DISTRIBUTIONS
Dividends from Net Investment Income --
Distributions from Realized Capital Gains --
--------------
Total Distributions --
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.35
==========================================================================================================================
TOTAL RETURN** 1.70%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $24
Ratio of Total Expenses to Average Net Assets 0.45%+
Ratio of Net Investment Income to Average Net Assets 2.17%+
Portfolio Turnover Rate 40%+
==========================================================================================================================
</TABLE>
*Inception.
**Total return figures do not reflect the 0.5% transaction fee on purchases and
redemptions.
+Annualized.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
TOTAL INTERNATIONAL STOCK INDEX FUND
YEAR ENDED DECEMBER 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED ---------------------------------------- APR. 29* TO
THROUGHOUT EACH PERIOD JUN. 30, 2000 1999 1998 1997 DEC. 31, 1996
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.31 $11.19 $ 9.87 $10.14 $10.26
--------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income -- .21 .21 .18 .150
Capital Gain Distributions Received .01 .04 .02 .02 .015
Net Realized and Unrealized Gain (Loss)
on Investments (.61) 3.09 1.31 (.28) (.110)
--------------------------------------------------------------------------
Total from Investment Operations (.60) 3.34 1.54 (.08) .055
--------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income -- (.21) (.21) (.17) (.160)
Distributions from Realized Capital Gains (.04) (.01) (.01) (.02) (.015)
--------------------------------------------------------------------------
Total Distributions (.04) (.22) (.22) (.19) (.175)
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.67 $14.31 $11.19 $ 9.87 $10.14
==========================================================================================================================
TOTAL RETURN** -4.21% 29.92% 15.60% -0.77% 0.55%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $2,870 $2,570 $1,375 $903 $280
Ratio of Expenses to
Average Net Assets--Note C 0% 0% 0% 0% 0%
Ratio of Net Investment Income to
Average Net Assets 0.03%+ 2.04% 2.18% 2.19% 1.51%+
Portfolio Turnover Rate 4%+ 1% 2% 0% 0%
==========================================================================================================================
</TABLE>
*Inception.
**Total return figures do not reflect the transaction fee on purchases (0.5%
from 11/3/1997 through 3/31/2000, 0.75% from 1/1/1997 through 11/2/1997, 1.0%
in 1996) or the $10 annual account maintenance fee applied on balances under
$10,000.
+Annualized.
49
<PAGE> 52
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
--------------------------------------------------------------------------------------------------------------------------
DEVELOPED MARKETS INDEX FUND
MAY 8* TO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD JUNE 30, 2000
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
--------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income --
Capital Gain Distributions Received --
Net Realized and Unrealized Gain (Loss) on Investments .34
--------------
Total from Investment Operations .34
--------------
DISTRIBUTIONS
Dividends from Net Investment Income --
Distributions from Realized Capital Gains --
--------------
Total Distributions --
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.34
==========================================================================================================================
TOTAL RETURN** 3.40%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $28
Ratio of Total Expenses to Average Net Assets--Note C 0%
Ratio of Net Investment Income to Average Net Assets 0.42%+
Portfolio Turnover Rate 0%
==========================================================================================================================
</TABLE>
*Inception.
**Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
+Annualized.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL DEVELOPED MARKETS INDEX FUND
JUNE 1* TO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD JUNE 30, 2000
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
--------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .01
Capital Gain Distributions Received --
Net Realized and Unrealized Gain (Loss) on Investments .26
--------------
Total from Investment Operations .27
--------------
DISTRIBUTIONS
Dividends from Net Investment Income --
Distributions from Realized Capital Gains --
--------------
Total Distributions --
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.27
==========================================================================================================================
TOTAL RETURN 2.70%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $11
Ratio of Total Expenses to Average Net Assets--Note C 0%
Ratio of Net Investment Income to Average Net Assets 0.86%**
Portfolio Turnover Rate 2%
==========================================================================================================================
</TABLE>
*Inception.
**Annualized.
50
<PAGE> 53
NOTES TO FINANCIAL STATEMENTS
Vanguard International Stock Index Funds comprise the European, Pacific,
Emerging Markets, and Total International Stock Index Funds, the Developed
Markets Index Fund and the Institutional Developed Markets Index Fund, 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 Developed Markets
and Institutional Developed Markets Index Funds seek to match the performance of
their target index by investing in the European and Pacific 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, Developed Markets, and Institutional Developed Markets
Index Funds: 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, and the Pacific Stock Index Fund uses
Nikkei 300 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.
51
<PAGE> 54
NOTES TO FINANCIAL STATEMENTS (continued)
The European and Pacific Stock Index Funds enter into forward currency
contracts to maintain the same currency exposure as their respective indexes.
The funds' risks in 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, 2000, 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
INDEX FUND (000) NET ASSETS CAPITALIZATION
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European $1,158 0.02% 1.2%
Pacific 451 0.02 0.5
Emerging Markets 206 0.02 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, Developed Markets, and Institutional Developed Markets
Index Funds. The special service agreement provides that Vanguard will reimburse
the funds' expenses to the extent of savings in administrative and marketing
costs realized by Vanguard in the operation of the funds. Accordingly, all
expenses incurred by the funds during the period ended June 30, 2000, were
reimbursed by Vanguard.
52
<PAGE> 55
D. Effective in May 2000, the European, Pacific, and Emerging Markets Stock
Index Funds each offer two classes of shares, Investor Shares and Institutional
Shares. Institutional Shares are designed primarily for institutional investors
that meet certain administrative and servicing criteria and have a minimum
investment of $10 million. Investor Shares are offered to all other investors.
Both classes of shares have equal rights to assets and earnings, except that
each class bears certain class-specific expenses related to maintenance of
shareholder accounts (included in Management and Administrative expense),
marketing and distribution, and shareholder reporting. Class-specific expenses
for the period ended June 30, 2000, represented the following percentages of
average net assets:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
INDEX FUND INVESTOR SHARES* INSTITUTIONAL SHARES*
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
European 0.15% 0.04%
Pacific 0.22 0.07
Emerging Markets 0.24 0.05
-----------------------------------------------------------------------------------------------------
</TABLE>
*Annualized based on the period from inception of the new institutional shares.
Income, expenses not attributable to a specific class, and realized and
unrealized gains and losses on investments are allocated to each class of shares
based on its relative net assets.
E. During the period ended June 30, 2000, purchases and sales of investment
securities other than temporary cash investments were:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
(000)
-------------------------------------
INDEX FUND PURCHASES SALES
----------------------------------------------------------------------------------------------
<S> <C> <C>
European $464,143 $230,796
Pacific 182,384 40,895
Emerging Markets 355,932 218,830
Total International 470,238 50,500
Developed Markets 27,390 --
Institutional Developed Markets 11,200 92
----------------------------------------------------------------------------------------------
</TABLE>
F. At June 30, 2000, net unrealized appreciation of investment securities for
federal income tax purposes was:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
(000)
----------------------------------------------------------------
APPRECIATED DEPRECIATED NET UNREALIZED
INDEX FUND SECURITIES SECURITIES APPRECIATION
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European* $2,180,774 $(239,560) $1,941,214
Pacific 633,344 (215,255) 418,089
Emerging Markets 238,807 (166,422) 72,385
Total International 472,329 (873) 471,456
Developed Markets 524 -- 524
Institutional Developed Markets 249 -- 249
-----------------------------------------------------------------------------------------------
</TABLE>
*See Note G.
53
<PAGE> 56
NOTES TO FINANCIAL STATEMENTS (continued)
At June 30, 2000, the aggregate settlement value of open futures contracts
and the related unrealized appreciation (depreciation) were:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(000)
--------------------------------------
AGGREGATE UNREALIZED
INDEX FUND/ NUMBER OF SETTLEMENT APPRECIATION
FUTURES CONTRACTS LONG CONTRACTS VALUE (DEPRECIATION)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European/
FTSE 100 Index, exp. 9/2000 65 $ 6,267 $(222)
Pacific/
Nikkei 300 Index, exp. 9/2000 404 11,977 152
------------------------------------------------------------------------------------------------
</TABLE>
At June 30, 2000, the European and Pacific 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
--------------------------- UNREALIZED
INDEX FUND/ FOREIGN U.S. MARKET VALUE IN APPRECIATION
CONTRACT SETTLEMENT DATE CURRENCY DOLLARS U.S. DOLLARS (DEPRECIATION)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
European/
Receive:
9/22/2000 GBP 4,355 $ 6,547 $ 6,602 $ 55
Pacific/
Receive:
11/2/2000 AUD 3,367 2,183 2,026 (157)
9/13/2000 JPY 1,251,661 12,101 11,979 (122)
------------------------------------------------------------------------------------------------
</TABLE>
AUD--Australian Dollar.
GBP--Great Britain Pound.
JPY--Japanese Yen.
The European, Pacific, and Emerging Markets Stock Index Funds had net
unrealized foreign currency gains (losses) of $(139,000), $14,000, and
$(60,000), respectively, resulting from the translation of other assets and
liabilities at June 30, 2000.
G. 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, 2000, the European, Pacific, and
Emerging Markets Stock Index Funds realized net foreign currency gains (losses)
of $(694,000), $319,000, and $(924,000) 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.
54
<PAGE> 57
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, creating a difference between undistributed
net investment income and the cost of investments for financial statement and
tax purposes. During the six months ended June 30, 2000, the fund realized gains
on the sale of these securities of $608,000 which were included in 1998
distributions from net investment income for tax purposes; accordingly such
gains have been reclassified from accumulated net realized gains to
undistributed net investment income. At June 30, 2000, the remaining difference
of $17,485,000 is reflected in the balance of undistributed net investment
income; the corresponding difference between the securities' cost for financial
statement and tax purposes is reflected in unrealized appreciation.
For federal income tax purposes, at December 31, 1999, 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
AMOUNT YEAR(S) ENDING
INDEX FUND (000) DECEMBER 31
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Pacific $104,044 2005-2006
Emerging Markets 143,159 2003-2007
--------------------------------------------------------------------------------------------------
</TABLE>
H. The market value of securities on loan to broker/dealers at June 30, 2000,
and collateral received with respect to such loans were:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
(000)
------------------------------------
MARKET VALUE CASH
OF LOANED COLLATERAL
INDEX FUND SECURITIES RECEIVED
----------------------------------------------------------------------------------------------
<S> <C> <C>
European $681,596 $702,560
Pacific 106,181 113,212
Emerging Markets 10,171 10,529
----------------------------------------------------------------------------------------------
</TABLE>
Cash collateral received is invested in repurchase agreements.
55
<PAGE> 58
THE VANGUARD(R) FAMILY OF FUNDS
STOCK FUNDS
-------------------------------------------------------------------------------
500 Index Fund
Calvert Social Index(TM) Fund*
Capital Opportunity Fund
Convertible Securities Fund
Developed Markets Index Fund
Emerging Markets Stock
Index Fund*
Energy Fund
Equity Income Fund
European Stock Index Fund*
Explorer(TM) Fund
Extended Market Index Fund*
Global Equity Fund
Gold and Precious Metals Fund
Growth and Income Fund
Growth Equity Fund
Growth Index Fund*
Health Care Fund
Institutional Developed Markets Index Fund
Institutional Index Fund*
International Growth Fund
International Value Fund
Mid-Cap Index Fund*
Morgan(TM) Growth Fund
Pacific Stock Index Fund*
PRIMECAP Fund
REIT Index Fund
Selected Value Fund
Small-Cap Growth Index Fund*
Small-Cap Index Fund*
Small-Cap Value Index Fund*
Strategic Equity Fund
Tax-Managed Capital
Appreciation Fund*
Tax-Managed Growth and
Income Fund*
Tax-Managed International Fund*
Tax-Managed Small-Cap Fund*
Total International Stock
Index Fund
Total Stock Market Index Fund*
U.S. Growth Fund
U.S. Value Fund
Utilities Income Fund
Value Index Fund*
Windsor(TM) Fund
Windsor(TM) II Fund
BALANCED FUNDS
-------------------------------------------------------------------------------
Asset Allocation Fund
Balanced Index Fund
Global Asset Allocation Fund
LifeStrategy(R) Conservative
Growth Fund
LifeStrategy(R) Growth Fund
LifeStrategy(R) Income Fund
LifeStrategy(R) Moderate
Growth Fund
STAR(TM) Fund
Tax-Managed Balanced Fund
Wellesley(R) Income Fund
Wellington(TM) Fund
BOND FUNDS
-------------------------------------------------------------------------------
Admiral(TM) Intermediate-Term
Treasury Fund
Admiral(TM) Long-Term Treasury
Fund
Admiral(TM) Short-Term Treasury Fund
GNMA Fund
High-Yield Corporate Fund
High-Yield Tax-Exempt Fund
Inflation-Protected Securities Fund
Insured Long-Term Tax-Exempt Fund
Intermediate-Term Bond
Index Fund
Intermediate-Term Corporate Fund
Intermediate-Term Tax-Exempt Fund
Intermediate-Term Treasury Fund
Limited-Term Tax-Exempt Fund
Long-Term Bond Index Fund
Long-Term Corporate Fund
Long-Term Tax-Exempt Fund
Long-Term Treasury Fund
Preferred Stock Fund
Short-Term Bond Index Fund
Short-Term Corporate Fund*
Short-Term Federal Fund
Short-Term Tax-Exempt Fund
Short-Term Treasury Fund
State Tax-Exempt Bond Funds
(California, Florida,
Massachusetts, New Jersey,
New York, Ohio, Pennsylvania)
Total Bond Market Index Fund*
MONEY MARKET FUNDS
-------------------------------------------------------------------------------
Admiral(TM) Treasury Money
Market Fund
Federal Money Market Fund
Prime Money Market Fund*
State Tax-Exempt Money Market Funds
(California, New Jersey, New York, Ohio,
Pennsylvania)
Tax-Exempt Money Market Fund
Treasury Money Market Fund
VARIABLE ANNUITY PLAN
-------------------------------------------------------------------------------
Balanced Portfolio
Diversified Value Portfolio
Equity Income Portfolio
Equity Index Portfolio
Growth Portfolio
High-Grade Bond Portfolio
High Yield Bond Portfolio
International Portfolio
Mid-Cap Index Portfolio
Money Market Portfolio
REIT Index Portfolio
Short-Term Corporate Portfolio
Small Company Growth Portfolio
*Offers Institutional Shares.
For information about Vanguard funds and our variable annuity plan,
including charges and expenses, obtain a prospectus from The Vanguard
Group, P.O. Box 2600, Valley Forge, PA 19482-2600.
Read it carefully before you invest or send money.
56
<PAGE> 59
THE PEOPLE WHO GOVERN YOUR FUND
The trustees of your mutual fund are there to see that the fund is operated and
managed in your best interests since, as a shareholder, you are part owner of
the fund. Your fund trustees also serve on the board of directors of The
Vanguard Group, which is owned by the funds and exists solely to provide
services to them on an at-cost basis.
Six of Vanguard's seven board members are independent, meaning that they
have no affiliation with Vanguard or the funds they oversee, apart from the
sizable personal investments they have made as private individuals. They bring
distinguished backgrounds in business, academia, and public service to their
task of working with Vanguard officers to establish the policies and oversee the
activities of the funds.
Among board members' responsibilities are selecting investment advisers
for the funds; monitoring fund operations, performance, and costs; reviewing
contracts; nominating and selecting new trustees/directors; and electing
Vanguard officers.
The list below provides a brief description of each trustee's professional
affiliations. Noted in parentheses is the year in which the trustee joined the
Vanguard board.
TRUSTEES
JOHN J. BRENNAN - (1987) 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 - (1998) Vice President, Chief Information Officer, and a
member of the Executive Committee of Johnson & Johnson; Director of Johnson &
JohnsonoMerck Consumer Pharmaceuticals Co., The Medical Center at Princeton, and
Women's Research and Education Institute.
BRUCE K. MACLAURY - (1990) President Emeritus of The Brookings Institution;
Director of American Express Bank Ltd., The St. Paul Companies, Inc., and
National Steel Corp.
BURTON G. MALKIEL - (1977) 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 Select Sector SPDR
Trust.
ALFRED M. RANKIN, JR. - (1993) Chairman, President, Chief Executive Officer, and
Director of NACCO Industries, Inc.; Director of The BFGoodrich Co.
JAMES O. WELCH, JR. - (1971) 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 - (1985) Retired Chairman of Rohm & Haas Co.; Director of
AmeriSource Health Corporation, 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.
VANGUARD MANAGING DIRECTORS
R. GREGORY BARTON - Legal Department.
ROBERT A. DISTEFANO - Information Technology.
JAMES H. GATELY - Individual Investor Group.
KATHLEEN C. GUBANICH - Human Resources.
IAN A. MACKINNON - Fixed Income Group.
F. WILLIAM MCNABB, III - Institutional Investor Group.
MICHAEL S. MILLER - Planning and Development.
RALPH K. PACKARD - Chief Financial Officer.
GEORGE U. SAUTER - Quantitative Equity Group
<PAGE> 60
ABOUT OUR COVER
Our cover art, depicting HMS Vanguard at sea, is a reproduction of Leading the
Way, a 1984 work created and copyrighted by noted naval artist Tom Freeman, of
Forest Hill, Maryland.
[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
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fund prospectus.
Q722 082000
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