<PAGE> 1
VANGUARD(R)
INTERNATIONAL STOCK INDEX
FUNDS
VANGUARD EUROPEAN STOCK INDEX FUND
VANGUARD PACIFIC STOCK INDEX FUND
VANGUARD EMERGING MARKETS STOCK INDEX FUND
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND
[PHOTO]
Annual Report
December 31, 1999
[THE VANGUARD GROUP LOGO]
<PAGE> 2
[PHOTO]
JOHN C. BOGLE
FELLOW SHAREHOLDERS:
Two roads diverged in a wood, and I--I took the one less traveled by, and that
has made all the difference.
I can think of no better words than those of Robert Frost to begin this special
letter to our shareholders, who have placed such extraordinary trust in me and
in Vanguard over the past quarter century. When the firm was founded 25 years
ago, we deliberately took a new road to managing a mutual fund enterprise.
Instead of having the funds controlled by an outside management company with its
own financial interests, the Vanguard funds--there were only 11 of them
then--would be controlled by their own shareholders and operate solely in their
financial interests. The outcome of our unprecedented decision was by no means
certain. We described it then as "The Vanguard Experiment."
Well, I guess it's fair to say it's an experiment no more. During the past
25 years, the assets we hold in stewardship for investors have grown from $1
billion to more than $500 billion, and I believe that our reputation for
integrity, fair-dealing, and sound investment principles is second to none in
this industry. Our staggering growth--which I never sought--has come in
important part as a result of the simple investment ideas and basic human values
that are the foundation of my personal philosophy. I have every confidence that
they will long endure at Vanguard, for they are the right ideas and right
values, unshakable and eternal.
While Emerson believed that "an institution is the lengthened shadow of one
man," Vanguard today is far greater than any individual. The Vanguard crew has
splendidly implemented and enthusiastically supported our founding ideas and
values, and deserves the credit for a vital role in forging our success over the
years. It is a dedicated crew of fine human beings, working together in an
organization that is well prepared to press on regardless long after I am gone.
Creating and leading this enterprise has been an exhilarating run. Through it
all, I've taken the kudos and the blows alike, enjoying every moment to the
fullest, and even getting a second chance at life with a heart transplant nearly
four years ago. What more could a man ask?
While I shall no longer be serving on the Vanguard Board, I want to assure
you that I will remain vigorous and active in a newly created Vanguard unit,
researching the financial markets, writing, and speaking. I'll continue to focus
whatever intellectual power and ethical strength I possess on my mission to
assure that mutual fund investors everywhere receive a fair shake. In the spirit
of Robert Frost:
But I have promises to keep, and miles to go before I sleep, and miles to
go before I sleep.
You have given me your loyalty and friendship over these long years, and I
deeply appreciate your thousands of letters of support. For my part, I will
continue to keep an eagle eye on your interests, for you deserve no less. May
God bless you all, always.
/S/ JCB
CONTENTS
REPORT FROM THE CHAIRMAN............ 1
AFTER-TAX RETURNS REPORT............ 6
THE MARKETS IN PERSPECTIVE.......... 8
PERFORMANCE SUMMARIES............... 10
FUND PROFILES....................... 14
FINANCIAL STATEMENTS................ 19
REPORT OF INDEPENDENT ACCOUNTANTS... 51
<PAGE> 3
REPORT FROM THE CHAIRMAN
[PHOTO]
JOHN J. BRENNAN
International stock markets turned in excellent results during 1999, especially
the Asian and emerging markets that had been battered a year earlier. A rising
U.S. dollar eroded some of those returns for U.S. investors in most European
and emerging markets. But the dollar lost ground against the Japanese yen,
which enhanced returns from Japanese stocks to U.S. investors.
In this environment, the returns for Vanguard's international index funds
ranged from 16.6% for the European Stock Index Fund to a sizzling 61.6% for the
Emerging Markets Stock Index Fund. All four funds slightly outpaced their
target indexes, but fell short of the average returns from mutual fund peer
groups.
The table at right presents each fund's 12-month total return (capital
change plus reinvested dividends) along with those of the average competing
fund and an unmanaged index. Per-share figures for each fund, including its net
asset value, the dividends paid from net investment income, and any
distributions of net realized capital gains, are presented in the table that
follows this letter.
FINANCIAL MARKETS IN REVIEW
The fervor for technology, telecommunications, and other growth stocks that has
driven U.S. markets in recent years was evident in international markets during
1999. Japan's efforts to shore up its banking system and corporate merger
activity in Europe added to general optimism about the prospects for stocks
outside the United States. There were some striking differences in returns
among countries and market sectors, and the results for U.S. investors veered
dramatically with currency fluctuations. Overall, the developed markets outside
the United States, as measured by the Morgan Stanley Capital International
Europe, Australasia, Far East (EAFE) Index, provided total returns of 27.3% in
U.S. dollar terms. It was the first year since 1994 that international markets
as a group outperformed the Wilshire 5000 Total Market Index, a broad measure
of the U.S. market. (The Wilshire 5000 also had an outstanding year, rising
23.8%--its fifth consecutive annual increase of more than 20%.) Growth stocks
within the EAFE Index were up 29.7% in dollar terms, while value stocks
increased 24.5%.
Stocks in emerging markets gained a staggering 156.5% for the year in
local-currency terms, a far cry from the -6.1% decline during 1998. However,
the U.S. dollar generally gained against these countries' currencies, cutting
the overall return for U.S. investors to
<TABLE>
<CAPTION>
- --------------------------------------------------------
TOTAL RETURNS
YEAR ENDED
DECEMBER 31, 1999
- --------------------------------------------------------
<S> <C>
VANGUARD EUROPEAN STOCK INDEX FUND 16.6%
Average European Region Fund* 24.4
MSCI Europe Index 15.8
- --------------------------------------------------------
VANGUARD PACIFIC STOCK INDEX FUND 57.1%
Average Pacific Region Fund* 105.4
MSCI Pacific Free Index 56.4
- --------------------------------------------------------
VANGUARD EMERGING MARKETS
STOCK INDEX FUND 61.6%
Average Emerging Markets Fund* 70.8
Select Emerging Markets Free Index** 60.9
- --------------------------------------------------------
VANGUARD TOTAL INTERNATIONAL
STOCK INDEX FUND 29.9%
Average International Fund* 44.3
Total International Composite Index+ 28.1
- --------------------------------------------------------
</TABLE>
*Derived from data provided by Lipper Inc.
**Consists of stocks that can be bought free of restrictions in 13 emerging
markets of Europe, Asia, Africa, and Latin America and two developed markets
(Hong Kong and Singapore).
+Consists of the MSCI EAFE Index plus the Select Emerging Markets Free Index.
1
<PAGE> 4
60.9%. Pacific-region stocks, which are dominated by Japan, rose 43.9% in local
currency terms. There, the yen's rise to a four-year high against the dollar
worked to the benefit of U.S. investors, increasing the total return to 56.4%.
On European bourses, stocks rose 30.3% in local-currency terms, but this robust
gain was nearly halved for U.S. investors as the euro declined in value against
the dollar. Such currency fluctuations are an added risk that U.S. investors
incur--along with the substantial risks of stock-price fluctuations--when they
own international stocks.
The adjacent table presents the impact of currency shifts on international
stock returns during 1999. It shows the total returns for various areas in
local currencies, the effect of currency exchange rates, and the net total
return for dollar-based investors. For comparison, the return of the Wilshire
5000 Index is also shown.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
TOTAL RETURNS
YEAR ENDED
DECEMBER 31, 1999
---------------------------------
LOCAL
CURRENCY CURRENCY U.S. DOLLAR
INDEX RETURN IMPACT RETURN
- --------------------------------------------------------------------
<S> <C> <C> <C>
Wilshire 5000 Total Market Index
(United States) 23.8% -- 23.8%
- --------------------------------------------------------------------
MSCI Europe Index 30.3% -14.5% 15.8%
MSCI Pacific Free Index 43.9 +12.5 56.4
Select Emerging Markets Free Index 156.5 -95.6 60.9
- --------------------------------------------------------------------
Total International Composite Index 46.8% -18.7% 28.1%
- --------------------------------------------------------------------
</TABLE>
1999 PERFORMANCE OVERVIEW
During 1999, all of our international index funds provided outstanding returns
on an absolute basis and even came out a bit ahead of their target indexes.
Their returns fell short of the average return for similar mutual funds. Some of
our peers placed more assets in countries that did exceptionally well--or less
weighting in countries that lagged--than the index weightings. We do not expect
our index funds to be the best performers in their categories every year, but to
have highly competitive long-term returns that consistently parallel the returns
on the market indexes they track.
For the EUROPEAN STOCK INDEX FUND, our return of 16.6% exceeded by 0.8
percentage point the return of the MSCI Europe Index and lagged by 7.8
percentage points the return of the average European region fund. Our returns
were restrained somewhat by the relatively muted gain of the index's largest
market, the United Kingdom, which returned 12.5% in dollar terms. U.K. holdings
made up 28% of the fund's net assets on average. Germany and France, our next
largest country holdings, provided returns of 20.5% and 29.7%, respectively. The
index, and thus our fund, also had small weightings in some of Europe's
best-performing markets last year, notably Finland (up 153.3%) and Sweden
(80.6%).
The PACIFIC STOCK INDEX FUND'S total return of 57.1% exceeded by 0.7
percentage point the return of the MSCI Pacific Free Index, but fell short of
our average competitor by 48.3 percentage points. The peer group's average was
skewed somewhat by very high returns earned by a few funds. Also, the index we
track excludes some Pacific markets that had lofty returns in 1999, including
Malaysia (up 114.3% in dollar terms), Indonesia (93.5%), and South Korea
(92.4%). Most of the fund's gain came from the Japanese market's 61.8% ascent,
because the fund has four-fifths of its assets in Japanese companies. Other
bright spots included Hong Kong (up 59.5% in dollar terms) and Singapore
(99.4%). Returns were more subdued in Australia (up 18.7%), our second-largest
country holding, and in New Zealand (14.3%).
The EMERGING MARKETS STOCK INDEX FUND, with a gain of 61.6%, led its target
index by 0.7 percentage point but fell 9.2 percentage points short of the
average competing
2
<PAGE> 5
fund. The fund's four biggest country holdings--Mexico, South Africa, Brazil,
and Hong Kong--had exemplary returns of 80.1%, 57.2%, 67.2%, and 59.5%,
respectively, during 1999. We had nothing invested at year-end in Russia (up
247.1%) and just a tiny amount in Malaysia (up 114.3%). Neither of these
countries is currently part of the Select Emerging Markets Free Index.
The TOTAL INTERNATIONAL STOCK INDEX FUND earned 29.9%, 1.8 percentage
points more than its unmanaged composite index but 14.4 percentage points less
than the average international fund. This "fund of funds" invests in our
European, Pacific, and Emerging Markets Stock Index Funds in proportion to their
benchmarks and weightings in the Total International Composite Index. At
year-end, the fund had 59.8% of its assets in the European fund, 30.3% in the
Pacific fund, and 9.9% in the Emerging Markets fund. In 1999, the lower return
of the European fund partially offset the strong advances by the Pacific and
Emerging Markets funds.
Of course, our goal is to provide returns that track the performance of the
target indexes, a goal we surpassed in 1999. Although we were gratified to
outpace the indexes--because mutual funds incur operating expenses and
transaction costs that indexes do not--we don't expect to do so with regularity.
A key factor in our international index funds' performance is our emphasis
on low operating costs. In 1999, our funds' expense ratios (expenses as a
percentage of average net assets) were sharply lower than those of competing
mutual funds. For example, the expense ratio of our Pacific Stock Index Fund was
0.37%--or $3.70 per $1,000 in assets--compared with 2.06% ($20.60 per $1,000)
for its average peer.
In addition, our funds have lower average turnover rates (the volume of
stocks traded in a year as a percentage of all stocks held). Turnover rates in
our funds were 7% for the European fund, 6% for the Pacific fund, and 22% for
the Emerging Markets fund. In contrast, comparable mutual funds have turnover
rates of up to 100%. Lower turnover means that less is spent on buying and
selling securities--and these costs can be high in international markets. It
also helps reduce the realization of taxable capital gains that must be
distributed to shareholders.
Vanguard's Core Management Group once again did a remarkable job of
accurately tracking the performance of each fund's target index.
LONG-TERM PERFORMANCE OVERVIEW
During the 1990s, international markets were more volatile and, on balance, much
less rewarding than the red-hot U.S. market. The MSCI EAFE Index generated
average annual returns for U.S. investors of just 7.3% during the decade, while
U.S. stocks, as measured by the Wilshire 5000 Index, produced an average annual
return of 17.6%. Most of the EAFE Index's gains were concentrated in Europe,
which produced very good returns averaging 14.6% per year. The Pacific region
suffered from a collapse in Japan's stock market and real estate bubble and the
ensuing economic malaise. During the 1990s, Japanese stocks declined -0.7% a
year, and the Pacific region overall returned only 0.3% a year, on average, even
after the big rebound in 1999.
Indexing has shown itself during this period to be a fully competitive
long-term strategy in international markets. The table on page 4 shows the
lifetime records for our four funds, the average peer fund in each category, and
the appropriate target index. Along with annualized returns, the table shows the
results of hypothetical $10,000 initial investments in each fund and its peer,
assuming that dividends and capital gains distributions were reinvested. As you
can see, our funds have done an excellent job of tracking their target indexes.
The European fund has established a solid performance edge over
3
<PAGE> 6
the average returns from competing funds, while the Pacific, Emerging Markets,
and Total International funds have trailed average gains for their peers. The
Pacific fund, with a 3.2% return since its inception in June 1990, has fallen
short of competitors by more than 5 percentage points, mostly reflecting its
higher commitment to Japan.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
TOTAL RETURNS
FROM INCEPTION* THROUGH DECEMBER 31, 1999
- ---------------------------------------------------------------------
AVERAGE FINAL VALUE OF A
ANNUAL RETURN $10,000 INITIAL INVESTMENT
- ---------------------------------------------------------------------
AVERAGE AVERAGE
VANGUARD COMPETING TARGET VANGUARD COMPETING
STOCK INDEX FUND FUND FUND INDEX FUND FUND
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
European 14.6% 11.7% 14.8% $36,709 $28,623
Pacific 3.2 8.8 3.1 13,499 22,317
Emerging Markets 6.2 6.3 4.9 14,073 14,158
Total International 11.6 16.9 11.3 14,985 17,768
- ---------------------------------------------------------------------
</TABLE>
*For the European and Pacific funds: June 18, 1990; for the Emerging Markets
fund: May 4, 1994; for the Total International fund: April 29, 1996.
IN SUMMARY
The temptation for investors to forgo diversification and to chase hot
performance, such as that of emerging markets in the past year, can be strong.
But building an investment program around a relatively narrow group of stocks
that have recently skyrocketed is a dangerous--and unnecessary--gamble. The
financial markets are ever cyclical. Stocks of all styles and sizes--and those
from different regions--move in and out of favor in unpredictable patterns. That
is why we recommend that investors hold balanced, diversified portfolios of
stock funds, bond funds, and short-term reserves. Our well-diversified, low-cost
international stock index funds can be a sensible component in such a blend.
Investors who craft such diversified portfolios, in proportions suited to their
individual goals, investment time horizon, and temperament for risk-taking, are
in position for long-term investment success, despite the turbulence they're
sure to encounter along the way.
/s/ John J. Brennan
John J. Brennan
Chairman and Chief Executive Officer
January 25, 2000
A NOTE OF THANKS TO OUR FOUNDER
As you may have read on the inside cover of our report, our founder, John C.
Bogle, retired on December 31, 1999, as Senior Chairman of our Board after
nearly 25 years of devoted service to Vanguard and our shareholders. Vanguard
investors have Jack to thank for creating a truly mutual mutual fund company
that operates solely in the interest of its fund shareholders. And mutual fund
investors everywhere have benefited from his energetic efforts to improve this
industry. Finally, on a personal note, I am forever grateful to Jack for giving
me the opportunity to join this great company in 1982.
4
<PAGE> 7
<TABLE>
<CAPTION>
FUND STATISTICS
- ----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1999
---------------------------------------
NET ASSET VALUE
PER SHARE DISTRIBUTIONS PER
DECEMBER 31, SHARE FROM NET DIVIDENDS PER SHARE
------------------ REALIZED FROM NET
STOCK INDEX FUND 1998 1999 CAPITAL GAINS INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
European $25.28 $28.82 $0.15 $0.50
Pacific 7.84 12.22 -- 0.09
Emerging Markets 7.91 12.50 -- 0.27
Total International* 11.19 14.31 0.01 0.21
- ----------------------------------------------------------------------------------------------
</TABLE>
*Shareholders of Vanguard Total International Stock Index Fund will receive a
supplemental capital gains distribution of approximately $0.04 per share in
March 2000. This distribution will reflect realized gains on portfolio
transactions and long-term gain distributions by the underlying funds during
November and December 1999.
5
<PAGE> 8
A REPORT ON YOUR FUND'S AFTER-TAX RETURNS
Beginning with this annual report, Vanguard is pleased to provide a review of
the after-tax performance of our International Stock Index Funds. The figures on
this page demonstrate the considerable impact that federal income taxes can have
on a fund's return--an important consideration for investors who own mutual
funds in taxable accounts. While the pretax return is most often used to tally a
fund's performance, the fund's after-tax return, which accounts for taxes on
distributions of capital gains and income dividends, is a better representation
of the return that many investors actually received. If you own the fund in a
tax-deferred account such as an individual retirement account or a 401(k), this
information does not apply to you. Such accounts are not subject to current
taxes.
The table below presents the pretax and after-tax returns for the
International Stock Index Funds and appropriate peer groups of mutual funds. Two
things to keep in mind:
- The after-tax return calculations use the top federal income tax rates in
effect at the time of each distribution. The tax burden, therefore, would be
somewhat less, and the after-tax return somewhat more, for those in lower tax
brackets.
- The peer funds' returns are provided by Morningstar, Inc. (Elsewhere in
this report, returns for comparable mutual funds are derived from data provided
by Lipper Inc., which differ somewhat.)
As you can see, for investors in the highest tax brackets, the pretax
returns of our funds were reduced during 1999 by a range of 0.5 percentage point
to 1.4 percentage points. Comparable mutual funds lost more to taxes, except in
emerging markets where Vanguard Emerging Markets Stock Index Fund retained less
of its 1999 pretax total return than did the average diversified emerging
markets fund.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS: PRETAX AND AFTER-TAX
PERIODS ENDED DECEMBER 31, 1999
-------------------------------------------------------------
1 YEAR 5 YEARS** SINCE INCEPTION+
-------------------- ----------------- -------------------
PRETAX AFTER-TAX PRETAX AFTER-TAX PRETAX AFTER-TAX
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Vanguard European
Stock Index Fund 16.6% 15.7% 22.6% 21.5% 14.6% 13.6%
Average Europe Stock Fund* 24.9 23.2 20.7 18.1 -- --
- -------------------------------------------------------------------------------------------
Vanguard Pacific
Stock Index Fund 57.1% 56.6% 2.5% 2.1% 3.2% 2.8%
Average Japan Stock Fund* 113.9 111.5 9.0 8.1 -- --
- -------------------------------------------------------------------------------------------
Vanguard Emerging Markets
Stock Index Fund 61.6% 60.2% 5.1% 4.2% 6.2% 5.4%
Average Diversified Emerging
Markets Fund* 71.8 71.5 4.7 4.1 -- --
- -------------------------------------------------------------------------------------------
Vanguard Total International
Stock Index Fund 29.9% 29.1% 11.6% 10.8% -- --
Average Foreign Stock Fund* 44.3 42.1 -- -- -- --
- -------------------------------------------------------------------------------------------
</TABLE>
*Based on data from Morningstar, Inc.
**For Vanguard Total International Stock Index Fund, returns are annualized
since inception on April 29, 1996.
+June 18, 1990, for Vanguard European Stock Index Fund and Vanguard Pacific
Stock Index Fund. May 4, 1994, for Vanguard Emerging Markets Stock Index Fund.
Over the five years ended December 31, 1999, the European Stock Index Fund
was more tax efficient than its average peer, while our Emerging Markets and
Pacific funds were slightly less tax-efficient than their peer groups. Since its
April 1996 inception, the Total International Stock Index Fund's annualized
pretax return of 11.6% has been reduced by taxes to 10.8%. Morningstar does not
provide
6
<PAGE> 9
competitors' after-tax returns for such specific periods. We stress that because
many interrelated factors affect how tax-friendly a fund may be, it's very
difficult to predict tax efficiency. A fund's tax efficiency can be influenced
by its turnover rate, the types of securities it holds, the accounting practices
it uses when selling shares, and the net cash flow it receives.
Finally, it's important to understand that our calculation does not reflect
the effect of your own investment activities. Specifically, you may incur
additional capital gains taxes--thereby lowering your after-tax return--if you
decide to sell all or some of your shares.
A NOTE ABOUT OUR CALCULATIONS: Pretax total returns assume that all
distributions received (income dividends, short-term capital gains, and
long-term capital gains) are reinvested in new shares, while our after-tax
returns assume that distributions are reduced by any taxes owed on them before
reinvestment. Total returns do not reflect any transaction fees. When
calculating the taxes due, we used the highest individual federal income tax
rates at the time of the distributions. Those rates are currently 39.6% for
dividends and short-term capital gains and 20% for long-term capital gains. The
calculation does not account for state and local income taxes, nor does it take
into consideration any tax adjustments that a shareholder may claim for foreign
taxes paid by the fund. The competitive group returns provided by Morningstar
are calculated in a manner consistent with that used for Vanguard funds.
7
<PAGE> 10
THE MARKETS IN PERSPECTIVE
YEAR ENDED DECEMBER 31, 1999
A global expansion in economic activity bolstered stocks at home and abroad
during 1999. The muscular U.S. economy provided a good bit of the oomph, but it
got an assist from solid growth in Asian, European, and Latin American economies
that had slumped in 1997 and 1998.
Interest rates increased significantly--causing bond proces to fall--as
both investors and monetary policymakers grew concerned that economic growth was
so vigorous that it would cause inflation to accelerate.
U.S. STOCK MARKETS
The booming economy and growing corporate profits provided plenty of fuel for
stock prices during 1999. However, higher interest rates restrained the rise,
especially for financial-services and electric utility stocks regarded as
interest rate sensitive.
U.S. economic output increased at an inflation-adjusted rate of about
4%--a very rapid pace for such a large, mature economy. Analysts estimated that
corporate profits would grow by 14% in 1999 and again in 2000. Consumer
spending, which accounts for roughly two-thirds of economic activity, was
strong. People felt prosperous, thanks to the long bull market, plentiful jobs,
and rising incomes. (After-tax personal income grew by more than 5% in 1999, and
unemployment at year-end was at a three-decade low of 4.1% of the workforce.)
The stock market, as measured by the Wilshire 5000 Index, gained 23.8%,
with more than three-quarters of the gain coming in the final quarter of 1999.
For the first time in several years, smaller stocks outpaced
large-capitalization issues. The S&P 500 Index, which is dominated by large-cap
stocks and accounts for more than three-quarters of the U.S. stock market's
total value, gained 21.0% during the year; the rest of the market gained 35.4%.
Hidden in the market averages was an amazing divergence in stock
performance. Prices soared for most technology-related stocks, but performance
was pedestrian, at best, for most other issues. Indeed, three-fifths of stocks
on the New York Stock Exchange fell in 1999. The technology sector of the S&P
500 Index gained 74%, and the producer-durables sector, driven by huge gains for
some makers of telecommunications and technology gear, was up 49%. These results
were in stark contrast to the declines suffered by food and beverage companies
in the consumer-staples sector (-16%) and by many companies in the health-care
group (-10%).
<TABLE>
<CAPTION>
- --------------------------------------------------------------
AVERAGE ANNUAL RETURNS
PERIODS ENDED DECEMBER 31, 1999
-------------------------------
1 YEAR 3 YEARS 5 YEARS
- --------------------------------------------------------------
<S> <C> <C> <C>
STOCKS
S&P 500 Index 21.0% 27.6% 28.6%
Russell 2000 Index 21.3 13.1 16.7
Wilshire 5000 Index 23.8 26.1 27.1
MSCI EAFE Index 27.3 16.1 13.2
- --------------------------------------------------------------
BONDS
Lehman Aggregate Bond Index -0.8% 5.7% 7.7%
Lehman 10 Year Municipal Bond
Index -1.3 4.8 7.1
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 4.7 5.0 5.2
- --------------------------------------------------------------
OTHER
Consumer Price Index 2.7% 2.0% 2.4%
- --------------------------------------------------------------
</TABLE>
8
<PAGE> 11
Investors seemed bedazzled by the prospects for growth in revenue and
profits among tech stocks, but less interested in the actual profits for nontech
companies. Remarkably, the average S&P 500 stock without earnings gained 36.5%
in 1999, while the average stock with earnings rose 11.5%. There is general
agreement that growth in Internet commerce, computers, software, wireless
communications, and other key tech sectors will be stupendous. However, there is
much disagreement about whether profits will grow so impressively, given the
intense competition. During 1999, optimists clearly ruled.
U.S. BOND MARKETS
The pickup in worldwide economic activity buoyed stock prices but depressed bond
prices. Interest rates, which move in the opposite direction from bond prices,
rose sharply. The rate increase stemmed from increased borrowing by corporations
and individuals and from investors' fears that a sizzling economy was bound to
send inflation soaring.
The inflation evidence was ambiguous. Price increases were greater in 1999
than in 1998 at both the wholesale and consumer levels. Wholesale prices rose
3.0%, the biggest gain since 1990. And the Consumer Price Index advanced 2.7% in
1999 after a gain of just 1.6% in 1998. However, energy prices, which plunged in
1998 and shot up in 1999, skewed the figures in both periods. At the consumer
level, the "core rate" of inflation, which excludes food and energy prices, was
up just 1.9% in 1999, the smallest increase in 35 years. At midyear, the Federal
Reserve Board, aiming to cool the economy a bit to head off price pressures,
began raising short-term interest rates. In all, the Fed pushed up
rates by 0.75 percentage point in three quarter-point steps. The bond market
anticipated the Fed--interest rates began rising sharply in February--and at
year-end the yield of 30-year U.S. Treasury bonds was up 1.38 percentage points
(138 basis points) to 6.48%. The 10-year Treasury note--a benchmark for mortgage
lenders--rose 179 basis points, from 4.65% to 6.44%. Short-term rates didn't
rise as far; 3-month Treasury bill yields were up 88 basis points to 5.33% at
year-end.
Price declines, as usual, were greatest for long-term bonds and least for
short-term bonds. The overall market, as measured by the Lehman Aggregate Bond
Index, which has an intermediate-term average maturity, posted a -0.8% total
return in 1999. Short-term bonds generally provided returns of 2% to 3%.
Long-term bonds suffered significant price declines, and the Lehman Long
Government/Corporate Index recorded a -7.7% total return.
INTERNATIONAL STOCK MARKETS
Bullishness among stock investors was an international phenomenon in 1999. The
biggest gains came in Pacific-region and emerging markets that had suffered most
from economic slumps and currency crises during 1997 and 1998.
Overall, the Morgan Stanley Capital International Europe, Australasia, Far
East (EAFE) Index of major developed markets produced a 27.3% return for U.S.
dollar-based investors. The MSCI Pacific Free Index gained an astounding 56.4%
for U.S. investors, as a strong rise in the Japanese yen against the U.S. dollar
tacked on about 12.5 percentage points to a 43.9% return in local currencies. In
Europe, currency fluctuations had the opposite effect: European currencies,
including the new 11-nation common currency, the euro, mostly fell against the
dollar, and the 30.3% return in local currencies was nearly halved to 15.8% in
U.S. dollars.
Emerging markets managed a stunning turnaround, as the Select Emerging
Markets Free Index rose 60.9% in U.S.-dollar terms after having plummeted -18.4%
in 1998 and -16.4% in 1997.
9
<PAGE> 12
PERFORMANCE SUMMARY
EUROPEAN STOCK INDEX FUND
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>
TOTAL INVESTMENT RETURNS: JUNE 18, 1990-DECEMBER 31, 1999
- ---------------------------------------------------------
EUROPEAN STOCK INDEX FUND MSCI EUROPE
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
1990 -8.7% 1.5% -7.2% -6.4%
1991 9.5 2.9 12.4 14.1
1992 -5.9 2.6 -3.3 -3.9
1993 27.3 1.8 29.1 29.3
1994 -0.5 2.4 1.9 2.8
1995 19.6 2.7 22.3 22.1
1996 18.6 2.7 21.3 21.4
1997 22.0 2.2 24.2 23.7
1998 26.3 2.6 28.9 28.7
1999 14.6 2.0 16.6 15.8
- ---------------------------------------------------------
</TABLE>
See Financial Highlights table on page 43 for dividend and capital gains
information for the past five years.
CUMULATIVE PERFORMANCE: JUNE 18, 1990-DECEMBER 31, 1999
- -------------------------------------------------------
[LNE GRAPH]
<TABLE>
<S> <C> <C> <C>
6/18/1990 9950 10000 10000
1990 06 10220 10323 10335
1990 09 8483 8666 8620
1990 12 9184 9049 9357
1991 03 9478 9173 9761
1991 06 8931 8569 9122
1991 09 10056 9414 10308
1991 12 10323 9552 10679
1992 03 10001 9285 10315
1992 06 11083 9855 11338
1992 09 10511 9092 10798
1992 12 9981 8786 10260
1993 03 10580 9165 10883
1993 06 10826 9323 11088
1993 09 11799 10241 12123
1993 12 12888 11066 13261
1994 03 12616 11122 13053
1994 06 12551 10785 12921
1994 09 13051 11231 13541
1994 12 13130 11201 13635
1995 03 13833 11395 14478
1995 06 14961 12234 15420
1995 09 15575 12824 16066
1995 12 16055 13088 16628
1996 03 16651 13879 17264
1996 06 17178 14283 17735
1996 09 17820 14560 18417
1996 12 19468 16213 20190
1997 03 20420 16823 21175
1997 06 22374 17557 23072
1997 09 24234 18707 24937
1997 12 24185 18772 24985
1998 03 29111 22553 30035
1998 06 30749 23351 31614
1998 09 26317 19337 27126
1998 12 31165 23005 32150
1999 03 30500 22462 31476
1999 06 30586 22228 31406
1999 09 30919 22315 31857
1999 12 36525 28623 37220
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1999
-------------------------------
SINCE FINAL VALUE OF A
1 YEAR 5 YEARS INCEPTION $10,000 INVESTMENT
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
European Stock Index Fund* 16.03% 22.46% 14.55% $36,525
Average European Region Fund** 24.42 20.64 11.66 28,623
MSCI Europe Index 15.77 22.27 14.78 37,220
- -----------------------------------------------------------------------------------------------
</TABLE>
*Performance figures are adjusted for the 0.5% transaction fee on purchases.
The figures do not reflect the $10 annual account maintenance fee applied on
balances under $10,000.
**Derived from data provided by Lipper Inc.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED DECEMBER 31, 1999
- -----------------------------------------------------------------------------------------
INCEPTION SINCE INCEPTION
---------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
European Stock Index Fund* 6/18/1990 16.03% 22.46% 12.09% 2.46% 14.55%
- -----------------------------------------------------------------------------------------
</TABLE>
*Performance figures are adjusted for the 0.5% transaction fee on purchases. The
figures do not reflect the $10 annual account maintenance fee applied on
balances under $10,000.
10
<PAGE> 13
PERFORMANCE SUMMARY
PACIFIC STOCK INDEX FUND
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>
TOTAL INVESTMENT RETURNS: JUNE 18, 1990-DECEMBER 31, 1999
PACIFIC STOCK INDEX FUND MSCI PACIFIC
FREE
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
1990 -14.3% 0.3% -14.0% -15.0%
1991 10.0 0.7 10.7 11.5
1992 -18.7 0.5 -18.2 -18.5
1993 34.7 0.8 35.5 36.1
1994 12.2 0.8 13.0 12.8
1995 1.7 1.0 2.7 2.9
1996 -8.6 0.8 -7.8 -8.2
1997 -26.5 0.8 -25.7 -25.7
1998 1.6 0.8 2.4 2.6
1999 55.9 1.2 57.1 56.4
- ---------------------------------------------------------
</TABLE>
See Financial Highlights table on page 44 for dividend information for the past
five years.
<TABLE>
<CAPTION>
CUMULATIVE PERFORMANCE: JUNE 18, 1990-DECEMBER 31, 1999
- ---------------------------------------------------------
Pacific Stock Average Pacific MSCI Pacific
Index Fund* Region Fund** Free Index
<S> <C> <C> <C>
6/18/1990 9950 10000 10000
1990 06 9851 9950 9965
1990 09 7552 8080 7540
1990 12 8513 8505 8503
1991 03 9209 9418 9312
1991 06 8861 9420 8894
1991 09 9388 9593 9435
1991 12 9420 9701 9482
1992 03 7650 8870 7669
1992 06 7270 9809 7276
1992 09 7930 9612 7943
1992 12 7708 9740 7726
1993 03 9023 10096 9076
1993 06 10583 11598 10650
1993 09 11144 13096 11185
1993 12 10442 15955 10520
1994 03 11256 13436 11360
1994 06 12452 14457 12522
1994 09 12101 15863 12174
1994 12 11804 14029 11868
1995 03 11522 12841 11701
1995 06 11125 13980 11216
1995 09 11585 14665 11673
1995 12 12128 14177 12211
1996 03 12392 14313 12505
1996 06 12529 15895 12562
1996 09 12022 15350 12051
1996 12 11179 13947 11206
1997 03 10084 13032 10112
1997 06 12030 16054 12001
1997 09 10477 14207 10474
1997 12 8310 10877 8322
1998 03 8557 10826 8599
1998 06 7793 10575 7813
1998 09 6727 9453 6764
1998 12 8510 10864 8542
1999 03 9443 11920 9479
1999 06 10301 15697 10320
1999 09 11516 17737 11509
1999 12 13432 22317 13358
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1999
-------------------------------
SINCE FINAL VALUE OF A
1 YEAR 5 YEARS INCEPTION $10,000 INVESTMENT
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Stock Index Fund* 56.27% 2.41% 3.14% $13,432
Average Pacific Region Fund** 105.42 9.73 8.78 22,317
MSCI Pacific Free Index 56.38 2.39 3.08 13,358
- ---------------------------------------------------------------------------------------------------
</TABLE>
*Performance figures are adjusted for the 0.5% transaction fee on purchases.
The figures do not reflect the $10 annual account maintenance fee applied on
balances under $10,000.
**Derived from data provided by Lipper Inc.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED DECEMBER 31, 1999
- -----------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION ---------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pacific Stock Index Fund* 6/18/1990 56.27% 2.41% 2.33% 0.81% 3.14%
- -----------------------------------------------------------------------------------------
</TABLE>
*Performance figures are adjusted for the 0.5% transaction fee on purchases. The
figures do not reflect the $10 annual account maintenance fee applied on
balances under $10,000.
11
<PAGE> 14
PERFORMANCE SUMMARY
EMERGING MARKETS STOCK INDEX FUND
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>
TOTAL INVESTMENT RETURNS: MAY 4, 1994-DECEMBER 31, 1999
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
</TABLE>
*Select Emerging Markets Free Index consists of stocks that can be bought free
of restrictions in 13 emerging markets of Europe, Asia, Africa, and Latin
America and two developed markets (Hong Kong and Singapore).
See Financial Highlights table on page 44 for dividend information for the past
five years.
CUMULATIVE PERFORMANCE: MAY 4, 1994-DECEMBER 31, 1999
- -----------------------------------------------------
[LINE GRAPH]
<TABLE>
<S> <C> <C> <C>
5/4/1994 9900 10000 10000
199406 10256 10572 10190
199409 12488 12560 12256
199412 10655 10939 10380
199503 9459 9712 9252
199506 10655 10162 10432
199509 10714 10449 10420
199512 10714 10437 10381
199603 11801 11282 11395
199606 12299 11375 11800
199609 12100 11247 11635
199612 12410 11607 11958
199703 13017 12780 12534
199706 13906 13430 13403
199709 12612 13386 12168
199712 10322 11331 10001
199803 11005 11979 10655
199806 8636 9150 8367
199809 7106 7167 6864
199812 8452 8291 8161
199903 9370 8930 8958
199906 11187 10615 10728
199909 10642 10223 10148
199912 13793 14158 13128
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURNS PERIODS ENDED
DECEMBER 31, 1999
---------------------------
SINCE FINAL VALUE OF A
1 YEAR 5 YEARS INCEPTION $10,000 INVESTMENT
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Emerging Markets Stock Index Fund* 58.36% 4.67% 5.85% $13,793
Average Emerging Markets Fund** 70.77 5.29 6.34 14,158
Select Emerging Markets Free Index+ 60.86 4.81 4.93 13,128
- -----------------------------------------------------------------------------------------------
</TABLE>
*Performance figures are adjusted for the 1% transaction fee on purchases and
redemptions. The figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
**Derived from data provided by Lipper Inc.
+Consists of stocks that can be bought free of restrictions in 13 emerging
markets of Europe, Asia, Africa, and Latin America and two developed markets
(Hong Kong and Singapore).
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION -----------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets Stock Index Fund* 5/4/1994 58.36% 4.67% 3.72% 2.13% 5.85%
- -------------------------------------------------------------------------------------------
</TABLE>
*Performance figures are adjusted for the 1% transaction fee on purchases and
redemptions. The figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
12
<PAGE> 15
PERFORMANCE SUMMARY
TOTAL INTERNATIONAL STOCK INDEX FUND
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>
TOTAL INVESTMENT RETURNS: APRIL 29, 1996-DECEMBER 31, 1999
- -----------------------------------------------------------
TOTAL INTERNATIONAL STOCK INDEX FUND COMPOSITE*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1996 -1.0% 1.6% 0.6% 0.6%
1997 -2.5 1.7 -0.8 -0.8
1998 13.5 2.1 15.6 15.9
1999 28.0 1.9 29.9 28.1
- -----------------------------------------------------------
</TABLE>
*Total International Composite Index consists of the MSCI EAFE Index plus the
Select Emerging Markets Free Index.
See Financial Highlights table on page 45 for dividend and capital gains
information since the fund's inception.
<TABLE>
<CAPTION>
CUMULATIVE PERFORMANCE: APRIL 29, 1996-DECEMBER 31, 1999
- ----------------------------------------------------------
Total Total
International Average International
Stock Index International Composite
Fund Fund Index
<S> <C> <C> <C>
4/29/1996 9950 10000 10000
1996 06 9842 10031 9925
1996 09 9813 9966 9897
1996 12 9955 10367 10055
1997 03 9886 10510 9979
1997 06 11123 11671 11220
1997 09 10897 11803 11003
1997 12 9878 10893 9978
1998 03 11229 12518 11356
1998 06 11089 12651 11233
1998 09 9477 10575 9605
1998 12 11419 12312 11563
1999 03 11654 12524 11794
1999 06 12144 13359 12297
1999 09 12563 13920 12710
1999 12 14910 17768 14815
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1999
----------------------------------- FINAL VALUE OF A
1 YEAR SINCE INCEPTION $10,000 INVESTMENT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total International Stock Index Fund* 29.27% 11.49% $14,910
Average International Fund** 44.32 16.95 17,768
Total International Composite Index+ 28.13 11.30 14,815
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
*Performance figures are adjusted for the 0.5% transaction fee on purchases.
The figures do not reflect the $10 annual account maintenance fee applied on
balances under $10,000.
**Derived from data provided by Lipper Inc.
+Consists of the MSCI EAFE Index plus the Select Emerging Markets Free Index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION -------------------------------
DATE 1 YEAR CAPITAL INCOME TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total International Stock Index Fund* 4/29/1996 29.27% 9.49% 2.00% 11.49%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Performance figures are adjusted for the 0.5% transaction fee on purchases.
The figures do not reflect the $10 annual account maintenance fee applied on
balances under $10,000.
13
<PAGE> 16
FUND PROFILE
EUROPEAN STOCK INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of December
31, 1999, compared where appropriate to its unmanaged target index. Key elements
of this Profile are defined on page 15.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
- ----------------------------------------------------------
EUROPEAN MSCI
STOCK INDEX EUROPE
- ----------------------------------------------------------
<S> <C> <C>
Number of Stocks 559 547
Turnover Rate 7% --
Expense Ratio 0.29% --
Cash Reserves 0.3% --
</TABLE>
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS
(% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
Nokia Oyj 3.2%
Deutsche Telekom AG 3.2
BP Amoco PLC 2.8
British Telecommunications PLC 2.3
France Telecom SA 2.0
Royal Dutch Petroleum Co. 1.9
LM Ericsson Telephone AB B Shares 1.8
Mannesmann AG 1.8
HSBC Holdings PLC 1.7
Roche Holding AG 1.6
- -------------------------------------------------------
Top Ten 22.3%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
EUROPEAN MSCI
STOCK INDEX EAFE
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.85 1.00
Beta 0.89 1.00
</TABLE>
<TABLE>
<CAPTION>
COUNTRY DIVERSIFICATION (% OF COMMON STOCKS)
- ---------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998 DECEMBER 31, 1999
--------------------------------------------------------
EUROPEAN EUROPEAN MSCI
STOCK INDEX STOCK INDEX EUROPE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Austria........................................................... 0.5% 0.3% 0.3%
Belgium........................................................... 2.6 1.5 1.4
Denmark........................................................... 1.2 1.2 1.2
Finland........................................................... 2.1 4.5 4.5
France............................................................ 12.9 14.6 15.4
Germany........................................................... 14.1 15.8 15.7
Ireland........................................................... 0.7 0.6 0.6
Italy............................................................. 7.0 6.5 6.4
Netherlands....................................................... 8.8 8.6 7.9
Norway............................................................ 0.6 0.6 0.6
Portugal.......................................................... 0.9 0.7 0.7
Spain............................................................. 4.6 4.1 4.1
Sweden............................................................ 3.7 4.1 4.0
Switzerland....................................................... 11.2 8.6 8.5
United Kingdom.................................................... 28.4 28.3 28.7
United States..................................................... 0.7 0.0 0.0
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 17
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 RESERVES. The percentage of a fund's net assets invested in "cash
equivalents"--highly liquid, short-term, interest-bearing securities. This
figure does not include cash invested in futures contracts to simulate stock
investment.
COUNTRY DIVERSIFICATION. The percentages of a fund's common stock invested in
securities of various countries.
EXPENSE RATIO. The percentage of a fund's average net assets used to pay its
annual administrative and advisory expenses. These expenses directly reduce
returns to investors.
NUMBER OF STOCKS. An indicator of diversification. The more stocks a fund holds,
the more diversified it is and the more likely to perform in line with the
overall stock market.
R-SQUARED. A measure of how much of a fund's past returns can be explained by
the returns from the overall market (or its benchmark index). If a fund's total
return were precisely synchronized with the overall market's return, its
R-squared would be 1.00. If a fund's returns bore no relationship to the
market's returns, its R-squared would be 0.
TEN LARGEST HOLDINGS. The percentage of net assets that a fund has invested in
its ten largest holdings. (The average for stock mutual funds is about 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 past year. Funds
with high turnover rates incur higher transaction costs and are more likely to
distribute capital gains (which are taxable to investors).
15
<PAGE> 18
FUND PROFILE
PACIFIC STOCK INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of December
31, 1999, compared where appropriate to its unmanaged target index. Key elements
of this Profile are defined on page 15.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
- ----------------------------------------------------------
MSCI
PACIFIC PACIFIC
STOCK INDEX FREE
- ----------------------------------------------------------
<S> <C> <C>
Number of Stocks 413 420
Turnover Rate 6% --
Expense Ratio 0.37% --
Cash Reserves 0.2% --
</TABLE>
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS
(% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
Nippon Telegraph and Telephone Corp. 6.4%
Toyota Motor Corp. 5.3
Softbank Corp. 3.0
Fujitsu Ltd. 2.6
The Bank of Tokyo-Mitsubishi Ltd. 1.9
Sony Music Entertainment 1.9
Matsushita Electric Industrial Co., Ltd. 1.7
Hutchison Whampoa Ltd. 1.7
Sony Corp. 1.7
Murata Manufacturing Co., Ltd. 1.6
- -------------------------------------------------------
Top Ten 27.8%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
PACIFIC MSCI
STOCK INDEX EAFE
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.71 1.00
Beta 1.21 1.00
</TABLE>
<TABLE>
<CAPTION>
COUNTRY DIVERSIFICATION (% OF COMMON STOCKS)
- -----------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998 DECEMBER 31, 1999
----------------------------------------------------------
PACIFIC PACIFIC MSCI
STOCK INDEX STOCK INDEX PACIFIC FREE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Australia.................................................... 10.1% 7.4% 7.3%
Hong Kong.................................................... 7.9 7.1 7.0
Japan........................................................ 78.2 81.7 82.0
New Zealand.................................................. 0.8 0.5 0.5
Singapore.................................................... 3.0 3.3 3.2
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 19
FUND PROFILE
EMERGING MARKETS STOCK INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of December
31, 1999, compared where appropriate to its unmanaged target index. Key elements
of this Profile are defined on page 15.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
- ----------------------------------------------------------
EMERGING MARKETS
STOCK INDEX INDEX*
- ----------------------------------------------------------
<S> <C> <C>
Number of Stocks 496 484
Turnover Rate 22% --
Expense Ratio 0.58% --
Cash Reserves 5.4% --
</TABLE>
*Select Emerging Markets Free Index.
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS
(% OF TOTAL NET ASSETS)
- -------------------------------------------------------
<S> <C>
Telefonos de Mexico SA 5.2%
Hutchison Whampoa Ltd. 3.0
Cable & Wireless HKT Ltd. 1.9
Turkiye Is Bankasi AS C Shares 1.6
Cheung Kong Holdings Ltd. 1.6
Centrais Electricas Brasileiras SA 1.4
Hellenic Telecommunication
Organization SA 1.4
Petroleo Brasileiro SA Pfd. 1.4
National Bank of Greece SA 1.4
De Beers Centenary AG 1.3
- -------------------------------------------------------
Top Ten 20.2%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
EMERGING MARKETS MSCI
STOCK INDEX EAFE
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.59 1.00
Beta 1.57 1.00
</TABLE>
<TABLE>
<CAPTION>
COUNTRY DIVERSIFICATION (% OF COMMON STOCKS)
- -----------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998 DECEMBER 31, 1999
----------------------------------------------------------
EMERGING MARKETS EMERGING MARKETS
STOCK INDEX STOCK INDEX INDEX*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Argentina .................................................. 5.7% 2.9% 2.9%
Brazil...................................................... 14.6 13.4 13.7
Czech Republic.............................................. 1.5 0.9 0.9
Greece...................................................... 8.1 9.0 8.9
Hong Kong................................................... 16.0 13.3 13.7
Hungary..................................................... 1.7 1.7 1.7
Indonesia................................................... 2.2 2.5 2.4
Israel...................................................... 4.0 5.6 5.7
Malaysia.................................................... 3.8 0.0 0.0
Mexico...................................................... 13.3 16.4 15.8
Philippines................................................. 2.6 1.7 1.7
Poland...................................................... 1.2 1.7 1.7
Singapore................................................... 6.5 5.9 6.3
South Africa................................................ 13.0 15.0 14.8
Thailand.................................................... 3.3 4.3 4.2
Turkey...................................................... 2.5 5.7 5.6
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*Select Emerging Markets Free Index.
17
<PAGE> 20
FUND PROFILE
TOTAL INTERNATIONAL STOCK INDEX FUND
This Profile provides a snapshot of the fund's characteristics as of December
31, 1999, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 15.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
- ----------------------------------------------------------
<S> <C>
Expense Ratio 0%
Average Weighted Expense Ratio* 0.34%
</TABLE>
*For underlying funds.
<TABLE>
<CAPTION>
ALLOCATION TO UNDERLYING
VANGUARD FUNDS
- -------------------------------------------------------
<S> <C>
European Stock Index Fund 59.8%
Pacific Stock Index Fund 30.3
Emerging Markets Stock Index Fund 9.9
- -------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
TOTAL INTERNATIONAL MSCI
STOCK INDEX EAFE
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.98 1.00
Beta 1.06 1.00
</TABLE>
18
<PAGE> 21
FINANCIAL STATEMENTS
DECEMBER 31, 1999
STATEMENT OF NET ASSETS
This Statement provides a detailed list of each fund's
holdings, including each security's market value on the last day of the
reporting period. European, Pacific, and Emerging Markets Stock Index Fund
securities are grouped and subtotaled by asset type (common stocks, bonds, etc.)
and by country; the Total International Stock Index Fund lists investments in
shares of each Vanguard International Stock Index fund. Other assets are added
to, and liabilities are subtracted from, the value of Total Investments to
calculate the fund's Net Assets. Finally, Net Assets are divided by the
outstanding shares of the fund to arrive at its share price, or Net Asset Value
(NAV) Per Share.
At the end of the Statement of Net Assets, you will find a
table displaying the composition of the fund's net assets on both a dollar and
per-share basis. Because all income and any realized gains must be distributed
to shareholders each year, the bulk of net assets consists of Paid in Capital
(money invested by shareholders). The amounts shown for Undistributed Net
Investment Income and Accumulated Net Realized Gains usually approximate the
sums the fund had available to distribute to shareholders as income dividends or
capital gains as of the statement date, but may differ because certain
investments or transactions may be treated differently for financial statement
and tax purposes. Any Accumulated Net Realized Losses, and any cumulative excess
of distributions over net income or net realized gains, will appear as negative
balances. Unrealized Appreciation (Depreciation) is the difference between the
market value of the fund's investments and their cost, and reflects the gains
(losses) that would be realized if the fund were to sell all of its investments
at their statement-date values.
<TABLE>
<CAPTION>
- ---------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- ---------------------------------------------------------
COMMON STOCKS (99.1%)(1)
- ---------------------------------------------------------
<S> <C> <C>
AUSTRIA (0.3%)
Bank Austria AG 114,304 $ 6,416
- - Oesterreichische
Elektrizitaetswirtschafts AG
Class A 27,267 3,813
OMV AG 21,947 2,123
Wienerberger
Baustoffindustrie AG 68,950 1,492
EA-Generali AG 7,605 1,269
VA Technologies AG 12,630 829
Austria Tabak AG 16,016 771
Flughafen Wien AG 19,150 662
Austrian Airlines AG 30,080 567
Boehler-Uddeholm AG 11,441 525
Mayr-Melnhof Karton AG 10,510 485
RHI AG 16,407 470
Oesterreichische Brau-
Beteiligungs AG 9,710 389
Lenzing AG 4,490 243
BWT Best Water Technology AG 1,760 236
Bau Holding AG 5,860 220
Bau Holding AG Pfd. 3,234 116
- - Austria Mikro Systeme
International AG 3,631 115
---------
20,741
---------
BELGIUM (1.5%)
Fortis AG (B) 703,890 25,271
Electrabel SA 50,965 16,602
Suez Lyonnaise des Eaux 85,920 13,701
Solvay SA 93,312 7,669
UCB SA 167,250 7,217
Groupe Bruxelles Lambert SA 32,855 6,586
Delhaize-Le Lion SA 60,439 4,531
Colruyt NV 44,345 2,534
Barco NV 17,264 2,405
D'Ieteren SA 5,760 2,349
Bekaert NV 31,660 1,749
Union Miniere SA 35,481 1,373
Glaverbel SA 11,604 997
Compagnie Maritime Belge
SA (CMB) 16,238 772
Suez Lyonnaise-Strips VVPR 85,920 1
---------
93,757
---------
DENMARK (1.2%)
Tele Danmark A/S 193,112 14,280
D/S 1912 B Shares 995 11,660
D/S Svendborg B Shares 689 11,415
Novo Nordisk A/S B Shares 67,783 8,947
Den Danske Bank A/S 62,056 6,770
Unidanmark A/S A Shares 78,806 5,520
- - ISS International Service
Systems A/S B Shares 31,685 2,121
Danisco A/S 51,005 1,979
- - Navision Software A/S 21,100 1,521
Carlsberg A/S A Shares 31,053 1,138
FLS Industries A/S B Shares 41,442 1,038
- - Vestas Wind Systems A/S 5,600 988
</TABLE>
19
<PAGE> 22
<TABLE>
<CAPTION>
- ---------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- ---------------------------------------------------------
COMMON STOCKS (99.1%)(1)
- ---------------------------------------------------------
<S> <C> <C>
Carlsberg A/S B Shares 24,024 $ 906
William Demant A/S 8,200 773
Falck A/S 6,500 679
Bang & Olufsen Holding A/S
B Shares 12,715 462
SAS Danmark A/S 40,085 416
- - Topdanmark A/S 16,400 323
NKT Holding A/S 5,512 307
Radiometer A/S B Shares 6,676 249
- - East Asiatic Co. A/S 19,359 201
---------
71,693
---------
FINLAND (4.5%)
Nokia Oyj 1,096,929 197,859
Sonera Oyj 650,209 44,349
UPM-Kymmene Oyj 235,693 9,450
Tieto Corp. B Shares 67,915 4,220
Pohjola Group Insurance 39,288 2,363
Sampo Insurance Co., Ltd.
A Shares 52,224 1,816
Outokumpu Oyj A Shares 114,550 1,613
- - Metso Oyj 111,504 1,442
Kone Corp. Oyj B shares 19,044 933
Kesko Oyj 73,528 929
Hartwall Oyj Abp 63,602 918
Metra Oyj B Shares 36,726 681
Rautaruuki Oyj 95,189 663
Raisio Group PLC 150,524 593
Instrumentarium Group B Shares 18,078 587
Kemira Oyj 92,360 560
Finnlines Oyj 14,719 457
Stockmann AB Oyj A Shares 24,500 393
Amer Group Ltd. 19,220 388
Stockmann AB Oyj B Shares 26,530 380
Uponor Oyj 20,965 370
Metra Oyj A Shares 12,470 228
Sanitec Oyj 4,578 56
---------
271,248
---------
FRANCE (14.5%)
France Telecom SA 924,505 121,667
Total Fina SA B Shares 669,068 88,856
Carrefour SA 312,673 57,382
L'Oreal SA 61,989 49,488
Vivendi 535,339 48,104
AXA SA 319,331 44,297
Aventis SA 720,381 41,662
Alcatel 180,106 41,159
LVMH Moet Hennessy Louis
Vuitton SA 88,823 39,591
Banque Nationale de Paris SA 415,471 38,145
Pinault-Printemps-Redoute SA 107,100 28,125
- - Sanofi-Synthelabo SA 657,740 27,254
Societe Generale SA 95,762 22,172
Cap Gemini SA 69,450 17,542
Bouygues SA 25,976 16,429
Canal Plus SA 111,876 16,203
Groupe Danone SA 65,711 15,412
Suez Lyonnaise des Eaux 96,605 15,405
Cie. de St. Gobain SA 77,398 14,484
L'Air Liquide SA (Registered) 75,945 12,651
Lafarge SA 97,001 11,239
Schneider Electric SA 143,441 11,207
PSA Peugeot Citroen SA 40,624 9,178
Accor SA 169,680 8,158
Etablissements Economiques du
Casino Guichard-Perrachon SA 66,679 7,599
Dassault Systemes SA 104,074 6,749
Sagem SA 9,615 6,650
Lagardere SCA 108,806 5,889
Valeo SA 73,465 5,640
Sodexho Alliance SA 30,463 5,365
Pechiney SA A Shares 71,173 5,061
Thomson-CSF SA 146,757 4,823
Cie. Generale des Etablissements
Michelin SA B Shares 118,573 4,635
Usinor Sacilor SA 226,258 4,230
Sidel SA 29,442 3,025
Essilor International SA 9,496 2,932
Pernod Ricard SA 50,618 2,882
Publicis SA 7,378 2,773
Societe BIC SA 49,221 2,229
Imerys 13,777 2,044
Eridania Beghin-Say SA 17,348 1,857
- - Club Mediterranee SA 14,610 1,681
Simco SA 20,587 1,658
Group Pour L'Finance
D'Construction 13,541 1,520
Cie. Francaise d'Etudes
et de Construction SA 14,415 1,471
Groupe GTM 13,763 1,331
Etablissements Economiques du
Casino Guichard-Perrachon
SA Pfd. 16,668 1,279
Coflexip SA 14,908 1,078
Zodiac SA 4,735 996
Groupe SEB SA 13,427 942
Cie. Parisienne de
Reescompte SA 20,693 819
Nord-Est SA 16,628 452
Chargeurs SA 3,410 191
Elf Aquitaine SA 6 1
---------
883,612
---------
GERMANY (15.7%)
Deutsche Telekom AG 2,738,518 194,882
Mannesmann AG 454,426 110,224
Allianz AG 221,483 74,146
Siemens AG 534,672 68,060
Deutsche Bank AG 570,674 47,898
DaimlerChrysler AG 568,958 43,911
Muenchener
Rueckversicherungs-
Gesellschaft AG (Registered) 159,943 40,799
Bayer AG 663,541 31,325
BASF AG 562,007 28,841
SAP AG 55,275 27,092
Dresdner Bank AG 480,887 26,510
Bayerische Hypo-und
Vereinsbank AG 384,988 26,240
DaimlerChrysler AG ADR 327,337 25,614
SAP AG Pfd. 39,531 23,734
Veba AG 451,391 21,920
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
- ---------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ---------------------------------------------------------
<S> <C> <C>
RWE AG 428,413 $ 16,661
Volkswagen AG 279,146 15,604
- - Thyssen Krupp AG 464,356 14,033
Metro AG 243,226 13,018
Viag AG 627,725 11,451
Deutsche Lufthansa AG 341,411 8,110
Preussag AG 137,754 7,813
Schering AG 60,864 7,372
EM.TV & Merchandising AG 106,350 6,822
Fresenius Medical Care AG 69,800 6,080
WCM Beteiligungs-und
Grundbesitz AG 143,650 5,543
Heidelberger Zement AG 69,058 5,341
Linde AG 97,035 5,340
Beiersdorf AG 73,106 4,885
Merck KGaA 147,731 4,561
Karstadt Quelle AG 101,316 4,056
Man AG 97,767 3,611
Adidas-Salomon AG 41,191 3,068
Volkswagen AG Pfd. 88,722 2,828
Hochtief AG 62,078 2,302
Gehe AG 57,150 2,205
RWE AG Pfd. 70,046 2,148
Continental AG 104,237 2,074
Douglas Holding AG 30,153 1,292
Dyckerhoff AG Pfd. 39,302 1,198
- - SGL Carbon AG 18,041 1,194
Kamps AG 16,250 1,116
Man AG Pfd. 32,392 714
Buderus AG 41,782 704
Bilfinger & Berger Bau AG 28,568 618
Metro AG Pfd. 20,068 604
Friederich Grohe AG Pfd. 1,971 587
AGIV AG 31,794 572
- - Kloeckner-Humbolt-Deutz AG 58,773 342
Fag Kugelfischer Georg
Schaefer AG 38,118 340
Rheinmetall AG 21,903 330
- - Brau und Brunnen AG 5,698 268
Salamander AG 21,530 259
Rheinmetall AG Pfd. 19,831 209
IWKA AG 8,400 176
Escada AG 865 113
Escada AG Pfd. 930 104
Holsten-Brauerei AG 2,600 44
Heidelberger Zement AG VVPR
STRIP NPV 23,295 2
---------
956,908
---------
IRELAND (0.6%)
Allied Irish Banks PLC 842,629 9,561
Eircom PLC 1,962,000 8,358
CRH PLC 346,806 7,439
Jefferson Smurfit Group PLC 919,816 2,766
Irish Life & Permanent PLC 279,997 2,638
Kerry Group PLC A Shares 147,784 1,763
- - Ryanair Holdings PLC 145,972 1,587
Independent News & Media PLC 202,781 1,323
Waterford Wedgewood PLC 632,017 640
DCC PLC 85,354 633
Fyffes PLC 262,415 526
Greencore Group PLC 170,670 522
Jurys Hotel Group PLC 49,372 364
- - Tullow Oil PLC 258,817 335
Irish Continental Group PLC 28,736 294
---------
38,749
---------
ITALY (6.5%)
Telecom Italia Mobile SpA 6,054,714 67,301
Telecom Italia SpA 3,394,268 47,629
Ente Nazionale
Idrocarburi SpA 7,326,685 40,096
Assicurazioni Generali SpA 1,256,340 41,302
- - Enel SpA 6,714,053 27,995
San Paolo-IMI SpA 1,499,832 20,279
Mediaset SpA 1,072,568 16,599
Banco Intesa SpA 3,691,019 14,909
- - Olivetti SpA 4,408,472 12,704
Fiat SpA 354,228 10,066
Banca di Roma SpA 6,791,100 8,685
Telecom Italia Mobile
SpA Risp. 1,606,777 7,618
Riunione Adriatica di
Sicurta SpA 685,213 6,841
Pirelli SpA 2,360,288 6,447
Telecom Italia SpA Risp. 921,155 5,586
Montedison SpA 2,853,174 4,647
Benetton Group SpA 1,884,116 4,306
Mondadori (Arnoldo)
Editore SpA 123,266 3,892
Alitalia SpA 1,480,087 3,509
Banco Popolare di Milano SpA 429,100 3,325
Autogrill SpA 244,600 3,065
Italgas SpA 758,619 2,859
Parmalat Finanziaria SpA 2,037,326 2,593
Bulgari SpA 283,435 2,534
Banca Intesa Non-Conv Risp. 1,230,820 2,492
Italcementi SpA 206,020 2,478
Fiat SpA Pfd. 153,889 2,213
Banca Commerciale
Italiana SpA 389,076 2,106
La Rinascente SpA 311,622 1,990
Fiat SpA Risp. 121,718 1,781
Societa Assicuratrice
Industriale SpA 156,288 1,740
Magneti Marelli SpA 397,703 1,511
Societa Assicuratrice
Industriale SpA Risp. 288,627 1,429
Sirti SpA 357,500 1,272
Burgo (Cartiere) SpA 179,400 1,176
SNIA BPD SpA 1,031,348 1,104
Italcementi SpA Risp. 218,375 948
Montedison SpA Risp. 966,644 920
Impregilo SpA 1,331,584 817
Marzotto & Figli SpA 114,128 812
La Rinascente SpA Pfd. 172,797 745
La Rinascente SpA Risp. 200,493 699
- - Banca Intesa Put Warrants
Exp. 11/15/2002 389,076 679
Cementir SpA 512,983 653
Reno De Medici SpA 219,226 593
- - Beni Stabili SpA 1,525,832 535
</TABLE>
21
<PAGE> 24
<TABLE>
<CAPTION>
- ---------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- ---------------------------------------------------------
<S> <C> <C>
Pirelli SpA Risp. 292,300 $ 527
SNIA SpA 591,720 466
Danieli & Co. SpA 54,090 304
Marzotto & Figli SpA Risp. 24,250 191
Danieli & Co. SpA Risp. 75,500 185
---------
395,153
---------
NETHERLANDS (8.5%)
Royal Dutch Petroleum Co. 1,930,636 117,750
ING Groep NV 873,224 52,462
Aegon NV 520,327 50,014
Koninklijke KPN NV 427,838 41,553
Philips Electronics NV 305,737 41,369
STMicroelectronics NV 260,290 39,864
ABN-AMRO Holding NV 1,381,830 34,348
Unilever NV 515,604 28,341
Koninklijke Ahold NV 591,488 17,424
- - ASM Lithography Holding NV 125,281 13,850
Heineken NV 281,965 13,684
Akzo Nobel NV 266,312 13,293
TNT Post Group NV 432,892 12,344
Wolters Kluwer NV 248,154 8,357
Getronics NV 101,513 8,058
Aegon NV ARS 80,913 7,727
Elsevier NV 586,265 6,969
- - Baan Co. NV 191,561 2,694
Hagemeyer NV 97,946 2,257
KLM Royal Dutch Airlines NV 52,968 1,354
Oce NV 67,724 1,139
Buhrmann NV 70,829 1,061
Vedior NV 86,632 886
- - Koninklijke Vopak NV 35,324 836
IHC Caland NV 20,975 762
Nedlloyd Groep NV 19,669 548
Stork NV 29,150 424
Hollandsche Beton Groep NV 29,230 278
---------
519,646
---------
NORWAY (0.6%)
Norsk Hydro ASA 238,742 9,981
Orkla ASA A Shares 187,766 3,224
Christiania Bank Og
Kreditkasse ASA 599,210 2,945
DNB Holding ASA 681,405 2,789
- - Storebrand ASA 231,551 1,758
- - Petro Geo-Services ASA 89,843 1,599
Norske Skogindustrier ASA
A Shares 27,148 1,412
Tomra Systems ASA 75,760 1,282
Merkantildata ASA 102,503 1,237
Schibsted ASA 64,468 1,195
- - NCL Holdings ASA 216,265 931
Bergesen D.Y. ASA A Shares 50,294 914
- - Kvaerner ASA 43,313 911
Elkem ASA 36,966 851
Bergesen D.Y. ASA B Shares 27,292 465
Hafslund ASA A Shares 75,421 454
SAS Norge ASA B Shares 41,605 450
Norske Skogindustrier ASA
B Shares 9,721 408
- - Proxima ASA 45,955 320
Lief Hoegh & Co. ASA 24,729 292
Smedvig ASA A Shares 22,638 282
- - Kvaerner ASA B Shares 14,970 263
Smedvig ASA B Shares 19,806 210
Hafslund ASA B Shares 39,258 151
Unitor ASA 20,218 151
---------
34,475
---------
PORTUGAL (0.7%)
Portugal Telecom SA
(Registered) 915,590 9,994
Electricidade de Portugal SA 516,083 8,964
Banco Espirito Santo SA 153,403 4,290
Sonae SGPS SA 69,557 3,653
Banco Comercial Portugues SA 566,545 3,129
Banco Comercial Portugues SA
8% Cvt. Pfd. Series A 27,639 2,888
Jeronimo Martins & Filho,
SGPS, SA 91,781 2,337
Brisa-Auto Estradas de
Portugal, SA 268,375 2,050
Cimpor-Cimento de Portugal SA 113,549 1,878
Portucel Industrial-Empresa
Productora de Cellulosa SA 113,452 777
Companhia de
Seguros Tranquilidade 14,464 441
Cin-Corporacao Industrial do
Norte SA 13,938 340
Unicer-Uniao Cervejeira SA 16,418 324
Corticeira Amorin SA 24,113 236
Inapa-Investimentos
Participacoes e Gestao SA 26,269 214
Efacec-Empresa Fabrilde
Maquinas Electricas SA 29,500 170
Engil-SGPS 13,150 124
Sociedade Construcoes Soares
da Costa SA 15,933 49
Efacec-Empresa Fabrilde
Maquinas Electricas SA
1999 New Shares 1,957 11
---------
41,869
---------
SPAIN (4.0%)
- - Telefonica SA 2,903,277 72,167
Banco Santander Central
Hispano, SA 3,408,848 38,404
Banco Bilbao Vizcaya SA 1,960,066 27,779
Repsol SA 1,027,371 23,705
Endesa SA 947,485 18,718
Argentaria SA 500,832 11,711
Iberdrola SA 794,203 10,953
Gas Natural SDG SA 405,985 9,306
Altadis SA 399,324 5,672
Union Electrica Fenosa SA 259,757 4,515
Corporacion Financiera Alba SA 69,290 2,359
Fomento de Construc y Contra SA 106,264 2,151
Acerinox SA 52,530 2,085
Autopista Concesionaria
Espanola SA 212,257 2,053
- - Sol Melia SA 146,793 1,655
Sociedad General de Aguas de
Barcelona SA 104,100 1,517
Grupo Dragados SA 139,638 1,226
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
- ---------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ---------------------------------------------------------
<S> <C> <C>
ACS, Actividades de
Construccion y Servicios, SA 44,697 $ 1,055
Azucarera Ebro Agricolas SA 63,494 922
Corporacion Mapfre SA 56,287 921
- - TelePizza, SA 206,450 869
Zardoya Otis SA 88,260 864
Vallehermoso SA 116,541 815
Metrovacesa SA 45,343 782
Cortefiel, SA 24,300 633
Portland Valderrivas SA 21,444 557
Prosegur Cia de Seguridad SA
(Registered) 54,600 487
- - Asturiana de Zinc, SA 31,700 407
Empresa Nacional Compania de
Celulosas SA 20,150 401
Immobiliaria Urbis SA 87,360 394
Viscofan Industria Navarra de
Envolturas Celulosicas SA 50,620 392
Uralita SA 47,564 334
- - El Aguila SA 38,608 314
- - Puleva SA 188,086 275
Fabrica Espanola de Productos
Quimicos y Farmaceuticos, SA 23,400 226
- - Ercros SA 233,502 110
---------
246,734
---------
SWEDEN (4.0%)
LM Ericsson Telephone AB
B Shares 1,762,832 112,872
Hennes & Mauritz AB B Shares 746,744 24,912
Skandia Forsakrings AB 457,841 13,773
Electrolux AB Series B 327,833 8,212
Svenska Handelsbanken AB
A Shares 639,652 8,012
ForeningsSparbanken AB 503,853 7,372
Volvo AB B Shares 265,285 6,832
Skandinaviska Eeskilda Banken
AB A Shares 664,819 6,693
- - NetCom AB B Shares 92,798 6,496
Svenska Cellulosa AB B Shares 196,781 5,805
Sandvik AB A Shares 167,415 5,223
Securitas AB B shares 284,561 5,130
WM-Data AB B Shares 65,884 4,057
Skanska AB B Shares 98,648 3,661
Atlas Copco AB A Shares 120,590 3,550
Volvo AB A Shares 113,160 2,848
OM Gruppen AB 97,925 2,121
Gambro AB 211,700 1,896
Sandvik AB B Shares 59,013 1,872
Atlas Copco AB B Shares 55,630 1,576
SKF AB B Shares 59,388 1,439
Swedish Match AB 382,202 1,329
Assidoman AB 80,100 1,299
Drott AB B Shares 108,358 1,230
Svenska Handelsbanken AB
B Shares 102,000 1,200
Svenskt Stal AB (SSAB)-
Series A 75,609 1,168
SKF AB A Shares 41,840 960
Trelleborg AB B Shares 105,198 942
Granges AB 36,646 761
Gambro AB B Shares 70,300 634
Diligentia AB 64,385 528
Svenskt Stal AB (SSAB)-Series B 29,833 437
Esselte AB B Shares 19,680 149
Esselte AB A Shares 17,160 129
---------
245,118
---------
SWITZERLAND (8.5%)
Novartis AG (Registered) 65,033 94,986
Roche Holding AG 6,330 74,739
Nestle SA (Registered) 35,512 64,713
UBS AG 196,603 52,813
Credit Suisse Group AG
(Registered) 248,243 49,083
- - ABB Ltd. 268,176 32,627
Swisscom AG 66,031 26,565
Schweizerische
Rueckversicherungs-
Gesellschaft 12,990 26,544
Zurich Allied AG 44,096 25,013
Roche Holding AG (Bearer) 1,441 23,406
Adecco SA (Bearer) 15,190 11,767
Holderbank Financiere Glarus AG
(Bearer) 4,679 6,372
Alusuisse-Lonza Group AG
(Registered) 5,548 4,069
The Swatch Group AG (Bearer) 3,129 3,585
- - Lonza AG 5,041 3,048
Holderbank Financiere Glarus AG
(Registered) 8,432 2,976
The Swatch Group AG
(Registered) 12,486 2,894
Sulzer AG (Registered) 3,235 2,092
Sairgroup 9,367 1,876
Kuoni Reisen Holding AG
(Registered) 290 1,198
- - SGS Societe Generale de
Surveillance Holding SA (Bearer) 870 1,103
Georg Fischer AG (Registered) 3,043 1,046
Schindler Holding AG (Registered) 636 1,013
Valora Holding AG 3,767 1,003
Sika Finanz AG (Bearer) 2,261 735
Schindler Holding AG (Ptg. Ctf.) 443 706
Forbo Holding AG (Registered) 1,423 667
Grands Magasins Jelmoli SA
(Bearer) 503 597
Moevenpick Holding AG (Bearer) 1,100 543
- - SGS Societe Generale de
Surveillance Holding SA
(Registered) 1,617 496
Grands Magasins Jelmoli SA
(Registered) 1,363 315
---------
518,590
---------
UNITED KINGDOM (28.0%)
BP Amoco PLC 16,944,420 170,001
British Telecommunications
PLC 5,720,536 139,496
HSBC Holdings PLC 7,521,372 104,615
Glaxo Wellcome PLC 3,205,812 90,419
Vodafone Airtouch PLC 15,057,072 74,441
AstraZeneca Group PLC 1,578,608 65,336
</TABLE>
23
<PAGE> 26
<TABLE>
<CAPTION>
- ---------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- ---------------------------------------------------------
<S> <C> <C>
SmithKline Beecham PLC 4,955,677 $ 63,098
Lloyds TSB Group PLC 4,887,161 61,005
Vodaphone Airtouch PLC ADR 1,177,400 58,281
Marconi PLC 2,360,128 41,671
Barclays PLC 1,336,148 38,375
Prudential PLC 1,720,448 33,829
Diageo PLC 3,066,851 24,615
British Sky Broadcasting
Group PLC 1,516,781 24,361
Halifax PLC 2,022,270 22,375
Rio Tinto PLC 919,449 22,154
Abbey National PLC 1,312,327 20,939
BG PLC 3,107,953 20,036
Unilever PLC 2,582,507 18,959
CGU PLC 1,152,815 18,535
Tesco PLC 6,005,237 18,220
Invensys PLC 3,300,793 17,928
Reuters Group PLC 1,262,591 17,287
Pearson PLC 532,630 17,203
British Aerospace PLC 2,581,531 17,059
Granada Group PLC 1,631,646 16,502
Allied Zurich PLC 1,392,140 16,368
Royal Bank of Scotland
Group PLC 809,419 14,324
Kingfisher PLC 1,197,561 13,260
The Sage Group PLC 1,078,150 13,128
Marks & Spencer PLC 2,567,913 12,199
Legal & General Group PLC 4,469,816 12,139
Hays PLC 742,329 11,797
- - Arm Holdings PLC 168,475 11,342
British American Tobacco PLC 1,939,446 10,995
Cadbury Schweppes PLC 1,823,234 10,990
WPP Group PLC 662,857 10,480
Bass PLC 810,033 10,059
Centrica PLC 3,542,007 10,019
National Grid Group PLC 1,286,500 9,766
GKN PLC 621,220 9,762
J. Sainsbury PLC 1,716,042 9,659
3i Group PLC 540,269 9,622
The Peninsular & Oriental Steam
Navigation Co. 572,380 9,530
Rentokil Initial PLC 2,590,505 9,425
BOC Group PLC 420,914 9,023
Logica PLC 350,221 9,014
Dixons Group PLC 372,904 8,949
Compass Group PLC 593,331 8,128
Boots Co. PLC 825,152 8,006
Misys PLC 497,249 7,734
Scottish Power PLC 1,005,784 7,603
Railtrack Group PLC 448,123 7,511
Reed International PLC 978,004 7,306
- - Corus Group PLC 2,794,505 7,251
Sema Group PLC 398,304 7,151
Amvesco PLC 606,622 7,039
EMI Group PLC 696,498 6,820
Imperial Chemical
Industries PLC 644,708 6,811
BAA PLC 933,844 6,547
British Airways PLC 957,568 6,235
National Power PLC 1,065,518 6,157
Schroders PLC 277,563 5,574
Land Securities PLC 497,234 5,562
Carlton Communications PLC 559,495 5,438
Great Universal Stores PLC 888,680 5,185
United Utilities PLC 470,463 4,879
- - Canary Wharf Finance PLC 766,245 4,755
Hanson PLC 567,374 4,746
Scottish Power PLC ADR 154,280 4,320
Hilton Group PLC 1,314,810 4,201
Electrocomponents PLC 367,235 4,057
Blue Circle Industries PLC 698,791 4,052
Smiths Industries PLC 267,557 3,989
Wolseley PLC 502,833 3,848
Thames Water PLC 304,159 3,785
Capita Group PLC 208,603 3,782
Stagecoach Holdings PLC 1,398,212 3,594
Nycomed Amersham PLC 576,087 3,579
British Land Co., PLC 479,543 3,169
RMC Group PLC 230,019 3,151
TI Group PLC 408,676 3,129
BP Amoco PLC ADR 52,200 3,096
BBA Group PLC 364,443 2,937
Smith & Nephew PLC 861,014 2,886
Psion PLC 63,202 2,750
Williams PLC 595,916 2,706
Arjo Wiggins Appleton PLC 740,517 2,685
Burmah Castrol PLC 135,108 2,461
Tate & Lyle PLC 377,437 2,421
Airtours PLC 393,447 2,410
Ocean Group PLC 125,712 2,340
Lasmo PLC 1,217,288 2,310
MEPC PLC 303,931 2,278
Racal Electronics PLC 254,549 2,277
Rank Group PLC 696,466 2,200
Anglian Water PLC 227,895 2,075
Slough Estates PLC 359,557 2,043
FKI PLC 523,008 2,023
Bunzl PLC 368,803 2,021
Johnson Matthey PLC 167,326 1,861
London Bridge Software
Holdings PLC 26,219 1,845
Hammerson PLC 266,706 1,827
SSL International PLC 127,406 1,610
United Biscuits Holdings PLC 363,959 1,555
- - Eidos PLC 16,956 1,485
Rexam PLC 335,875 1,353
IMI PLC 308,224 1,331
Pilkington PLC 886,300 1,207
The Berkeley Group PLC 104,265 1,197
Caradon PLC 450,793 1,126
Barratt Developments PLC 227,724 1,057
- - Celltech Chiroscience PLC 121,105 1,033
De La Rue PLC 179,877 1,000
Unigate PLC 195,802 978
Meyer International PLC 123,843 767
Taylor Woodrow PLC 346,239 753
Amec PLC 169,227 668
Lex Service PLC 98,971 593
George Wimpey PLC 267,413 478
Jarvis PLC 132,291 469
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
BICC PLC 298,957 $ 439
Hepworth PLC 135,402 413
Coats Viyella PLC 415,032 274
-----------------
1,712,922
-----------------
- ---------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $3,876,007) 6,051,215
- ---------------------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- ---------------------------------------------------------------------------------------------
CORPORATE BONDS
- ---------------------------------------------------------------------------------------------
BG Transco Holdings PLC
4.187%, 12/14/2022 GBP 445 720
BG Transco Holdings PLC
7.00%, 12/16/2024 GBP 445 698
BG Transco Holdings PLC
(3) 7.06%, 6/14/2000 GBP 445 722
- ---------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $2,183) 2,140
- ---------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (6.5%)(1)
- ---------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
(2) 5.67%, 2/3/2000 $ 500 497
FEDERAL NATIONAL MORTGAGE ASSN.
(2) 5.64%, 1/18/2000 2,500 2,494
REPURCHASE AGREEMENTS
Deutsche Bank Securities Inc.
(Dated 12/31/1999,
Repurchase Value $320,108,000
Collateralized by Federal Home Loan
Mortgage Corp. 5.851%, 2/15/2000)
4.05%, 1/3/2000 39,400 39,400
4.05%, 1/3/2000--Note G 280,600 280,600
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
3.25%, 1/3/2000 8,867 8,867
3.47%, 1/3/2000--Note G 60,985 60,985
- ---------------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $392,843) 392,843
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (105.6%)
(COST $4,271,033) 6,446,198
- ---------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-5.6%)
- ---------------------------------------------------------------------------------------------
Other Assets--Note B 34,371
Security Lending Collateral Payable
to Brokers--Note G (341,585)
Other Liabilities (32,744)
-------------------
(339,958)
- ---------------------------------------------------------------------------------------------
NET ASSETS (100%)
- ---------------------------------------------------------------------------------------------
Applicable to 211,839,214 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization) $6,106,240
=============================================================================================
NET ASSET VALUE PER SHARE $28.82
- ---------------------------------------------------------------------------------------------
*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 99.7% and
5.9%, respectively, of net assets.
See Note E in Notes to Financial Statements.
(2)Securities with an aggregate value of
$2,991,000 have been segregated as initial
margin for open futures contracts.
(3)Adjustable Rate Security.
ADR--American Depositary Receipt.
ARS--American Registered Share.
GBP--Great Britain Pound.
(Ptg. Ctf.)--Participating Certificate.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
AT DECEMBER 31, 1999, NET ASSETS CONSISTED OF:
- ---------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $3,944,658 $18.62
Overdistributed Net Investment
Income--Note F (23,035) (.11)
Accumulated Net Realized
Gains--Note F 8,378 .04
Unrealized Appreciation
(Depreciation)--Note E
Investment Securities 2,175,165 10.27
Futures Contracts 1,167 --
Foreign Currencies and
Forward Currency Contracts (93) --
- ---------------------------------------------------------------------------------------------
NET ASSETS $6,106,240 $28.82
- ---------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 28
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- ---------------------------------------------------------------------------------------------
COMMON STOCKS (98.2%)(1)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
AUSTRALIA (7.2%)
Telstra Corp. Ltd. 4,662,402 $ 25,261
National Australia Bank Ltd. 1,142,663 17,421
Broken Hill Proprietary Co. Ltd. 1,294,187 16,938
News Corp. Ltd. 1,518,137 14,692
News Corp. Ltd. Pfd. 1,590,475 13,581
Westpac Banking Corp., Ltd. 1,446,719 9,946
AMP Ltd. 900,582 9,918
WMC Ltd. 846,779 4,654
Westfield Trust (Units) 2,365,005 4,627
Rio Tinto Ltd. 213,069 4,562
Brambles Industries Ltd. 157,048 4,329
Coles Myer Ltd. 829,854 4,272
Colonial Ltd. 954,972 4,255
- - Telstra Corp. Ltd.
Insured Receipt 1,104,000 3,879
Foster's Brewing Group Ltd. 1,209,751 3,459
Woolworths Ltd. 803,951 2,757
Suncorp-Metway Ltd. 476,851 2,562
Amcor Ltd. 470,633 2,197
Coca-Cola Amatil Ltd. 761,453 2,073
CSR Ltd. 747,710 1,810
Pioneer International Ltd. 596,220 1,791
Stockland Trust Group Ltd. 851,146 1,782
Wesfarmers Ltd. 200,668 1,651
Southcorp Ltd. 463,496 1,629
Tabcorp Holdings Ltd. 225,913 1,525
QBE Insurance Group Ltd. 321,152 1,492
CSL Ltd. 95,931 1,375
North Ltd. 552,400 1,298
Australian Gas Light Co., Ltd. 220,758 1,291
MIM Holdings Ltd. 1,251,667 1,286
Boral Ltd. 757,896 1,170
Orica Ltd. 203,871 1,095
Pacific Dunlop Ltd. 774,586 1,093
Santos Ltd. 396,769 1,077
Howard Smith Ltd. 151,656 1,032
Normandy Mining Ltd. 1,319,690 933
British American Tobacco
Australasia Ltd. 101,603 907
AMP Group Finance Services
Ltd. Income Security 14,015 854
Hardie (James) Industries Ltd. 283,372 740
Leighton Holdings Ltd. 184,050 711
Goodman Fielder Ltd. 761,142 677
F.H. Faulding & Co., Ltd. 97,637 639
- - Newcrest Mining Ltd. 185,214 630
Futuris Corp., Ltd. 443,640 621
Westralian Sands Ltd. 220,483 583
Mayne Nickless Ltd. 212,081 545
Email Ltd. 245,833 389
Delta Gold NL 165,500 252
Sons of Gwalia Ltd. 74,209 248
David Jones Ltd. 252,932 228
Metal Manufactures Ltd. 141,300 208
Resolute Ltd. 111,700 28
-------------
182,973
-------------
HONG KONG (7.0%)
Hutchison Whampoa Ltd. 2,870,000 41,720
Cable & Wireless HKT Ltd. 9,142,831 26,405
Cheung Kong Holdings Ltd. 1,740,000 22,104
Sun Hung Kai Properties Ltd. 1,805,400 18,812
Hang Seng Bank Ltd. 1,433,000 16,360
CLP Holdings Ltd. 1,752,500 8,071
Swire Pacific Ltd. A Shares 1,130,500 6,675
Hong Kong & China Gas
Co., Ltd. 3,385,311 4,638
Cathay Pacific Airways Ltd. 2,499,000 4,452
Johnson Electric Holdings Ltd. 687,500 4,413
Wharf Holdings Ltd. 1,768,314 4,106
New World Development
Co., Ltd. 1,595,797 3,593
Bank of East Asia Ltd. 1,020,333 2,835
Television Broadcasts Ltd. 327,000 2,229
Shangri-La Asia Ltd. 1,545,744 1,770
Hang Lung Development
Co., Ltd. 1,351,000 1,529
South China Morning Post Ltd. 1,269,000 1,094
Hysan Development Co., Ltd. 837,211 1,061
Wing Lung Bank Ltd. 172,728 700
Miramar Hotel & Investment Ltd. 512,000 550
Giordano International Ltd. 502,000 517
Varitronix International Ltd. 208,000 479
- - Hong Kong and Shanghai
Hotels Ltd. 699,000 463
Hopewell Holdings Ltd. 551,400 328
Hong Kong Aircraft &
Engineering Co., Ltd. 162,800 270
Tai Cheung Holdings Ltd. 1,005,000 243
- - Regal Hotels International
Holdings Ltd. 3,068,800 229
Shun Tak Holdings Ltd. 1,116,000 212
- - Oriental Press Group Ltd. 1,238,000 158
Elec & Eltek International
Holdings Ltd. 717,000 134
Hong Kong Construction
Holdings Ltd. 337,000 122
- - i-CABLE Communications Ltd. 4,155 6
- - Peregrine Investment
Holdings Ltd. 293,200 0
-------------
176,278
-------------
JAPAN (80.3%)
Nippon Telegraph and
Telephone Corp. 9,414 160,954
Toyota Motor Corp. 2,778,000 134,347
Softbank Corp. 79,100 75,580
Fujitsu Ltd. 1,429,000 65,059
The Bank of Tokyo-
Mitsubishi Ltd. 3,457,000 48,095
Sony Music Entertainment 191,700 47,385
Matsushita Electric Industrial
Co., Ltd. 1,525,000 42,165
Sony Corp. 140,900 41,710
Murata Manufacturing Co., Ltd. 176,000 41,268
Hitachi Ltd. 2,465,000 39,496
Kyocera Corp. 139,700 36,169
Rohm Co., Ltd. 87,900 36,069
Ito-Yokado Co., Ltd. 306,000 33,184
Takeda Chemical Industries Ltd. 657,000 32,415
NEC Corp. 1,200,000 28,548
</TABLE>
26
<PAGE> 29
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Nomura Securities Co., Ltd. 1,526,000 $ 27,507
Tokyo Electric Power Co. 1,011,800 27,085
Honda Motor Co., Ltd. 721,000 26,768
Canon, Inc. 643,000 25,505
Fuji Bank Ltd. 2,540,000 24,642
Fanuc Co., Ltd. 176,200 22,396
Sharp Corp. 830,000 21,205
Sumitomo Bank Ltd. 1,499,000 20,489
Advantest Corp. 74,100 19,547
Secom Co., Ltd. 171,000 18,795
Industrial Bank of Japan Ltd. 1,953,000 18,794
Toshiba Corp. 2,385,000 18,175
Tokyo Electron Ltd. 128,630 17,594
Nintendo Co. 105,000 17,419
Sakura Bank Ltd. 3,006,681 17,390
Takefuji Corp. 129,500 16,182
East Japan Railway Co. 2,967 15,972
Daiwa Securities Group Inc. 1,018,000 15,903
Denso Corp. 666,000 15,877
Fuji Photo Film Co., Ltd. 383,000 13,957
Bridgestone Corp. 630,500 13,860
Tokio Marine & Fire
Insurance Co. 1,163,000 13,578
Shin-Etsu Chemical Co., Ltd. 302,000 12,982
Kao Corp. 455,000 12,958
Kansai Electric Power Co., Inc. 740,600 12,887
Asahi Bank Ltd. 2,078,000 12,790
Yamato Transport Co., Ltd. 321,000 12,419
Nippon Steel Corp. 4,989,000 11,649
Nissan Motor Co., Ltd. 2,942,000 11,555
Japan Tobacco, Inc. 1,503 11,483
Central Japan Railway Co. 1,783 11,166
SMC Corp. 49,500 10,934
Tokai Bank Ltd. 1,669,000 10,501
Mitsubishi Electric Corp. 1,585,000 10,220
Mitsubishi Estate Co., Ltd. 995,000 9,692
Benesse Corp. 40,300 9,686
Mitsubishi Corp. 1,173,000 9,042
Yamanouchi Pharmaceuticals
Co., Ltd. 257,000 8,964
Dai-Nippon Printing Co., Ltd. 549,000 8,743
Mitsubishi Trust &
Banking Corp. 962,000 8,459
Mitsui & Co., Ltd. 1,201,000 8,390
Mitsubishi Heavy
Industries Ltd. 2,501,000 8,332
Kirin Brewery Co., Ltd. 767,000 8,056
Trans Cosmos, Inc. 18,700 7,966
Nikon Corp. 271,000 7,943
Sumitomo Corp. 799,000 7,736
CSK Corp. 47,200 7,655
Taisho Pharmaceutical Co. 258,000 7,562
Furukawa Electric Co. 474,000 7,178
Konami Co., Ltd. 39,600 7,061
Nidec Corp. 24,300 7,004
Sankyo Co., Ltd. 339,000 6,955
Hoya Corp. 86,000 6,764
Hirose Electric Co., Ltd. 30,200 6,760
Asahi Glass Co., Ltd. 872,000 6,739
Oriental Land Co.,Ltd. 75,800 6,502
Shizuoka Bank Ltd. 619,000 6,338
Sumitomo Electric
Industries Ltd. 545,000 6,288
Tohoku Electric Power Co. 398,300 5,915
Sanyo Electric Co., Ltd. 1,406,000 5,701
Sumitomo Chemical Co. 1,191,000 5,585
Asahi Chemical Industry
Co., Ltd. 1,061,000 5,442
Mitsubishi Chemical Corp. 1,537,000 5,406
Itochu Corp. 1,058,000 5,261
Promise Co.,Ltd. 102,700 5,218
Tokyo Gas Co., Ltd. 2,138,000 5,201
Kinki Nippon Railway Co. 1,294,000 5,183
Taiyo Yuden Co., Ltd. 87,000 5,151
Toppan Printing Co., Ltd. 506,000 5,042
Minebea Co., Ltd. 294,000 5,035
Ajinomoto Co., Inc. 462,000 4,807
Sekisui House Ltd. 534,000 4,722
Marubeni Corp. 1,119,000 4,690
Nippon Mitsubishi Oil Corp. 1,065,600 4,685
OJI Paper Co., Ltd. 770,000 4,627
Osaka Gas Co., Ltd. 1,884,000 4,528
Shiseido Co., Ltd. 307,000 4,469
Tokyo Broadcasting System, Inc. 132,000 4,462
Mitsui Fudosan Co., Ltd. 654,000 4,422
Omron Corp. 192,000 4,418
Nippon Express Co., Ltd. 792,000 4,372
Shimamura Co., Ltd. 27,100 4,289
Kawasaki Steel Corp. 2,375,000 4,246
Eisai Co., Ltd. 220,000 4,224
Terumo Corp. 158,000 4,214
Jusco Co., Ltd. 239,000 4,159
Asahi Breweries Ltd. 375,000 4,096
Marui Co., Ltd. 270,000 4,025
Bank of Yokohama Ltd. 871,000 4,008
Toray Industries, Inc. 1,030,000 3,985
Kubota Corp. 1,040,000 3,973
Japan Air Lines Co., Ltd. 1,324,000 3,919
Nippon Paper Industries Co. 702,000 3,861
Nippon Yusen Kabushiki
Kaisha Co. 921,000 3,761
Mitsui Marine & Fire
Insurance Co. 610,000 3,612
Daiwa Bank, Ltd. 1,217,000 3,567
77 Bank Ltd. 333,000 3,484
Pioneer Corp. 132,000 3,482
Bank of Fukuoka, Ltd. 498,000 3,450
Nitto Denko Corp. 68,000 3,395
Kadokawa Shoten
Publishing Co., Ltd. 9,900 3,327
Kaneka Corp. 258,000 3,294
Komatsu Ltd. 711,000 3,265
Sumitomo Marine & Fire
Insurance Co. 530,000 3,262
Joyo Bank Ltd. 699,000 3,210
World Co., Ltd. 25,800 3,201
Shionogi & Co., Ltd. 259,000 3,140
Uni-Charm Corp. 54,300 3,125
</TABLE>
27
<PAGE> 30
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Gunma Bank Ltd. 471,000 $ 3,060
Fuji Machine Manufacturing
Co., Ltd. 37,100 2,987
Tostem Corp. 162,000 2,904
Daiwa House Industry Co., Ltd. 388,000 2,881
NSK Ltd. 415,000 2,834
Daiichi Pharmaceutical Co., Ltd. 212,000 2,753
Kuraray Co., Ltd. 270,000 2,730
Namco Ltd. 42,000 2,716
Olympus Optical Co., Ltd. 192,000 2,711
Daikin Industries Ltd. 192,000 2,607
Ohbayashi Corp. 546,000 2,576
Takara Shuzo Co. 160,000 2,518
Sega Enterprises Ltd. 77,300 2,454
Teijin Ltd. 666,000 2,453
Toyo Seikan Kaisha Ltd. 165,000 2,386
Toho Co., Ltd. 16,200 2,365
Ebara Corp. 204,000 2,272
Asatsu-DK Inc. 32,100 2,164
Sanrio Co., Ltd. 58,000 2,142
Nissin Food Products Co., Ltd. 90,900 2,136
Kajima Corp. 714,000 2,128
Nippon Meat Packers, Inc. 163,000 2,110
Toyo Information
Systems Co., Ltd. 30,000 2,110
NGK Insulators Ltd. 279,000 2,069
Skylark Co., Ltd. 88,000 2,068
- - Daiei, Inc. 520,000 2,058
Mitsui Trust & Banking Co. 904,000 2,040
Nippon Comsys Corp. 98,000 2,030
Alps Electric Co., Ltd. 133,000 2,026
Mitsubishi Materials Corp. 808,000 1,974
- - Sumitomo Metal Industries Ltd. 2,619,000 1,970
Chugai Pharmaceutical Co., Ltd. 182,000 1,965
Tokyu Corp. 799,000 1,944
Fuji Soft ABC Inc. 24,600 1,923
Shimizu Corp. 582,000 1,922
Tobu Railway Co., Ltd. 653,000 1,914
Kyowa Hakko Kogyo Co. 312,000 1,869
Onward Kashiyama Co., Ltd. 134,000 1,833
Shimano, Inc. 103,900 1,827
Sekisui Chemical Co. 406,000 1,797
Mitsui Mining & Smelting
Co., Ltd. 367,000 1,732
Dai-Nippon Ink &
Chemicals, Inc. 581,000 1,720
Nippon Sheet Glass Co., Ltd. 329,000 1,704
Tosoh Corp. 445,000 1,696
Casio Computer Co. 202,000 1,676
Nichiei Co., Ltd. 77,200 1,674
Yamazaki Baking Co., Ltd. 153,000 1,658
Toto Ltd. 269,000 1,624
Kinden Corp. 208,000 1,595
NGK Spark Plug Co. 172,000 1,571
Kurita Water Industries Ltd. 96,000 1,523
Takashimaya Co. 216,000 1,486
Meiji Seika Kaisha Ltd. 259,000 1,470
Citizen Watch Co., Ltd. 230,000 1,461
Keihin Electric Express Railway
Co., Ltd. 417,000 1,426
Uny Co., Ltd. 140,000 1,366
Taiheiyo Cement Corp 709,000 1,351
Taisei Corp. 709,000 1,344
Kawasaki Heavy Industries Ltd. 1,007,000 1,338
Ube Industries Ltd. 626,000 1,303
Hokuriku Bank Ltd. 550,000 1,300
Koyo Seiko Co., Ltd. 146,000 1,257
Yokogawa Electric Corp. 178,000 1,254
Daito Trust Construction Co., Ltd. 107,900 1,202
Showa Shell Sekiyu K.K. 270,000 1,190
Mitsukoshi Ltd. 338,000 1,189
Wacoal Corp. 135,000 1,186
Kokuyo Co., Ltd. 89,000 1,183
Sumitomo Heavy Industries Ltd. 431,000 1,179
Isetan Co. 159,000 1,165
Amada Co., Ltd. 211,000 1,152
House Foods Industry Corp. 76,000 1,151
Aoyama Trading Co., Ltd. 53,100 1,136
Makita Corp. 125,000 1,124
Nisshin Flour Milling Co., Ltd. 162,000 1,116
Mitsubishi Rayon Co., Ltd. 460,000 1,115
Fujikura Ltd. 279,000 1,107
Ishikawajima-Harima Heavy
Industries Co. 937,000 1,080
Ashikaga Bank Ltd. 516,000 1,028
Komori Corp. 54,000 1,028
Sumitomo Forestry Co. 130,000 1,003
NTN Corp. 339,000 1,000
Denki Kagaku Kogyo K.K. 334,000 995
Meitec Corp. 30,800 978
Konica Corp. 262,000 973
Yamaha Corp. 150,000 973
Mycal Corp. 223,000 970
INAX Corp. 173,000 967
Autobacs Seven Co., Ltd. 28,200 923
Toda Corp. 239,000 918
- - Sumitomo Metal Mining Co. 410,000 913
Mori Seiki Co. 68,000 910
Nippon Shinpan Co. 386,000 898
Snow Brand Milk Products Co. 222,000 894
- - Showa Denko K.K. 755,000 863
Nishimatsu Construction Co. 206,000 825
Kikkoman Corp. 122,000 809
Yakult Honsha Co., Ltd. 124,000 800
Nisshinbo Industries, Inc. 175,000 790
Kamigumi Co., Ltd. 187,000 786
Sapparo Breweries Ltd. 241,000 777
Daicel Chemical Industries Ltd. 267,000 743
- - Dai-Nippon Screen
Manufacturing Co., Ltd. 124,000 739
Katokichi Co., Ltd. 33,000 714
Mitsubishi Logistics Corp. 112,000 713
Tokyo Style Co. 86,000 706
Toyobo Ltd. 543,000 706
Hankyu Department Stores, Inc. 131,000 691
Daiwa Kosho Lease Co., Ltd. 213,000 685
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Kyowa Exeo Corp. 78,000 $ 678
- - Seiyu Ltd. 196,000 670
Mitsubishi Gas Chemical Co. 341,000 663
Cosmo Oil Co., Ltd. 443,000 662
Japan Energy Corp. 729,000 662
Kawasaki Kisen Kaisha Ltd. 444,000 659
Sanden Corp. 110,000 656
Toei Co. 113,000 625
Daimaru, Inc. 183,000 619
Nippon Shokubai K.K. 134,000 619
Okumura Corp. 181,000 610
- - Tokyo Dome Corp. 125,000 598
Takara Standard Co. 120,000 594
Seino Transportation Co., Ltd. 112,000 593
- - Kanebo Ltd. 361,000 582
Arabian Oil Co., Ltd. 33,700 579
Sanwa Shutter Corp. 155,000 575
Meiji Milk Products Co., Ltd. 179,000 544
Teikoku Oil Co., Ltd. 176,000 533
Hitachi Zosen Corp. 700,000 527
- - Renown, Inc. 207,000 506
Gunze Ltd. 190,000 505
Tsubakimoto Chain Co. 134,000 491
Nichirei Corp. 187,000 484
Shimachu Co. 33,600 463
Sho-Bond Corp. 25,800 458
Brother Industries Ltd. 197,000 452
Daifuku Co., Ltd. 78,000 450
Makino Milling Machine Co. 68,000 442
Sumitomo Osaka Cement
Co., Ltd. 315,000 415
Takuma Co., Ltd. 57,000 407
Maeda Road Construction
Co., Ltd. 84,000 406
Tokyo Tatemono Co., Ltd. 222,000 395
Kaken Pharmaceutical Co. 71,000 394
Noritake Co., Ltd. 110,000 388
Amano Corp. 65,000 387
- - Mitsui Engineering &
Shipbuilding Co., Ltd. 558,000 382
- - Penta-Ocean Construction Co. 266,000 379
Kureha Chemical Industry Co. 151,000 370
Nippon Light Metal Co. 396,000 368
- - JGC Corp. 150,000 363
Okuma Corp. 114,000 356
- - Daikyo, Inc. 158,000 350
NOF Corp. 148,000 350
Tokyotokeiba Co. 246,000 336
- - Kumagai Gumi Co., Ltd. 488,000 334
Iwatani International Corp. 169,000 304
Mitsubishi Paper Mills Ltd. 227,000 304
- - Japan Steel Works Ltd. 266,000 291
- - Ishihara Sangyo Kaisha Ltd. 204,000 269
Nippon Suisan Kaisha Ltd. 175,000 268
- - Chiyoda Corp. 174,000 253
Oyo Corp. 18,000 240
- - Unitika Ltd. 326,000 226
Nitto Boseki Co., Ltd. 158,000 205
Toa Corp. 145,000 197
- - Fujita Corp. 356,000 191
Mitsui Soko Co., Ltd. 92,000 190
Nippon Sharyo Ltd. 84,000 181
- - Haseko Corp. 305,000 146
------------
2,028,251
------------
MALAYSIA
- - Aokam Perdana Bhd. 11,233 30
- - Promet Bhd. 765,000 0
------------
30
------------
NEW ZEALAND (0.5%)
Telecom Corp. of
New Zealand Ltd. 1,393,798 6,542
Carter Holt Harvey Ltd. 1,416,183 1,846
Lion Nathan Ltd. 426,213 989
Contact Energy Ltd. 471,575 824
Fletcher Challenge Ltd. Energy 266,305 694
Fisher & Paykel Industries Ltd. 151,795 578
- - Brierley Investments Ltd. 2,427,154 506
Fletcher Challenge Ltd. Building 288,958 425
Fletcher Challenge Ltd. Paper 575,882 402
- - Fletcher Challenge Ltd. Forest 764,561 307
------------
13,113
------------
SINGAPORE (3.2%)
- - DBS Group Holdings Ltd. 1,036,732 16,988
Singapore Airlines Ltd. 948,833 10,764
Singapore
Telecommunications Ltd. 4,556,098 9,408
Oversea-Chinese Banking
Corp., Ltd. 1,022,410 9,389
United Overseas Bank Ltd. 837,248 7,388
Singapore Press Holdings Ltd. 277,155 6,005
City Developments Ltd. 648,312 3,794
Singapore Technologies
Engineering Ltd. 2,408,000 3,729
Venture Manufacturing
(Singapore) Ltd. 169,000 1,938
Sembcorp Industries Ltd. 1,218,419 1,660
Keppel Corp., Ltd. 609,750 1,596
Creative Technology Ltd. 66,550 1,206
- - Neptune Orient Lines Ltd. 894,000 1,197
United Industrial Corp., Ltd. 1,842,000 1,039
Fraser & Neave Ltd. 218,000 805
Cycle & Carriage Ltd. 190,651 589
Parkway Holdings Ltd. 244,320 554
First Capital Corp., Ltd. 386,000 514
Natsteel Ltd. 257,071 512
Overseas Union Enterprise Ltd. 148,000 497
Haw Par Brothers
International Ltd. 220,000 401
Hotel Properties Ltd. 362,000 326
Comfort Group Ltd. 413,000 227
Robinson & Co., Ltd. 57,000 195
Inchcape Bhd. 172,000 179
------------
80,900
------------
- --------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $1,899,584) 2,481,545
- --------------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 32
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
FACE MARKET
AMOUNT VALUE*
PACIFIC STOCK INDEX FUND (000) (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS (0.6%)
- --------------------------------------------------------------------------------------
Nitto Denko
3.90%, 3/30/2001 JPY 67,000 $ 2,546
Sumitomo Bank
International
0.75%, 5/31/2001 JPY 1,022,000 11,508
- --------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS
(COST $12,227) 14,054
- --------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (7.5%)(1)
- --------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSN.
(2) 5.64%, 1/18/2000 $ 1,000 998
(2) 5.64%, 1/21/2000 3,200 3,192
REPURCHASE AGREEMENTS
Deutsche Bank Securities Inc.
(Dated 12/31/1999
Repurchase Value $180,061,000
Collateralized by Federal Home Loan
Mortgage Corp. 5.851%, 2/15/2000)
4.05%, 1/3/2000 36,902 36,902
4.05%, 1/3/2000--Note G 143,098 143,098
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
3.25%, 1/3/2000 5,371 5,371
- --------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $189,559) 189,561
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS (106.3%)
(COST $2,101,370) 2,685,160
- --------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-6.3%)
- --------------------------------------------------------------------------------------
Other Assets--Note B 7,603
Security Lending Collateral Payable
to Brokers--Note G (143,098)
Other Liabilities (23,336)
------------
(158,831)
------------
- ---------------------------------------------------------------------------------------
NET ASSETS (100%)
- ---------------------------------------------------------------------------------------
Applicable to 206,718,908 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization) $2,526,329
=======================================================================================
NET ASSET VALUE PER SHARE $12.22
=======================================================================================
*See Note A in Notes to Financial Statements.
-Non-Income-Producing Security.
(1)The fund invests a portion of its cash
reserves in equity markets through the
use of index futures contracts. After
giving effect to futures investments,
the fund's effective common stock and
temporary cash investment positions
represent 99.2% and 6.5%, respectively,
of net assets. See Note E in Notes to
Financial Statements.
(2)Securities with an aggregate value of
$4,190,000 have been
segregated as initial margin for open
futures contracts.
JPY--Japanese Yen.
<CAPTION>
- ---------------------------------------------------------------------------------------
AT DECEMBER 31, 1999, NET ASSETS CONSISTED OF:
- ---------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $2,047,131 $ 9.90
Overdistributed Net Investment
Income--Note F (1,690) (.01)
Accumulated Net Realized
Losses--Note F (103,959) (.50)
Unrealized Appreciation
(Depreciation)--Note E
Investment Securities 583,790 2.82
Futures Contracts 1,063 .01
Foreign Currencies and
Forward Currency Contracts (6) --
- ---------------------------------------------------------------------------------------
NET ASSETS $2,526,329 $12.22
=======================================================================================
</TABLE>
30
<PAGE> 33
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- ---------------------------------------------------------------------------------------
COMMON STOCKS (94.6%)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
ARGENTINA (2.7%)
Telefonica Argentina SA
Class B 2,915,100 $ 8,951
Perez Companc SA 1,120,846 5,740
Banco Galicia y Buenos Aires
SA de CV 641,678 3,190
Siderca SA Class A 1,415,649 2,973
Banco Frances Del Rio de la
Plata SA 290,168 2,293
Transportadora de Gas Sur SA 997,370 1,875
- - Astra Cia Argentina de
Petroleum SA 737,010 1,570
Irsa Inversiones y
Representaciones SA 269,047 872
- - Molinos Rio de la Plata SA 324,600 799
- - Juan Minetti SA 227,934 572
- - Acindar Industria Argentina de
Aceros SA 353,800 566
- - Solvay Indupa S.A.I.C. 340,438 293
Central Puerto SA 154,783 251
Renault Argentina SA 221,848 244
Ledesma SA 271,743 168
- - Polledo SA 182,900 166
Nobleza Piccardo SA 66,724 141
Cresud SA 139,825 137
- - Sociedad Comercial de Plata SA 462,430 133
- - Alpargatas S.A.I.C. 2,547 21
------------
30,955
------------
BRAZIL (12.7%)
Petroleo Brasileiro SA Pfd. 61,713,377 15,728
Cia Vale Do Rio Pfd. A 525,790 14,565
Centrais Electricas
Brasileiras SA 612,874,988 13,415
Tele Norte Leste
Participacoes SA Pfd. 283,639,150 7,621
Embratel Participacoes
SA Pfd. 284,594,150 7,332
Telesp Participacoes SA Pfd. 283,511,222 6,880
Banco Itau SA Pfd. 69,702,420 5,986
Banco Bradesco SA Pfd. 691,979,431 5,432
Tele Centro Sul
Participacoes SA Pfd. 284,184,150 5,194
Telesp Celular
Participacoes SA Pfd. 285,932,150 5,069
Companhia Energetica de
Minas Gerais Pfd. 212,719,329 4,773
Companhia Cervejaria
Brahma Pfd. 6,197,950 4,533
Companhia
Siderurgica Nacional 96,700,500 3,750
Companhia Brasileira de
Distribuicao Grupo Pao
de Acucar 109,717,000 3,647
Aracruz Celulose SA Pfd.
B Shares 1,447,671 3,513
Tele Norte Leste
Participacoes SA 169,644,560 3,055
Souza Cruz SA 411,900 3,049
- - Embratel Participacoes SA 170,083,560 2,846
Centrais Electricas
Brasileiras SA Pfd.
B Shares 116,607,124 2,784
Votorantim Celulose e Papel
SA Pfd. 51,466,831 2,367
Telesp Participacoes SA 170,492,560 2,362
Tele Sudeste Celular
Participacoes SA Pfd. 287,414,150 2,126
- - Tele Centro Sul
Participacoes SA 172,644,560 1,856
Usiminas-Usinas
Siderurgicas de Minas
Gerais SA Pfd. Class A 300,069 1,629
Telesp Celular
Participacoes SA 170,035,589 1,611
Companhia
Cervejaria Brahma 3,468,265 1,566
White Martins SA 1,387,365 976
Companhia Paulista de
Forca e Luz 19,474,400 966
- - Banco do Estado de
Sao Paulo SA Pfd. 25,743,800 913
Copene-Petroquimica
SA Pfd. A Shares 2,569,194 851
Sadia SA Pfd. 886,400 805
Companhia Brasileira de
Petroleo Ipiranga Pfd. 65,861,000 705
Metalurgica Gerdau SA Pfd. 14,620,400 705
Tele Sudeste Celular
Participacoes SA 175,605,560 700
- - Centrais Geradoras do Sul
do Brasil SA 632,835,377 642
Fertilizantes Fosfatados
SA Pfd. 146,730,000 634
Perdigao Agroindustrial SA 302,024,000 550
Brasmotor SA Pfd. 3,686,000 517
Companhia Cimento Portland
Itau Pfd. 3,150,800 442
Companhia de Tecidos
Norte de Minas Pfd. 4,462,289 408
Bombril SA Pfd. 52,068,031 404
Duratex SA Pfd. 11,221,567 351
Inepar SA Industria
e Construcoes 61,500,000 257
Lojas Americanas SA Pfd. 64,583,796 250
- - Metal Leve SA Industria
e Comercio Pfd. 13,773,000 248
Centrais Geradoras do Sul
do Brasil SA 144,644,711 158
Lojas Americanas SA 32,279,008 98
Marcopolo SA Pfd. 83,900 98
- - Banco HSBC Bamerindus SA 52,300 0
------------
144,367
------------
CZECH REPUBLIC (0.8%)
- - Cesky Telecom a.s. 253,763 4,074
- - Ceske Energeticke Zavody a.s. 861,320 2,126
- - Ceska Sporitelna a.s. 222,586 1,028
- - Komercni Banka a.s. 49,240 840
Tabak a.s. 3,215 647
- - Unipetrol a.s. 319,770 455
Severoceske Doly a.s. 8,280 117
</TABLE>
31
<PAGE> 34
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- ---------------------------------------------------------------------------------------
COMMON STOCKS (94.6%)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
- - Skoda Plzen a.s. 35,490 $ 115
Inzenyrske a Prumyslove
Stavby (IPS) a.s. 22,030 92
- - Podnik Vypocetni Techniky a.s. 692 77
- - Nova Hut a.s. 12,132 34
- - Deza Valasske Mezirici a.s. 3,138 31
- - Synthesia a.s. 6,820 14
------------
9,650
------------
GREECE (8.6%)
Hellenic Telecommunication
Organization SA 677,769 16,034
National Bank of Greece SA 213,963 15,714
Alpha Credit Bank SA 135,392 10,593
- - Commercial Bank of Greece SA 115,445 8,871
Intracom SA 132,812 6,060
Ergo Bank SA 55,288 5,316
Hellenic Bottling Co. SA (Bearer) 191,640 4,435
Titan Cement Co. SA 53,860 3,172
Attica Enterprises SA 118,116 2,258
Heracles General Cement SA 63,700 2,040
Athens Medical Center SA 38,750 1,989
Hellenic Technodomiki SA 52,910 1,763
Aluminum of Greece SA 30,100 1,458
Michaniki SA 84,260 1,369
Atti-Kat SA 88,145 1,328
- - Hellenic Sugar Industry SA 44,884 1,254
Fourlis Brothers SA 29,992 1,189
Inform P. Lykos SA 30,590 1,114
Papastratos Cigarettes SA 33,938 1,052
Klonatex ICST & TSA SA 44,400 1,012
Aktor SA 43,440 974
Aegek SA 62,580 934
Silver & Baryte Ores Mining SA 18,828 890
- - Petzetakis SA 40,524 817
- - Aspis Pronoia SA 36,010 797
Delta Dairy SA 21,610 770
Hellas Can Packaging SA 13,420 740
Elais SA 17,540 726
Epilectos SA 58,470 649
Alte SA 29,680 575
El. D. Mouzakis SA 20,120 519
Klonatex ICST & TSA SA Pfd. 23,350 435
Delta Dairy SA Pfd. 7,220 250
- - Parnassos Enterprises ABE SA 15,930 240
------------
97,337
------------
HONG KONG (12.6%)
Hutchison Whampoa Ltd. 2,358,800 34,289
Cable & Wireless HKT Ltd. 7,533,627 21,757
Cheung Kong Holdings Ltd. 1,392,900 17,695
Sun Hung Kai Properties Ltd. 1,426,100 14,860
Hang Seng Bank Ltd. 1,166,400 13,317
CLP Holdings Ltd. 1,355,300 6,242
Swire Pacific Ltd. A Shares 928,700 5,484
Hong Kong & China Gas
Co., Ltd. 3,026,997 4,147
Cathay Pacific Airways Ltd. 2,111,000 3,761
Johnson Electric Holdings Ltd. 573,500 3,681
Wharf Holdings Ltd. 1,369,785 3,181
New World Development
Co., Ltd. 1,223,063 2,753
Bank of East Asia Ltd. 904,381 2,513
Television Broadcasts Ltd. 257,000 1,752
Shangri-La Asia Ltd. 1,302,689 1,491
Hang Lung Development
Co., Ltd. 952,000 1,078
South China Morning Post Ltd. 1,032,000 889
Hysan Development Co., Ltd. 671,754 851
Wing Lung Bank Ltd. 138,208 560
- - Hong Kong and Shanghai
Hotels Ltd. 699,500 463
Giordano International Ltd. 408,000 420
Miramar Hotel & Investment Ltd. 355,000 381
Hopewell Holdings Ltd. 596,000 355
Varitronix International Ltd. 150,000 345
Hong Kong Aircraft &
Engineering Co., Ltd. 128,000 212
- - Oriental Press Group Ltd. 1,378,000 176
- - Regal Hotels International
Holdings Ltd. 2,112,000 158
Tai Cheung Holdings Ltd. 562,000 136
Shun Tak Holdings Ltd. 684,000 130
Hong Kong Construction
Holdings Ltd. 337,000 122
Elec & Eltek International
Holdings Ltd. 650,000 121
- - i-CABLE Communications Ltd. 3,890 5
- - Peregrine Investment
Holdings Ltd. 459,000 0
------------
143,325
------------
HUNGARY (1.6%)
Magyar Tavkozlesi Rt. 1,401,370 9,765
MOL Magyar Olaj-es
Gazipari Rt. 130,042 2,688
OTB Bank Rt. 38,762 2,257
Richter Gedeon Rt. 24,860 1,625
Tisza Vegyi Kombinat Rt. 31,110 590
Demasz Rt. 4,030 305
Raba Rt. 25,075 231
Pick Szeged Rt. 4,290 200
- - Danubius Hotel and Spa Rt. 9,660 175
Pannonplast Rt. 4,590 113
- - Graboplast Rt. 6,490 59
- - Fotex Rt. 145,830 52
- - Zalakeramia Rt. 5,730 43
------------
18,103
------------
INDONESIA (2.3%)
PT Telekomunikasi Indonesia 13,440,720 7,578
- - PT Indofood Sukses Makmur 2,447,500 3,038
- - PT Indah Kiat Pulp &
Paper Corp. 7,016,522 2,737
PT Gudang Garam 1,015,500 2,708
- - PT Astra International 3,006,000 1,599
PT Semen Gresik TbK 756,500 1,188
- - PT Bank Pan Indonesia TbK 7,124,000 682
- - PT Matahari Putra Prima 3,678,000 613
- - PT Gadjah Tunggal 3,926,000 543
- - PT Medco Energi Corp. 723,000 482
- - PT Bimantara Citra 1,969,500 461
- - PT Polysindo Eka Perkasa 7,358,000 444
PT Timah TbK 611,500 423
- - PT Citra Marga
Nusaphala Persada 3,425,500 413
</TABLE>
32
<PAGE> 35
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
- - PT Kalbe Farma 2,507,500 $ 400
- - PT Budi Acid Jaya 2,587,500 248
- - PT Barito Pacific Timber 2,710,500 240
- - PT Sinar Mas Argo 405,000 227
- - PT Great River International 1,602,000 187
- - PT Daya Guna Samudera 628,320 178
- - PT Mulia Industrindo 1,867,520 152
- - PT Darya Varia Laboratoria 582,000 151
- - PT Hero Supermarket 422,500 151
- - PT Jakarta International
Hotel & Development 1,406,500 140
- - PT Modern Photo Film Co. 394,500 134
- - PT Trias Sentosa 1,097,000 132
- - PT Indorama Synthetics 567,000 131
- - PT Charoen Pokphand
Indonesia TbK 248,500 113
- - PT Mayora Indah 785,940 106
- - PT Apac Centertex Corp. 1,065,500 98
- - PT Semen Cibinong TbK 1,219,000 86
- - PT Dharmala Intiland 2,154,200 84
- - PT Ciputra Development 917,000 78
- - PT Pakuwon Jati 1,286,500 78
- - PT Duta Anggada Realty 1,392,664 64
- - PT London Sumatra Indonesia 499,100 64
- - PT Japfa Comfeed Indonesia 605,500 60
PT Asahimas Flat Glass 292,000 48
- - PT Argha Karya Prima Industry 365,500 43
- - PT Putra Surya Perkasa 2,960,000 42
- - PT Kabel Indonesia 791,500 39
- - PT Fisk Aragung Perkasa 945,100 23
- - PT Sierad Produca 322,500 10
- - PT Bank Dagang Nasional
Indonesia (Foreign) 2,906,374 0
------------
26,416
------------
ISRAEL (5.3%)
- - Check Point Software
Technologies Ltd. 48,100 9,560
Teva Pharmaceutical
Industries Ltd. 83,773 5,760
Bank Hapoalim Ltd. 1,706,697 5,309
- - Bezeq Israeli
Telecommunication Corp., Ltd. 1,017,043 5,061
Bank Leumi Le-Israel 1,924,790 4,044
ECI Telecom Ltd. 123,610 3,909
- - Gilat Satellite Networks Ltd. 26,309 3,124
Koor Industries Ltd. 22,310 2,226
- - Orbotech Ltd. 26,250 2,034
Israel Chemicals Ltd. 1,569,180 1,724
IDB Holding Corp., Ltd. 46,860 1,553
- - Galileo Technology Ltd. 54,200 1,308
- - Matav-Cable Systems Media Ltd. 35,290 1,019
CLAL Insurance Enterprise
Holdings Ltd. 67,438 1,005
Osem Investment Ltd. 147,870 953
Super Sol Ltd. 273,925 930
- - Makhteshim-Agan
Industries Ltd. 505,493 883
The Israel Corp. Ltd.-ILS 1 Par 6,276 883
- - Scitex Corp., Ltd. 55,800 813
Property & Building Corp. 5,641 599
Industrial Buildings Corp. 383,883 589
Azorim Investment Development
& Construction Ltd. 43,627 533
Elbit Systems Ltd. 34,090 533
- - Formula Systems (1985) Ltd. 12,180 513
First International Bank of Israel
Ltd.-ILS 5 Par 74,700 505
Elite Industries Ltd. 8,665 458
Delta-Galil Industries Ltd. 21,530 391
Africa-Israel Investments Ltd. 3,254 375
The Israel Land Development
Co., Ltd. 41,800 365
Jerusalem Economic Corp., Ltd. 62,379 352
Elco Holdings Ltd. 42,286 350
- - Ormat Industries Ltd. 133,074 330
Agis Industries Ltd. 41,730 321
- - Fundtech Ltd. 15,500 318
First International Bank of Israel
Ltd.-ILS 1 Par 236,400 313
Africa-Israel Investments
(1985) Ltd. 255 278
American Israeli Paper Mills Ltd. 4,562 277
Elbit Medical Imaging Ltd. 29,410 251
- - Ofer Development &
Investment Ltd. 51,535 238
Elite Industries Ltd. 17,960 185
Israel Petrochemical
Enterprises Ltd. 25,056 153
- - Polgat Ltd. 18,506 131
Mehadrin Ltd. 3,280 127
Israel Cold Storage &
Supply Company Ltd. 16,300 88
Ackerstein Industries Ltd. 49,710 76
The Israel Corp. Ltd.-ILS 5 Par 314 19
Ackerstein Industries Ltd.-
ILS 5 Par 456 8
Ackerstein Industries Ltd.-
ILS 1 Par 127 1
------------
60,775
------------
MALAYSIA
- - Aokam Perdana Bhd. 8,033 22
- - Promet Bhd. 386,000 0
------------
22
------------
MEXICO (15.4%)
Telefonos de Mexico SA
Series L 8,078,749 45,214
- - Grupo Televisa SA (CPO) 422,442 14,275
Telefonos de Mexico SA
Series A 2,483,490 14,056
Grupo Modelo SA de CV
Series C 4,425,287 12,150
- - Cemex CPO 2,019,767 11,304
- - Cifra SA-Series V 5,398,755 10,832
- - Grupo Financiero Banamex
Accival, SA de CV 2,035,250 8,167
Kimberly Clark de Mexico SA
de CV Series A 1,868,738 7,301
Fomento Economico
Mexica UBD 1,492,630 6,667
- - Grupo Carso SA de CV
Series A1 1,228,580 6,123
Grupo Mexico SA Series B 924,093 4,581
</TABLE>
33
<PAGE> 36
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
- - Grupo Bimbo SA 1,923,298 $ 4,295
- - Alfa SA de CV Series A 798,782 3,753
- - Savia SA de CV 620,570 3,598
- - Grupo Financiero Bancomer,
SA de CV 8,388,550 3,508
Apasco SA de CV 371,444 2,314
Controladora Comercial
Mexicana SA de CV (Units) 1,444,070 1,937
- - Cifra SA de CV Series C 918,390 1,749
- - Desc SA de CV Series B 2,029,775 1,672
Groupo Elektra, SA de CV 1,605,810 1,584
Industrias Penoles SA
Series CP 525,959 1,516
Grupo Continental SA 1,006,142 1,466
Tubos de Acero de Mexico SA 93,990 1,240
- - Grupo Financiero Banamex
Accival SA de CV Series L 287,610 1,109
- - Grupo Financiero Banorte SA
de CV 654,860 989
Vitro SA 496,060 938
- - Grupo Financiero Probursa SA
de CV Series B 4,843,356 696
Grupo Industrial Maseca SA
de CV Series B 1,243,560 615
- - Corporacion GEO, SA de CV 139,000 524
Empresas ICA Sociedad
Controladora SA de CV 867,040 494
- - Empaques Ponderosa SA
Series B 642,000 308
- - Consorcio G Grupo Dina SA 909,000 197
- - Grupo Herdez SA Series B 424,000 166
Cydsa SA Series A 138,000 135
- - Cemex SA CPO Warrants
Exp. 12/13/2002 124,000 105
------------
175,578
------------
PHILIPPINES (1.7%)
Philippine Long Distance
Telephone Co. 158,749 4,038
Metropolitan Bank & Trust Co. 430,574 3,098
SM Prime Holdings, Inc. 12,905,420 2,434
San Miguel Corp. Class B 965,694 1,366
Manila Electric Co. 451,078 1,287
Ayala Land, Inc. 4,282,289 1,116
Petron Corp. 12,853,654 1,021
Union Bank of the
Philippines Corp. 681,200 701
- - Philippine National Bank Corp. 270,424 637
- - Filinvest Land, Inc. 5,638,320 574
- - Security Bank Corp. 372,718 338
Universal Robina Corp. 1,878,400 336
- - International Container
Terminal Services, Inc. 3,186,532 289
- - Ionics Circuit, Inc. 630,150 219
RFM Corp. 1,952,400 203
- - Southeast Asia Cement
Holdings Inc. 13,616,591 159
- - Manila Mining Corp. Class B 739,936,629 156
- - EEI Corp. 5,388,400 94
- - Guoco Holdings
Philippines, Inc. 3,781,800 94
- - Keppel Philippines Marine Inc. 4,377,371 87
- - DMCI Holdings, Inc. 3,118,800 84
- - Philex Mining Corp. Class B 5,930,750 78
- - Alsons Cement Corp. 965,000 61
Robinson's Land Co. Class B 760,200 60
Bacnotan
Consolidated Industries 141,000 56
- - Mondragon International
Philippines, Inc. 2,247,740 55
- - C&P Homes, Inc. 4,775,008 53
- - Republic Glass Holdings Corp. 770,000 14
------------
18,708
------------
POLAND (1.7%)
Telekomunikacja Polska SA 740,510 4,847
- - Polski Koncern Naftowy SA 585,000 3,561
KGHM Polska Miedz SA 254,380 1,598
Bank Handlowy W Warszawie 88,820 1,315
BIG Bank Gdanski SA 409,040 1,265
Bank Rozwoju Eksportu SA 30,390 962
- - Elektrim Spolka Akcyjna SA 93,700 928
Bank Slaski SA w Katowicach 13,050 886
Wielkopolski Bank Kredytowy SA 97,870 662
- - Orbis SA 57,980 501
Prokom Software SA 15,650 484
- - Exbud SA 31,400 256
- - Fabryka Kotlow Rafako SA 135,439 214
Celuloza Zaklady Celulozy i
Papieru w Swieciu SA 51,102 200
- - Budimex SA 25,600 176
Stomil Olsztyn SA 26,000 162
Mostostal-Export SA 136,318 142
- - Okocimskie Zaklady
Piwowarskie SA 24,600 117
Optimus SA 6,200 117
Przedsiebiorstwo
Farmaceutyczne JELFA SA 13,410 114
- - Stalexport SA 15,800 105
- - Agros Holding SA 13,600 92
Mostostal Zabrze-Holding SA 22,454 65
------------
18,769
------------
SINGAPORE (5.6%)
- - DBS Group Holdings Ltd. 795,497 13,035
Singapore
Telecommunications Ltd. 3,862,200 7,975
Singapore Airlines Ltd. 685,200 7,773
Oversea-Chinese Banking
Corp.,Ltd. 754,609 6,930
United Overseas Bank Ltd. 612,613 5,405
Singapore Press Holdings Ltd. 234,451 5,080
City Developments Ltd. 547,000 3,201
Singapore Technologies
Engineering Ltd. 1,500,000 2,323
Venture Manufacturing
(Singapore) Ltd. 144,000 1,651
Sembcorp Industries Ltd. 1,029,006 1,402
Keppel Corp., Ltd. 534,000 1,397
Creative Technology Ltd. 57,700 1,046
- - Neptune Orient Lines Ltd. 705,000 944
Fraser & Neave Ltd. 225,600 833
United Industrial Corp., Ltd. 1,352,000 763
Cycle & Carriage Ltd. 215,000 665
Parkway Holdings Ltd. 257,000 583
</TABLE>
34
<PAGE> 37
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
MARKET
VALUE*
SHARES (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Natsteel Ltd. 246,000 $ 490
Overseas Union Enterprise Ltd. 126,000 423
First Capital Corp., Ltd. 307,000 409
Comfort Group Ltd. 634,000 348
Haw Par Brothers
International Ltd. 167,000 305
Hotel Properties Ltd. 331,000 298
Inchcape Bhd. 282,000 293
Robinson & Co., Ltd. 73,600 252
------------
63,824
------------
SOUTH AFRICA (14.2%)
De Beers Centenary AG 527,490 15,334
Firstrand Ltd. 7,477,495 10,686
South African Breweries Ltd. 1,048,492 10,659
Anglo American Platinum Corp. 292,365 8,879
Nedcor Ltd. 319,601 7,111
Sasol Ltd. 817,010 6,886
Anglogold Ltd. 131,985 6,786
Rembrandt Group Ltd. 705,810 6,717
M-Cell Ltd. 1,551,779 5,998
- - Dimension Data Holdings Ltd. 938,391 5,883
Sanlam Ltd. 3,605,120 5,035
Investec Bank Ltd. 107,370 4,760
Liberty Life Assn. of Africa Ltd. 371,333 4,282
Amalgamated Banks of
South Africa Group Ltd. 875,376 3,924
Bidvest Group Ltd. 380,189 3,711
BOE Ltd. 3,751,310 3,655
Impala Platinum Holdings Ltd. 86,261 3,488
- - Imperial Holdings Ltd. 295,471 3,229
Comparex Holdings Ltd. 442,220 3,095
Gold Fields Ltd. 629,931 3,043
Coronation Holdings Ltd. 132,130 3,021
Sappi Ltd. 299,617 2,958
Tiger Oats Ltd. 222,390 2,564
Omni Media Corporation Ltd. 103,070 2,209
- - MIH Holdings Ltd. 374,290 2,127
Nampak Ltd. 676,560 2,033
Barlow Ltd. 274,915 1,978
Fedsure Holdings Ltd. 228,080 1,852
Metro Cash & Carry Ltd. 1,584,507 1,801
Metropolitan Life Ltd. 927,870 1,612
Profurn Ltd. 1,428,740 1,575
Naspers Ltd. 165,360 1,558
- - African Bank Investments Ltd. 738,140 1,522
Pepkor Ltd. 286,070 1,347
ISCOR Ltd. 348,306 1,318
JD Group Ltd. 150,872 1,299
Tongaat-Hulett Group Ltd. 138,377 1,169
Pick'n Pay Stores Ltd. 635,360 1,083
African Life Assurance
Company Ltd. 146,700 1,001
Foschini Ltd. 291,532 798
Woolworths Holdings Ltd. 1,115,200 743
Wooltru Ltd. N Shares 334,763 666
Reunert Ltd. 339,540 469
Wooltru Ltd. 234,729 469
Safmarine & Rennies
Holdings Ltd. 727,280 378
Primedia Ltd. 288,850 356
------------
161,067
------------
THAILAND (4.0%)
- - Advanced Information
Services (Foreign) 311,400 5,238
- - Thai Farmers Bank PLC
(Foreign) 2,779,320 4,660
- - Siam Commerical Bank
Cvt. Pfd. 3,700,580 4,530
- - TelecomAsia PLC (Foreign) 3,043,900 3,969
- - Bangkok Bank PLC (Foreign) 1,379,310 3,487
- - Siam Cement PLC (Foreign) 86,221 2,873
- - PTT Exploration & Production
PLC (Foreign) 432,600 2,671
- - Siam City Cement PLC (Foreign) 361,026 1,941
BEC World Public
Co. Ltd. (Foreign) 259,323 1,836
Delta Electronics (Thailand)
Public Co. Ltd. 137,959 1,645
- - Thai Petrochemical Industry
PLC (Foreign) 2,709,300 1,262
- - Bank of Ayudhya PLC (Foreign) 2,843,800 1,211
- - United Broadcasting Corp. PLC
(Foreign) 1,022,076 1,027
- - Siam Commercial Bank PLC
(Foreign) 777,983 958
- - Land & House PLC (Foreign) 727,502 692
Charoen Pokphand Feedmill
PLC (Foreign) 228,600 669
Electricity Generating PLC
(Foreign) 527,300 656
- - Siam Cement PLC (Local) 32,819 646
- - Hana Microelectronics Co.
(Foreign) 119,800 577
- - United Communication Industry
PLC (Foreign) 540,500 539
- - National Petrochemical PLC
(Foreign) 429,100 468
- - Bangkok Expressway PLC
(Foreign) 965,500 463
- - ABN AMRO Asia Securities
Co. Ltd. (Foreign) 233,640 457
- - KGI Securities One Public
Co., Ltd. (Foreign) 2,786,290 408
- - Italian-Thai Development PLC
(Foreign) 347,000 388
Thai Union Frozen Products
Public Co. Ltd. 80,400 306
- - Advance Agro PLC (Foreign) 582,840 313
- - Nation Multimedia Group PLC
(Foreign) 481,695 244
- - Regional Container Lines PLC
(Foreign) 146,400 199
Pizza PLC (Foreign) 97,100 187
Banpu PLC (Foreign) 187,200 157
- - Bangkok Bank PLC (Local) 96,400 156
Ayudhya Insurance PLC (Foreign) 59,200 156
- - Tanayong PLC (Foreign) 688,845 150
- - Banpu Public Co. Ltd.
(Foreign) Rights Exp. 1/4/2000 187,200 107
Saha-Union PLC (Foreign) 303,600 101
- - Bangkok Land Public
Co. Ltd. (Foreign) 479,100 97
</TABLE>
35
<PAGE> 38
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUNDS SHARES (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
- - Bangkok Land
Public Co. Ltd. 596,700 $ 94
- - Tuntex (Thailand) PLC (Foreign) 277,700 79
ICC International PLC (Foreign) 39,200 74
Sermsuk PLC (Foreign) 13,800 70
Sermsuk Public Co. Ltd. 18,200 66
- - Advance Agro PLC (Local) 79,700 40
BEC World Public Co. Ltd. (Local) 8,000 57
Thai Reinsurance Public Co. Ltd. 41,900 42
- - Tipco Asphalt PLC (Foreign) 36,000 32
Saha-Union PLC (Local) 75,000 24
- - CMIC Finance & Securities PLC
(Foreign) 366,000 0
------------
46,022
------------
TURKEY (5.4%)
Turkiye Is Bankasi A.S.
C Shares 381,472,146 18,286
Yapi ve Kredi Bankasi A.S. 328,033,273 10,130
- - Turkiye Garanti Bankasi A.S. 355,304,175 5,371
Arcelik A.S. 43,846,616 2,870
Migros Turk A.S. 3,998,475 2,580
- - Eregli Demir ve Celik
Fabrikalari A.S. 57,867,750 2,400
- - Ford Otomotiv Sanayii A.S. 39,112,500 1,731
Ege Biracilik ve Malt
Sanayii A.S. 16,559,942 1,267
- - Vestel Elektronik Sanayi ve
Ticaret A.S. 5,230,281 1,254
Aygaz A.S. 6,255,438 1,211
Netas-Northern Elektrik
Telekomunikasyon A.S. 8,507,000 1,129
Akcansa Cimento A.S. 49,079,920 1,108
- - Alarko Holdings 19,011,064 1,087
- - Tofas Turk Otomobil
Fabrikasi A.S. 79,020,883 962
Aksigorta A.S. 14,698,000 894
Brisa Bridgestone Sabanci
Lastik San. ve Tic A.S. 13,944,000 836
Trakya Cam Sanayii A.S. 61,106,669 777
Cukurova Elektrik A.S. 637,100 763
- - Ihlas Holding A.S. 9,099,287 679
Sarkuysan Elektrolitik Bakir
Sanayi ve Ticaret A.S. 23,017,839 615
- - Aksa Akrilik Kimya Sanayii A.S. 11,521,083 542
Cisma Cemento 21,374,992 532
Kordsa Kord Bezi Sanayi ve
Ticaret A.S. 15,779,510 516
Adana Cimento Sanayii Turk
Anonim Sirketi 14,273,608 513
- - Eczacibasi Ilac Sanayi ve
Ticaret A.S. 15,981,400 435
- - Goodyear Lastikleri T.A.S. 16,202,375 426
- - Turk Demir Dokum
Fabrikalari S.A. 14,899,256 323
- - Efes Sinai Yatirim Holding A.S. 20,795,000 318
Doktas Dokumculuk Ticaret
ve Sanayii A.S. 11,990,000 254
- - Tat Konserve A.S. 9,853,800 245
Bagfas Bandirma Gubre
Fabrikalari A.S. 4,034,000 219
- - Sabah Yayincilik A.S. 24,498,000 210
Kartonsan Karton Sanayi ve
Ticaret A.S. 2,579,650 162
Kav Orman Sanayii A.S. 9,776,250 142
Turkiye Is Bankasi A.S. 41,900 141
Adana Cimento Sanayii A.S.
C Shares 25,562,974 125
- - Cimentas Izmir Cimento
Fabrikasi T.A.S. 2,599,000 104
Usas Ucak Servisi A.S. 51,500 85
- - Raks Elektronik Sanayi ve
Ticaret A.S. 9,014,607 36
- - Sifas Sentetik Iplik
Fabrikalari A.S. 2,534,898 0
------------
61,278
------------
- ---------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $863,652) 1,076,196
- ---------------------------------------------------------------------------------------
<CAPTION> FACE
AMOUNT
(000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS (6.4%)
- ---------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
3.25%, 1/3/2000 $59,569 59,569
3.47%, 1/3/2000--Note G 13,165 13,165
- ---------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $72,734) 72,734
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS (101.0%)
(COST $936,386) 1,148,930
- ---------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-1.0%)
- ---------------------------------------------------------------------------------------
Other Assets--Note B 5,702
Liabilities--Note G (16,987)
------------
(11,285)
- ---------------------------------------------------------------------------------------
NET ASSETS (100%)
- ---------------------------------------------------------------------------------------
Applicable to 90,995,028 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization) $1,137,645
=======================================================================================
NET ASSET VALUE PER SHARE $12.50
=======================================================================================
*See Note A in Notes to Financial Statements.
- -Non-Income-Producing Security.
ILS--Israeli Shekel.
</TABLE>
36
<PAGE> 39
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- ---------------------------------------------------------------------------------------
AT DECEMBER 31, 1999, NET ASSETS CONSISTED OF:
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $1,068,803 $11.74
Overdistributed Net Investment
Income--Note F (395) --
Accumulated Net Realized
Losses--Note F (143,159) (1.57)
Unrealized Appreciation
(Depreciation)--Note E
Investment Securities 212,544 2.33
Foreign Currencies (148) --
- ---------------------------------------------------------------------------------------
NET ASSETS $1,137,645 $12.50
=======================================================================================
</TABLE>
37
<PAGE> 40
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
MARKET
TOTAL INTERNATIONAL STOCK INDEX FUND VALUE*
SHARES (000)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT COMPANIES (100.0%)
- --------------------------------------------------------------------------------------------------------------
Vanguard European Stock Index Fund 53,314,923 $1,537,069
Vanguard Pacific Stock Index Fund 63,675,444 778,114
Vanguard Emerging Markets Stock Index Fund 20,263,801 253,298
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT COMPANIES
(COST $1,983,818) 2,568,481
- ---------------------------------------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- ---------------------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT (0.5%)
- ---------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government Obligations in a Pooled Cash Account
3.25%, 1/3/2000
(COST $12,969) $12,969 12,969
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.5%)
(COST $1,996,787) 2,581,450
- ---------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.5%)
- ---------------------------------------------------------------------------------------------------------------
Other Assets 7,759
Liabilities (19,630)
--------------
(11,871)
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- ---------------------------------------------------------------------------------------------------------------
Applicable to 179,529,932 outstanding $.001 par value shares of
beneficial interest (unlimited authorization) $2,569,579
===============================================================================================================
NET ASSET VALUE PER SHARE $14.31
===============================================================================================================
*See Note A in Notes to Financial Statements.
- ---------------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 1999, NET ASSETS CONSISTED OF:
- ---------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- ---------------------------------------------------------------------------------------------------------------
Paid in Capital $1,977,834 $11.02
Overdistributed Net Investment Income (193) --
Accumulated Net Realized Gains 7,275 .04
Unrealized Appreciation--Note E 584,663 3.25
- --------------------------------------------------------------------------------------------------------------
NET ASSETS $2,569,579 $14.31
===============================================================================================================
</TABLE>
38
<PAGE> 41
STATEMENT OF OPERATIONS
This Statement shows dividend and interest income earned by each fund during
the reporting period, and details the operating expenses charged to the fund.
These expenses directly reduce the amount of investment income available to pay
to shareholders as dividends. The Total International Stock Index Fund's Income
Distributions Received from the other funds' net income have been reduced by
its share of the other funds' expenses.
This Statement also shows any Net Gain (Loss) realized on the sale of
investments, and the increase or decrease in the Unrealized Appreciation
(Depreciation) on investments during the period--these amounts include the
effect of foreign currency movements on the value of a fund's securities.
Currency gains (losses) on the translation of other assets and liabilities,
combined with the results of any investments in forward currency contracts
during the period, are shown separately. If a fund invested in futures contracts
during the period, the results of these investments are also shown separately.
The Total International Stock Index Fund's Capital Gain Distributions Received
from the other funds' realized net gains are shown separately from the Net Gain
(Loss) realized on the sale of investments in the other funds.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING
EUROPEAN PACIFIC MARKETS
STOCK INDEX STOCK INDEX STOCK INDEX
FUND FUND FUND
-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1999
-----------------------------------------------------------------------
(000) (000) (000)
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
<S> <C> <C> <C>
Dividends* $109,074 $ 18,551 $ 22,373
Interest 2,448 2,137 2,274
Security Lending 2,777 1,017 555
---------------------------------------------------------------------
Total Income 114,299 21,705 25,202
---------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 87 87 87
Management and Administrative 11,163 4,927 2,501
Marketing and Distribution 856 246 142
Custodian Fees 2,314 763 1,896
Auditing Fees 10 9 8
Shareholders' Reports 142 45 33
Trustees' Fees and Expenses 7 2 1
---------------------------------------------------------------------
Total Expenses 14,579 6,079 4,668
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 99,720 15,626 20,534
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold 36,509 (1,467) (51,231)
Futures Contracts 8,992 13,433 3,338
Foreign Currencies and Forward Currency Contracts (3,583) 3,409 3,535
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) 41,918 15,375 (44,358)
- -----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities 712,931 736,890 418,253
Futures Contracts (331) 2,509 --
Foreign Currencies and Forward Currency Contracts (410) (1,066) (79)
- -----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 712,190 738,333 418,174
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $853,828 $769,334 $394,350
===================================================================================================================================
</TABLE>
*Dividends are net of foreign withholding taxes of $9,231,000, $1,498,000, and
$1,080,000, respectively.
39
<PAGE> 42
STATEMENT OF OPERATIONS (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
TOTAL INTERNATIONAL STOCK INDEX FUND
YEAR ENDED DECEMBER 31, 1999
(000)
- -------------------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
<S> <C>
Income Distributions Received $ 36,702
Interest 250
- -------------------------------------------------------------------------------------------
NET INVESTMENT INCOME--Note C 36,952
- -------------------------------------------------------------------------------------------
REALIZED NET GAIN
Capital Gain Distributions Received 7,734
Investment Securities Sold --
- -------------------------------------------------------------------------------------------
REALIZED NET GAIN 7,734
- -------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES 491,852
- -------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $536,538
===========================================================================================
</TABLE>
40
<PAGE> 43
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how each fund's total net assets changed during the two
most recent reporting periods. The Operations section summarizes information
detailed in the Statement of Operations. The amounts shown as Distributions to
shareholders from the fund's net income and capital gains may not match the
amounts shown in the Operations section, because distributions are determined on
a tax basis and may be made in a period different from the one in which the
income was earned or the gains were realized on the financial statements. The
Capital Share Transactions section shows the amount shareholders invested in the
fund, either by purchasing shares or by reinvesting distributions, as well as
the amounts redeemed. The corresponding numbers of Shares Issued and Redeemed
are shown at the end of the Statement.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
EUROPEAN STOCK PACIFIC STOCK
INDEX FUND INDEX FUND
------------------------------ -------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998 1999 1998
(000) (000) (000) (000)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 99,720 $ 70,308 $ 15,626 $ 10,542
Realized Net Gain (Loss) 41,918 13,446 15,375 (81,819)
Change in Unrealized Appreciation (Depreciation) 712,190 670,223 738,333 96,076
----------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 853,828 753,977 769,334 24,799
----------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income (103,284) (88,786) (18,206) (8,350)
Realized Capital Gain (30,952) (21,542) -- --
----------------------------------------------------------------------
Total Distributions (134,236) (110,328) (18,206) (8,350)
----------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 1,625,077 1,842,080 937,319 355,601
Issued in Lieu of Cash Distributions 123,576 101,520 16,672 7,588
Redeemed (841,311) (540,369) (211,622) (174,046)
----------------------------------------------------------------------
Net Increase from Capital Share Transactions 907,342 1,403,231 742,369 189,143
- -----------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) 1,626,934 2,046,880 1,493,497 205,592
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 4,479,306 2,432,426 1,032,832 827,240
----------------------------------------------------------------------
End of Year $6,106,240 $4,479,306 $2,526,329 $1,032,832
=============================================================================================================================
(1)Shares Issued (Redeemed)
Issued 63,521 75,396 94,959 47,512
Issued in Lieu of Cash Distributions 4,357 4,001 1,411 982
Redeemed (33,203) (23,075) (21,453) (23,899)
----------------------------------------------------------------------
Net Increase in Shares Outstanding 34,675 56,322 74,917 24,595
=============================================================================================================================
</TABLE>
41
<PAGE> 44
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS TOTAL INTERNATIONAL
STOCK INDEX FUND STOCK INDEX FUND
------------------------------ --------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998 1999 1998
(000) (000) (000) (000)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 20,534 $ 18,473 $ 36,952 $ 24,942
Realized Net Gain (Loss) (44,358) (69,804) 7,734 2,035
Change in Unrealized Appreciation (Depreciation) 418,174 (79,610) 491,852 134,333
----------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 394,350 (130,941) 536,538 161,310
----------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income (23,915) (18,432) (36,705) (25,233)
Realized Capital Gain -- -- (1,332) (1,202)
----------------------------------------------------------------------
Total Distributions (23,915) (18,432) (38,037) (26,435)
----------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 343,122 210,263 808,009 478,309
Issued in Lieu of Cash Distributions 22,320 17,230 35,237 24,857
Redeemed* (175,220) (161,424) (147,650) (165,541)
----------------------------------------------------------------------
Net Increase from Capital Share Transactions 190,222 66,069 695,596 337,625
- -----------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) 560,657 (83,304) 1,194,097 472,500
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 576,988 660,292 1,375,482 902,982
----------------------------------------------------------------------
End of Year $1,137,645 $ 576,988 $2,569,579 $1,375,482
=============================================================================================================================
(1)Shares Issued (Redeemed)
Issued 34,157 24,196 66,288 44,998
Issued in Lieu of Cash Distributions 1,856 2,190 2,544 2,221
Redeemed (17,953) (19,600) (12,252) (15,789)
----------------------------------------------------------------------
Net Increase in Shares Outstanding 18,060 6,786 56,580 31,430
=============================================================================================================================
</TABLE>
*Emerging Markets Stock Index Fund amounts are net of redemption fees of
$1,092,000 and $1,517,000, respectively.
42
<PAGE> 45
FINANCIAL HIGHLIGHTS
This table summarizes each fund's investment results and distributions to
shareholders on a per-share basis; investment results for the Total
International Stock Index Fund include both income and capital gain
distributions received from the other funds. The table also presents the fund's
Total Return and shows net investment income and expenses as percentages of
average net assets. These data will help you assess: the variability of the
fund's net income and total returns from year to year; the relative
contributions of net income and capital gains to the fund's total return; how
much it costs to operate the fund; and the extent to which the fund tends to
distribute capital gains. The table also shows the Portfolio Turnover Rate, a
measure of trading activity. A turnover rate of 100% means that the average
security is held in the fund for one year.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
EUROPEAN STOCK INDEX FUND
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $25.28 $20.13 $16.57 $14.02 $11.76
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .50 .41 .38 .34 .32
Net Realized and Unrealized Gain (Loss) on Investments 3.69 5.40 3.63 2.63 2.30
----------------------------------------------------------
Total from Investment Operations 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 (.15) (.14) (.08) (.06) (.04)
----------------------------------------------------------
Total Distributions (.65) (.66) (.45) (.42) (.36)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $28.82 $25.28 $20.13 $16.57 $14.02
==========================================================================================================================
TOTAL RETURN* 16.62% 28.86% 24.23% 21.26% 22.28%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $6,106 $4,479 $2,432 $1,595 $1,017
Ratio of Total Expenses to Average Net Assets 0.29% 0.29% 0.31% 0.35% 0.35%
Ratio of Net Investment Income to Average Net Assets 1.99% 1.97% 2.19% 2.45% 2.66%
Portfolio Turnover Rate 7% 7% 3% 4% 2%
==========================================================================================================================
</TABLE>
*Total return figures do not reflect the transaction fee on purchases (0.5%
beginning 11/3/1997, 1.0% from 1995 through 11/2/1997) or the $10 annual
account maintenance fee applied on balances under $10,000.
43
<PAGE> 46
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
PACIFIC STOCK INDEX FUND
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 7.84 $ 7.72 $10.51 $11.50 $11.31
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
NET INVESTMENT INCOME .08 .085 .09 .10 .10
Net Realized and Unrealized Gain (Loss) on Investments 4.39 .100 (2.79) (1.00) .21
--------------------------------------------------------------
Total from Investment Operations 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 YEAR $12.22 $ 7.84 $ 7.72 $10.51 $11.50
==========================================================================================================================
TOTAL RETURN* 57.05% 2.41% -25.67% -7.82% 2.75%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $2,526 $1,033 $ 827 $978 $831
Ratio of Total Expenses to Average Net Assets 0.37% 0.40% 0.35% 0.35% 0.35%
Ratio of Net Investment Income to Average Net Assets 0.95% 1.17% 1.03% 0.89% 0.97%
Portfolio Turnover Rate 6% 4% 8% 9% 1%
==========================================================================================================================
</TABLE>
*Total return figures do not reflect the transaction fee on purchases (0.5%
beginning 1/1/1997, 1.0% in 1995 through 1996) or the $10 annual account
maintenance fee applied on balances under $10,000.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS STOCK INDEX FUND
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 7.91 $9.98 $12.28 $10.75 $10.87
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .24 .27 .24 .18 .15
Net Realized and Unrealized Gain (Loss) on Investments 4.62 (2.08) (2.31) 1.52 (.09)
----------------------------------------------------------
Total from Investment Operations 4.86 (1.81) (2.07) 1.70 .06
----------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.27) (.26) (.23) (.17) (.18)
Distributions from Realized Capital Gains -- -- -- -- --
----------------------------------------------------------
Total Distributions (.27) (.26) (.23) (.17) (.18)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $12.50 $7.91 $ 9.98 $12.28 $10.75
=========================================================================================================================
TOTAL RETURN* 61.57% -18.12% -16.82% 15.83% 0.56%
=========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $1,138 $577 $660 $637 $234
Ratio of Total Expenses to Average Net Assets 0.58% 0.61% 0.57% 0.60% 0.60%
Ratio of Net Investment Income to Average Net Assets 2.55% 2.99% 1.96% 1.69% 2.00%
Portfolio Turnover Rate 22% 22% 19% 1% 3%
=========================================================================================================================
</TABLE>
*Total return figures do not reflect the transaction fee on purchases (1.0%
beginning 11/3/1997, 1.5% from 1/1/1997 to 11/2/1997, 2.0% in 1995 through
1996), the 1.0% transaction fee on redemptions, or the $10 annual account
maintenance fee applied on balances under $10,000.
44
<PAGE> 47
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INTERNATIONAL STOCK INDEX FUND
YEAR ENDED DECEMBER 31,
----------------------------------------- APR. 29* TO
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 1999 1998 1997 DEC. 31, 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.19 $ 9.87 $10.14 $10.26
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .21 .21 .18 .150
Capital Gain Distributions Received .04 .02 .02 .015
Net Realized and Unrealized Gain (Loss) on Investments 3.09 1.31 (.28) (.110)
---------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.34 1.54 (.08) .055
---------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.21) (.21) (.17) (.160)
Distributions from Realized Capital Gains (.01) (.01) (.02) (.015)
---------------------------------------------------
Total Distributions (.22) (.22) (.19) (.175)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $14.31 $11.19 $ 9.87 $10.14
============================================================================================================================
TOTAL RETURN** 29.92% 15.60% -0.77% 0.55%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $2,570 $1,375 $903 $280
Ratio of Expenses to Average Net Assets--Note C 0% 0% 0% 0%
Ratio of Net Investment Income to Average Net Assets 2.04% 2.18% 2.19% 1.51%+
Portfolio Turnover Rate 1% 2% 0% 0%
============================================================================================================================
</TABLE>
*Inception.
**Total return figures do not reflect the transaction fee on purchases (0.5%
beginning 11/3/1997, 0.75% from 1/1/1997 to 11/2/1997, 1.0% in 1996) or the
$10 annual account maintenance fee applied on balances under $10,000.
+Annualized.
45
<PAGE> 48
NOTES TO FINANCIAL STATEMENTS
Vanguard International Stock Index Funds comprise the European, Pacific,
Emerging Markets, and Total International Stock Index Funds, each of which is
registered under the Investment Company Act of 1940 as an open-end investment
company, or mutual fund. The European, Pacific, and Emerging Markets Stock Index
Funds each seek to match the performance of a distinct international market
index by investing in common stocks. The Total International Stock Index Fund
seeks to match the performance of its target index by investing in the European,
Pacific, and Emerging Markets Stock Index Funds. The funds' direct and indirect
investments in foreign securities involve investment risks not normally
associated with investing in securities of United States corporations.
A. The following significant accounting policies conform to generally accepted
accounting principles for mutual funds. The funds consistently follow such
policies in preparing their financial statements.
1. SECURITY VALUATION: European, Pacific, and Emerging Markets Stock Index
Funds: Equity securities are valued at the latest quoted sales prices as of the
close of trading on the New York Stock Exchange (generally 4:00 p.m. Eastern
time) on the valuation date; such securities not traded on the valuation date
are valued at the mean of the latest quoted bid and asked prices. Prices are
taken from the primary market in which each security trades. Bonds, and
temporary cash investments acquired over 60 days to maturity, are valued using
the latest bid prices or using valuations based on a matrix system (which
considers such factors as security prices, yields, maturities, and ratings),
both as furnished by independent pricing services. Other temporary cash
investments are valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued by
methods deemed by the Board of Trustees to represent fair value. Total
International Stock Index Fund: Investments are valued at the net asset value of
each Vanguard fund determined as of the close of the New York Stock Exchange on
the valuation date. Temporary cash investments are valued at cost, which
approximates market value.
2. FOREIGN CURRENCY: Securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollars at the
exchange rates on the valuation date as employed by Morgan Stanley Capital
International in the calculation of its indexes.
Realized gains (losses) and unrealized appreciation (depreciation) on
investment securities include the effects of changes in exchange rates since the
securities were purchased, combined with the effects of changes in security
prices. Fluctuations in the value of other assets and liabilities resulting from
changes in exchange rates are recorded as unrealized foreign currency gains
(losses) until the asset or liability is settled in cash, when they are recorded
as realized foreign currency gains (losses).
3. FUTURES AND FORWARD CURRENCY CONTRACTS: The European Stock Index Fund
uses FTSE 100 Index futures contracts, the Pacific Stock Index Fund uses Nikkei
300 Index futures contracts, and the Emerging Markets Stock Index Fund uses Hang
Seng Index futures contracts, to a limited extent, with the objectives of
maintaining full exposure to the stock market, enhancing returns, maintaining
liquidity, and minimizing transaction costs. The funds may purchase futures
contracts to immediately invest incoming cash in the market, or sell futures in
response to cash outflows, thereby simulating a fully invested position in the
underlying index while maintaining a cash balance for liquidity. The funds may
seek to enhance returns by using futures contracts instead of the underlying
securities when futures are believed to be priced more attractively than the
underlying securities. The primary risks associated with the use of futures
contracts are imperfect correlation between changes in market values of stocks
held by the funds and the prices of futures contracts, and the possibility of an
illiquid market.
The European, Pacific, and Emerging Markets Stock Index Funds enter into
forward currency contracts to maintain the same currency exposure as their
respective indexes. The funds' risks in
46
<PAGE> 49
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. The funds may also invest directly in repurchase agreements.
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 December 31, 1999, the funds had contributed
capital to Vanguard (included in Other Assets) of:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CAPITAL CONTRIBUTED PERCENTAGE PERCENTAGE
TO VANGUARD OF FUND OF VANGUARD'S
STOCK INDEX FUND (000) NET ASSETS CAPITALIZATION
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European $1,121 0.02% 1.1%
Pacific 474 0.02 0.5
Emerging Markets 201 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 Index Fund. The special service agreement provides that
Vanguard will reimburse the fund's expenses to the extent of savings in
administrative and marketing costs realized by Vanguard in the operation of the
fund. Accordingly, all expenses incurred by the fund during the year ended
December 31, 1999, were reimbursed by Vanguard.
47
<PAGE> 50
NOTE TO FINANCIAL STATEMENTS (continued)
D. During the year ended December 31, 1999, purchases and sales of investment
securities other than temporary cash investments were:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
(000)
-------------------------------------
STOCK INDEX FUND PURCHASES SALES
--------------------------------------------------------------------
<S> <C> <C>
European $1,253,471 $350,695
Pacific 859,154 102,861
Emerging Markets 336,122 164,918
Total International 723,459 21,365
--------------------------------------------------------------------
</TABLE>
E. At December 31, 1999, net unrealized appreciation of investment securities
for federal income tax purposes was:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
(000)
--------------------------------------------------------------
APPRECIATED DEPRECIATED NET UNREALIZED
STOCK INDEX FUND SECURITIES SECURITIES APPRECIATION
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European* $2,298,845 $(141,773) $2,157,072
Pacific 805,157 (221,367) 583,790
Emerging Markets 319,212 (106,668) 212,544
Total International 584,663 -- 584,663
-------------------------------------------------------------------------------------------------
</TABLE>
*See Note F.
At December 31, 1999, the aggregate settlement value of open futures
contracts and the related unrealized appreciation were:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
(000)
----------------------------------------
AGGREGATE
STOCK INDEX FUND/ NUMBER OF SETTLEMENT UNREALIZED
FUTURES CONTRACTS LONG CONTRACTS VALUE APPRECIATION
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European/
FTSE 100 Index, exp. 3/2000 316 $35,600 $1,167
Pacific/
Nikkei 300 Index, exp. 3/2000 801 25,279 1,063
--------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE> 51
At December 31, 1999, the European, Pacific, and Emerging Markets Stock
Index Funds had open forward currency contracts to receive foreign currency in
exchange for U.S. dollars as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
(000)
--------------------------------------------------------------------
CONTRACT AMOUNT
---------------------------- UNREALIZED
STOCK 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:
3/24/2000 GBP 21,324 $34,328 $34,371 $43
Pacific/
Receive:
11/2/2000 AUD 3,367 2,183 2,207 24
3/15/2000 JPY 2,473,106 24,474 24,434 (40)
---------------------------------------------------------------------------------------------------
AUD--Australian Dollar.
GBP--Great Britain Pound.
JPY--Japanese Yen.
</TABLE>
Unrealized appreciation (depreciation) on open forward currency contracts is
treated as realized gain (loss) for tax purposes.
The European, Pacific, and Emerging Markets Stock Index Funds had net
unrealized foreign currency gains (losses) of $(136,000), $10,000, and
$(148,000), respectively, resulting from the translation of other assets and
liabilities at December 31, 1999.
F. Distributions are determined on a tax basis and may differ from net
investment income and realized capital gains for financial reporting purposes.
During the year ended December 31, 1999, the European, Pacific, and
Emerging Markets Stock Index Funds realized net foreign currency gains (losses)
of $(551,000), $1,129,000, and $3,524,000, 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. The Pacific and Emerging Markets Stock
Index Funds' currency gains above are net of $724,000 and $1,894,000,
respectively, of levies assessed on the repatriation of holdings denominated in
Malaysian ringgits during the year ended December 31, 1999.
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. At December 31, 1999, this difference is reflected in the balance of
overdistributed net investment income; the corresponding difference between the
securities' cost for financial statement and tax purposes is reflected in
unrealized appreciation.
49
<PAGE> 52
NOTES TO FINANCIAL STATEMENTS (continued)
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
YEAR(S)
AMOUNT ENDING
STOCK INDEX FUND (000) DECEMBER 31
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Pacific $104,044 2005-2006
Emerging Markets 143,159 2003-2007
---------------------------------------------------------------------------------------------------
</TABLE>
G. The market value of securities on loan to broker/dealers at December 31,
1999, and collateral received with respect to such loans were:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
(000)
---------------------------------------
MARKET VALUE CASH
OF LOANED COLLATERAL
STOCK INDEX FUND SECURITIES RECEIVED
-----------------------------------------------------------------------------
<S> <C> <C>
European $324,607 $341,585
Pacific 134,532 143,098
Emerging Markets 12,349 13,165
-----------------------------------------------------------------------------
</TABLE>
Cash collateral received is invested in repurchase agreements.
50
<PAGE> 53
REPORT OF INDEPENDENT ACCOUNTANTS
TO the Shareholders and Trustees of
Vanguard European Stock Index Fund,
Vanguard Pacific Stock Index Fund,
Vanguard Emerging Markets Stock Index Fund and
Vanguard Total International Stock Index Fund
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Vanguard European Stock Index Fund, Vanguard Pacific Stock Index Fund, Vanguard
Emerging Markets Stock Index Fund and Vanguard Total International Stock Index
Fund (the "Funds"), at December 31, 1999, the results of each of their
operations for the year then ended, the changes in each of their net assets for
each of the two years in the period then ended and the financial highlights for
each of the periods indicated, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 9, 2000
51
<PAGE> 54
- --------------------------------------------------------------------------------
SPECIAL 1999 TAX INFORMATION (UNAUDITED) FOR
VANGUARD INTERNATIONAL STOCK INDEX FUNDS
This information for the fiscal year ended December 31, 1999, is included
pursuant to provisions of the Internal Revenue Code.
The European Stock Index Fund and the Total International Stock Index Fund
distributed $30,952,000 and $1,332,000, respectively, as capital gain dividends
(from net long-term capital gains) to shareholders during the fiscal year ended
December 31, 1999, all of which is designated as a 20% rate gain distribution.
The Vanguard European Stock Index Fund, Pacific Stock Index, and Emerging
Markets Stock Index Funds have elected to pass through the credit for taxes paid
in foreign countries. Shareholders receive detailed information on foreign
income and foreign tax per share by country along with their 1999 Form 1099-DIV.
- --------------------------------------------------------------------------------
52
<PAGE> 55
- -------------------------------------------------------------------------------
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.
Seven of Vanguard's nine 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 C. BOGLE - (1967) Founder, Senior Chairman of the Board, and
Director/Trustee of The Vanguard Group, Inc., and each of the investment
companies in The Vanguard Group.
JOHN J. BRENNAN - (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 &
Johnson-Merck 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.
JOHN C. SAWHILL - (1991) President and Chief Executive Officer of The Nature
Conservancy; formerly, Director and Senior Partner of McKinsey & Co. and
President of New York University; Director of Pacific Gas and Electric Co.,
Procter & Gamble Co., NACCO Industries, and Newfield Exploration Co.
JAMES O. WELCH, JR. - (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
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 - Core Management Group.
<PAGE> 56
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.
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 4500" and "Wilshire 5000" are trademarks of Wilshire
Associates.
[THE VANGUARD GROUP LOGO]
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
WORLD WIDE WEB
www.vanguard.com
FUND INFORMATION
1-800-662-7447
INDIVIDUAL ACCOUNT SERVICES
1-800-662-2739
INSTITUTIONAL INVESTOR SERVICES
1-800-523-1036
This report is intended for the funds' shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus.
Q720-02/24/2000
(C) 2000 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing Corporation, Distributor.
