Vanguard STAR Fund NCSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT

REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-3919

Name of Registrant: Vanguard STAR Funds

Address of Registrant:	P.O. Box 2600
	Valley Forge, PA 19482

Name and address of agent for service:	Heidi Stam, Esquire
	P.O. Box 876
	Valley Forge, PA 19482

Registrant’s telephone number, including area code: (610) 669-1000

Date of fiscal year end: October 1

Date of reporting period: November 1, 2006–October 31, 2007

Item 1: Reports to Shareholders

> Vanguard STAR Fund returned 13.1% for the fiscal year ended October 31, 2007, beating its benchmark and peer group.

> All of STAR’s underlying funds contributed to the fund’s positive performance, with particularly strong returns coming from its two international funds.

> Domestically, the growth funds in STAR’s portfolio outperformed its value funds, although the value funds also produced excellent returns.

Contents

Your Fund’s Total Returns	1
Chairman’s Letter	2
Fund Profile	8
Performance Summary	10
Financial Statements	12
Your Fund’s After-Tax Returns	20
About Your Fund’s Expenses	21
Glossary	23

Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the cover of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.

Your Fund’s Total Returns

Fiscal Year Ended October 31, 2007
	Ticker	Total
	Symbol	Returns
Vanguard STAR Fund	VGSTX	13.1%
STAR Composite Index¹		12.6
STAR Composite Average²		13.0

Your Fund’s Performance at a Glance
October 31, 2006–October 31, 2007
			Distributions Per Share
	Starting	Ending	Income	Capital
	Share Price	Share Price	Dividends	Gains
Vanguard STAR Fund	$21.04	$22.80	$0.600	$0.327

1 The STAR Composite Index is weighted 50% Morgan Stanley Capital International (MSCI) US Broad Market Index, 25% Lehman Brothers U.S. Aggregate Bond Index, 12.5% Lehman 1–5 Year U.S. Credit Index, and 12.5% MSCI Europe, Australasia, Far East (EAFE) Index.

2 The STAR Composite Average, which is derived from data provided by Lipper Inc., is weighted 50% average general equity fund, 25% average fixed income fund, 12.5% average 1–5 year investment-grade fund, and 12.5% average international fund.

Chairman’s Letter

Dear Shareholder,

Vanguard STAR Fund produced a 13.1% return for the fiscal year ended October 31, 2007, coincidentally the same return as in the previous fiscal year. The fund’s return outpaced that of its benchmark and edged past the average return of its composite peer group, an approximation of STAR’s asset allocation made up of the relevant Lipper fund groups.

STAR is a “fund of funds,” meaning that it invests in other mutual funds. STAR holds a portfolio that is balanced between a diversified group of domestic and international stocks (60% to 65% of fund assets) and fixed income investments that cover all maturity categories (35% to 40%). During the fiscal year, each of the funds in these asset classes made significant contributions to STAR’s return on an absolute basis, and nine of STAR’s 11 underlying funds bested or came close to their respective benchmarks.

If you own the STAR Fund in a taxable account, you may wish to review a report on the fund’s after-tax returns on page 20.

Stocks rode a bumpy path to impressive results

Despite some volatility, the U.S. stock market produced strong results during the fund’s fiscal year. Ongoing problems with low-quality mortgage loans (an unpleasant postscript to the housing downturn) rattled financial markets in the spring and summer, and continued to make investors skittish through the close of the fiscal period. At the end of October, crude oil prices touched historic highs, while the U.S. dollar dipped to record lows versus other major currencies.

Still, the broad U.S. stock market returned an impressive 15.3%. Large-capitalization stocks outperformed small-caps, and growth stocks outperformed value stocks—both continuing recent months’ reversals of longer-term trends.

International companies performed even better than domestic issues. Stocks in emerging markets fared particularly well, followed by European and Pacific region stocks (Japan was a notable laggard). The weak U.S. dollar boosted foreign stock returns for U.S.-based investors.

Bond investors converged on high-quality issues

Declines in Treasury yields were steepest at the short end of the maturity spectrum, aided by the actions of the Federal Reserve Board. The central bank lowered the target for short-term interest rates to 4.50% in two separate rate cuts (a half-percentage-point in September and a quarter-point on October 31). The yield of the 3-month Treasury bill finished the fiscal period at 3.92%, after spending much of the year near 5%; the 10-year Treasury note ended at 4.47%.

Market Barometer
	Average Annual Total Returns
	Periods Ended October 31, 2007
	One Year	Three Years	Five Years
Stocks
Russell 1000 Index (Large-caps)	15.0%	13.8%	14.5%
Russell 2000 Index (Small-caps)	9.3	13.7	18.7
Dow Jones Wilshire 5000 Index (Entire market)	15.3	14.2	15.3
MSCI All Country World Index ex USA (International)	33.0	27.4	26.4


Bonds
Lehman U.S. Aggregate Bond Index (Broad taxable market)	5.4%	3.9%	4.4%
Lehman Municipal Bond Index	2.9	3.7	4.5
Citigroup 3-Month Treasury Bill Index	5.0	4.1	2.9


CPI
Consumer Price Index	3.5%	3.1%	2.9%

For the year, the broad taxable bond market returned 5.4%. Returns from tax-exempt bonds were lower, as these issues did not benefit from the late-summer rally in Treasuries.

STAR’s international funds continued their impressive showing

The returns of each of the 11 actively managed funds in STAR’s portfolio contributed significantly to its 13.1% return during the fiscal year, allowing STAR to outshine both its benchmark and peer group.

The most impressive returns came from STAR’s international stock investments, as the long rally in international stock markets continued. For U.S.-based investors, international returns were also helped by the declining U.S. dollar.

Vanguard International Growth Fund earned a 30.0% return, beating its benchmark by five percentage points primarily because of exceptional performance in emerging markets and good stock picks in Asia. Vanguard International Value Fund, helped along by its holdings in developing Latin American markets, outperformed its benchmark by almost three percentage points to deliver a 27.6% return.

Expense Ratios
Your fund compared with its peer group
	Aquired	Composite
	Fund Fees	Benchmark
	and Expenses¹	Expense Ratio²
STAR Fund	0.32%	1.29%

1 This figure represents a weighted average of the annualized expense ratios and any fees charged by the underlying mutual funds in which the STAR Fund invests. The fund does not charge any expenses or fees of its own. Acquired is a term that the Securities and Exchange Commission applies to any mutual fund whose shares are owned by another fund.

2 Based on the STAR Composite Average, which is weighted 50% average general equity fund, 25% average fixed income fund, 12.5% average 1–5 year investment-grade fund, and 12.5% average international fund. The figure is derived from data provided by Lipper Inc. and captures information through year-end 2006.

Among STAR’s domestic holdings, growth funds provided strong returns. Vanguard Morgan™ Growth Fund returned 20.6%, followed by Vanguard PRIMECAP Fund (+18.0%), and Vanguard U.S. Growth Fund (+17.1%). Vanguard Explorer™ Fund earned 15.3%, a solid return on an absolute basis but significantly below that of its benchmark, primarily because of disappointing stock selection.

Although value stocks trailed growth stocks during the past year, STAR’s U.S.-based value funds brought home respectable returns. Vanguard Windsor™ II Fund, STAR’s largest holding, returned 14.6% and significantly outperformed its benchmark. Contributing to Windsor II’s outperformance was its below-benchmark exposure to the financials sector, which took the brunt of the subprime mortgage-related stresses. Vanguard Windsor Fund, STAR’s other domestic value stock fund, earned 11.2%.

The total returns of STAR’s three bond funds bested, matched, or came close to those of their respective benchmarks despite a summer of fears over the potential impact of subprime-mortgage-market lending that spread through the global financial markets. The ripple effect sent our GNMA and long-term bond funds into negative territory in the third quarter even though Vanguard’s funds have virtually no exposure to these types of securities. All three funds ended the fiscal year on a positive note.

		Total Returns
Vanguard Fund	Percentage of	12 Months Ended
(Investor Shares)	STAR’s Assets¹	October 31, 2007
Stock Funds
Windsor II	16.1%	14.6%
Windsor	8.7	11.2
PRIMECAP	7.0	18.0
Morgan Growth	7.0	20.6
U.S. Growth	6.9	17.1
Explorer Fund	4.2	15.3
International Growth	6.5	30.0
International Value	6.4	27.6
Bond Funds
Long-Term Investment-Grade	12.5%	2.7%
GNMA	12.4	5.6
Short-Term Investments
Short-Term Investment-Grade	12.3%	5.4%
Combined	100.0%	13.1%

1 As of October 31, 2007.

STAR’s long-term results underscore balance’s benefits

Over the ten-year period ended October 31, 2007, STAR produced an average annual return of 8.5%, outpacing the returns of its benchmark, its composite peer group, and the broad U.S. stock market. (See the table below.)

A hypothetical investment of $10,000 made ten years ago in the stock-and-bond STAR Fund would have grown to $22,586, almost $2,100 more than the same hypothetical investment would have generated in the stock-only Dow Jones Wilshire 5000 Composite Index.

These results reflect STAR’s balanced approach—bonds can at times outperform stocks and also provide ballast to help counteract stocks’ volatility. STAR’s balanced approach also applies within asset classes. Its three bond funds cover the maturity spectrum. And each of its eight stock funds offers a different investment approach, providing STAR with diversified exposure to world stock markets.

Funds of funds bring simplicity to investors

A properly designed fund of funds, such as the STAR Fund, can effectively address a fundamental problem in investing: We can’t know for sure in advance which investment types will do well at any given time. STAR harnesses some fundamental investment principles to address this uncertainty. These include diversification among and within asset classes, costs that provide a performance tailwind because they’re among the lowest in the industry, and a long-term orientation.

Total Returns
Ten Years Ended October 31, 2007
	Average
	Annual Return
STAR Fund	8.5%
STAR Composite Index¹	7.4
STAR Composite Average²	6.6
Dow Jones Wilshire 5000 Index	7.4

The figures shown represent past performance, which is not a guarantee of future results. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at www.vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost.

1 The STAR Composite Index is weighted 62.5% Dow Jones Wilshire 5000 Index, 25% Lehman U.S. Aggregate Bond Index, and 12.5% Citigroup 3-Month Treasury Bill Index through December 31, 2002; 50% Dow Jones Wilshire 5000 Index, 25% Lehman U.S. Aggregate Bond Index, 12.5% Lehman 1–5 Year U.S. Credit Index, and 12.5% MSCI EAFE Index through April 22, 2005; and 50% MSCI US Broad Market Index, 25% Lehman U.S. Aggregate Bond Index, 12.5% Lehman 1–5 Year U.S. Credit Index, and 12.5% MSCI EAFE Index thereafter.

2 The STAR Composite Average, which is derived from data provided by Lipper Inc., is weighted 62.5% average general equity fund, 25% average fixed income fund, and 12.5% average money market fund through December 31, 2002; and 50% average general equity fund, 25% average fixed income fund, 12.5% average 1–5 year investment-grade fund, and 12.5% average international fund thereafter.

A fund of funds can also simplify investing by effectively reducing the number of funds in your personal portfolio to one, no matter how many underlying funds make up its portfolio. This simplicity makes for easier recordkeeping, and it can give you a clearer picture of your investment portfolio. And your fund of funds takes onto itself the important task of periodically rebalancing to restore its original asset allocation and maintain its risk and return characteristics.

Thank you for entrusting your assets to Vanguard.

Sincerely,

John J. Brennan

Chairman and Chief Executive Officer

November 13, 2007

Fund Profile

As of October 31, 2007

Financial Attributes

Yield	2.8%
Acquired Fund Fees and Expenses¹	0.32%

Allocation to Underlying Vanguard Funds

Stock Funds
Windsor II	16.1%
Windsor	8.7
PRIMECAP	7.0
Morgan Growth	7.0
U.S. Growth	6.9
Explorer Fund	4.2
International Growth	6.5
International Value	6.4
Bond Funds
Long-Term Investment-Grade	12.5%
GNMA	12.4
Short-Term Investments
Short-Term Investment-Grade	12.3%

Volatility Measures²
	Fund Versus
	Composite Index³
R-Squared	0.98
Beta	1.03

Equity Investment Focus

Fixed Income Investment Focus

Fund Asset Allocation

1 This figure represents a weighted average of the expense ratios and any fees charged by the underlying mutual funds in which STAR Fund invests. The fund does not charge any expenses or fees of its own. Acquired is a term that the Securities and Exchange Commission applies to any mutual fund whose shares are owned by another fund.

2 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 23.

3 The STAR Composite Index is weighted 50% Dow Jones Wilshire 5000 Index, 25% Lehman U.S. Aggregate Bond Index, 12.5% Lehman 1–5 Year U.S. Credit Index, and 12.5% MSCI EAFE Index through April 22, 2005; and 50% MSCI US Broad Market Index, 25% Lehman U.S. Aggregate Bond Index, 12.5% Lehman 1–5 Year U.S. Credit Index, and 12.5% MSCI EAFE Index thereafter.

Performance Summary

All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at www.vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.

Cumulative Performance: October 31, 1997–October 31, 2007

Initial Investment of $10,000

	Average Annual Total Returns			Final Value
	Periods Ended October 31, 2007			of a $10,000
	One Year	Five Years	Ten Years	Investment
STAR Fund¹	13.14%	12.89%	8.49%	$22,586
Dow Jones Wilshire 5000 Index	15.28	15.31	7.44	20,495
STAR Composite Index²	12.59	12.02	7.37	20,358
STAR Composite Average³	13.05	11.70	6.61	18,970

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 The STAR Composite Index is weighted 62.5% Dow Jones Wilshire 5000 Index, 25% Lehman U.S. Aggregate Bond Index, and 12.5% Citigroup 3-Month Treasury Bill Index through December 31, 2002; 50% Dow Jones Wilshire 5000 Index, 25% Lehman U.S. Aggregate Bond Index, 12.5% Lehman 1–5 Year U.S. Credit Index, and 12.5% MSCI EAFE Index through April 22, 2005; and 50% MSCI US Broad Market Index, 25% Lehman U.S. Aggregate Bond Index, 12.5% Lehman 1–5 Year U.S. Credit Index, and 12.5% MSCI EAFE Index thereafter.

3 The STAR Composite Average, which is derived from data provided by Lipper Inc., is weighted 62.5% average general equity fund, 25% average fixed income fund, and 12.5% average money market fund through December 31, 2002; and 50% average general equity fund, 25% average fixed income fund, 12.5% average 1–5 year investment-grade fund, and 12.5% average international fund thereafter.

Fiscal-Year Total Returns (%): October 31, 1997–October 31, 2007


	STAR Fund			Composite
Fiscal	Capital	Income	Total	Index¹Total
Year	Return	Return	Return	Return
1998	5.8%	3.4%	9.2%	12.8%
1999	7.3	3.4	10.7	16.4
2000	8.6	3.9	12.5	7.9
2001	–6.4	3.3	–3.1	–12.9
2002	–9.4	2.9	–6.5	–6.5
2003	15.7	3.3	19.0	17.3
2004	7.5	2.6	10.1	9.2
2005	6.8	2.5	9.3	7.8
2006	10.2	2.9	13.1	13.5
2007	10.1	3.0	13.1	12.6

Average Annual Total Returns: Periods Ended September 30, 2007

This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

						Ten Years
	Inception Date	One Year	Five Years	Capital	Income	Total
STAR Fund²	3/29/1985	13.54%	13.22%	4.97%	3.12%	8.09%

2 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

Note: See Financial Highlights table on page 16 for dividend and capital gains information.

Financial Statements

Statement of Net Assets

As of October 31, 2007

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

			Market
			Value^•
		Shares	($000)
Investment Companies (100.0%)
U.S. Stock Funds (49.8%)
	Vanguard Windsor II Fund Investor Shares	64,416,944	2,437,537
	Vanguard Windsor Fund Investor Shares	67,679,887	1,321,111
	Vanguard PRIMECAP Fund Investor Shares	13,353,206	1,067,055
	Vanguard Morgan Growth Fund Investor Shares	47,870,993	1,057,470
	Vanguard U.S. Growth Fund Investor Shares	50,607,442	1,054,659
	Vanguard Explorer Fund Investor Shares	7,616,732	639,272
			7,577,104
International Stock Funds (12.9%)
	Vanguard International Growth Fund Investor Shares	33,596,625	981,357
	Vanguard International Value Fund	20,106,933	972,975
			1,954,332
Bond Funds (24.9%)
	Vanguard Long-Term Investment-Grade Fund Investor Shares	209,989,844	1,900,408
	Vanguard GNMA Fund Investor Shares	184,730,939	1,889,798
			3,790,206
Short-Term Bond Fund (12.3%)
	Vanguard Short-Term Investment-Grade Fund Investor Shares	176,203,349	1,869,518

Money Market Fund (0.1%)
¹	Vanguard Market Liquidity Fund, 4.955%	17,808,867	17,809
Total Investment Companies (Cost $10,737,447)			15,208,969
Other Assets and Liabilities (0.0%)
Other Assets			30,372
Liabilities			(29,406)
			966
Net Assets (100%)
Applicable to 667,048,646 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)			15,209,935
Net Asset Value Per Share			$22.80

At October 31, 2007, net assets consisted of:²
	Amount	Per
	($000)	Share
Paid-in Capital	10,185,961	$15.27
Undistributed Net Investment Income	111,051	.17
Accumulated Net Realized Gains	441,401	.66
Unrealized Appreciation	4,471,522	6.70
Net Assets	15,209,935	$22.80

• See Note A in Notes to Financial Statements.

1 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.

2 See Note C in Notes to Financial Statements for the tax-basis components of net assets.

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Income Distributions Received	409,893
Net Investment Income—Note B	409,893
Realized Net Gain (Loss)
Capital Gain Distributions Received	442,595
Investment Securities Sold	40,429
Realized Net Gain (Loss)	483,024
Change in Unrealized Appreciation (Depreciation) of Investment Securities	880,955
Net Increase (Decrease) in Net Assets Resulting from Operations	1,773,872

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	409,893	334,697
Realized Net Gain (Loss)	483,024	275,478
Change in Unrealized Appreciation (Depreciation)	880,955	937,240
Net Increase (Decrease) in Net Assets Resulting from Operations	1,773,872	1,547,415
Distributions
Net Investment Income	(390,425)	(316,401)
Realized Capital Gain¹	(209,760)	(33,279)
Total Distributions	(600,185)	(349,680)
Capital Share Transactions—Note E
Issued	1,450,174	1,768,850
Issued in Lieu of Cash Distributions	583,135	338,007
Redeemed	(1,519,392)	(1,329,304)
Net Increase (Decrease) from Capital Share Transactions	513,917	777,553
Total Increase (Decrease)	1,687,604	1,975,288
Net Assets
Beginning of Period	13,522,331	11,547,043
End of Period²	15,209,935	13,522,331

1 Includes fiscal 2007 and 2006 short-term gain distributions totaling $39,771,000 and $33,279,000, respectively. Short-term gain distributions are treated as ordinary income dividends for tax purposes.

2 Net Assets—End of Period includes undistributed (overdistributed) net investment income of $111,051,000 and $91,583,000.

Financial Highlights

For a Share Outstanding	Year Ended October 31,
Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$21.04	$19.14	$17.92	$16.67	$14.41
Investment Operations
Net Investment Income	.626	.533	.46	.41	.40
Capital Gain Distributions Received	.669	.378	.01	—	—
Net Realized and Unrealized Gain (Loss)
on Investments	1.392	1.554	1.19	1.26	2.28
Total from Investment Operations	2.687	2.465	1.66	1.67	2.68
Distributions
Dividends from Net Investment Income	(.600)	(.510)	(.44)	(.42)	(.42)
Distributions from Realized Capital Gains	(.327)	(.055)	—	—	—
Total Distributions	(.927)	(.565)	(.44)	(.42)	(.42)
Net Asset Value, End of Period	$22.80	$21.04	$19.14	$17.92	$16.67


Total Return¹	13.14%	13.13%	9.33%	10.14%	18.96%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$15,210	$13,522	$11,547	$10,083	$8,671
Ratio of Total Expenses to
Average Net Assets—Note B	0%²	0%	0%	0%	0%
Ratio of Net Investment Income to
Average Net Assets	2.85%	2.64%	2.44%	2.39%	2.60%
Portfolio Turnover Rate	8%	9%	6%	6%	15%

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 The acquired fund fees and expenses were 0.32%.

See accompanying Notes, which are an integral part of the Financial Statements.

Notes to Financial Statements

Vanguard STAR Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund follows a balanced investment strategy by investing in selected Vanguard funds. The fund invests 60% to 70% of its net assets in stock funds (predominantly large-capitalization U.S. stock funds), 20% to 30% in intermediate- to long-term bond funds, and 10% to 20% in a short-term bond fund.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Valuation: Investments are valued at the net asset value of each underlying Vanguard fund determined as of the close of the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in the financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Other: Income and capital gain distributions received are 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.

B. Under a service agreement, The Vanguard Group furnishes corporate management, administrative, marketing, and distribution services to the fund. The 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 October 31, 2007, were reimbursed by Vanguard. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

For tax purposes, at October 31, 2007, the fund had $157,517,000 of ordinary income and $395,129,000 of long-term capital gains available for distribution.

At October 31, 2007, the cost of investment securities for tax purposes was $10,737,641,000. Net unrealized appreciation of investment securities for tax purposes was $4,471,328,000, consisting of unrealized gains of $4,471,768,000 on securities that had risen in value since their purchase and $440,000 in unrealized losses on securities that had fallen in value since their purchase.

D. During the year ended October 31, 2007, the fund purchased $1,867,070,000 of investment securities and sold $1,090,857,000 of investment securities other than temporary cash investments.

E. Capital shares issued and redeemed were:

	Year Ended October 31,
	2007	2006
	Shares	Shares
	(000)	(000)
Issued	67,082	88,228
Issued in Lieu of Cash Distributions	27,479	17,291
Redeemed	(70,107)	(66,266)
Net Increase (Decrease) in Shares Outstanding	24,454	39,253

F. In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes.” FIN 48 establishes the minimum threshold for recognizing, and a system for measuring, the benefits of tax-return positions in financial statements, and is effective for the fund’s fiscal year beginning November 1, 2007. Management has analyzed the fund’s tax positions taken on federal income tax returns for all open tax years (tax years ended October 31, 2004–2007) for purposes of implementing FIN 48, and has concluded that as of October 31, 2007, no provision for income tax would be required in the fund’s financial statements.

Report of Independent Registered

Public Accounting Firm

To the Trustees of Vanguard STAR Funds and the Shareholders of Vanguard STAR Fund:

In our opinion, the accompanying statement 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 STAR Fund (the “Fund”) at October 31, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 October 31, 2007 by agreement to the underlying ownership records for the Vanguard funds, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

December 6, 2007

Special 2007 tax information (unaudited) for Vanguard STAR Fund

This information for the fiscal year ended October 31, 2007, is included pursuant to provisions of the Internal Revenue Code.

The fund distributed $169,989,000 as capital gain dividends (from net long-term capital gains) to shareholders during the fiscal year.

The fund distributed $117,584,000 of qualified dividend income to shareholders during the fiscal year.

For corporate shareholders, 11.0% of investment income (dividend income plus short-term gains, if any) qualifies for the dividends-received deduction.

Your Fund’s After-Tax Returns

This table presents returns for your fund both before and after taxes. The after-tax returns are shown in two ways: (1) assuming that an investor owned the fund during the entire period and paid taxes on the fund’s distributions, and (2) assuming that an investor paid taxes on the fund’s distributions and sold all shares at the end of each period.

Calculations are based on the highest individual federal income tax and capital gains tax rates in effect at the times of the distributions and the hypothetical sales. State and local taxes were not considered. After-tax returns reflect any qualified dividend income, using actual prior-year figures and estimates for 2007. (In the example, returns after the sale of fund shares may be higher than those assuming no sale. This occurs when the sale would have produced a capital loss. The calculation assumes that the investor received a tax deduction for the loss.)

Please note that your actual after-tax returns will depend on your tax situation and may differ from those shown. Also note that if you own the fund in a tax-deferred account, such as an individual retirement account or a 401(k) plan, this information does not apply to you. Such accounts are not subject to current taxes.

Finally, keep in mind that a fund’s performance—whether before or after taxes—does not guarantee future results.

Average Annual Total Returns: STAR Fund¹
Periods Ended October 31, 2007
	One	Five	Ten
	Year	Years	Years
Returns Before Taxes	13.14%	12.89%	8.49%
Returns After Taxes on Distributions	11.92	11.92	6.61
Returns After Taxes on Distributions and Sale of Fund Shares	8.91	10.72	6.27

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

About Your Fund’s Expenses

As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.

A typical fund’s expenses are expressed as a percentage of its average net assets. The STAR Fund has no direct expenses, but bears its proportionate share of the costs for the underlying funds in which it invests. These indirect expenses make up the acquired fund fees and expenses, also expressed as a percentage of average net assets.

The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The costs were calculated using the acquired fund fees and expenses for STAR Fund.

The table below illustrates your fund’s costs in two ways:

• Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.

To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading “Expenses Paid During Period.”

• Based on hypothetical 5% yearly return. This section is intended to help you compare your fund’s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Six Months Ended October 31, 2007
	Beginning	Ending	Expenses
	Account Value	Account Value	Paid During
STAR Fund	4/30/2007	10/31/2007	Period¹
Based on Actual Fund Return	$1,000.00	$1,054.45	$1.66
Hypothetical 5% Yearly Return	1,000.00	1,023.59	1.63

Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include the account service fee described in the prospectus. If such a fee were applied to your account, your costs would be higher. Your fund does not charge transaction fees, such as purchase or redemption fees, nor does it carry a “sales load.”

1 The calculations are based on the acquired fund fees and expenses for the most recent six-month period of each underlying fund. STAR Fund’s acquired fund fees and expenses figure as of October 31, 2007, was 0.32%. The dollar amounts shown as “Expenses Paid” are equal to the expense figure multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period.

The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.

You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.

Glossary

Acquired Fund Fees and Expenses. Funds that invest in other Vanguard funds incur no direct expenses, but they do bear proportionate shares of the operating, administrative, and advisory expenses of the underlying funds, and they must pay any fees charged by those funds. The figure for acquired fund fees and expenses represents a weighted average of these underlying costs. Acquired is a term that the Securities and Exchange Commission applies to any mutual fund whose shares are owned by another fund.

Beta. A measure of the magnitude of a fund’s past share-price fluctuations in relation to the ups and downs of a given market index. The index is assigned a beta of 1.00. Compared with a given index, a fund with a beta of 1.20 typically would have seen its share price rise or fall by 12% when the index rose or fell by 10%. A fund’s beta should be reviewed in conjunction with its R-squared (see definition below). The lower the R-squared, the less correlation there is between the fund and the index, and the less reliable beta is as an indicator of volatility.

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.

Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund’s investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is measured from the inception date.

R-Squared. A measure of how much of a fund’s past returns can be explained by the returns from the market in general, as measured by a given index. If a fund’s total returns were precisely synchronized with an index’s returns, its R-squared would be 1.00. If the fund’s returns bore no relationship to the index’s returns, its R-squared would be 0.

Yield. A snapshot of a fund’s income from interest and dividends. The yield, expressed as a percentage of the fund’s net asset value, is based on income earned over the past 30 days and is annualized, or projected forward for the coming year.

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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 a part owner of the fund. Your fund’s trustees also serve on the board of directors of The Vanguard Group, Inc., which is owned by the Vanguard funds and provides services to them on an at-cost basis.

A majority of Vanguard’s 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.

Our independent board members 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 advisors for the funds; monitoring fund operations, performance, and costs; reviewing contracts; nominating and selecting new trustees/directors; and electing Vanguard officers.

Each trustee serves a fund until its termination; or until the trustee’s retirement, resignation, or death; or otherwise as specified in the fund’s organizational documents. Any trustee may be removed at a shareholders’ meeting by a vote representing two-thirds of the net asset value of all shares of the fund together with shares of other Vanguard funds organized within the same trust. The table on these two pages shows information for each trustee and executive officer of the fund. The mailing address of the trustees and officers is P.O. Box 876, Valley Forge, PA 19482.

Chairman of the Board, Chief Executive Officer, and Trustee

John J. Brennan¹
Born 1954	Principal Occupation(s) During the Past Five Years: Chairman of the Board, Chief Executive
Trustee since May 1987;	Officer, and Director/Trustee of The Vanguard Group, Inc., and of each of the investment
Chairman of the Board and	companies served by The Vanguard Group.
Chief Executive Officer
148 Vanguard Funds Overseen

Independent Trustees

Charles D. Ellis
Born 1937	Principal Occupation(s) During the Past Five Years: Applecore Partners (pro bono ventures
Trustee since January 2001	in education); Senior Advisor to Greenwich Associates (international business strategy
148 Vanguard Funds Overseen	consulting); Successor Trustee of Yale University; Overseer of the Stern School of Business
	at New York University; Trustee of the Whitehead Institute for Biomedical Research.

Rajiv L. Gupta
Born 1945	Principal Occupation(s) During the Past Five Years: Chairman, President, and
Trustee since December 2001²	Chief Executive Officer of Rohm and Haas Co. (chemicals); Board Member of
148 Vanguard Funds Overseen	the American Chemistry Council; Director of Tyco International, Ltd. (diversified
	manufacturing and services) since 2005; Trustee of Drexel University and of the
	Chemical Heritage Foundation.

Amy Gutmann
Born 1949	Principal Occupation(s) During the Past Five Years: President of the University of
Trustee since June 2006	Pennsylvania since 2004; Professor in the School of Arts and Sciences, Annenberg School
148 Vanguard Funds Overseen	for Communication, and Graduate School of Education of the University of Pennsylvania
	since 2004; Provost (2001–2004) and Laurance S. Rockefeller Professor of Politics and
	the University Center for Human Values (1990–2004), Princeton University; Director of
	Carnegie Corporation of New York since 2005 and of Schuylkill River Development
	Corporation and Greater Philadelphia Chamber of Commerce since 2004.

JoAnn Heffernan Heisen
Born 1950	Principal Occupation(s) During the Past Five Years: Corporate Vice President and
Trustee since July 1998	Chief Global Diversity Officer since 2006, Vice President and Chief Information
148 Vanguard Funds Overseen	Officer (1997–2005), and Member of the Executive Committee of Johnson &
	Johnson (pharmaceuticals/consumer products); Director of the University Medical
	Center at Princeton and Women’s Research and Education Institute.

André F. Perold
Born 1952	Principal Occupation(s) During the Past Five Years: George Gund Professor of Finance
Trustee since December 2004	and Banking, Harvard Business School; Senior Associate Dean, Director of Faculty
148 Vanguard Funds Overseen	Recruiting, and Chair of Finance Faculty, Harvard Business School; Director and Chairman
	of UNX, Inc. (equities trading firm) since 2003; Chair of the Investment Committee of
	HighVista Strategies LLC (private investment firm) since 2005.

Alfred M. Rankin, Jr.
Born 1941	Principal Occupation(s) During the Past Five Years: Chairman, President, Chief Executive
Trustee since January 1993	Officer, and Director of NACCO Industries, Inc. (forklift trucks/housewares/lignite); Director
148 Vanguard Funds Overseen	of Goodrich Corporation (industrial products/aircraft systems and services).


J. Lawrence Wilson
Born 1936	Principal Occupation(s) During the Past Five Years: Retired Chairman and Chief Executive
Trustee since April 1985	Officer of Rohm and Haas Co. (chemicals); Director of Cummins Inc. (diesel engines) and
148 Vanguard Funds Overseen	AmerisourceBergen Corp. (pharmaceutical distribution); Trustee of Vanderbilt University
	and of Culver Educational Foundation.

Executive Officers¹

Thomas J. Higgins
Born 1957	Principal Occupation(s) During the Past Five Years: Principal of The Vanguard Group, Inc.;
Treasurer since July 1998	Treasurer of each of the investment companies served by The Vanguard Group.
148 Vanguard Funds Overseen


Heidi Stam
Born 1956	Principal Occupation(s) During the Past Five Years: Managing Director of The Vanguard
Secretary since July 2005	Group, Inc., since 2006; General Counsel of The Vanguard Group since 2005; Secretary of
148 Vanguard Funds Overseen	The Vanguard Group, and of each of the investment companies served by The Vanguard
	Group, since 2005; Principal of The Vanguard Group (1997–2006).

Vanguard Senior Management Team

R. Gregory Barton	Kathleen C. Gubanich	F. William McNabb, III	Ralph K. Packard
Mortimer J. Buckley	Paul A. Heller	Michael S. Miller	George U. Sauter

Founder

John C. Bogle

Chairman and Chief Executive Officer, 1974–1996

1 Officers of the funds are “interested persons” as defined in the Investment Company Act of 1940.

2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard State Tax-Exempt Funds.

More information about the trustees is in the Statement of Additional Information, available from The Vanguard Group.

P.O. Box 2600

Valley Forge, PA 19482-2600

Connect with Vanguard^®> www.vanguard.com

Fund Information > 800-662-7447	Vanguard, STAR, Connect with Vanguard, Windsor,
	Explorer, Morgan, and the ship logo are trademarks
Direct Investor Account Services > 800-662-2739	of The Vanguard Group, Inc.

Institutional Investor Services > 800-523-1036
	All other marks are the exclusive property of their
Text Telephone for People	respective owners.
With Hearing Impairment > 800-952-3335
	All comparative mutual fund data are from Lipper Inc.
	or Morningstar, Inc., unless otherwise noted.

	You can obtain a free copy of Vanguard’s proxy voting
This material may be used in conjunction	guidelines by visiting our website, www.vanguard.com,
with the offering of shares of any Vanguard	and searching for “proxy voting guidelines,” or by
fund only if preceded or accompanied by	calling Vanguard at 800-662-2739. The guidelines are
the fund’s current prospectus.	also available from the SEC’s website, www.sec.gov.
	In addition, you may obtain a free report on how your
	fund voted the proxies for securities it owned during
	the 12 months ended June 30. To get the report, visit
	either www.vanguard.com or www.sec.gov.

	You can review and copy information about your fund
	at the SEC’s Public Reference Room in Washington, D.C.
	To find out more about this public service, call the SEC
	at 202-551-8090. Information about your fund is also
	available on the SEC’s website, and you can receive
	copies of this information, for a fee, by sending a
	request in either of two ways: via e-mail addressed to
	publicinfo@sec.gov or via regular mail addressed to the
	Public Reference Section, Securities and Exchange
	Commission, Washington, DC 20549-0102.




	© 2007 The Vanguard Group, Inc.
	All rights reserved.
	Vanguard Marketing Corporation, Distributor.

	Q560 122007

> For the fiscal year ended October 31, 2007, returns for the Vanguard LifeStrategy Funds ranged from 8.1% for the most conservative fund to 16.3% for the fund with the most aggressive asset allocation.

> The Total International Stock Index Fund, a component of three of the four funds, gained 32.5% for the 12 months.

> The performance of each LifeStrategy Fund surpassed that of its corresponding benchmark index and the average result of peer funds with similar asset allocations. A higher-than-target stock allocation for each fund was the most significant factor in this outperformance.

Contents

Your Fund’s Total Returns	1
Chairman’s Letter	2
LifeStrategy Income Fund	7
LifeStrategy Conservative Growth Fund	17
LifeStrategy Moderate Growth Fund	27
LifeStrategy Growth Fund	37
Your Fund’s After-Tax Returns	49
About Your Fund’s Expenses	50
Glossary	52

Your Fund’s Total Returns

Fiscal Year Ended October 31, 2007
	Ticker	Total
	Symbol	Returns
Vanguard LifeStrategy Income Fund	VASIX	8.1%
Income Composite Index¹		7.3
Income Composite Average²		6.9


Vanguard LifeStrategy Conservative Growth Fund	VSCGX	10.8%
Conservative Growth Composite Index¹		9.7
Conservative Growth Composite Average²		9.7


Vanguard LifeStrategy Moderate Growth Fund	VSMGX	13.6%
Moderate Growth Composite Index¹		12.1
Moderate Growth Composite Average²		12.5


Vanguard LifeStrategy Growth Fund	VASGX	16.3%
Growth Composite Index¹		14.5
Growth Composite Average²		15.4

Your Fund’s Performance at a Glance
October 31, 2006–October 31, 2007


	Starting	Ending	Distributions Per Share
	Share	Share	Income	Capital	SEC
	Price	Price	Dividends	Gains	Yield³
LifeStrategy Income Fund	$13.97	$14.44	$0.570	$0.068	4.03%
LifeStrategy Conservative Growth Fund	16.43	17.61	0.570	0.000	3.36
LifeStrategy Moderate Growth Fund	20.09	22.21	0.560	0.000	2.72
LifeStrategy Growth Fund	23.32	26.56	0.520	0.000	2.05

1 Total returns for the composite indexes are derived by applying the funds’ target allocations to the results of the following benchmarks: for U.S. stocks, the Morgan Stanley Capital International (MSCI) US Broad Market Index; for international stocks, the MSCI Europe, Australasia, Far East (EAFE) Index; for bonds, the Lehman Brothers U.S. Aggregate Bond Index; and for short-term investments, the Lehman 1–3 Year U.S. Credit Index.

2 Each average is a blended composite that weights the return of the average comparable mutual fund for each asset class in proportion to the target weighting of the appropriate LifeStrategy Fund. All average returns for funds are derived from data provided by Lipper Inc. The Income Composite Average is weighted 60% average fixed income fund, 20% average general equity fund, and 20% average money market fund. The Conservative Growth Composite Average is weighted 40% average fixed income fund, 35% average general equity fund, 20% average money market fund, and 5% average international fund. The Moderate Growth Composite Average is weighted 50% average general equity fund, 40% average fixed income fund, and 10% average international fund. The Growth Composite Average is weighted 65% average general equity fund, 20% average fixed income fund, and 15% average international fund.

3 Thirty-day advertised yield net of expenses at month-end.

Chairman’s Letter

Dear Shareholder,

Despite an unsettling summer in stock and bond markets, returns were solid across asset classes for the year ended October 31, 2007. The well-diversified Vanguard LifeStrategy Funds captured these gains, with returns ranging from 8.1% for the most conservative fund in the series (the LifeStrategy Income Fund) to 16.3% for the most aggressive (the LifeStrategy Growth Fund).

The funds enjoyed a performance advantage both over their composite benchmarks and the returns that could have been earned from a composite of equity and fixed income mutual funds allocated in similar proportions. Each fund’s 25% exposure to Vanguard Asset Allocation Fund helped to sharpen that performance edge. The manager of the Asset Allocation Fund has continued to heavily favor stocks over bonds, which in turn boosted the LifeStrategy Funds’ stock exposure and performance.

Yields for the two more conservative funds, LifeStrategy Income and LifeStrategy Conservative Growth, were 4.03% and 3.36%, respectively, at the end of the fiscal year.

Stocks rode a bumpy path to impressive results

Bond investors converged on high-quality issues

As troubles in the subprime credit market rippled across the financial markets, bond investors sought the relative safety of U.S. Treasury bonds. This “flight to quality” drove prices for Treasuries higher and yields lower, and widened the spread between Treasury yields and the much higher yields demanded by investors for riskier bonds. Declines in Treasury yields were steepest at the short end of the maturity spectrum, aided by the actions of the Federal Reserve Board. The central bank lowered the target for short-term interest rates to 4.50% in two separate rate cuts (a half-percentage-point in September and a quarter-point on October 31). The yield of the 3-month Treasury bill finished the fiscal period at 3.92%, after spending much of the year near 5%; the 10-year Treasury note ended at 4.47%.

Market Barometer
	Average Annual Total Returns
	Periods Ended October 31, 2007
	One Year	Three Years	Five Years
Stocks
Russell 1000 Index (Large-caps)	15.0%	13.8%	14.5%
Russell 2000 Index (Small-caps)	9.3	13.7	18.7
Dow Jones Wilshire 5000 Index (Entire market)	15.3	14.2	15.3
MSCI All Country World Index ex USA (International)	33.0	27.4	26.4


Bonds
Lehman U.S. Aggregate Bond Index (Broad taxable market)	5.4%	3.9%	4.4%
Lehman Municipal Bond Index	2.9	3.7	4.5
Citigroup 3-Month Treasury Bill Index	5.0	4.1	2.9


CPI
Consumer Price Index	3.5%	3.1%	2.9%

For the year, the broad taxable bond market returned 5.4%. Returns from tax-exempt bonds were lower, as these issues did not benefit from the late-summer rally in Treasuries.

Elevated stock exposure benefited all four funds

The four LifeStrategy portfolios are “funds of funds” that invest in up to five other Vanguard mutual funds, primarily index portfolios that track the broad U.S. stock or bond markets, or international equity markets. For the 12-month period, the underlying funds performed as follows:

Total International Stock Index Fund: 32.5% Total Stock Market Index Fund: 14.9% Asset Allocation Fund: 14.1% Short-Term Investment-Grade Fund: 5.4% Total Bond Market Index Fund: 5.3%

The return for each LifeStrategy Fund reflected its exposure to each of these asset classes. LifeStrategy Growth had the heaviest weighting in domestic and international stocks, which boosted its return to 16.3%. LifeStrategy Income’s 8.1% gain reflected its more-modest exposure to stocks and the fact that it holds no international stocks, in accordance with its more-conservative mandate. (See your fund’s respective Fund Profile page for a breakdown of its underlying holdings.)

Expense Ratios
Your fund compared with its peer group
	Acquired	Peer-Group
	Fund Fees	Expense
	and Expenses¹	Ratio²
LifeStrategy Income Fund	0.24%	1.10%
LifeStrategy Conservative Growth Fund	0.24	1.18
LifeStrategy Moderate Growth Fund	0.23	1.29
LifeStrategy Growth Fund	0.23	1.38

1 This figure represents a weighted average of the annualized expense ratios and any fees charged by the underlying mutual funds in which the LifeStrategy Funds invest. The LifeStrategy Funds do not charge any expenses or fees of their own. Acquired is a term that the Securities and Exchange Commission applies to any mutual fund whose shares are owned by another fund.

2 Peer groups are (from top to bottom) the Income Composite Average, the Conservative Growth Composite Average, the Moderate Growth Composite Average, and the Growth Composite Average. Each average is a blended composite that weights the expense of the average comparable mutual fund for each asset class in proportion to the target weighting of the appropriate LifeStrategy Fund. Peer-group expense ratios are derived from data provided by Lipper Inc. and capture information through year-end 2006.

Each LifeStrategy Fund invests about 25% of its assets in Vanguard Asset Allocation Fund, which tacks toward stocks, bonds, or cash, depending on signals from the advisor’s quantitative model. Over the 12 months, the Asset Allocation Fund’s stock allocation dropped from 100% to 80% as

the model predicted lower, but still relatively generous, prospective returns for stocks compared with those for bonds and cash. Even with the decline in stock exposure, the fund outdistanced its comparative benchmark, which maintains a static 65%/35% split between stocks and bonds. That performance edge filtered through all four LifeStrategy Funds.(At the end of the period, the Asset Allocation Fund held 90% of its assets in stocks.)

Three factors drive funds’ excellent long-term records

Most investors select LifeStrategy Funds as a long-term investment that provides both broad diversification and a stable risk profile. As this goal suggests, a longer-term perspective is in order. For the past decade, each of the funds has produced returns that surpassed those of their comparative measures.

Several factors play into the funds’ outperformance. First, the indexing expertise of Vanguard’s Quantitative Equity and Fixed Income Groups, which have honed their indexing methods in an effort to tightly track the performance of the funds’ benchmarks. Second, the exceptionally low costs of each of the underlying funds help them to post higher net returns. Also, Vanguard does not charge an additional fee for the fund-of-funds structure, an atypical approach that benefits investors. Finally, Vanguard Asset Allocation Fund has been successful in making rewarding tactical shifts between stocks and bonds over the past decade.

Target and Actual Asset Allocations
Percentages as of October 31, 2007
					Short-Term
		Stocks¹		Bonds	Investments
	Target	Actual	Target	Actual	Target	Actual
LifeStrategy Income Fund	20%	28%	60%	52%	20%	20%
LifeStrategy Conservative Growth Fund	40	48	40	32	20	20
LifeStrategy Moderate Growth Fund	60	68	40	32	0	0
LifeStrategy Growth Fund	80	88	20	12	0	0

1 Actual international stock positions for the Income, Conservative Growth, Moderate Growth, and Growth Funds equaled 0%, 5%, 10%, and 16% of assets, respectively.

In volatile markets, diversification and long-term perspective are key

The sharp increase in stock market volatility in recent months was a jolt to many investors. We at Vanguard always encourage shareholders to invest with a long-term view, to diversify within and across asset classes, and to pay attention to costs—bedrock principles that are even more important during periods of market turbulence.

The LifeStrategy Funds embody many of these key principles. They can give you the opportunity to take part in some of the rewards that each asset class offers while helping to dampen the effects of downturns. They offer diversification within a single fund at a low cost, due to their largely indexed strategy. And the four-fund lineup allows you to choose the fund whose risk profile best matches your own tolerance for market volatility.

Thank you for your ongoing confidence in Vanguard.

Sincerely,

John J. Brennan

Chairman and Chief Executive Officer

November 13, 2007

Total Returns
Ten Years Ended October 31, 2007
	Average
	Annual Return
LifeStrategy Income Fund	6.5%
Income Composite Index	6.0
Income Composite Average¹	5.0
LifeStrategy Conservative Growth Fund	7.1
Conservative Growth Composite Index	6.5
Conservative Growth Composite Average¹	5.6
LifeStrategy Moderate Growth Fund	7.7
Moderate Growth Composite Index	7.3
Moderate Growth Composite Average¹	6.5
LifeStrategy Growth Fund	8.0
Growth Composite Index	7.6
Growth Composite Average¹	6.9

1 Each average is a blended composite that weights the return of the average comparable mutual fund for each asset class in proportion to the target weighting of the appropriate LifeStrategy Fund. All together, the composites use returns for the average fixed income fund, the average general equity fund, the average international fund (except for the LifeStrategy Income Fund, which holds no international stocks), and the average money market fund. These returns are derived from data provided by Lipper Inc.

LifeStrategy Income Fund

Fund Profile

As of October 31, 2007

Financial Attributes

Yield	4.03%
Acquired Fund Fees and Expenses¹	0.24%

Volatility Measures²
	Fund Versus
	Composite Index³
R-Squared	0.95
Beta	1.08

Allocation to Underlying Vanguard Funds

Total Bond Market Index Fund	49.9%
Asset Allocation Fund	25.2
Short-Term Investment-Grade Fund	19.9
Total Stock Market Index Fund	5.0

Equity Investment Focus

Fixed Income Investment Focus

Fund Asset Allocation

1 This figure represents a weighted average of the annualized expense ratios and any fees charged by the underlying mutual funds in which the fund invests. The fund does not charge any expenses or fees of its own. Acquired is a term that the Securities and Exchange Commission applies to any mutual fund whose shares are owned by another fund.

2 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 52.

3 60% Lehman U.S. Aggregate Bond Index, 20% Dow Jones Wilshire 5000 Index, and 20% Citigroup 3-Month Treasury Index through August 31, 2003; 60% Lehman U.S. Aggregate Bond Index, 20% Dow Jones Wilshire 5000 Index, and 20% Lehman 1–3 Year U.S. Credit Index through April 22, 2005; and 60% Lehman U.S. Aggregate Bond Index, 20% MSCI US Broad Market Index, and 20% Lehman 1–3 Year U.S. Credit Index thereafter.

LifeStrategy Income Fund

Performance Summary

Cumulative Performance: October 31, 1997–October 31, 2007

Initial Investment of $10,000

	Average Annual Total Returns			Final Value
	Periods Ended October 31, 2007			of a $10,000
	One Year	Five Years	Ten Years	Investment
LifeStrategy Income Fund¹	8.14%	7.20%	6.46%	$18,694
Lehman U.S. Aggregate Bond Index	5.38	4.41	5.91	17,756
Income Composite Index²	7.32	6.33	6.00	17,901
Income Composite Average³	6.87	6.37	5.01	16,299

1 Total return figures do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 60% Lehman U.S. Aggregate Bond Index, 20% Dow Jones Wilshire 5000 Index, and 20% Citigroup 3-Month Treasury Index through August 31, 2003; 60% Lehman U.S. Aggregate Bond Index, 20% Dow Jones Wilshire 5000 Index, and 20% Lehman 1–3 Year U.S. Credit Index through April 22, 2005; and 60% Lehman U.S. Aggregate Bond Index, 20% MSCI US Broad Market Index, and 20% Lehman 1–3 Year U.S. Credit Index thereafter.

A composite fund average weighted 60% average fixed income fund, 20% average general equity fund, and 20% average money market fund. Derived from data provided by Lipper Inc.

LifeStrategy Income Fund

Fiscal-Year Total Returns (%): October 31, 1997–October 31, 2007
				Income
Fiscal	Capital	Income	Total	Composite
Year	Return	Return	Return	Index¹
1998	6.8%	5.4%	12.2%	10.0%
1999	0.1	5.2	5.3	6.1
2000	1.7	5.8	7.5	7.4
2001	–0.7	5.5	4.8	3.7
2002	–5.3	4.5	–0.8	1.3
2003	6.1	3.8	9.9	8.2
2004	2.8	3.4	6.2	5.9
2005	–0.1	3.5	3.4	3.0
2006	4.4	4.1	8.5	7.3
2007	3.9	4.2	8.1	7.3

Average Annual Total Returns: Periods Ended September 30, 2007

						Ten Years
	Inception Date	One Year	Five Years	Capital	Income	Total
LifeStrategy Income Fund²	9/30/1994	8.42%	7.41%	1.86%	4.55%	6.41%

1 60% Lehman U.S. Aggregate Bond Index, 20% Dow Jones Wilshire 5000 Index, and 20% Citigroup 3-Month Treasury Index through August 31, 2003; 60% Lehman U.S. Aggregate Bond Index, 20% Dow Jones Wilshire 5000 Index, and 20% Lehman 1–3 Year U.S. Credit Index through April 22, 2005; and 60% Lehman U.S. Aggregate Bond Index, 20% MSCI US Broad Market Index, and 20% Lehman 1–3 Year U.S. Credit Index thereafter.

2 Total return figures do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
Note: See Financial Highlights table on page 14 for dividend and capital gains information.

LifeStrategy Income Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

		Market
		Value^•
	Shares	($000)
Investment Companies (100.1%)
U.S. Stock Fund (5.0%)
Vanguard Total Stock Market Index Fund Investor Shares	2,536,832	94,979

Balanced Fund (25.2%)
Vanguard Asset Allocation Fund Investor Shares	15,112,845	475,601

Bond Fund (50.0%)
Vanguard Total Bond Market Index Fund Investor Shares	93,884,100	941,658

Short-Term Bond Fund (19.9%)
Vanguard Short-Term Investment-Grade Fund Investor Shares	35,426,131	375,871
Total Investments (Cost $1,688,581)		1,888,109
Other Assets and Liabilities (–0.1%)
Other Assets		9,645
Liabilities		(12,718)
		(3,073)
Net Assets (100%)
Applicable to 130,584,928 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)		1,885,036
Net Asset Value Per Share		$14.44

At October 31, 2007, net assets consisted of:¹
	Amount	Per
	($000)	Share
Paid-in Capital	1,673,936	$12.82
Undistributed Net Investment Income	8,036	.06
Accumulated Net Realized Gains	3,536	.03
Unrealized Appreciation	199,528	1.53
Net Assets	1,885,036	$14.44

• See Note A in Notes to Financial Statements.

1 See Note C in Notes to Financial Statements for the tax-basis components of net assets.

LifeStrategy Income Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Income Distributions Received	71,760
Net Investment Income—Note B	71,760
Realized Net Gain (Loss)
Capital Gain Distributions Received	—
Investment Securities Sold	4,081
Realized Net Gain (Loss)	4,081
Change in Unrealized Appreciation (Depreciation) of Investment Securities	61,643
Net Increase (Decrease) in Net Assets Resulting from Operations	137,484

LifeStrategy Income Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	71,760	63,568
Realized Net Gain (Loss)	4,081	8,495
Change in Unrealized Appreciation (Depreciation)	61,643	64,199
Net Increase (Decrease) in Net Assets Resulting from Operations	137,484	136,262
Distributions
Net Investment Income	(70,696)	(63,294)
Realized Capital Gain¹	(8,121)	—
Total Distributions	(78,817)	(63,294)
Capital Share Transactions—Note E
Issued	479,041	336,154
Issued in Lieu of Cash Distributions	73,744	58,819
Redeemed	(392,021)	(553,945)
Net Increase (Decrease) from Capital Share Transactions	160,764	(158,972)
Total Increase (Decrease)	219,431	(86,004)
Net Assets
Beginning of Period	1,665,605	1,751,609
End of Period²	1,885,036	1,665,605

1 Includes fiscal 2007 short-term gain distributions totaling $3,344,000. Short-term gain distributions are treated as ordinary income dividends for tax purposes.

2 Net Assets—End of Period includes undistributed net investment income of $8,036,000 and $6,972,000.

LifeStrategy Income Fund

Financial Highlights

	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$13.97	$13.38	$13.39	$13.03	$12.28
Investment Operations
Net Investment Income	.570	.53	.47	.43	.44
Capital Gain Distributions Received	—	—	—	.01	—
Net Realized and Unrealized Gain (Loss)
on Investments	.538	.58	(.02)	.35	.76
Total from Investment Operations	1.108	1.11	.45	.79	1.20
Distributions
Dividends from Net Investment Income	(.570)	(.52)	(.46)	(.43)	(.45)
Distributions from Realized Capital Gains	(.068)	—	—	—	—
Total Distributions	(.638)	(.52)	(.46)	(.43)	(.45)
Net Asset Value, End of Period	$14.44	$13.97	$13.38	$13.39	$13.03


Total Return¹	8.14%	8.49%	3.39%	6.15%	9.95%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$1,885	$1,666	$1,752	$1,611	$1,305
Ratio of Expenses to
Average Net Assets—Note B	0%²	0%	0%	0%	0%
Ratio of Net Investment Income to
Average Net Assets	4.07%	3.85%	3.47%	3.31%	3.53%
Portfolio Turnover Rate	8%	14%	6%	4%	4%

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 The acquired fund fees and expenses were 0.24%.

See accompanying Notes, which are an integral part of the Financial Statements.

LifeStrategy Income Fund

Notes to Financial Statements

Vanguard LifeStrategy Income Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard STAR^®Funds. The fund follows a balanced investment strategy by investing in selected Vanguard funds to achieve its targeted allocation of assets to U.S. stocks, bonds, and short-term reserves.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

For tax purposes, at October 31, 2007, the fund had $9,940,000 of ordinary income and $1,804,000 of long-term capital gains available for distribution.

At October 31, 2007, the cost of investment securities for tax purposes was $1,688,752,000. Net unrealized appreciation of investment securities for tax purposes was $199,357,000, consisting of unrealized gains of $210,086,000 on securities that had risen in value since their purchase and $10,729,000 in unrealized losses on securities that had fallen in value since their purchase.

D. During the year ended October 31, 2007, the fund purchased $304,494,000 of investment securities and sold $143,225,000 of investment securities other than temporary cash investments.

LifeStrategy Income Fund

E. Capital shares issued and redeemed were:

	Year Ended October 31,
	2007	2006
	Shares	Shares
	(000)	(000)
Issued	33,884	24,760
Issued in Lieu of Cash Distributions	5,255	4,362
Redeemed	(27,763)	(40,824)
Net Increase (Decrease) in Shares Outstanding	11,376	(11,702)

LifeStrategy Conservative Growth Fund

Fund Profile

As of October 31, 2007

Financial Attributes

Yield	3.36%
Acquired Fund Fees and Expenses¹	0.24%

Volatility Measures²
	Fund Versus
	Composite Index³
R-Squared	0.98
Beta	1.13

Allocation to Underlying Vanguard Funds

Total Bond Market Index Fund	29.8%
Asset Allocation Fund	25.0
Total Stock Market Index Fund	20.1
Short-Term Investment-Grade Fund	19.9
Total International Stock Index Fund	5.2

Equity Investment Focus

Fixed Income Investment Focus

Fund Asset Allocation

2 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 52.

3 40% Lehman U.S. Aggregate Bond Index, 35% Dow Jones Wilshire 5000 Index, 20% Citigroup 3-Month Treasury Index, and 5% MSCI EAFE Index through August 31, 2003; 40% Lehman U.S. Aggregate Bond Index, 35% Dow Jones Wilshire 5000 Index, 20% Lehman 1–3 Year U.S. Credit Index, and 5% MSCI EAFE Index through April 22, 2005; and 40% Lehman U.S. Aggregate Bond Index, 35% MSCI US Broad Market Index, 20% Lehman 1–3 Year U.S. Credit Index, and 5% MSCI EAFE Index thereafter.

LifeStrategy Conservative Growth Fund

Performance Summary

Cumulative Performance: October 31, 1997–October 31, 2007

Initial Investment of $10,000

	Average Annual Total Returns			Final Value
	Periods Ended October 31, 2007			of a $10,000
	One Year	Five Years	Ten Years	Investment
LifeStrategy Conservative Growth Fund¹	10.84%	9.83%	7.06%	$19,783
Lehman U.S. Aggregate Bond Index	5.38	4.41	5.91	17,756
Dow Jones Wilshire 5000 Index	15.28	15.31	7.44	20,495
Conservative Growth Composite Index²	9.71	8.85	6.49	18,751
Conservative Growth Composite Average³	9.67	8.69	5.64	17,313

1 Total return figures do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 40% Lehman U.S. Aggregate Bond Index, 35% Dow Jones Wilshire 5000 Index, 20% Citigroup 3-Month Treasury Index, and 5% MSCI EAFE Index through August 31, 2003; 40% Lehman U.S. Aggregate Bond Index, 35% Dow Jones Wilshire 5000 Index, 20% Lehman 1–3 Year U.S. Credit Index, and 5% MSCI EAFE Index through April 22, 2005; and 40% Lehman U.S. Aggregate Bond Index, 35% MSCI US Broad Market Index, 20% Lehman 1–3 Year U.S. Credit Index, and 5% MSCI EAFE Index thereafter.

3 A composite fund average weighted 40% average fixed income fund, 35% average general equity fund, 20% average money market fund, and 5% average international fund. Derived from data provided by Lipper Inc.

LifeStrategy Conservative Growth Fund

Fiscal-Year Total Returns (%): October 31, 1997–October 31, 2007
				Conservative
				Growth
Fiscal	Capital	Income	Total	Composite
Year	Return	Return	Return	Index¹
1998	8.5%	4.5%	13.0%	11.0%
1999	5.5	4.5	10.0	11.0
2000	2.5	4.8	7.3	7.0
2001	–7.6	4.3	–3.3	–4.6
2002	–7.7	3.6	–4.1	–2.5
2003	10.6	3.4	14.0	12.2
2004	4.7	2.8	7.5	7.2
2005	2.8	3.0	5.8	5.2
2006	7.8	3.4	11.2	10.1
2007	7.2	3.6	10.8	9.7

Average Annual Total Returns: Periods Ended September 30, 2007

						Ten Years
	Inception Date	One Year	Five Years	Capital	Income	Total
LifeStrategy Conservative
Growth Fund²	9/30/1994	11.31%	10.29%	3.04%	3.80%	6.84%

1 40% Lehman U.S. Aggregate Bond Index, 35% Dow Jones Wilshire 5000 Index, 20% Citigroup 3-Month Treasury Index, and 5% MSCI EAFE Index through August 31, 2003; 40% Lehman U.S. Aggregate Bond Index, 35% Dow Jones Wilshire 5000 Index, 20% Lehman 1–3 Year U.S. Credit Index, and 5% MSCI EAFE Index through April 22, 2005; and 40% Lehman U.S. Aggregate Bond Index, 35% MSCI US Broad Market Index, 20% Lehman 1–3 Year U.S. Credit Index, and 5% MSCI EAFE Index thereafter.

2 Total return figures do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

Note: See Financial Highlights table on page 24 for dividend and capital gains information.

LifeStrategy Conservative Growth Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

		Market
		Value^•
	Shares	($000)
Investment Companies (100.1%)
U.S. Stock Fund (20.1%)
Vanguard Total Stock Market Index Fund Investor Shares	37,797,644	1,415,144

International Stock Fund (5.2%)
Vanguard Total International Stock Index Fund	16,674,731	365,010

Balanced Fund (25.0%)
Vanguard Asset Allocation Fund Investor Shares	56,102,246	1,765,537

Bond Fund (29.9%)
Vanguard Total Bond Market Index Fund Investor Shares	210,215,845	2,108,465

Short-Term Bond Fund (19.9%)
Vanguard Short-Term Investment-Grade Fund Investor Shares	132,064,278	1,401,202
Total Investments (Cost $5,908,777)		7,055,358
Other Assets and Liabilities (–0.1%)
Other Assets		19,917
Liabilities		(31,655)
		(11,738)
Net Assets (100%)
Applicable to 399,996,611 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)		7,043,620
Net Asset Value Per Share		$17.61

At October 31, 2007, net assets consisted of:¹
	Amount	Per
	($000)	Share
Paid-in Capital	5,870,599	$14.67
Undistributed Net Investment Income	22,889	.06
Accumulated Net Realized Gains	3,551	.01
Unrealized Appreciation	1,146,581	2.87
Net Assets	7,043,620	$17.61

• See Note A in Notes to Financial Statements.

1 See Note C in Notes to Financial Statements for the tax-basis components of net assets.

LifeStrategy Conservative Growth Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Income Distributions Received	219,319
Net Investment Income—Note B	219,319
Realized Net Gain (Loss)
Capital Gain Distributions Received	—
Investment Securities Sold	8,734
Realized Net Gain (Loss)	8,734
Change in Unrealized Appreciation (Depreciation) of Investment Securities	424,584
Net Increase (Decrease) in Net Assets Resulting from Operations	652,637

LifeStrategy Conservative Growth Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	219,319	148,299
Realized Net Gain (Loss)	8,734	6,680
Change in Unrealized Appreciation (Depreciation)	424,584	347,065
Net Increase (Decrease) in Net Assets Resulting from Operations	652,637	502,044
Distributions
Net Investment Income	(213,606)	(142,715)
Realized Capital Gain	—	—
Total Distributions	(213,606)	(142,715)
Capital Share Transactions—Note E
Issued	2,532,740	1,570,776
Issued in Lieu of Cash Distributions	208,599	138,928
Redeemed	(1,463,169)	(821,888)
Net Increase (Decrease) from Capital Share Transactions	1,278,170	887,816
Total Increase (Decrease)	1,717,201	1,247,145
Net Assets
Beginning of Period	5,326,419	4,079,274
End of Period¹	7,043,620	5,326,419

1 Net Assets—End of Period includes undistributed net investment income of $22,889,000 and $17,176,000.

LifeStrategy Conservative Growth Fund

Financial Highlights

	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$16.43	$15.24	$14.83	$14.17	$12.81
Investment Operations
Net Investment Income	.58	.50	.44	.40	.39
Capital Gain Distributions Received	—	—	—	.01	—
Net Realized and Unrealized Gain (Loss)
on Investments	1.17	1.18	.41	.64	1.37
Total from Investment Operations	1.75	1.68	.85	1.05	1.76
Distributions
Dividends from Net Investment Income	(.57)	(.49)	(.44)	(.39)	(.40)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.57)	(.49)	(.44)	(.39)	(.40)
Net Asset Value, End of Period	$17.61	$16.43	$15.24	$14.83	$14.17


Total Return¹	10.84%	11.23%	5.77%	7.49%	13.99%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$7,044	$5,326	$4,079	$3,463	$2,795
Ratio of Expenses to
Average Net Assets—Note B	0%²	0%	0%	0%	0%
Ratio of Net Investment Income to
Average Net Assets	3.40%	3.21%	2.95%	2.74%	2.92%
Portfolio Turnover Rate	10%	4%	7%	5%	5%

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 The acquired fund fees and expenses were 0.24%.

See accompanying Notes, which are an integral part of the Financial Statements.

LifeStrategy Conservative Growth Fund

Notes to Financial Statements

Vanguard LifeStrategy Conservative Growth Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard STAR Funds. The fund follows a balanced investment strategy by investing in selected Vanguard funds to achieve its targeted allocation of assets to U.S. stocks, international stocks, bonds, and short-term reserves.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

The fund used a capital loss carryforward of $5,607,000 to offset taxable capital gains realized during the year ended October 31, 2007, reducing the amount of capital gains that would otherwise be available to distribute to shareholders. For tax purposes, at October 31, 2007, the fund had $26,748,000 of ordinary income and no long-term capital gains available for distribution.

At October 31, 2007, the cost of investment securities for tax purposes was $5,909,085,000. Net unrealized appreciation of investment securities for tax purposes was $1,146,273,000, consisting of unrealized gains of $1,153,287,000 on securities that had risen in value since their purchase and $7,014,000 in unrealized losses on securities that had fallen in value since their purchase.

D. During the year ended October 31, 2007, the fund purchased $1,945,702,000 of investment securities and sold $636,097,000 of investment securities other than temporary cash investments.

LifeStrategy Conservative Growth Fund

E. Capital shares issued and redeemed were:

	Year Ended October 31,
	2007	2006
	Shares	Shares
	(000)	(000)
Issued	149,769	99,714
Issued in Lieu of Cash Distributions	12,327	8,898
Redeemed	(86,238)	(52,170)
Net Increase (Decrease) in Shares Outstanding	75,858	56,442

LifeStrategy Moderate Growth Fund

Fund Profile

As of October 31, 2007

Financial Attributes

Yield	2.72%
Acquired Fund Fees and Expenses¹	0.23%

Volatility Measures²
	Fund Versus
	Composite Index³
R-Squared	0.99
Beta	1.10

Allocation to Underlying Vanguard Funds

Total Stock Market Index Fund	34.8%
Total Bond Market Index Fund	29.9
Asset Allocation Fund	25.0
Total International Stock Index Fund	10.3

Equity Investment Focus

Fixed Income Investment Focus

Fund Asset Allocation

2 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 52.

3 50% Dow Jones Wilshire 5000 Index, 40% Lehman U.S. Aggregate Bond Index, and 10% MSCI EAFE Index through April 22, 2005; and 50% MSCI US Broad Market Index, 40% Lehman U.S. Aggregate Bond Index, and 10% MSCI EAFE Index thereafter.

LifeStrategy Moderate Growth Fund

Performance Summary

Cumulative Performance: October 31, 1997–October 31, 2007

Initial Investment of $10,000

	Average Annual Total Returns			Final Value
	Periods Ended October 31, 2007			of a $10,000
	One Year	Five Years	Ten Years	Investment
LifeStrategy Moderate Growth Fund¹	13.55%	12.55%	7.67%	$20,933
Dow Jones Wilshire 5000 Index	15.28	15.31	7.44	20,495
Lehman U.S. Aggregate Bond Index	5.38	4.41	5.91	17,756
Moderate Growth Composite Index²	12.11	11.67	7.33	20,287
Moderate Growth Composite Average³	12.54	11.58	6.49	18,755

1 Total return figures do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 50% Dow Jones Wilshire 5000 Index, 40% Lehman U.S. Aggregate Bond Index, and 10% MSCI EAFE Index through April 22, 2005; and 50% MSCI US Broad Market Index, 40% Lehman U.S. Aggregate Bond Index, and 10% MSCI EAFE Index thereafter.

3 A composite fund average weighted 50% average general equity fund, 40% average fixed income fund, and 10% average international fund. Derived from data provided by Lipper Inc.

LifeStrategy Moderate Growth Fund

Fiscal-Year Total Returns (%): October 31, 1997–October 31, 2007
				Moderate
				Growth
Fiscal	Capital	Income	Total	Composite
Year	Return	Return	Return	Index¹
1998	10.8%	3.5%	14.3%	12.8%
1999	10.7	3.6	14.3	15.0
2000	3.8	3.4	7.2	6.9
2001	–13.7	3.0	–10.7	–10.9
2002	–10.1	2.8	–7.3	–5.5
2003	15.0	3.1	18.1	16.9
2004	6.9	2.5	9.4	9.1
2005	5.4	2.6	8.0	7.5
2006	11.1	3.0	14.1	13.0
2007	10.6	3.0	13.6	12.1

Average Annual Total Returns: Periods Ended September 30, 2007

						Ten Years
	Inception Date	One Year	Five Years	Capital	Income	Total
LifeStrategy Moderate Growth Fund²	9/30/1994	14.31%	13.29%	4.24%	3.04%	7.28%

1 50% Dow Jones Wilshire 5000 Index, 40% Lehman U.S. Aggregate Bond Index, and 10% MSCI EAFE Index through April 22, 2005; and 50% MSCI US Broad Market Index, 40% Lehman U.S. Aggregate Bond Index, and 10% MSCI EAFE Index thereafter.

2 Total return figures do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

Note: See Financial Highlights table on page 34 for dividend and capital gains information.

LifeStrategy Moderate Growth Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

		Market
		Value^•
	Shares	($000)
Investment Companies (100.1%)
U.S. Stock Fund (34.9%)
Vanguard Total Stock Market Index Fund Investor Shares	105,175,282	3,937,763

International Stock Fund (10.3%)
Vanguard Total International Stock Index Fund	52,938,740	1,158,829

Balanced Fund (25.0%)
Vanguard Asset Allocation Fund Investor Shares	89,507,292	2,816,794

Bond Fund (29.9%)
Vanguard Total Bond Market Index Fund Investor Shares	335,858,379	3,368,660
Total Investment Companies (Cost $8,453,030)		11,282,046
Other Assets and Liabilities (–0.1%)
Other Assets		27,752
Liabilities		(37,529)
		(9,777)
Net Assets (100%)
Applicable to 507,514,634 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)		11,272,269
Net Asset Value Per Share		$22.21

At October 31, 2007, net assets consisted of:¹
	Amount	Per
	($000)	Share
Paid-in Capital	8,352,900	$16.47
Undistributed Net Investment Income	78,328	.15
Accumulated Net Realized Gains	12,025	.02
Unrealized Appreciation	2,829,016	5.57
Net Assets	11,272,269	$22.21

• See Note A in Notes to Financial Statements.

1 See Note C in Notes to Financial Statements for the tax-basis components of net assets.

LifeStrategy Moderate Growth Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Income Distributions Received	293,198
Net Investment Income—Note B	293,198
Realized Net Gain (Loss)
Capital Gain Distributions Received	—
Investment Securities Sold	18,635
Realized Net Gain (Loss)	18,635
Change in Unrealized Appreciation (Depreciation) of Investment Securities	1,006,051
Net Increase (Decrease) in Net Assets Resulting from Operations	1,317,884

LifeStrategy Moderate Growth Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	293,198	230,205
Realized Net Gain (Loss)	18,635	17,599
Change in Unrealized Appreciation (Depreciation)	1,006,051	882,180
Net Increase (Decrease) in Net Assets Resulting from Operations	1,317,884	1,129,984
Distributions
Net Investment Income	(274,151)	(221,290)
Realized Capital Gain	—	—
Total Distributions	(274,151)	(221,290)
Capital Share Transactions—Note E
Issued	2,350,057	2,000,890
Issued in Lieu of Cash Distributions	270,796	218,740
Redeemed	(1,855,708)	(1,443,071)
Net Increase (Decrease) from Capital Share Transactions	765,145	776,559
Total Increase (Decrease)	1,808,878	1,685,253
Net Assets
Beginning of Period	9,463,391	7,778,138
End of Period¹	11,272,269	9,463,391

1 Net Assets—End of Period includes undistributed net investment income of $78,328,000 and $59,281,000.

LifeStrategy Moderate Growth Fund

Financial Highlights

	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$20.09	$18.09	$17.17	$16.06	$13.96
Investment Operations
Net Investment Income	.58	.51	.47	.39	.345
Capital Gain Distributions Received	—	—	—	.03	—
Net Realized and Unrealized Gain (Loss)
on Investments	2.10	1.99	.89	1.07	2.130
Total from Investment Operations	2.68	2.50	1.36	1.49	2.475
Distributions
Dividends from Net Investment Income	(.56)	(.50)	(.44)	(.38)	(.375)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.56)	(.50)	(.44)	(.38)	(.375)
Net Asset Value, End of Period	$22.21	$20.09	$18.09	$17.17	$16.06


Total Return¹	13.55%	14.09%	7.97%	9.37%	18.06%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$11,272	$9,463	$7,778	$6,596	$5,246
Ratio of Expenses to
Average Net Assets—Note B	0%²	0%	0%	0%	0%
Ratio of Net Investment Income to
Average Net Assets	2.81%	2.70%	2.61%	2.36%	2.39%
Portfolio Turnover Rate	7%	8%	8%	6%	5%

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 The acquired fund fees and expenses were 0.23%.

See accompanying Notes, which are an integral part of the Financial Statements.

LifeStrategy Moderate Growth Fund

Notes to Financial Statements

Vanguard LifeStrategy Moderate Growth Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard STAR Funds. The fund follows a balanced investment strategy by investing in selected Vanguard funds to achieve its targeted allocation of assets to U.S. stocks, international stocks, bonds, and short-term reserves.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

The fund used a capital loss carryforward of $5,204,000 to offset taxable capital gains realized during the year ended October 31, 2007, reducing the amount of capital gains that would otherwise be available to distribute to shareholders. For tax purposes, at October 31, 2007, the fund had $83,075,000 of ordinary income and $7,277,000 of long-term capital gains available for distribution.

At October 31, 2007, the cost of investment securities for tax purposes was $8,453,030,000. Net unrealized appreciation of investment securities for tax purposes was $2,829,016,000, consisting entirely of unrealized gains on securities that had risen in value since their purchase.

D. During the year ended October 31, 2007, the fund purchased $1,593,334,000 of investment securities and sold $779,134,000 of investment securities, other than temporary cash investments.

LifeStrategy Moderate Growth Fund

E. Capital shares issued and redeemed were:

	Year Ended October 31,
	2007	2006
	Shares	Shares
	(000)	(000)
Issued	111,993	105,376
Issued in Lieu of Cash Distributions	13,031	11,859
Redeemed	(88,517)	(76,272)
Net Increase (Decrease) in Shares Outstanding	36,507	40,963

LifeStrategy Growth Fund

Fund Profile

As of October 31, 2007

Financial Attributes

Yield	2.05%
Acquired Fund Fees and Expenses¹	0.23%

Volatility Measures²
	Fund Versus
	Composite Index³
R-Squared	1.00
Beta	1.09

Allocation to Underlying Vanguard Funds

Total Stock Market Index Fund	49.7%
Asset Allocation Fund	24.9
Total International Stock Index Fund	15.6
Total Bond Market Index Fund	9.8

Equity Investment Focus

Fixed Income Investment Focus

Fund Asset Allocation

2 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 52.

3 65% Dow Jones Wilshire 5000 Index, 20% Lehman U.S. Aggregate Bond Index, and 15% MSCI EAFE Index through April 22, 2005; and 65% MSCI US Broad Market Index, 20% Lehman U.S. Aggregate Bond Index, and 15% MSCI EAFE Index thereafter.

LifeStrategy Growth Fund

Performance Summary

Cumulative Performance: October 31, 1997–October 31, 2007

Initial Investment of $10,000

	Average Annual Total Returns			Final Value
	Periods Ended October 31, 2007			of a $10,000
	One Year	Five Years	Ten Years	Investment
LifeStrategy Growth Fund¹	16.32%	15.19%	8.02%	$21,628
Dow Jones Wilshire 5000 Index	15.28	15.31	7.44	20,495
Growth Composite Index²	14.54	14.22	7.63	20,853
Growth Composite Average³	15.44	13.92	6.94	19,564

1 Total return figures do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 65% Dow Jones Wilshire 5000 Index, 20% Lehman U.S. Aggregate Bond Index, and 15% MSCI EAFE Index through April 22, 2005; and 65% MSCI US Broad Market Index, 20% Lehman U.S. Aggregate Bond Index, and 15% MSCI EAFE Index thereafter.

3 A composite fund average weighted 65% average general equity fund, 20% average fixed income fund, and 15% average international fund. Derived from data provided by Lipper Inc.

LifeStrategy Growth Fund

Fiscal-Year Total Returns (%): October 31, 1997–October 31, 2007
				Growth
Fiscal	Capital	Income	Total	Composite
Year	Return	Return	Return	Index¹
1998	12.2%	2.6%	14.8%	13.5%
1999	16.6	2.8	19.4	20.0
2000	4.3	2.5	6.8	6.4
2001	–20.1	1.9	–18.2	–18.4
2002	–12.7	1.8	–10.9	–9.4
2003	19.9	2.2	22.1	20.9
2004	8.8	1.9	10.7	10.4
2005	8.1	2.2	10.3	9.8
2006	14.5	2.4	16.9	15.8
2007	13.9	2.4	16.3	14.5

Average Annual Total Returns: Periods Ended September 30, 2007

				Ten Years
	Inception Date	One Year	Five Years	Capital	Income	Total
LifeStrategy Growth Fund²	9/30/1994	17.28%	16.17%	5.19%	2.26%	7.45%

1 65% Dow Jones Wilshire 5000 Index, 20% Lehman U.S. Aggregate Bond Index, and 15% MSCI EAFE Index through April 22, 2005; and 65% MSCI US Broad Market Index, 20% Lehman U.S. Aggregate Bond Index, and 15% MSCI EAFE Index thereafter.

2 Total return figures do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

Note: See Financial Highlights table on page 44 for dividend and capital gains information.

LifeStrategy Growth Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

		Market
		Value^•
	Shares	($000)
Investment Companies (100.0%)
U.S. Stock Fund (49.7%)
Vanguard Total Stock Market Index Fund Investor Shares	137,691,873	5,155,184

International Stock Fund (15.6%)
Vanguard Total International Stock Index Fund	73,875,910	1,617,144

Balanced Fund (24.9%)
Vanguard Asset Allocation Fund Investor Shares	81,897,244	2,577,306

Bond Fund (9.8%)
Vanguard Total Bond Market Index Fund Investor Shares	101,809,090	1,021,145
Total Investment Companies (Cost $7,204,666)		10,370,779
Other Assets and Liabilities (0.0%)
Other Assets		14,986
Liabilities		(13,702)
		1,284
Net Assets (100%)
Applicable to 390,575,176 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)		10,372,063
Net Asset Value Per Share		$26.56

At October 31, 2007, net assets consisted of:¹
	Amount	Per
	($000)	Share
Paid-in Capital	7,180,744	$18.38
Undistributed Net Investment Income	38,553	.10
Accumulated Net Realized Losses	(13,347)	(.03)
Unrealized Appreciation	3,166,113	8.11
Net Assets	10,372,063	$26.56

• See Note A in Notes to Financial Statements.

1 See Note C in Notes to Financial Statements for the tax-basis components of net assets.

LifeStrategy Growth Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Income Distributions Received	203,521
Net Investment Income—Note B	203,521
Realized Net Gain (Loss)
Capital Gain Distributions Received	—
Investment Securities Sold	7,256
Realized Net Gain (Loss)	7,256
Change in Unrealized Appreciation (Depreciation) of Investment Securities	1,205,218
Net Increase (Decrease) in Net Assets Resulting from Operations	1,415,995

LifeStrategy Growth Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	203,521	155,467
Realized Net Gain (Loss)	7,256	9,757
Change in Unrealized Appreciation (Depreciation)	1,205,218	1,003,198
Net Increase (Decrease) in Net Assets Resulting from Operations	1,415,995	1,168,422
Distributions
Net Investment Income	(194,349)	(152,028)
Realized Capital Gain	—	—
Total Distributions	(194,349)	(152,028)
Capital Share Transactions—Note E
Issued	1,973,518	1,689,483
Issued in Lieu of Cash Distributions	192,075	150,342
Redeemed	(1,437,481)	(1,038,605)
Net Increase (Decrease) from Capital Share Transactions	728,112	801,220
Total Increase (Decrease)	1,949,758	1,817,614
Net Assets
Beginning of Period	8,422,305	6,604,691
End of Period¹	10,372,063	8,422,305

1 Net Assets—End of Period includes undistributed net investment income of $38,553,000 and $29,381,000.

LifeStrategy Growth Fund

Financial Highlights

	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$23.32	$20.37	$18.84	$17.32	$14.45
Investment Operations
Net Investment Income	.54	.45	.42	.32	.28
Capital Gain Distributions Received	—	—	—	.16	—
Net Realized and Unrealized Gain (Loss)
on Investments	3.22	2.95	1.51	1.36	2.87
Total from Investment Operations	3.76	3.40	1.93	1.84	3.15
Distributions
Dividends from Net Investment Income	(.52)	(.45)	(.40)	(.32)	(.28)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.52)	(.45)	(.40)	(.32)	(.28)
Net Asset Value, End of Period	$26.56	$23.32	$20.37	$18.84	$17.32


Total Return¹	16.32%	16.94%	10.30%	10.70%	22.12%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$10,372	$8,422	$6,605	$5,535	$4,422
Ratio of Expenses to
Average Net Assets—Note B	0%²	0%	0%	0%	0%
Ratio of Net Investment Income to
Average Net Assets	2.15%	2.07%	2.09%	1.79%	1.79%
Portfolio Turnover Rate	4%	3%	4%	5%	2%

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

2 The acquired fund fees and expenses were 0.23%.

See accompanying Notes, which are an integral part of the Financial Statements.

LifeStrategy Growth Fund

Notes to Financial Statements

Vanguard LifeStrategy Growth Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard STAR Funds. The fund follows a balanced investment strategy by investing in selected Vanguard funds to achieve its targeted allocation of assets to U.S. stocks, international stocks, bonds, and short-term reserves.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

For tax purposes, at October 31, 2007, the fund had $37,344,000 of ordinary income available for distribution. The fund had available realized losses of $12,138,000 to offset future net capital gains of $9,185,000 through October 31, 2010, and $2,953,000 through October 31, 2011.

At October 31, 2007, the cost of investment securities for tax purposes was $7,204,666,000. Net unrealized appreciation of investment securities for tax purposes was $3,166,113,000, consisting entirely of unrealized gains on securities that had risen in value since their purchase.

D. During the year ended October 31, 2007, the fund purchased $1,084,396,000 of investment securities and sold $329,474,000 of investment securities, other than temporary cash investments.

LifeStrategy Growth Fund

E. Capital shares issued and redeemed were:

	Year Ended October 31,
	2007	2006
	Shares	Shares
	(000)	(000)
Issued	79,793	77,515
Issued in Lieu of Cash Distributions	7,827	7,132
Redeemed	(58,141)	(47,727)
Net Increase (Decrease) in Shares Outstanding	29,479	36,920

Report of Independent Registered

Public Accounting Firm

To the Trustees of Vanguard STAR Funds and the Shareholders of Vanguard LifeStrategy Income Fund, Vanguard LifeStrategy Conservative Growth Fund, Vanguard LifeStrategy Moderate Growth Fund and Vanguard LifeStrategy Growth 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 LifeStrategy Income Fund, Vanguard LifeStrategy Conservative Growth Fund, Vanguard LifeStrategy Moderate Growth Fund and Vanguard LifeStrategy Growth Fund (separate portfolios of Vanguard STAR Funds, hereafter referred to as the “Funds”) at October 31, 2007, 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 five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 October 31, 2007 by agreement to the underlying ownership records for the Vanguard funds, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

December 6, 2007

Special 2007 tax information (unaudited) for Vanguard LifeStrategy Funds

This information for the fiscal year ended October 31, 2007, is included pursuant to provisions of the Internal Revenue Code.

The funds distributed qualified dividend income to shareholders during the fiscal year as follows:

	Qualified Dividend Income
LifeStrategy Fund	($000)
Income	7,346
Conservative Growth	47,487
Moderate Growth	107,366
Growth	127,500

The funds distributed capital gain dividends (from net long-term capital gains) to shareholders during the fiscal year as follows:

	Capital Gains
LifeStrategy Fund	($000)
Income	4,777
Conservative Growth	—
Moderate Growth	—
Growth	—

For corporate shareholders, the percentage of investment income (dividend income plus short-term gains, if any) that qualifies for the dividends-received deduction is as follows:

LifeStrategy Fund	Percentage
Income	10.0%
Conservative Growth	18.7
Moderate Growth	31.1
Growth	52.2

Your Fund’s After-Tax Returns

Finally, keep in mind that a fund’s performance—whether before or after taxes—does not guarantee future results.

Average Annual Total Returns: Vanguard LifeStrategy Funds¹
Periods Ended October 31, 2007
	One	Five	Ten
	Year	Years	Years
LifeStrategy Income Fund
Returns Before Taxes	8.14%	7.20%	6.46%
Returns After Taxes on Distributions	6.60	5.91	4.64
Returns After Taxes on Distributions and Sale of Fund Shares	5.39	5.46	4.44


LifeStrategy Conservative Growth Fund
Returns Before Taxes	10.84%	9.83%	7.06%
Returns After Taxes on Distributions	9.71	8.82	5.54
Returns After Taxes on Distributions and Sale of Fund Shares	7.17	7.96	5.18


LifeStrategy Moderate Growth Fund
Returns Before Taxes	13.55%	12.55%	7.67%
Returns After Taxes on Distributions	12.73	11.75	6.47
Returns After Taxes on Distributions and Sale of Fund Shares	8.99	10.52	5.95


LifeStrategy Growth Fund
Returns Before Taxes	16.32%	15.19%	8.02%
Returns After Taxes on Distributions	15.79	14.66	7.13
Returns After Taxes on Distributions and Sale of Fund Shares	10.87	13.10	6.51

1 Total return figures do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

About Your Fund’s Expenses

A typical fund’s expenses are expressed as a percentage of its average net assets. The LifeStrategy Funds have no direct expenses, but each fund bears its proportionate share of the expenses of the underlying funds in which it invests. These indirect expenses make up the fund’s acquired fund fees and expenses, also expressed as a percentage of average net assets.

The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The costs are calculated using each fund’s acquired fund fees and expenses.

The table on page 51 illustrates your fund’s costs in two ways:

Six Months Ended October 31, 2007
	Beginning	Ending	Expenses
	Account Value	Account Value	Paid During
	4/30/2007	10/31/2007	Period¹
Based on Actual Fund Return
LifeStrategy Income Fund	$1,000.00	$1,035.73	$1.23
LifeStrategy Conservative Growth Fund	1,000.00	1,046.11	1.24
LifeStrategy Moderate Growth Fund	1,000.00	1,056.00	1.19
LifeStrategy Growth Fund	1,000.00	1,066.08	1.20
Based on Hypothetical 5% Yearly Return
LifeStrategy Income Fund	$1,000.00	$1,024.00	$1.22
LifeStrategy Conservative Growth Fund	1,000.00	1,024.00	1.22
LifeStrategy Moderate Growth Fund	1,000.00	1,024.05	1.17
LifeStrategy Growth Fund	1,000.00	1,024.05	1.17

1 The calculations are based on the acquired fund fees and expenses for the most recent six-month period. The LifeStrategy Funds’ acquired fund fees and expenses as of October 31, 2007, are (in order as listed from top to bottom above) 0.24%, 0.24%, 0.23%, and 0.23%. The dollar amounts shown as “Expenses Paid” are equal to the annualized average weighted expense ratio for the underlying funds, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period.

Glossary

Equity Exposure. A measure that reflects a fund’s investments in stocks and stock futures. Any holdings in short-term reserves are excluded.

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.

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The People Who Govern Your Fund

Chairman of the Board, Chief Executive Officer, and Trustee

John J. Brennan¹
Born 1954	Principal Occupation(s) During the Past Five Years: Chairman of the Board, Chief Executive
Trustee since May 1987;	Officer, and Director/Trustee of The Vanguard Group, Inc., and of each of the investment
Chairman of the Board and	companies served by The Vanguard Group.
Chief Executive Officer
148 Vanguard Funds Overseen

Independent Trustees

Charles D. Ellis
Born 1937	Principal Occupation(s) During the Past Five Years: Applecore Partners (pro bono ventures
Trustee since January 2001	in education); Senior Advisor to Greenwich Associates (international business strategy
148 Vanguard Funds Overseen	consulting); Successor Trustee of Yale University; Overseer of the Stern School of Business
	at New York University; Trustee of the Whitehead Institute for Biomedical Research.

Rajiv L. Gupta
Born 1945	Principal Occupation(s) During the Past Five Years: Chairman, President, and
Trustee since December 2001²	Chief Executive Officer of Rohm and Haas Co. (chemicals); Board Member of
148 Vanguard Funds Overseen	the American Chemistry Council; Director of Tyco International, Ltd. (diversified
	manufacturing and services) since 2005; Trustee of Drexel University and of the
	Chemical Heritage Foundation.

Amy Gutmann
Born 1949	Principal Occupation(s) During the Past Five Years: President of the University of
Trustee since June 2006	Pennsylvania since 2004; Professor in the School of Arts and Sciences, Annenberg School
148 Vanguard Funds Overseen	for Communication, and Graduate School of Education of the University of Pennsylvania
	since 2004; Provost (2001–2004) and Laurance S. Rockefeller Professor of Politics and
	the University Center for Human Values (1990–2004), Princeton University; Director of
	Carnegie Corporation of New York since 2005 and of Schuylkill River Development
	Corporation and Greater Philadelphia Chamber of Commerce since 2004.

JoAnn Heffernan Heisen
Born 1950	Principal Occupation(s) During the Past Five Years: Corporate Vice President and
Trustee since July 1998	Chief Global Diversity Officer since 2006, Vice President and Chief Information
148 Vanguard Funds Overseen	Officer (1997–2005), and Member of the Executive Committee of Johnson &
	Johnson (pharmaceuticals/consumer products); Director of the University Medical
	Center at Princeton and Women’s Research and Education Institute.

André F. Perold
Born 1952	Principal Occupation(s) During the Past Five Years: George Gund Professor of Finance
Trustee since December 2004	and Banking, Harvard Business School; Senior Associate Dean, Director of Faculty
148 Vanguard Funds Overseen	Recruiting, and Chair of Finance Faculty, Harvard Business School; Director and Chairman
	of UNX, Inc. (equities trading firm) since 2003; Chair of the Investment Committee of
	HighVista Strategies LLC (private investment firm) since 2005.

Alfred M. Rankin, Jr.
Born 1941	Principal Occupation(s) During the Past Five Years: Chairman, President, Chief Executive
Trustee since January 1993	Officer, and Director of NACCO Industries, Inc. (forklift trucks/housewares/lignite); Director
148 Vanguard Funds Overseen	of Goodrich Corporation (industrial products/aircraft systems and services).


J. Lawrence Wilson
Born 1936	Principal Occupation(s) During the Past Five Years: Retired Chairman and Chief Executive
Trustee since April 1985	Officer of Rohm and Haas Co. (chemicals); Director of Cummins Inc. (diesel engines) and
148 Vanguard Funds Overseen	AmerisourceBergen Corp. (pharmaceutical distribution); Trustee of Vanderbilt University
	and of Culver Educational Foundation.

Executive Officers¹

Thomas J. Higgins
Born 1957	Principal Occupation(s) During the Past Five Years: Principal of The Vanguard Group, Inc.;
Treasurer since July 1998	Treasurer of each of the investment companies served by The Vanguard Group.
148 Vanguard Funds Overseen


Heidi Stam
Born 1956	Principal Occupation(s) During the Past Five Years: Managing Director of The Vanguard
Secretary since July 2005	Group, Inc., since 2006; General Counsel of The Vanguard Group since 2005; Secretary of
148 Vanguard Funds Overseen	The Vanguard Group, and of each of the investment companies served by The Vanguard
	Group, since 2005; Principal of The Vanguard Group (1997–2006).

Vanguard Senior Management Team

R. Gregory Barton	Kathleen C. Gubanich	F. William McNabb, III	Ralph K. Packard
Mortimer J. Buckley	Paul A. Heller	Michael S. Miller	George U. Sauter

Founder

John C. Bogle

Chairman and Chief Executive Officer, 1974–1996

1 Officers of the funds are “interested persons” as defined in the Investment Company Act of 1940.

2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard State Tax-Exempt Funds.

More information about the trustees is in the Statement of Additional Information, available from The Vanguard Group.

P.O. Box 2600

Valley Forge, PA 19482-2600

Connect with Vanguard^®> www.vanguard.com

Fund Information > 800-662-7447	Vanguard, LifeStrategy, STAR, Connect with Vanguard, and
	the ship logo are trademarks of The Vanguard Group, Inc.
Direct Investor Account Services > 800-662-2739
	All other marks are the exclusive property of their
Institutional Investor Services > 800-523-1036	respective owners.

Text Telephone for People
With Hearing Impairment > 800-952-3335	All comparative mutual fund data are from Lipper Inc.
	or Morningstar, Inc., unless otherwise noted.


	You can obtain a free copy of Vanguard’s proxy voting
	guidelines by visiting our website, www.vanguard.com,
This material may be used in conjunction	and searching for “proxy voting guidelines,” or by
with the offering of shares of any Vanguard	calling Vanguard at 800-662-2739. The guidelines are
fund only if preceded or accompanied by	also available from the SEC’s website, www.sec.gov.
the fund’s current prospectus.	In addition, you may obtain a free report on how your
	fund voted the proxies for securities it owned during
	the 12 months ended June 30. To get the report, visit
	either www.vanguard.com or www.sec.gov.



	You can review and copy information about your fund
	at the SEC’s Public Reference Room in Washington, D.C.
	To find out more about this public service, call the SEC
	at 202-551-8090. Information about your fund is also
	available on the SEC’s website, and you can receive
	copies of this information, for a fee, by sending a
	request in either of two ways: via e-mail addressed to
	publicinfo@sec.gov or via regular mail addressed to the
	Public Reference Section, Securities and Exchange
	Commission, Washington, DC 20549-0102.





	© 2007 The Vanguard Group, Inc.
	All rights reserved.
	Vanguard Marketing Corporation, Distributor.

	Q880 122007

> For the fiscal year ended October 31, 2007, returns for the Vanguard International Stock Index Funds were excellent across the board. A falling U.S. dollar boosted returns for U.S. investors.

> The funds tracked their benchmarks, though adjustments for fair-value pricing provided a temporary performance advantage. All but two delivered returns that surpassed the average return for their mutual fund peers.

> The rapid industrialization of emerging market economies and a high level of mergers and acquisitions were among the factors driving international gains.

Contents

Your Fund’s Total Returns	1
Chairman’s Letter	4
European Stock Index Fund	11
Pacific Stock Index Fund	48
Emerging Markets Stock Index Fund	82
Total International Stock Index Fund	128
Developed Markets Index Fund	138
Institutional Developed Markets Index Fund	148
Your Fund’s After-Tax Returns	160
About Your Fund’s Expenses	162
Glossary	165

	European Stock Index Fund
	Pacific Stock Index Fund
	Emerging Markets Stock Index Fund
	Developed Markets Index Fund
	Institutional Developed Markets Index Fund

Your Fund’s Total Returns

Fiscal Year Ended October 31, 2007
	Ticker	Total
	Symbol	Returns
Vanguard European Stock Index Fund
Investor Shares	VEURX	28.5%
Admiral™ Shares¹	VEUSX	28.6
Signal™ Shares²	VESSX	28.6
Institutional Shares³	VESIX	28.6
ETF Shares⁴	VGK
Market Price		28.4
Net Asset Value		28.6
MSCI Europe Index		28.0
Average European Region Fund⁵		27.5


Vanguard Pacific Stock Index Fund
Investor Shares	VPACX	19.5%
Admiral Shares¹	VPADX	19.6
Signal Shares²	VPASX	5.7⁶
Institutional Shares³	VPKIX	19.7
ETF Shares⁴	VPL
Market Price		19.1
Net Asset Value		19.7
MSCI Pacific Index		18.3
Average Japan/Pacific Region Fund⁵		13.9

1 A lower-cost class of shares available to many longtime shareholders and to those with significant investments in the fund.

2 Signal Shares also carry lower costs and are available to certain institutional shareholders who meet specific administrative, service, and account-size criteria.

3 This class of shares carries low expenses and is available for a minimum initial investment of $5 million.

4 Vanguard ETF™ Shares are traded on the American Stock Exchange and are available only through brokers. The table shows the ETF returnsbased on both the AMEX market price and the net asset value for a share. U.S. Pat. No. 6,879,964 B2.

5 Derived from data provided by Lipper Inc.

6 Since inception: June 4, 2007.

Your Fund’s Total Returns

Fiscal Year Ended October 31, 2007
	Ticker	Total
	Symbol	Returns
Vanguard Emerging Markets Stock Index Fund
Investor Shares	VEIEX	69.6%
Admiral Shares¹	VEMAX	69.8
Signal Shares²	VERSX	53.4³
Institutional Shares⁴	VEMIX	69.9
ETF Shares⁵	VWO
Market Price		68.7
Net Asset Value		69.8
MSCI Emerging Markets Index		67.8
Average Emerging Markets Fund⁶		63.3


Vanguard Total International Stock Index Fund	VGTSX	32.5%
Total International Composite Index⁷		31.6
Average International Fund⁶		27.8


Vanguard Developed Markets Index Fund	VDMIX	25.7%
MSCI EAFE Index		24.9
Average International Fund⁶		27.8


Vanguard Institutional Developed Markets Index Fund	VIDMX	25.8%
MSCI EAFE Index		24.9
Average International Fund⁶		27.8

1 A lower-cost class of shares available to many longtime shareholders and to those with significant investments in the fund.

2 Signal Shares also carry lower costs and are available to certain institutional shareholders who meet specific administrative, service, and account-size criteria.

3 Since inception: January 19, 2007.

4 This class of shares carries low expenses and is available for a minimum initial investment of $5 million.

5 Vanguard ETF Shares are traded on the American Stock Exchange and are available only through brokers. The table shows the ETF returns based on both the AMEX market price and the net asset value for a share. U.S. Pat. No. 6,879,964 B2.

6 Derived from data provided by Lipper Inc.

7 Consists of the MSCI Europe Index (56%), the MSCI Pacific Index (24%), and the MSCI Emerging Markets Index (20%) as of October 31, 2007.

Your Fund’s Performance at a Glance

October 31, 2006–October 31, 2007
			Distributions Per Share
	Starting	Ending	Income	Capital
	Share Price	Share Price	Dividends	Gains
European Stock
Investor Shares	$34.67	$43.43	$0.924	$0.000
Admiral Shares	81.50	102.09	2.242	0.000
Signal Shares	31.51	39.50	0.842	0.000
Institutional Shares	34.74	43.51	0.970	0.000
ETF Shares	65.21	81.66	1.809	0.000
Pacific Stock
Investor Shares	$12.13	$14.19	$0.267	$0.000
Admiral Shares	79.43	92.94	1.817	0.000
Signal Shares	30.53¹	32.28	0.000	0.000
Institutional Shares	12.15	14.22	0.283	0.000
ETF Shares	64.24	75.17	1.473	0.000
Emerging Markets Stock
Investor Shares	$22.05	$36.78	$0.396	$0.000
Admiral Shares	29.03	48.47	0.534	0.000
Signal Shares	30.38²	46.61	0.000	0.000
Institutional Shares	22.11	36.90	0.429	0.000
ETF Shares	69.91	116.62	1.339	0.000
Total International Stock	$16.90	$21.89	$0.402	$0.000
Developed Markets	$12.15	$14.91	$0.299	$0.005
Institutional Developed Markets	$12.05	$14.79	$0.316	$0.000

1 Share price at inception: June 4, 2007.

2 Share price at inception: January 19, 2007.

Chairman’s Letter

Dear Shareholder,

Like their U.S. counterpart, international stock markets experienced sharp declines during the summer; however, the growth juggernaut in developing countries was not to be stopped. Vanguard Emerging Markets Stock Index Fund returned an eye-popping 69.6% for Investor Shares. Gains in Europe and the Pacific region were more modest, but remained well ahead of the U.S. broad market.

Results for the Vanguard International Stock Index Funds exceeded those for their respective benchmark indexes and the average returns for their peer groups, with the exception of the Vanguard Developed Markets Index Fund and its institutional counterpart, which is available at a minimum initial investment of $5 million. The funds’ outperformance relative to the benchmarks was an anomaly driven by short-term discrepancies that arose from fair-value pricing, which is described more fully below.

If you own one or more of the funds in a taxable account, you may wish to review the details of the funds’ after-tax returns on page 120.

Stocks rode a bumpy path to impressive results

The turmoil that hit stock markets during the summer arose in the arena of U.S. housing finance. Years of extending home loans to U.S. buyers with weak credit came home to roost, ruffling balance sheets across the United States and Europe, where many financial institutions invested heavily in income-oriented products based on these mortgages. Skittish investors also had to contend with soaring crude oil prices, which touched historic highs at the end of the fiscal year, and a U.S. dollar that dipped to record lows versus other major currencies.

Still, the broad U.S. stock market returned an impressive 15.3%, while gains were significantly larger in Europe and emerging markets, which also benefited from a falling dollar. In the United States, large capitalization stocks outperformed small-caps, and growth stocks outperformed value stocks—both continuing the recent months’ reversals of longer-term trends. In most markets around the globe, top performances came from stocks in the energy, materials, and industrials sectors, which have benefited from rapid industrialization in emerging market economies.

Bond investors converged on high-quality issues

As troubles in the subprime credit markets rippled across the financial markets, bond investors sought the relative safety of U.S. Treasury bonds. This “flight to quality” drove prices for Treasuries higher and yields lower, and widened the spread between Treasury yields and the much higher yields demanded by investors for riskier bonds. Declines in Treasury yields were steepest at the short end of the maturity spectrum, aided by the actions of the Federal Reserve Board. The central bank lowered the target for short-term interest rates to 4.5% in two separate rate cuts (a half-percentage-point in September and a quarter-point on October 31). The yield of the 3-month Treasury bill finished the fiscal period at 3.92% after spending much of the year near 5%; the 10-year Treasury note ended at 4.47%.

Market Barometer
	Average Annual Total Returns
	Periods Ended October 31, 2007
	One Year	Three Years	Five Years
Stocks
MSCI All Country World Index ex USA (International)	33.0%	27.4%	26.4%
Russell 1000 Index (Large-caps)	15.0	13.8	14.5
Russell 2000 Index (Small-caps)	9.3	13.7	18.7
Dow Jones Wilshire 5000 Index (Entire market)	15.3	14.2	15.3


Bonds
Lehman U.S. Aggregate Bond Index (Broad taxable market)	5.4%	3.9%	4.4%
Lehman Municipal Bond Index	2.9	3.7	4.5
Citigroup 3-Month Treasury Bill Index	5.0	4.1	2.9


CPI
Consumer Price Index	3.5%	3.1%	2.9%

For the year, the broad taxable U.S. bond market returned 5.4%. Returns from tax-exempt bonds were lower, as these issues did not benefit from the late-summer rally in Treasuries.

Expense Ratios¹
Your fund compared with its peer group
	Fund	Acquired	Peer-Group
	Expense	Fund Fees and	Expense
	Ratio	Expenses²	Ratio
European Stock Index Fund
Investor Shares	0.22%	—	1.44%
Admiral Shares	0.12	—	1.44
Signal Shares	0.12	—	1.44
Institutional Shares	0.09	—	1.44
ETF Shares	0.12	—	1.44
Pacific Stock Index Fund
Investor Shares	0.22%	—	1.65%
Admiral Shares	0.12	—	1.65
Signal Shares	0.12³	—	1.65
Institutional Shares	0.09	—	1.65
ETF Shares	0.12	—	1.65
Emerging Markets Stock Index Fund
Investor Shares	0.37%	—	1.88%
Admiral Shares	0.25	—	1.88
Signal Shares	0.25³	—	1.88
Institutional Shares	0.20	—	1.88
ETF Shares	0.25	—	1.88
Total International Stock Index Fund	—	0.27%	1.57%
Developed Markets Index Fund	—	0.22%	1.57%
Institutional Developed Markets Index Fund	—	0.09%	1.57%

1 Fund expense ratios reflect the 12 months ended October 31, 2007. Peer groups are: for the European Stock Index Fund, the Average European Region Fund; for the Pacific Stock Index Fund, the Average Japan/Pacific Region Fund; for the Emerging Markets Stock Index Fund, the Average Emerging Markets Fund; for the other funds, the Average International Fund. Peer-group expense ratios are derived from data provided by Lipper Inc. and capture information through year-end 2006.

2 This figure represents a weighted average of the annualized expense ratios and any fees charged by the underlying mutual funds in which the fund invests. The fund does not have any expenses or fees of its own. Acquired is a term that the Securities and Exchange Commission applies to any mutual fund whose shares are owned by another fund.

3 Annualized.

Strong returns from markets around the globe

The Vanguard International Stock Index Fund lineup includes three distinct regional index funds (European, Pacific, and Emerging Markets) and three funds-of-funds that contain combinations of those regional funds.

The European Stock Index Fund’s Investor Shares posted a 28.5% return for the fiscal period. All three of the fund’s most heavily weighted countries (the United Kingdom, France, and Germany, which, on average, represented more than half of the index) posted stellar gains. The strongest results came from industrials, utilities, telecommunication services, and materials companies—with returns in these sectors ranging from 43% to 55%.

Exports to rapidly growing emerging markets fed the gains, which were also buoyed by an active mergers-and-acquisitions market. The weakest-performing sector was health care, which gained less than 2%. Negative returns from AstraZeneca and Novartis restrained performance for the fiscal year.

The Pacific Stock Index Fund’s Investor Shares returned 19.5% for the period. The gains here were lopsided: The 56.6% and 63.4% returns of Australia and Hong Kong, which together represented roughly 25% of the index on average, gave heft to returns that were otherwise restrained by a 4.9% performance from Japan, which represented 70% of the index. Japanese banks were particularly weak during the year, partly because of the impact of subprime mortgages. The Pacific Stock Index’s brightest sectors were energy, materials, and industrials. No sectors produced negative returns; however, utilities were flat and consumer discretionary stocks gained less than 4%, with Toyota Motor—Japan’s largest stock—falling 2%.

Total Returns
Ten Years Ended October 31, 2007¹
			Average
			Annual Return
			Average
	Vanguard	Target	Competing
Index Fund	Fund	Index	Fund²
European Stock Investor Shares	10.8%	10.7%	10.7%
Pacific Stock Investor Shares	6.4	6.4	6.0
Emerging Markets Stock Investor Shares	16.1	16.1	14.3
Total International Stock	10.2	10.1	8.8
Developed Markets	7.5	7.4	6.8
Institutional Developed Markets	7.5	7.5	6.7

1 Since inception for the Developed Markets Index Fund (May 8, 2000) and the Institutional Developed Markets Index Fund (June 1, 2000).

2 Derived from data provided by Lipper Inc.

The Emerging Markets Stock Index Fund’s Investor Shares delivered a 69.6% return, with supercharged results coming from throughout the developing world. Brazil, for example, gained 111.5% for the year, largely on the strength of its energy, metals, and mining companies. South Korea gained 56.3%, with shipping, construction, and engineering firms leading the way. The two countries accounted, on average, for just over 25% of the index. The Chinese stock market, home to a series of meteoric initial public offerings, soared 167.1%. China represented about 17% of the index at the end of the period. Among sectors, industrials and materials clocked triple-digit gains for the year, while energy, financials, and telecommunications stocks each gained in excess of 65%. The “weakest” sector was information technology, which gained 24.8%.

The Total International Stock Index Fund, the Developed Markets Index Fund, and the Institutional Developed Markets Index Fund are “funds of funds” that hold other Vanguard index funds; as such, their returns are a composite of results from different regions. The Total International Stock Index Fund—which holds market-based weightings in European, Pacific, and emerging market securities—returned 32.5% over the 12 months. The Developed Markets Index Fund and the Institutional Developed Markets Index Fund, which include only European and Pacific markets, returned 25.7% and 25.8%, respectively, for the period.

Fair-value pricing gave funds a slight performance advantage

As noted earlier, the returns of the funds exceeded those of their target indexes for the period. These gaps were largely a fleeting artifact of fair-value pricing, which allows the funds to calculate their net asset values based on real-time developments not reflected in closing market prices overseas. When fair-value pricing is used at the open or close of a reporting period, it may cause a seeming divergence between the return of a fund and that of its index. This discrepancy corrects itself when market prices reflect fair value, usually the next day.

The funds’ long-term results are more than respectable

As the table on page 12 shows, the Vanguard International Stock Index Funds have met their objective of tracking their respective benchmarks over the past decade. Their returns have also surpassed the average annual returns of their respective peer groups since inception or for the ten years ended October 31, 2007.

Vanguard’s Quantitative Equity Group has been managing index funds for more than 30 years. Its disciplined execution of the funds’ indexing mandates, combined with the funds’ extremely low costs, can help you capture as much of the respective markets’ return as possible.

International exposure helps to diversify your holdings

While investors in international stocks have come to expect lofty returns, there is no guarantee that these securities will continue to soar. That is why it is important to have a well-thought-out investment strategy based on a diversified mix of stock, bond, and money market mutual funds that fits your goals, time horizon, and risk tolerance. The extended period of outperformance for international markets may mean it is time to rebalance your portfolio to make sure your asset allocations have not gotten out of sync.

By combining domestic stock funds with international funds, as well as bond and money market funds, you can do much to insulate your portfolio from markets that can frown on one asset class and smile on another at the same time.

The International Stock Index Funds can add diversification to your portfolio and help you move toward your long-term investment goals.

Thank you for your ongoing confidence in Vanguard.

Sincerely,

John J. Brennan

Chairman and Chief Executive Officer

November 14, 2007

Vanguard European Stock Index ETF
Premium/Discount: March 4, 2005¹–October 31, 2007

	Market Price Above or		Market Price Below
	Equal to Net Asset Value		Net Asset Value
	Number	Percentage	Number	Percentage
Basis Point Differential²	of Days	of Total Days	of Days	of Total Days
0–24.9	158	23.51%	28	4.16%
25–49.9	206	30.66	3	0.45
50–74.9	145	21.58	1	0.15
75–100.0	80	11.90	0	0.00
>100.0	50	7.44	1	0.15
Total	639	95.09%	33	4.91%

Vanguard Pacific Stock Index ETF
Premium/Discount: March 4, 2005¹–October 31, 2007

	Market Price Above or		Market Price Below
	Equal to Net Asset Value		Net Asset Value
	Number	Percentage	Number	Percentage
Basis Point Differential²	of Days	of Total Days	of Days	of Total Days
0–24.9	163	24.26%	41	6.10%
25–49.9	179	26.64	15	2.23
50–74.9	132	19.64	0	0.00
75–100.0	76	11.31	1	0.15
>100.0	65	9.67	0	0.00
Total	615	91.52%	57	8.48%

Vanguard Emerging Markets Stock Index ETF
Premium/Discount: March 4, 2005¹–October 31, 2007

	Market Price Above or		Market Price Below
	Equal to Net Asset Value		Net Asset Value
	Number	Percentage	Number	Percentage
Basis Point Differential²	of Days	of Total Days	of Days	of Total Days
0–24.9	107	15.92%	66	9.82%
25–49.9	141	20.98	29	4.32
50–74.9	137	20.39	18	2.68
75–100.0	84	12.50	13	1.93
>100.0	56	8.33	21	3.13
Total	525	78.12%	147	21.88%

1 Inception.

2 One basis point equals 1/100 of a percentage point.

European Stock Index Fund

Fund Profile

As of October 31, 2007

Portfolio Characteristics
		Target	Broad
	Fund	Index¹	Index²
Number of Stocks	593	579	2,067
Turnover Rate	9%	—	—
Expense Ratio		—	—
Investor Shares	0.22%
Admiral Shares	0.12%
Signal Shares	0.12%
Institutional Shares	0.09%
ETF Shares	0.12%
Short-Term Reserves	–0.1%³	—	—

Sector Diversification (% of equity exposure)
		Target	Broad
	Fund	Index¹	Index²
Consumer Discretionary	10.0%	10.2%	9.8%
Consumer Staples	9.5	9.5	7.6
Energy	10.1	9.9	10.7
Financials	27.0	27.0	24.8
Health Care	6.9	6.9	6.6
Industrials	9.9	10.1	11.3
Information Technology	3.8	3.8	9.6
Materials	9.0	8.9	9.2
Telecommunication
Services	7.5	7.5	6.1
Utilities	6.3	6.2	4.3

Volatility Measures⁴
	Fund Versus	Fund Versus
	Target Index¹	Broad Index²
R-Squared	0.98	0.87
Beta	0.99	0.88

Ten Largest Holdings⁵(% of total net assets)

Royal Dutch Shell PLC	integrated
	oil and gas	2.8%
BP PLC	integrated
	oil and gas	2.5
HSBC Holdings PLC	diversified banks	2.3
Vodafone Group PLC	wireless
	telecommunication
	services	2.1
Nestle SA (Registered)	packaged foods
	and meats	1.8
Total SA	integrated
	oil and gas	1.7
Nokia Oyj	communications
	equipment	1.6
Telefonica SA	integrated
	telecommunication
	services	1.5
GlaxoSmithKline PLC	pharmaceuticals	1.5
Banco Santander
Central Hispano SA	diversified banks	1.4
Top Ten		19.2%

1 MSCI Europe Index.

2 MSCI All Country World Index ex USA.

3 The fund invested a portion of its cash reserves in equity markets through the use of index futures contracts. After the effect of the futures investments, the fund’s temporary cash position was negative.

4 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 165.

5 “Ten Largest Holdings” excludes any temporary cash investments and equity index products.

European Stock Index Fund

Market Diversification (% of equity exposure)
		Target
	Fund	Index¹
United Kingdom	32.9%	33.0%
France	14.2	14.0
Germany	12.5	12.4
Switzerland	9.4	9.4
Spain	6.1	6.1
Italy	5.5	5.4
Netherlands	4.1	4.3
Sweden	3.5	3.5
Finland	2.8	2.8
Belgium	1.9	1.9
Norway	1.5	1.5
Denmark	1.3	1.3
Greece	1.2	1.2
Ireland	1.0	1.0
Other European Countries	2.1	2.2

1 MSCI Europe Index.

European Stock Index Fund

Performance Summary

Cumulative Performance: October 31, 1997–October 31, 2007

Initial Investment of $10,000

	Average Annual Total Returns			Final Value of
	Periods Ended October 31, 2007			a $10,000
	One Year	Five Years	Ten Years	Investment
European Stock Index Fund Investor Shares¹	28.49%	24.38%	10.81%	$27,908
MSCI All Country World Index ex USA	32.97	26.39	10.75	27,762
MSCI Europe Index	27.96	24.29	10.66	27,547
Average European Region Fund²	27.48	24.55	10.73	27,702

				Final Value of
			Since	a $100,000
	One Year	Five Years	Inception³	Investment
European Stock Index Fund Admiral Shares¹	28.59%	24.50%	14.83%	$236,182
MSCI All Country World Index ex USA	32.97	26.39	16.65	260,425
MSCI Europe Index	27.96	24.29	14.66	234,005

			Final Value of
		Since	a $10,000,000
	One Year	Inception³	Investment
European Stock Index Fund Signal Shares¹	28.59%	30.81%	$13,324,326
MSCI All Country World Index ex USA	32.97	34.43	13,718,637
MSCI Europe Index	27.96	30.41	13,280,035

1 Returns do not reflect the 0.5% transaction fee on purchases through March 31, 2000; the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months; or, for the Investor Shares, the account service fee that may be applicable to certain accounts with balances below $10,000.

2 Derived from data provided by Lipper Inc.

3 Performance for the fund and its comparative standards is calculated since the following inception dates: August 13, 2001, for the Admiral Shares and October 6, 2006, for the Signal Shares.

European Stock Index Fund

				Final Value of
			Since	a $5,000,000
	One Year	Five Years	Inception²	Investment
European Stock Index Fund Institutional Shares¹	28.63%	24.56%	8.89%	$9,442,202
MSCI All Country World Index ex USA	32.97	26.39	9.85	10,076,044
MSCI Europe Index	27.96	24.29	8.71	9,326,061

			Final Value
		Since	of a $10,000
	One Year	Inception²	Investment
European Stock Index Fund ETF Shares	28.60%	21.78%	$16,890
MSCI All Country World Index ex USA	32.97	24.00	17,723
MSCI Europe Index	27.96	21.51	16,791

Cumulative Returns: ETF Shares, March 4, 2005–October 31, 2007

		Since
	One Year	Inception²
European Stock Index Fund ETF Shares Market Price	28.36%	69.14%
European Stock Index Fund ETF Shares Net Asset Value	28.60	68.90
MSCI Europe Index	27.96	67.91

1 Returns do not reflect the 0.5% transaction fee on purchases through March 31, 2000, or the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

2 Performance for the fund and its comparative standards is calculated since the following inception dates: May 15, 2000, for the Institutional Shares and March 4, 2005, for the ETF Shares.

European Stock Index Fund

Fiscal-Year Total Returns (%): October 31, 1997–October 31, 2007

Average Annual Total Returns: Periods Ended September 30, 2007

	Inception Date	One Year	Five Years	Ten Years
European Stock Index Fund
Investor Shares¹	6/18/1990	27.82%	25.49%	9.73%
Admiral Shares¹	8/13/2001	27.96	25.61	14.16²
Signal Shares¹	10/6/2006	27.07²
Institutional Shares¹	5/15/2000	27.99	25.69	8.30²
ETF Shares	3/4/2005
Market Price		26.92	20.35²	—
Net Asset Value		27.96	20.34²	—

2 Returns since inception.

Note: See Financial Highlights tables on pages 37-41 for dividend and capital gains information.

European Stock Index Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

			Market
			Value^•
		Shares	($000)
Common Stocks (99.4%)¹
Austria (0.8%)
	Erste Bank der
	Oesterreichischen
	Sparkassen AG	711,755	57,945
	OMV AG	620,828	46,614
	Telekom Austria AG	1,349,672	38,863
	Voestalpine AG	416,844	37,664
	Raiffeisen International
	Bank–Holding AG	134,183	22,323
	Oesterreichische
	Elektrizitaetswirtschafts
	AG Class A	331,933	21,996
	Wienerberger AG	300,150	18,752
*	Meinl European Land Ltd.	1,129,021	15,891
	Immofinanz Immobilien
	Anlagen AG	1,164,846	13,905
	Andritz AG	146,617	10,844
*	IMMOEAST Immobilien
	Anlagen AG	799,999	9,779
	Wiener Staedtische
	Allgemeine
	Versicherung AG	120,373	8,888
*	RHI AG	97,147	4,978
	Flughafen Wien AG	39,697	4,711
	Mayr-Melnhof Karton AG	32,007	3,814
*	BETandWIN.com Interactive
	Entertainment AG	18,459	629
			317,596
Belgium (1.9%)
	Fortis	7,764,519	249,359
	KBC Bank & Verzekerings
	Holding	682,968	95,992
	InBev	689,925	65,299
	Dexia	1,969,027	63,395

			Market
			Value•
		Shares	($000)
	Groupe Bruxelles
	Lambert SA	313,016	40,104
	Solvay SA	239,024	36,395
	Belgacom SA	635,817	30,469
	Delhaize Group	291,998	27,843
	Umicore	93,241	23,313
	UCB SA	235,821	13,857
	Colruyt NV	62,515	13,396
	Mobistar SA	120,984	10,960
	Bekaert NV	46,015	6,352
	Cofinimmo	31,989	6,015
	Compagnie Maritime
	Belge SA	52,632	4,843
	Omega Pharma SA	68,807	4,618
	D’Ieteren SA	10,572	4,588
	Euronav SA	89,099	2,653
	Barco NV	31,774	2,616
*	Fortis Strip--VVPR	2,988,696	43
	Agfa Gevaert NV	2,050	29
			702,139
Denmark (1.3%)
	Novo Nordisk A/S B Shares	905,669	112,872
	Danske Bank A/S	1,708,953	75,641
*	Vestas Wind Systems A/S	696,922	62,523
	AP Moller-Maersk A/S
	B Shares	4,134	57,243
	FLS Industries A/S B Shares	200,027	21,802
	DSV A/S	758,496	20,153
	Novozymes A/S	173,363	18,946
*	Jyske Bank A/S	221,703	18,346
	Carlsberg A/S B Shares	128,070	17,323
	Danisco A/S	190,187	14,679
*	Topdanmark A/S	64,756	11,099
	Sydbank A/S	236,843	10,944
	NKT Holding A/S	88,873	9,736
	Coloplast A/S B Shares	100,147	9,727
*	William Demant A/S	95,195	8,769
	Trygvesta A/S	102,260	8,146
*	GN Store Nord A/S	629,765	6,718
	H. Lundbeck A/S	199,884	5,749

			Market
			Value•
		Shares	($000)
	East Asiatic Co. A/S	62,775	5,083
	Bang & Olufsen A/S
	B Shares	39,570	4,659
	Dampskibsselskabet
	Torm A/S	109,452	4,598
			504,756
Finland (2.8%)
	Nokia Oyj	15,404,668	611,800
	Fortum Oyj	1,677,094	72,926
	Sampo Oyj A Shares	1,629,179	51,174
	UPM-Kymmene Oyj	2,077,174	46,660
	Stora Enso Oyj R Shares	1,756,151	32,394
	Metso Oyj	480,073	29,311
	Kone Oyj	287,394	23,861
	Wartsila Oyj B Shares	244,305	20,026
	Rautaruuki Oyj	315,923	18,207
	Neste Oil Oyj	482,570	17,390
	Elisa Oyj Class A	562,469	16,734
	Outokumpu Oyj A Shares	444,172	16,666
	Kesko Oyj	248,088	14,902
	Nokian Renkaat Oyj	392,995	14,881
	YIT Oyj	476,880	14,755
	KCI Konecranes Oyj	226,696	10,209
	SanomaWSOY Oyj	310,181	8,972
	Cargotec Corp.	144,545	8,965
	Orion Oyj	328,716	8,453
	OKO Bank (Osuuspankkien
	Keskuspankki Oyj)	359,666	7,748
	Amer Sports Oyj A Shares	270,999	7,212
	TietoEnator Oyj B Shares	224,372	5,524
	Uponor Oyj	206,431	5,417
			1,064,187
France (14.1%)
	Total SA	8,101,031	653,721
	BNP Paribas SA	3,158,341	350,043
	Sanofi-Aventis	3,835,509	337,386
	AXA	5,987,429	268,933
	France Telecom SA	6,864,035	253,832
	Suez SA	3,853,646	251,418
	Societe Generale Class A	1,388,621	234,594
	Vivendi SA	4,347,416	196,457
	Carrefour SA	2,253,915	162,869
	Groupe Danone	1,668,336	143,588
	Cie. de St. Gobain SA	1,252,512	134,985
	Air Liquide SA	904,024	124,858
*	Vinci SA	1,483,928	122,450
	L’Oreal SA	929,537	122,368
	LVMH Louis Vuitton
	Moet Hennessy	912,364	117,862
	Renault SA	693,731	117,171

			Market
			Value•
		Shares	($000)
	Veolia Environnement	1,285,662	115,103
	Schneider Electric SA	806,502	111,563
	Credit Agricole SA	2,545,238	100,839
	Alstom	385,804	91,499
	Lafarge SA	555,876	90,867
	Alcatel-Lucent	8,558,148	83,194
	Bouygues SA	824,470	79,570
	Pernod Ricard SA	335,273	77,640
	Compagnie Generale des
	Etablissements Michelin SA	533,560	71,858
	Unibail Co.	277,836	69,387
	Accor SA	709,335	67,958
	Pinault-Printemps-
	Redoute SA	298,678	59,398
	Vallourec SA	184,735	53,795
	PSA Peugeot Citroen	565,454	52,704
	Essilor International SA	733,482	46,868
	STMicroelectronics NV	2,568,077	43,998
	Gaz de France	737,284	41,999
	Lagardere S.C.A.	486,415	41,249
	Hermes International	281,322	37,080
	Technip SA	376,866	33,876
	Cap Gemini SA	516,109	33,054
	Sodexho Alliance SA	371,863	26,922
*	Business Objects SA	440,573	26,499
	SCOR SA	806,093	22,047
	Publicis Groupe SA	539,419	21,982
	CNP Assurances	167,458	21,396
	Dassault Systemes SA	342,623	21,302
	Thales SA	329,848	20,619
	Safran SA	742,907	18,910
	Casino Guichard-
	Perrachon SA	161,958	18,135
	Thomson SA	927,530	16,257
*	Atos Origin SA	259,296	15,810
	Neopost SA	130,731	15,204
	Aeroports de Paris (ADP)	128,328	14,715
	Valeo SA	260,001	14,314
	Air France	343,461	13,106
	Imerys SA	117,328	11,431
	Zodiac SA	155,502	10,795
	Klepierre	189,219	10,297
	Icade	123,184	9,126
	Societe des Autoroutes
	Paris-Rhin-Rhone	83,345	8,869
	M6 Metropole Television	268,892	7,980
	Gecina SA	46,405	7,957
	Societe BIC SA	101,356	7,881
	Societe Television Francaise 1	265,680	7,391
	PagesJaunes SA	93,088	2,060
			5,367,039

			Market
			Value•
		Shares	($000)
Germany (12.5%)
	E.On AG	2,342,844	458,025
	Siemens AG	3,201,998	434,178
	Allianz AG	1,689,494	380,437
	DaimlerChrysler AG
	(Registered)	3,157,345	345,420
	BASF AG	1,879,730	260,221
	Deutsche Bank AG	1,908,330	253,735
	RWE AG	1,673,660	228,637
	Bayer AG	2,731,444	228,027
	Deutsche Telekom AG	10,663,632	218,928
	SAP AG	3,369,415	182,195
	Volkswagen AG	594,580	169,965
	Muenchener
	Rueckversicherungs-
	Gesellschaft AG
	(Registered)	748,187	143,622
	Deutsche Boerse AG	752,314	118,512
	Commerzbank AG	2,348,704	99,511
	ThyssenKrupp AG	1,354,911	90,245
	Porsche AG	32,916	87,725
	Man AG	424,312	75,873
	Continental AG	496,218	75,049
	Volkswagen AG Pfd.	395,951	74,922
	Deutsche Post AG	2,324,544	70,439
	Linde AG	453,916	57,518
	Metro AG	609,627	55,328
	Adidas AG	765,824	51,081
*	Infineon Technologies AG	3,299,591	48,456
	Hypo Real Estate
	Holding AG	757,459	44,842
	Fresenius Medical Care AG	712,723	37,729
	DaimlerChrysler AG	327,337	36,056
	Henkel KGaA Pfd.	670,373	34,251
	Salzgitter AG	154,572	30,425
	Merck KGaA	243,068	30,418
	Beiersdorf AG	331,673	26,297
	Deutsche Lufthansa AG	861,552	25,436
*	TUI AG	802,883	23,779
	Hochtief AG	158,081	21,835
	Solarworld AG	315,001	21,383
	Henkel KGaA	396,944	18,375
	Celesio AG	319,996	18,183
	RWE AG Pfd.	146,617	17,923
	IVG Immobilien AG	385,300	17,526
	Wincor Nixdorf AG	130,769	13,028
	Bilfinger Berger AG	140,758	12,551
*	Qiagen NV	523,803	12,331
	Rheinmetall AG	135,339	12,078

			Market
			Value•
		Shares	($000)
	Puma AG	26,119	11,238
	Deutsche Postbank AG	150,852	11,010
	Suedzucker AG	445,249	10,113
*	Arcandor AG	291,629	9,389
	ProSieben Sat.1 Media AG	310,146	9,105
	Heidelberger
	Druckmaschinen AG	212,130	8,664
	Douglas Holding AG	118,328	7,551
	Altana AG	264,427	6,409
	MLP AG	204,477	2,716
*	Premier AG	69,490	1,423
			4,740,113
Greece (1.2%)
	National Bank of Greece SA	1,276,909	89,226
	Alpha Credit Bank SA	1,457,230	54,105
	Bank of Piraeus	1,206,233	48,567
	EFG Eurobank Ergasias	1,175,496	45,869
	Hellenic Telecommunications
	Organization SA	1,150,837	42,271
	Greek Organization of
	Football Prognostics	839,478	34,370
	Coca-Cola Hellenic
	Bottling Co. SA	405,130	25,149
	Public Power Corp.	443,164	18,005
	National Bank of
	Greece SA ADR	1,218,898	17,077
	Cosmote Mobile
	Communications SA	424,496	14,680
	Titan Cement Co. SA	223,070	10,913
	Hellenic Telecommunications
	Organization SA ADR	466,250	8,644
	Hellenic Technodomiki
	Tev SA	548,152	8,355
	Hellenic Exchanges SA	215,650	7,547
	Hellenic Petroleum SA	477,211	7,461

			Market
			Value•
		Shares	($000)
	Viohalco, Hellenic Copper &
	Aluminum Industry SA	386,220	6,330
	Folli-Follie SA	59,190	2,553
	Motor Oil (Hellas) Corinth
	Refineries SA	58,914	1,460
			442,582
Ireland (1.0%)
	Allied Irish Banks PLC	3,302,998	83,274
	CRH PLC	2,052,537	79,188
	Bank of Ireland	3,706,797	68,312
*	Elan Corp. PLC	1,713,309	40,877
	Kerry Group PLC A Shares	515,187	15,440
	Irish Life & Permanent PLC	652,337	14,826
	Kingspan Group PLC	478,718	11,302
	IAWS Group PLC	476,133	11,216
	DCC PLC	302,306	8,321
	Paddy Power PLC	178,200	7,390
	Independent News &
	Media PLC	2,007,558	7,375
*	Ryanair Holdings PLC	868,762	7,270
*	Ryanair Holdings PLC ADR	116,373	5,724
	C&C Group PLC	688,976	5,514
	Grafton Group PLC	410,002	4,580
	Greencore Group PLC	611,566	4,164
			374,773
Italy (5.4%)
	Eni SpA	9,793,705	357,598
	Unicredito Italiano SpA	32,545,486	279,969
	Intesa Sanpaolo SpA	28,972,726	229,841
	Enel SpA	16,278,092	195,180
	Assicurazioni Generali SpA	3,966,960	189,055
	Telecom Italia SpA	40,665,704	127,428
	Fiat SpA	2,670,719	86,597
	Telecom Italia SpA RNC	24,954,739	64,630
	Unione Di Banche
	Italiane ScpA	2,284,363	63,685
*	Banco Popolare SpA	2,521,216	60,515
	Mediobanca Banca di
	Credito Finanziaria SpA	1,845,547	43,887
	Atlantia SpA	969,218	38,116
	Finmeccanica SpA	1,119,316	33,295
	Mediaset SpA	2,888,656	29,962
	Intesa Sanpaolo SpA Non
	Convertible Risp.	3,509,185	26,644
	Banca Monte dei Paschi
	di Siena SpA	4,155,471	26,608
	Banca Popolare di
	Milano SpA	1,561,809	24,606
	Parmalat SpA	5,892,162	21,827
	Alleanza Assicurazioni SpA	1,592,505	21,587

			Market
			Value•
		Shares	($000)
	Snam Rete Gas SpA	3,309,521	21,425
	Luxottica Group SpA	520,718	18,345
*	Pirelli & C. Accomandita
	per Azioni SpA	14,156,357	18,140
	Terna SpA	4,515,789	17,700
	Fondiaria–Sai SpA	258,814	12,602
	Compagnia Assicuratrice
	Unipol SpA	3,382,042	12,131
	Lottomatica SpA	329,277	11,785
	Bulgari SpA	563,111	8,826
	Autogrill SpA	382,558	7,654
	Italcementi SpA	272,877	6,286
	Mondadori (Arnoldo)
	Editore SpA	443,576	4,393
	Seat Pagine Gialle SpA	6,998,895	4,073
	Mediolanum SpA	432,982	3,228
			2,067,618
Luxembourg (0.7%)
*	ArcelorMittal	3,414,006	275,482

Netherlands (4.1%)
	ING Groep NV	7,068,477	319,486
	Unilever NV	6,450,787	209,959
	Koninklijke (Royal) Philips
	Electronics NV	4,299,291	177,872
	Koninklijke KPN NV	7,255,374	136,990
	Aegon NV	5,491,743	113,844
	Akzo Nobel NV	1,022,726	82,430
	Heineken NV	921,707	64,701
	TNT NV	1,511,081	62,008
	Koninklijke Ahold NV	3,808,423	57,382
	ASML Holding NV	1,553,038	54,075
	Reed Elsevier NV	2,698,894	52,455
	European Aeronautic
	Defence and Space Co.	1,413,336	48,178
	Koninklijke DSM NV	551,052	31,300
	Wolters Kluwer NV	903,193	28,368
	SBM Offshore NV	530,701	20,480
	Fugro NV	218,205	19,181
	Hagemeyer NV	2,608,849	17,788
	Vedior NV	680,114	15,500
	Corio NV	156,140	13,711
	Wereldhave NV	78,171	9,338
	Randstad Holding NV	146,674	8,172
	Oce NV	373,161	7,518
	Corporate Express	241,720	2,706
	ASML Holding N.V.
	(New York Shares)	34,293	1,197
	Koninklijke Numico NV	7,366	583
	Aegon NV (New York) ARS	3,320	69
			1,555,291
Norway (1.5%)

			Market
			Value•
		Shares	($000)
	Statoil ASA	4,828,271	164,482
	Telenor ASA	3,160,511	74,416
	Orkla ASA	3,134,898	58,611
	DnB NOR ASA	2,766,804	45,852
*	Renewable Energy Corp. AS	650,400	33,407
	Yara International ASA	684,165	26,666
*	SeaDrill Ltd.	937,309	22,440
	Aker Kvaerner ASA	621,155	21,785
	Acergy SA	733,853	21,269
	Petroleum Geo-
	Services ASA	643,655	19,109
	Norsk Hydro ASA	1,234,543	18,149
	Prosafe ASA	691,550	12,323
	Storebrand ASA	846,433	12,134
	Tandberg ASA	431,750	11,049
	Schibsted ASA	176,002	10,027
	Frontline Ltd.	196,934	8,906
*	Marine Harvest	7,891,205	8,056
*	Ocean Rig ASA	643,326	5,149
	Tomra Systems ASA	667,333	4,860
	Stolt-Nielsen SA	138,755	4,072
*	Det Norske Oljeselskap
	(DNO) ASA	513,224	963
*	TGS Nopec
	Geophysical Co. ASA	13,586	229
	Norske Skogindustrier ASA	852	9
			583,963
Portugal (0.5%)
	Electricidade de
	Portugal SA	7,566,871	48,754
	Portugal Telecom
	SGPS SA	2,973,263	39,839
	Banco Comercial
	Portugues SA	8,153,407	39,808
	Banco Espirito Santo SA	845,868	20,580
	Brisa-Auto Estradas
	de Portugal SA	1,127,824	16,038
	PT Multimedia-Servicos
	de Telecomunicacoes
	e Multimedia, SGPS, SA	829,981	11,304
	Sonae SGPS SA	2,992,862	8,793
	Banco BPI SA	857,146	7,570
	Cimpor-Cimento
	de Portugal SA	758,273	6,907
	Jeronimo Martins, SGPS, SA	709,732	5,285
*	Sonae Industria–SGPS SA	234,208	2,853
			207,731
Spain (6.1%)
	Telefonica SA	16,516,684	546,886
	Banco Santander Central
	Hispano SA	23,527,099	514,530
	Banco Bilbao Vizcaya

			Market
			Value•
		Shares	($000)
	Argentaria SA	14,099,398	356,812
	Iberdrola SA	14,088,923	227,278
	Repsol YPF SA	2,985,427	117,946
	Altadis SA	963,592	68,718
	Industria de Diseno
	Textil SA	820,786	61,369
	Banco Popular Espanol SA	3,200,678	56,173
	ACS, Actividades de
	Construccion y Servicios, SA	796,479	49,449
	Acciona SA	107,609	33,304
	Gamesa Corporacion
	Tecnologica, SA	640,715	32,609
	Abertis Infraestructuras SA	902,183	30,167
	Union Fenosa SA	402,854	26,832
	Gas Natural SDG SA	421,255	25,971
	Acerinox SA	585,976	17,322
	Sacyr Vallehermoso SA	364,819	17,217
	Grupo Ferrovial, SA	168,714	14,743
	Indra Sistemas, SA	502,570	14,621
	Cintra Concesiones
	de Infraestructuras
	de Transport SA	776,508	13,621
	Fomento de Construc y
	Contra SA	127,466	11,137
	Corporacion Mapfre SA	2,225,489	10,497
	Zardoya Otis SA	285,070	9,654
	Iberia (Linea Aerea Espana)	1,800,433	9,185
	Sociedad General de Aguas
	de Barcelona SA	226,419	9,057
	Telefonica SA ADR	87,308	8,683
*	Sogecable SA	205,690	8,321
	Zeltia SA	611,435	7,210
	Ebro Puleva SA	345,011	7,137
	Antena 3 Television	388,374	6,914
	Promotora de
	Informaciones SA	291,660	5,734
	Gestevision Telecinco SA	3,903	113
	Endesa SA	1,114	58
			2,319,268
Sweden (3.5%)
	Telefonaktiebolaget LM
	Ericsson AB Class B	49,080,941	146,850
	Nordea Bank AB	7,806,862	139,832
	Hennes & Mauritz AB
	B Shares	1,785,850	119,329
	TeliaSonera AB	8,445,346	83,320
*	Volvo AB B Shares	3,657,420	71,924
*	Sandvik AB	3,570,473	67,846
	Svenska Handelsbanken
	AB A Shares	1,855,744	61,708
	Skandinaviska Enskilda
	Banken AB A Shares	1,746,057	53,763

			Market
			Value•
		Shares	($000)
*	Atlas Copco AB–A Shares	2,526,364	42,465
	Svenska Cellulosa AB-B	2,116,624	37,399
*	Scania AB–B Shares	1,354,606	37,191
*	Volvo AB A Shares	1,784,720	34,797
*	SKF AB–B Shares	1,526,889	29,788
	Alfa Laval AB	356,876	28,433
	Skanska AB B Shares	1,415,704	28,149
	Tele2 AB B Shares	1,146,803	27,087
	Assa Abloy AB	1,174,103	24,670
*	Atlas Copco AB–B Shares	1,573,875	24,666
	SSAB Svenskt Stal
	AB Series A	711,119	23,183
	Swedish Match AB	1,004,663	22,514
	Boliden AB	1,119,829	19,849
	Electrolux AB Series B	956,765	18,586
	Getinge AB B Shares	638,031	16,907
	Modern Times Group
	AB B Shares	193,653	13,695
	OMX AB	317,443	13,374
	Husqvarna AB B Shares	1,058,089	12,786
*	Lundin Petroleum AB	998,254	12,039
	SSAB Svenskt Stal
	AB Series B	312,737	9,251
	Oriflame Cosmetics SA	151,758	9,193
	Eniro AB	668,177	8,578
	Trelleborg AB B Shares	329,044	8,415
	Kungsleden AB	538,182	7,706
	Castellum AB	582,004	7,406
	Fabege AB	618,004	7,382
	D. Carnegie & Co. AB	328,940	7,303
	Elekta AB B Shares	326,755	6,322
*	SAS AB	278,733	4,892
	Securitas Systems
	AB B Shares	1,181,965	4,752
	Holmen AB	116,838	4,609
	Securitas AB B Shares	316,355	4,002
	Axfood AB	109,214	3,861
*	Securitas Direct
	AB B Shares	1,209,804	3,622
	Billerud Aktiebolag	226,802	2,739
	Wihlborgs Fastigheter AB	128,454	2,484
	Hoganas AB B Shares	93,774	2,260
*	Eniro AB
	Rights Exp. 11/19/07	663,753	191
			1,317,118
Switzerland (9.4%)
	Nestle SA (Registered)	1,507,482	696,279
	Novartis AG (Registered)	8,725,822	464,164
	Roche Holdings AG	2,642,888	451,414
	UBS AG	7,452,452	399,543
	Credit Suisse Group
	(Registered)	4,115,453	278,110

			Market
			Value•
		Shares	($000)
	ABB Ltd.	7,900,339	238,830
	Cie. Financiere
	Richemont AG	1,963,700	140,430
	Zurich Financial Services AG	460,864	139,150
	Swiss Re (Registered)	1,338,124	125,808
	Syngenta AG	391,427	94,684
	Holcim Ltd. (Registered)	754,915	86,302
	Swatch Group AG (Bearer)	121,784	38,988
	Swiss Life Holding	127,028	35,164
	Swisscom AG	85,330	31,583
	Adecco SA (Registered)	497,091	29,970
	Synthes, Inc.	223,205	27,870
*	Logitech International SA	706,737	24,609
	Givaudan SA	24,623	24,221
	SGS Societe Generale de
	Surveillance Holding SA
	(Registered)	17,662	23,201
	Kuehne & Nagel
	International AG	203,161	21,833
	Lonza AG (Registered)	170,729	19,917
	Sonova Holding AG	174,673	19,663
	Nobel Biocare Holding AG	66,178	19,320
*	OC Oerlikon Corp AG	38,433	18,324
	Sulzer AG (Registered)	10,941	17,585
	Geberit AG	126,215	17,072
	Schindler Holding AG
	(Bearer Participation
	Certificates)	191,491	13,426
	CIBA Specialty
	Chemicals AG (Registered)	266,581	13,279
	Swatch Group AG
	(Registered)	197,790	12,447
	Rieter Holding AG	17,095	9,943
	PSP Swiss Property AG	180,592	9,789
	Straumann Holding AG	29,171	8,154
	Kuoni Reisen Holding AG
	(Registered)	13,512	6,765
	UBS AG (New York Shares)	70,740	3,798
	Kudelski SA	133,163	3,760
	Clariant AG	135,005	1,729
			3,567,124
United Kingdom (32.6%)
	BP PLC	68,536,539	891,662
	HSBC Holdings PLC	44,054,589	873,457
	Vodafone Group PLC	188,571,796	743,076
	GlaxoSmithKline PLC	21,507,908	552,452
	Royal Dutch Shell PLC
	Class B	10,380,109	452,882
	Royal Bank of Scotland
	Group PLC	37,665,107	406,784
	Royal Dutch Shell PLC
	Class A

		Market
		Value•
	Shares	($000)
(Amsterdam Shares)	8,492,604	372,615
Rio Tinto PLC	3,766,908	353,242
Anglo American PLC	5,059,177	351,906
BHP Billiton PLC	8,688,824	333,695
Barclays PLC	24,618,259	311,580
Tesco PLC	29,827,896	303,428
AstraZeneca Group PLC	5,627,965	277,150
HBOS PLC	14,097,588	256,972
Lloyds TSB Group PLC	21,214,394	240,986
BG Group PLC	12,772,456	236,812
Royal Dutch Shell PLC
Class A	5,314,307	233,087
Diageo PLC	10,012,617	229,726
British American
Tobacco PLC	5,775,746	220,042
BT Group PLC	26,427,922	179,637
Xstrata PLC	2,375,952	171,320
National Grid Transco PLC	10,149,501	167,883
Unilever PLC	4,928,301	167,116
Aviva PLC	9,771,439	153,954
Prudential PLC	9,253,511	151,170
Reckitt Benckiser
Group PLC	2,293,634	133,238
BAE Systems PLC	12,682,682	131,762
Imperial Tobacco
Group PLC	2,548,576	129,364
Centrica PLC	13,805,811	106,112
Cadbury Schweppes PLC	7,909,268	105,211
Scottish & Southern
Energy PLC	3,242,683	105,153
SABMiller PLC	3,392,062	102,173
Marks & Spencer
Group PLC	6,405,120	87,077
Man Group PLC	6,798,093	83,543
Old Mutual PLC	20,296,525	77,907
Rolls-Royce Group PLC	6,795,270	76,235
Legal & General
Group PLC	24,580,770	71,761
J. Sainsbury PLC	5,880,675	67,036
Reed Elsevier PLC	4,813,772	63,147
Land Securities Group PLC	1,810,815	62,086

			Market
			Value•
		Shares	($000)
	Imperial Chemical
	Industries PLC	4,496,869	61,671
	British Sky Broadcasting
	Group PLC	4,285,618	60,694
	Reuters Group PLC	4,243,382	58,505
	International Power PLC	5,643,102	57,536
	WPP Group PLC	3,977,722	54,420
	Compass Group PLC	7,492,827	54,052
	United Utilities PLC	3,310,496	50,332
	Scottish & Newcastle PLC	3,021,582	49,298
	Smith & Nephew PLC	3,509,432	47,527
	Invesco PLC	3,005,500	46,005
	British Land Co., PLC	2,001,648	45,284
	BP PLC ADR	575,360	44,872
	British Energy Group PLC	3,861,558	42,892
	Vodafone Group PLC ADR	1,030,225	40,457
	Experian Group Ltd.	3,845,957	40,441
	Resolution PLC	2,579,749	39,222
	Next PLC	845,550	38,959
	Pearson PLC	2,213,298	36,911
	Standard Life PLC	6,206,621	36,827
	Kingfisher PLC	8,810,802	36,263
	Capita Group PLC	2,275,321	35,532
	Smiths Group PLC	1,447,646	34,051
*	3i Group PLC	1,475,359	33,381
	Carnival PLC	697,861	32,666
	ITV PLC	15,276,022	31,578
	Home Retail Group	3,461,877	31,474
	Johnson Matthey PLC	816,816	30,406
	Royal & Sun Alliance
	Insurance Group PLC	8,984,598	29,604
	Rexam PLC	2,531,860	28,613
	Whitbread PLC	742,034	27,409
	FirstGroup PLC	1,636,700	27,175
	Severn Trent PLC	892,852	26,978
	Enterprise Inns PLC	2,026,953	26,625
	Rentokil Initial PLC	6,826,648	24,501
	ICAP PLC	2,005,172	24,484
	Cable and Wireless PLC	6,017,202	24,451
	Amec PLC	1,256,954	21,903
	Burberry Group PLC	1,646,645	21,128
	London Stock
	Exchange PLC	596,022	20,888
	Ladbrokes PLC	2,369,162	20,357
	GKN PLC	2,650,448	20,287
	Yell Group PLC	2,080,508	19,728
	LogicaCMG PLC	5,788,691	19,652
	Liberty International PLC	781,301	19,485
	Bunzl PLC	1,271,215	19,170
	Group 4 Securicor PLC	4,336,207	19,167

			Market
			Value•
		Shares	($000)
	Cobham PLC	4,274,818	18,773
	DSG International PLC	6,940,379	18,745
	Friends Provident PLC	4,842,359	18,589
	Investec PLC	1,523,370	18,498
	Inchcape PLC	1,834,373	18,022
	Meggitt PLC	2,462,707	17,536
	Kelda Group PLC	881,148	17,430
	William Hill PLC	1,328,330	17,158
	Serco Group PLC	1,801,664	16,946
	Balfour Beatty PLC	1,622,689	16,808
	Hammerson PLC	715,641	16,592
	Wolseley PLC	952,524	16,567
*	British Airways PLC	1,780,681	16,559
	Mitchells & Butlers PLC	1,146,622	15,926
	Punch Taverns PLC	758,268	15,899
	InterContinental
	Hotels Group PLC	673,837	15,734
	Hays PLC	5,472,242	15,674
	ARM Holdings PLC	5,008,293	15,454
*	Invensys PLC	2,211,811	15,100
	EMAP PLC	812,236	14,855
	Kesa Electricals PLC	2,231,557	14,816
	IMI PLC	1,252,268	14,685
	United Business Media PLC	955,256	14,530
*	Charter PLC	626,652	14,179
	Cookson Group PLC	797,395	13,868
	The Sage Group PLC	2,743,452	13,844
	Schroders PLC	424,841	13,654
	National Express Group PLC	494,329	13,596
	Persimmon PLC	617,155	13,505
	Arriva PLC	746,020	13,055
	Mondi PLC	1,396,563	12,944
	Intertek Testing
	Services PLC	590,911	12,674
*	TUI Travel PLC	2,261,278	12,672
	Aggreko PLC	963,405	12,606
	Carphone Warehouse PLC	1,683,627	12,340
*	Thomas Cook Group PLC	1,839,057	11,472
	Michael Page
	International PLC	1,246,643	11,395
	The Berkeley Group
	Holdings PLC	318,139	11,305
	Stagecoach Group PLC	2,000,734	11,300
	De La Rue PLC Group	564,382	9,648
	Aegis Group PLC	3,635,496	9,572
	Misys PLC	1,890,424	9,566
	Tate & Lyle PLC	1,031,424	9,360
	Taylor Wimpey PLC	1,757,810	9,093
	Signet Group PLC	4,666,405	8,801
	Daily Mail and

			Market
			Value•
		Shares	($000)
	General Trust PLC	682,484	8,721
	Biffa PLC	1,426,499	7,741
	SSL International PLC	717,410	7,706
	The Davis
	Service Group PLC	643,410	7,310
	Barratt Developments PLC	511,570	6,966
*	CSR PLC	493,603	6,657
	Bellway PLC	288,404	6,475
	Segro PLC	647,764	6,306
	Tullett Prebon PLC	678,527	6,264
	Cattles PLC	835,387	5,954
	WPP Group PLC ADR	78,406	5,394
	Great Portland Estates PLC	441,870	5,269
	Tomkins PLC	1,066,213	4,941
	Close Brothers Group PLC	287,841	4,614
	Brixton PLC	556,177	4,302
	Bovis Homes Group PLC	270,784	3,750
	Electrocomponents PLC	662,188	3,456
	Rank Group PLC	1,474,288	3,152
*	PartyGaming PLC	4,468,698	2,910
	BBA Aviation PLC	540,730	2,723
*	Galiform PLC	1,115,133	2,675
	Travis Perkins PLC	53,544	1,625
	FKI PLC	618,919	1,198
	Premier Farnell PLC	255,646	863
	Trinity Mirror PLC	37,479	314
			12,405,931
Total Common Stocks
(Cost $24,365,475)			37,812,711
Temporary Cash Investments (0.3%)¹
Money Market Fund (0.3%)
² Vanguard Market Liquidity
Fund, 4.955%		139,256,337	139,256

		Face
		Amount
		($000)
U.S. Agency Obligations (0.0%)
3 Federal Home Loan Bank
4 4.656%, 1/29/08		7,000	6,922
Total Temporary Cash Investments
(Cost $146,177)			146,178
Total Investments (99.7%)
(Cost $24,511,652)			37,958,889
Other Assets and Liabilities (0.3%)
Other Assets—Note B			965,133
Liabilities			(867,613)
			97,520
Net Assets (100%)			38,056,409

At October 31, 2007, net assets consisted of:⁵

		Amount
		($000)
Paid-in Capital		23,674,255
Undistributed Net Investment Income		954,677
Accumulated Net Realized Losses		(29,788)
Unrealized Appreciation
Investment Securities		13,447,237
Futures Contracts		4,563
Foreign Currencies and
Forward Currency Contracts		5,465
Net Assets		38,056,409

	Amount
	($000)
Investor Shares—Net Assets
Applicable to 603,003,373 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	26,187,542
Net Asset Value Per Share—
Investor Shares	$43.43


Admiral Shares—Net Assets
Applicable to 28,941,744 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	2,954,761
Net Asset Value Per Share—
Admiral Shares	$102.09


Signal Shares—Net Assets
Applicable to 12,720,759 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	502,496
Net Asset Value Per Share—
Signal Shares	$39.50


Institutional Shares—Net Assets
Applicable to 120,956,241 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	5,263,265
Net Asset Value Per Share—
Institutional Shares	$43.51


ETF Shares—Net Assets
Applicable to 38,556,342 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	3,148,345
Net Asset Value Per Share—
ETF Shares	$81.66

• 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 99.8% and –0.1%, respectively, of net assets. See Note D in Notes to Financial Statements.

2 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.

3 The issuer operates under a congressional charter; its securities are neither issued nor guaranteed by the U.S. government. If needed, access to additional funding from the U.S. Treasury (beyond the issuer’s line of credit) would require congressional action.

4 Securities with a value of $6,922,000 have been segregated as initial margin for open futures contracts.

5 See Note D in Notes to Financial Statements for the tax-basis components of net assets.

ADR—American Depositary Receipt.

European Stock Index Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Dividends¹	1,059,481
Interest²	6,871
Security Lending	28,608
Total Income	1,094,960
Expenses
The Vanguard Group—Note B
Investment Advisory Services	757
Management and Administrative—Investor Shares	35,972
Management and Administrative—Admiral Shares	2,204
Management and Administrative—Signal Shares	57
Management and Administrative—Institutional Shares	1,673
Management and Administrative—ETF Shares	1,469
Marketing and Distribution—Investor Shares	5,036
Marketing and Distribution—Admiral Shares	401
Marketing and Distribution—Signal Shares	1
Marketing and Distribution—Institutional Shares	1,019
Marketing and Distribution—ETF Shares	497
Custodian Fees	7,159
Auditing Fees	40
Shareholders’ Reports—Investor Shares	179
Shareholders’ Reports—Admiral Shares	11
Shareholders’ Reports—Signal Shares	1
Shareholders’ Reports—Institutional Shares	1
Shareholders’ Reports—ETF Shares	54
Trustees’ Fees and Expenses	32
Total Expenses	56,563
Expenses Paid Indirectly—Note C	(602)
Net Expenses	55,961
Net Investment Income	1,038,999
Realized Net Gain (Loss)
Investment Securities Sold	71,281
Futures Contracts	8,670
Foreign Currencies and Forward Currency Contracts	17,392
Realized Net Gain (Loss)	97,343
Change in Unrealized Appreciation (Depreciation)
Investment Securities	6,488,532
Futures Contracts	382
Foreign Currencies and Forward Currency Contracts	4,850
Change in Unrealized Appreciation (Depreciation)	6,493,764
Net Increase (Decrease) in Net Assets Resulting from Operations	7,630,106

1 Dividends are net of foreign withholding taxes of $58,163,000.

2 Interest income from an affiliated company of the fund was $6,174,000.

European Stock Index Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	1,038,999	618,399
Realized Net Gain (Loss)	97,343	436,790
Change in Unrealized Appreciation (Depreciation)	6,493,764	3,893,796
Net Increase (Decrease) in Net Assets Resulting from Operations	7,630,106	4,948,985
Distributions
Net Investment Income
Investor Shares	(460,764)	(283,561)
Admiral Shares	(62,628)	(37,265)
Signal Shares	(341)	—
Institutional Shares	(90,854)	(50,291)
ETF Shares	(39,981)	(7,061)
Realized Capital Gain
Investor Shares	—	—
Admiral Shares	—	—
Signal Shares	—	—
Institutional Shares	—	—
ETF Shares	—	—
Total Distributions	(654,568)	(378,178)
Capital Share Transactions—Note F
Investor Shares	4,446,099	2,675,066
Admiral Shares	162,740	374,593
Signal Shares	467,826	11,714
Institutional Shares	1,192,242	708,374
ETF Shares	1,456,669	890,919
Net Increase (Decrease) from Capital Share Transactions	7,725,576	4,660,666
Total Increase (Decrease)	14,701,114	9,231,473
Net Assets
Beginning of Period	23,355,295	14,123,822
End of Period¹	38,056,409	23,355,295

1 Net Assets—End of Period includes undistributed net investment income of $954,677,000 and $554,797,000.

European Stock Index Fund

Financial Highlights

Investor Shares


	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$34.67	$27.00	$23.77	$19.93	$16.44
Investment Operations
Net Investment Income	1.298¹	.92	.67	.54	.44
Net Realized and Unrealized Gain (Loss)
on Investments	8.386	7.45	3.14	3.76	3.45
Total from Investment Operations	9.684	8.37	3.81	4.30	3.89
Distributions
Dividends from Net Investment Income	(.924)	(.70)	(.58)	(.46)	(.40)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.924)	(.70)	(.58)	(.46)	(.40)
Net Asset Value, End of Period	$43.43	$34.67	$27.00	$23.77	$19.93


Total Return²	28.49%	31.63%	16.21%	21.89%	24.27%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$26,188	$16,850	$10,759	$7,904	$5,339
Ratio of Total Expenses to
Average Net Assets	0.22%	0.27%	0.27%	0.27%	0.32%
Ratio of Net Investment Income to
Average Net Assets	3.35%	3.35%	2.84%	2.67%	2.76%
Portfolio Turnover Rate³	9%	6%	5%	5%	6%

1 Calculated based on average shares outstanding.

2 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months or the account service fee that may be applicable to certain accounts with balances below $10,000.

3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

European Stock Index Fund

Admiral Shares


	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$81.50	$63.44	$55.84	$46.82	$38.61
Investment Operations
Net Investment Income	3.140¹	2.23	1.611	1.308	1.070
Net Realized and Unrealized Gain (Loss)
on Investments	19.692	17.51	7.396	8.830	8.115
Total from Investment Operations	22.832	19.74	9.007	10.138	9.185
Distributions
Dividends from Net Investment Income	(2.242)	(1.68)	(1.407)	(1.118)	(.975)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(2.242)	(1.68)	(1.407)	(1.118)	(.975)
Net Asset Value, End of Period	$102.09	$81.50	$63.44	$55.84	$46.82


Total Return²	28.59%	31.77%	16.32%	21.98%	24.42%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$2,955	$2,175	$1,360	$628	$447
Ratio of Total Expenses to
Average Net Assets	0.12%	0.17%	0.18%	0.18%	0.23%
Ratio of Net Investment Income to
Average Net Assets	3.45%	3.45%	2.93%	2.76%	2.84%
Portfolio Turnover Rate³	9%	6%	5%	5%	6%

1 Calculated based on average shares outstanding.

2 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

European Stock Index Fund

Signal Shares
	Year	Oct. 6,
	Ended	2006¹to
	October 31,	Oct. 31,
For a Share Outstanding Throughout Each Period	2007	2006
Net Asset Value, Beginning of Period	$31.51	$30.41
Investment Operations
Net Investment Income	1.151²	.01²
Net Realized and Unrealized Gain (Loss) on Investments	7.681	1.09
Total from Investment Operations	8.832	1.10
Distributions
Dividends from Net Investment Income	(.842)	—
Distributions from Realized Capital Gains	—	—
Total Distributions	(.842)	—
Net Asset Value, End of Period	$39.50	$31.51


Total Return³	28.59%	3.62%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$502	$12
Ratio of Total Expenses to Average Net Assets	0.12%	0.17%*
Ratio of Net Investment Income to Average Net Assets	3.45%	3.45%*
Portfolio Turnover Rate⁴	9%	6%

1 Inception.

2 Calculated based on average shares outstanding.

3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than two months.

4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

* Annualized.

European Stock Index Fund

Institutional Shares


	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$34.74	$27.05	$23.80	$19.96	$16.46
Investment Operations
Net Investment Income	1.35¹	.978	.721	.57	.471
Net Realized and Unrealized Gain (Loss)
on Investments	8.39	7.450	3.140	3.76	3.454
Total from Investment Operations	9.74	8.428	3.861	4.33	3.925
Distributions
Dividends from Net Investment Income	(.97)	(.738)	(.611)	(.49)	(.425)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.97)	(.738)	(.611)	(.49)	(.425)
Net Asset Value, End of Period	$43.51	$34.74	$27.05	$23.80	$19.96


Total Return²	28.63%	31.83%	16.42%	22.03%	24.49%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$5,263	$3,113	$1,827	$988	$649
Ratio of Total Expenses to
Average Net Assets	0.09%	0.12%	0.12%	0.12%	0.17%
Ratio of Net Investment Income to
Average Net Assets	3.48%	3.50%	2.99%	2.77%	2.96%
Portfolio Turnover Rate³	9%	6%	5%	5%	6%

1 Calculated based on average shares outstanding.

2 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

European Stock Index Fund

ETF Shares

			March 4,
		Year Ended	2005¹to
		October 31,	Oct. 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005
Net Asset Value, Beginning of Period	$65.21	$50.80	$50.96
Investment Operations
Net Investment Income	2.576²	1.80	1.04
Net Realized and Unrealized Gain (Loss) on Investments	15.683	13.99	(1.20)
Total from Investment Operations	18.259	15.79	(.16)
Distributions
Dividends from Net Investment Income	(1.809)	(1.38)	—
Distributions from Realized Capital Gains	—	—	—
Total Distributions	(1.809)	(1.38)	—
Net Asset Value, End of Period	$81.66	$65.21	$50.80


Total Return	28.60%	31.75%	–0.31%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$3,148	$1,205	$178
Ratio of Total Expenses to Average Net Assets	0.12%	0.18%	0.18%*
Ratio of Net Investment Income to Average Net Assets	3.45%	3.44%	2.93%*
Portfolio Turnover Rate³	9%	6%	5%

1 Inception.

2 Calculated based on average shares outstanding.

3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

* Annualized.

See accompanying Notes, which are an integral part of the Financial Statements.

European Stock Index Fund

Notes to Financial Statements

Vanguard European Stock Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard International Equity Index Funds. The fund invests in securities of foreign issuers, which may subject it to investment risks not normally associated with investing in securities of U.S. corporations. The fund offers five classes of shares: Investor Shares, Admiral Shares, Signal Shares, Institutional Shares, and ETF Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. Admiral Shares are designed for investors who meet certain administrative, service, tenure, and account-size criteria. Signal Shares are designed for institutional investors who meet certain administrative, service, and account-size criteria. Institutional Shares are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million. ETF Shares are listed for trading on the American Stock Exchange; they can be purchased and sold through a broker.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued at their fair values calculated according to procedures adopted by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value. 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.

2. Foreign Currency: Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the valuation date. 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 assets or liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).

3. Futures and Forward Currency Contracts: The fund uses 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 fund 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

European Stock Index Fund

cash balance for liquidity. The fund 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 fund and the prices of futures contracts, and the possibility of an illiquid market.

The fund also may enter into forward currency contracts to provide the appropriate currency exposure related to any open futures contracts. The fund’s risks in using these contracts include movement in the values of the foreign currencies relative to the U.S. dollar and the ability of the counterparties to fulfill their obligations under the contracts.

Futures and forward currency contracts are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the Statement of Net Assets. 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: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in the financial statements.

5. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

6. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

7. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. 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 redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At October 31, 2007, the fund had contributed capital of $3,021,000 to Vanguard (included in Other Assets), representing 0.01% of the fund’s net assets and 3.02% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

European Stock Index Fund

C. The fund’s custodian bank has agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the year ended October 31, 2007, custodian fee offset arrangements reduced the fund’s expenses by $602,000.

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended October 31, 2007, the fund realized net foreign currency gains of $7,800,000, which increased distributable net income for tax purposes; accordingly, such gains have been reclassified from accumulated net realized losses to undistributed net investment income. Certain of the fund’s investments are in securities considered to be “passive foreign investment companies,” for which any unrealized appreciation and/or realized gains are required to be included in distributable net income for tax purposes. During the year ended October 31, 2007, the fund realized gains on the sale of passive foreign investment companies of $7,649,000, which have been included in current and prior periods’ taxable income; accordingly, such gains have been reclassified from accumulated net realized losses to undistributed net investment income. Unrealized appreciation on the fund’s passive foreign investment company holdings at October 31, 2007, was $19,314,000, of which $17,126,000 has been distributed and is reflected in the balance of undistributed net income.

During the year ended October 31, 2007, the fund realized $33,426,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at October 31, 2007, the fund had $997,169,000 of ordinary income available for distribution. The fund had available realized losses of $13,739,000 to offset future net capital gains through October 31, 2011.

At October 31, 2007, the cost of investment securities for tax purposes was $24,541,847,000. Net unrealized appreciation of investment securities for tax purposes was $13,417,042,000, consisting of unrealized gains of $13,471,347,000 on securities that had risen in value since their purchase and $54,305,000 in unrealized losses on securities that had fallen in value since their purchase.

European Stock Index Fund

At October 31, 2007, the aggregate settlement value of open futures contracts expiring in December 2007 and the related unrealized appreciation (depreciation) were:

			($000)
		Aggregate	Unrealized
	Number of	Settlement	Appreciation
Futures Contracts	Long Contracts	Value	(Depreciation)
MSCI Pan-Euro Index	4,425	167,217	4,563

At October 31, 2007, the fund had open forward currency contracts to receive and deliver currencies as follows:

					Unrealized
					Appreciation
	Contract Amount (000)				(Depreciation)
Contract Settlement Date		Receive		Deliver	($000)
12/28/2007	EUR	112,427	USD	162,774	4,080

EUR—Euro.
USD—U.S. dollar.

Unrealized appreciation (depreciation) on open forward currency contracts is treated as realized gain (loss) for tax purposes.

The fund had net unrealized foreign currency gains of $1,385,000 resulting from the translation of other assets and liabilities at October 31, 2007.

E. During the year ended October 31, 2007, the fund purchased $10,603,812,000 of investment securities and sold $2,698,456,000 of investment securities, other than temporary cash investments.

European Stock Index Fund

F. Capital share transactions for each class of shares were:

	Year Ended October 31,
		2007		2006
	Amount	Shares	Amount	Shares
	($000)	(000)	($000)	(000)
Investor Shares
Issued	5,660,208	147,210	3,520,497	114,339
Issued in Lieu of Cash Distributions	454,609	12,663	277,433	9,958
Redeemed¹	(1,668,718)	(42,810)	(1,122,864)	(36,806)
Net Increase (Decrease)—Investor Shares	4,446,099	117,063	2,675,066	87,491
Admiral Shares
Issued	919,141	10,184	575,431	8,005
Issued in Lieu of Cash Distributions	51,856	615	31,004	474
Redeemed¹	(808,257)	(8,547)	(231,842)	(3,224)
Net Increase (Decrease)—Admiral Shares	162,740	2,252	374,593	5,255
Signal Shares
Issued	477,278	12,591	11,828	389
Issued in Lieu of Cash Distributions	341	10	—	—
Redeemed¹	(9,793)	(265)	(114)	(4)
Net Increase (Decrease)—Signal Shares	467,826	12,336	11,714	385
Institutional Shares
Issued	2,139,740	55,266	1,421,711	45,135
Issued in Lieu of Cash Distributions	80,880	2,251	43,746	1,569
Redeemed¹	(1,028,378)	(26,180)	(757,083)	(24,631)
Net Increase (Decrease)—Institutional Shares	1,192,242	31,337	708,374	22,073
ETF Shares
Issued	1,456,669	20,084	890,919	14,968
Issued in Lieu of Cash Distributions	—	—	—	—
Redeemed	—	—	—	—
Net Increase (Decrease)—ETF Shares	1,456,669	20,084	890,919	14,968

G. In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes.” FIN 48 establishes the minimum threshold for recognizing, and a system for measuring, the benefits of tax-return positions in financial statements, and is effective for the fund’s fiscal year beginning November 1, 2007. Management has analyzed the fund’s tax positions taken on federal income tax returns for all open tax years (tax years ended October 31, 2004–2007) for purposes of implementing FIN 48, and has concluded that as of October 31, 2007, no provision for income tax would be required in the fund’s financial statements.

1 Net of redemption fees of $1,200,000 and $712,000 (fund totals).

Pacific Stock Index Fund

Fund Profile

As of October 31, 2007

Portfolio Characteristics
		Target	Broad
	Fund	Index¹	Index²
Number of Stocks	560	558	2,067
Turnover Rate	3%	—	—
Expense Ratio		—	—
Investor Shares	0.22%
Admiral Shares	0.12%
Signal Shares	0.12%³
Institutional Shares	0.09%
ETF Shares	0.12%
Short-Term Reserves	–0.3%⁴	—	—

Sector Diversification (% of equity exposure)
		Target	Broad
	Fund	Index¹	Index²
Consumer Discretionary	14.3%	14.4%	9.8%
Consumer Staples	5.0	5.0	7.6
Energy	2.0	2.0	10.7
Financials	29.1	29.0	24.8
Health Care	4.1	4.1	6.6
Industrials	17.1	17.1	11.3
Information Technology	10.0	10.0	9.6
Materials	12.1	12.1	9.2
Telecommunication
Services	3.0	3.0	6.1
Utilities	3.3	3.3	4.3

Volatility Measures⁵
	Fund Versus	Fund Versus
	Target Index¹	Broad Index²
R-Squared	0.97	0.72
Beta	0.99	0.88

Ten Largest Holdings⁶(% of total net assets)

Toyota Motor Corp.	automobile
	manufacturers	3.4%
BHP Billiton Ltd.	diversified
	metals and mining	3.2
Mitsubishi UFJ
Financial Group	diversified banks	1.9
Commonwealth
Bank of Australia	diversified banks	1.7
National
Australia Bank Ltd.	diversified banks	1.5
Nintendo Co.	home entertainment
	software	1.4
Honda Motor Co., Ltd.	automobile
	manufacturers	1.3
Mizuho
Financial Group, Inc.	diversified banks	1.2
Canon, Inc.	office electronics	1.2
Sumitomo Mitsui
Financial Group, Inc.	diversified banks	1.2
Top Ten		18.0%

Market Diversification (% of equity exposure)
		Target
	Fund	Index¹
Japan	65.5%	65.6%
Australia	22.8	22.7
Hong Kong	7.4	7.2
Singapore	3.8	3.8
Other Pacific Countries	0.5	0.7

1 MSCI Pacific Index.

2 MSCI All Country World Index ex USA.

3 Annualized.

4 The fund invested a portion of its cash reserves in equity markets through the use of index futures contracts. After the effect of the futures investments, the fund’s temporary cash position was negative.

5 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 165.

6 “Ten Largest Holdings” excludes any temporary cash investments and equity index products.

Pacific Stock Index Fund

Performance Summary

Cumulative Performance: October 31, 1997–October 31, 2007

Initial Investment of $10,000

	Average Annual Total Returns			Final Value of
	Periods Ended October 31, 2007			a $10,000
	One Year	Five Years	Ten Years	Investment
Pacific Stock Index Fund Investor Shares¹	19.52%	21.05%	6.39%	$18,578
MSCI All Country World Index ex USA	32.97	26.39	10.75	27,762
MSCI Pacific Index	18.32	20.88	6.44	18,666
Average Japan/Pacific Region Fund²	13.91	18.99	5.97	17,851

				Final Value of
			Since	a $100,000
	One Year	Five Years	Inception³	Investment
Pacific Stock Index Fund Admiral Shares¹	19.64%	21.16%	12.04%	$202,788
MSCI All Country World Index ex USA	32.97	26.39	16.54	258,999
MSCI Pacific Index	18.32	20.88	12.03	202,597

		Final Value of
	Since	a $10,000,000
	Inception³	Investment
Pacific Stock Index Fund Signal Shares¹	5.73%	$10,573,207
MSCI All Country World Index ex USA	9.62	10,962,418
MSCI Pacific Index	4.79	10,478,656

2 Derived from data provided by Lipper Inc.

3 Performance for the fund and its comparative standards is calculated since the following inception dates: August 13, 2001, for the Admiral Shares and June 4, 2007, for the Signal Shares.

Pacific Stock Index Fund

				Final Value of
			Since	a $5,000,000
	One Year	Five Years	Inception¹	Investment
Pacific Stock Index Fund Institutional Shares²	19.72%	21.23%	4.84%	$7,116,172
MSCI All Country World Index ex USA	32.97	26.39	9.19	9,633,086
MSCI Pacific Index	18.32	20.88	4.80	7,093,402

			Final Value
		Since	of a $10,000
	One Year	Inception¹	Investment
Pacific Stock Index Fund ETF Shares	19.65%	17.61%	$15,394
MSCI All Country World Index ex USA	32.97	24.00	17,723
MSCI Pacific Index	18.32	17.31	15,293

Cumulative Returns: ETF Shares, March 4, 2005–October 31, 2007

		Since
	One Year	Inception¹
Pacific Stock Index Fund ETF Shares Market Price	19.12%	53.87%
Pacific Stock Index Fund ETF Shares Net Asset Value	19.65	53.94
MSCI Pacific Index	18.32	52.93

1 Performance for the fund and its comparative standards is calculated since the following inception dates: May 15, 2000, for the Institutional Shares and March 4, 2005, for the ETF Shares.

2 Returns do not reflect the 0.5% transaction fee on purchases through March 31, 2000, or the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

Pacific Stock Index Fund

Fiscal-Year Total Returns (%): October 31, 1997–October 31, 2007

Average Annual Total Returns: Periods Ended September 30, 2007

	Inception Date	One Year	Five Years	Ten Years
Pacific Stock Index Fund
Investor Shares¹	6/18/1990	18.82%	19.41%	4.65%
Admiral Shares¹	8/13/2001	18.95	19.55	11.59²
Signal Shares¹	6/04/2007	2.13²	—	—
Institutional Shares¹	5/15/2000	19.02	19.63	4.40²
ETF Shares	3/4/2005
Market Price		18.66	16.68²	—
Net Asset Value		18.95	16.65²	—

2 Returns since inception.

Note: See Financial Highlights tables on pages 71-75 for dividend and capital gains information.

Pacific Stock Index Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

		Market
		Value^•
	Shares	($000)
Common Stocks (99.2%)¹
Australia (22.5%)
BHP Billiton Ltd.	12,646,494	550,689
Commonwealth
Bank of Australia	4,900,818	282,259
National Australia
Bank Ltd.	6,150,214	248,825
Australia & New Zealand
Bank Group Ltd.	6,970,123	196,782
Westpac
Banking Corp., Ltd.	6,972,074	195,693
Woolworths Ltd.	4,549,368	142,585
Westfield Group	6,585,985	134,663
^Rio Tinto Ltd.	1,076,000	111,688
QBE Insurance Group Ltd.	3,249,668	99,448
Woodside Petroleum Ltd.	1,795,542	87,871
Macquarie Bank Ltd.	991,526	79,189
Brambles Ltd.	5,342,730	71,117
CSL, Ltd.	2,065,512	70,220
AMP Ltd.	7,057,964	67,579
Suncorp-Metway Ltd.	3,484,094	66,194
Coles Group Ltd.	4,287,463	64,701
^Wesfarmers Ltd.	1,461,882	60,155
Newcrest Mining Ltd.	1,706,429	52,018
Telstra Corp. Ltd.	10,790,141	47,226
Foster’s Group Ltd.	7,437,984	44,410
Stockland	5,240,010	44,018
Macquarie
Goodman Group	5,424,488	35,163
Australian Stock
Exchange Ltd.	644,620	34,760
Orica Ltd.	1,174,886	34,132
GPT Group	7,735,537	33,469
Publishing &
Broadcasting Ltd.	1,684,396	32,881
^Leighton Holdings Ltd.	525,205	30,747

		Market
		Value•
	Shares	($000)
Santos Ltd.	2,272,910	30,001
Macquarie
Infrastructure Group	10,019,339	29,742
Insurance Australia
Group Ltd.	6,750,059	29,693
Zinifex Ltd.	1,837,050	29,072
Tabcorp Holdings Ltd.	1,981,357	28,833
Origin Energy Ltd.	3,291,354	28,246
BlueScope Steel Ltd.	2,768,094	27,609
Transurban Group	4,019,640	27,360
Alumina Ltd.	4,261,442	26,781
Lend Lease Corp.	1,362,337	25,548
Toll Holdings Ltd.	2,038,778	25,479
WorleyParsons Ltd.	561,477	25,381
^Babcock & Brown Ltd.	873,307	25,287
AXA Asia Pacific
Holdings Ltd.	3,240,304	24,789
^Fortescue Metals
Group Ltd.	474,341	22,386
Amcor Ltd.	3,384,297	22,222
DB RREEF Trust	10,945,791	21,442
Centro Properties Group	3,183,478	20,956
Mirvac Group	3,830,005	20,770
Qantas Airways Ltd.	3,673,658	20,317
John Fairfax Holdings Ltd.	4,470,361	19,853
Sonic Healthcare Ltd.	1,179,429	19,021
Coca-Cola Amatil Ltd.	1,988,655	19,005
AGL Energy Ltd.	1,636,281	18,446
OneSteel Ltd.	2,814,794	18,188
Telstra Corp. Installment
Receipt Exp. 3/31/08	5,623,728	16,749
*^Paladin Resources Ltd.	2,045,590	15,926
Tattersall’s Ltd.	4,061,538	15,925
Asciano Group	2,018,514	15,835
Computershare Ltd.	1,908,307	15,387
Boral Ltd.	2,262,276	14,377
Cochlear Ltd.	207,500	13,343
^Aristocrat Leisure Ltd.	1,317,434	12,886
Harvey Norman
Holdings Ltd.	2,000,317	12,711
CFS Gandel Retail Trust	5,180,655	11,833
Macquarie Office Trust	7,568,073	11,612
CSR Ltd.	3,497,613	11,164
James Hardie
Industries NV	1,771,010	10,782
Macquarie Airports Group	2,600,105	10,686
Caltex Australia Ltd.	509,922	10,259
^Perpetual Trustees
Australia Ltd.	140,517	9,775
Lion Nathan Ltd.	1,110,254	9,656

		Market
		Value•
	Shares	($000)
ING Industrial Fund	3,418,564	8,958
Billabong International Ltd.	629,409	8,889
Symbion Health Ltd.	2,290,349	8,674
^ABC Learning Centres Ltd.	1,401,868	8,656
Challenger Financial
Services Group Ltd.	1,364,196	8,152
Goodman Fielder Ltd.	4,020,931	7,918
Commonwealth
Property Office Fund	5,250,140	7,770
Macquarie Communications
Infrastructure Group	1,378,206	7,436
Downer EDI Ltd.	1,057,972	6,597
Centro Retail Trust	4,157,111	6,233
Ansell Ltd.	511,708	5,932
Pacific Brands Ltd.	1,764,169	5,706
APN News & Media Ltd.	1,127,537	5,645
Paperlinx Ltd.	1,573,468	4,073
Futuris Corp., Ltd.	2,036,654	4,047
Iluka Resources Ltd.	834,564	3,415
		3,851,916
Hong Kong (7.4%)
Hong Kong Exchanges &
Clearing Ltd.	4,025,500	134,381
Cheung Kong Holdings Ltd.	5,675,228	111,322
Hutchison Whampoa Ltd.	8,016,360	100,755
Sun Hung Kai
Properties Ltd.	5,160,104	98,614
Esprit Holdings Ltd.	3,948,178	65,940
Hang Seng Bank Ltd.	2,885,166	58,944
Swire Pacific Ltd. A Shares	3,157,500	45,095
Li & Fung Ltd.	8,369,450	39,716
Boc Hong Kong
Holdings Ltd.	13,953,800	39,517
Hang Lung Properties Ltd.	7,811,720	37,583
Hong Kong &
China Gas Co., Ltd.	13,714,438	36,899
Bank of East Asia Ltd.	5,320,273	36,199
CLP Holdings Ltd.	4,997,063	33,771
New World
Development Co., Ltd.	9,057,146	32,644
Henderson Land
Development Co. Ltd.	3,295,324	29,541
Tencent Holdings Ltd.	3,352,600	28,740
Wharf Holdings Ltd.	4,621,914	27,868
Hong Kong Electric
Holdings Ltd.	5,238,350	26,932
* Foxconn International
Holdings Ltd.	7,920,238	22,085
Kerry Properties Ltd.	2,381,313	20,713
Link REIT	8,031,000	18,221

		Market
		Value•
	Shares	($000)
MTR Corp.	5,209,200	18,060
Sino Land Co.	5,142,400	16,120
Cathay Pacific Airways Ltd.	5,149,500	15,361
Kingboard Chemical
Holdings Ltd.	2,195,500	14,421
Shangri-La Asia Ltd.	4,386,068	13,998
Belle International
Holdings Ltd.	7,767,000	12,600
Hopewell Holdings Ltd.	2,346,800	12,161
Shui On Land Ltd.	7,111,243	9,899
PCCW Ltd.	15,129,769	9,770
Tingyi Holding Corp.	6,333,350	9,692
Orient Overseas
International Ltd.	815,224	8,416
Wing Hang Bank Ltd.	665,509	7,842
Hutchison
Telecommunications
International Ltd.	5,403,673	7,713
Hysan
Development Co., Ltd.	2,391,811	7,227
Television Broadcasts Ltd.	1,077,424	6,979
Shun Tak Holdings Ltd.	4,391,382	6,933
Yue Yuen Industrial
(Holdings) Ltd.	2,189,900	6,758
Cheung Kong Infrastructure
Holdings Ltd.	1,706,600	6,686
ASM Pacific Technology Ltd.	733,000	5,747
Melco International
Development Corp.	2,781,000	5,273
Techtronic
Industries Co., Ltd.	4,165,000	4,501
Johnson Electric
Holdings Ltd.	5,546,600	3,113
Giordano International Ltd.	5,141,600	2,404
		1,257,154
Japan (65.0%)
Toyota Motor Corp.	10,203,865	584,112
Mitsubishi UFJ
Financial Group	32,732,040	327,521
Nintendo Co.	373,620	237,278
Honda Motor Co., Ltd.	5,876,904	220,072
Mizuho Financial
Group, Inc.	37,197	209,064
Canon, Inc.	4,018,249	203,321
Sumitomo Mitsui
Financial Group, Inc.	24,765	202,858
Takeda
Pharmaceutical Co. Ltd.	3,183,847	198,877
Sony Corp.	3,778,864	186,625
Mitsui & Co., Ltd.	6,410,600	166,279

		Market
		Value•
	Shares	($000)
Mitsubishi Corp.	5,094,900	158,632
Nippon Steel Corp.	21,806,343	144,936
Matsushita Electric
Industrial Co., Ltd.	7,403,563	141,376
Mitsubishi Estate Co., Ltd.	4,424,000	132,624
JFE Holdings, Inc.	2,191,700	128,299
Nomura Holdings Inc.	6,665,000	118,765
Tokyo Electric Power Co.	4,586,510	116,382
Komatsu Ltd.	3,383,768	113,446
Millea Holdings, Inc.	2,795,000	109,999
East Japan Railway Co.	12,807	105,496
Shin-Etsu
Chemical Co., Ltd.	1,546,000	99,170
Japan Tobacco, Inc.	16,977	98,953
Toshiba Corp.	11,537,000	97,699
Nissan Motor Co., Ltd.	8,511,920	97,655
Astellas Pharma Inc.	2,021,298	89,728
Nippon Telegraph and
Telephone Corp.	19,557	89,505
Mitsubishi Electric Corp.	7,291,000	88,891
Fuji Photo Film Co., Ltd.	1,842,066	88,115
NTT DoCoMo, Inc.	60,444	87,940
Mitsui Fudosan Co., Ltd.	3,152,557	87,212
Hitachi Ltd.	12,707,000	85,096
Seven and I
Holdings Co., Ltd.	3,097,140	79,973
Fanuc Co., Ltd.	722,200	79,167
Sumitomo Metal
Industries Ltd.	15,412,000	76,283
Daiichi Sankyo Co., Ltd.	2,634,336	74,915
Denso Corp.	1,830,400	74,360
Itochu Corp.	5,680,000	71,775
Orix Corp.	344,806	70,729
Mitsubishi Heavy
Industries Ltd.	12,093,000	70,427
KDDI Corp.	9,283	70,111
Sumitomo Corp.	4,003,000	69,748
Mitsui OSK Lines Ltd.	4,088,000	67,565
Kansai Electric
Power Co., Inc.	2,900,400	65,317
Softbank Corp.	2,788,818	65,132
Chubu Electric Power Co.	2,505,500	64,201
Central Japan Railway Co.	5,918	61,223
Sharp Corp.	3,764,000	59,373
Hoya Corp.	1,560,094	56,809
Kao Corp.	1,966,661	56,403
Fujitsu Ltd.	7,034,000	55,229
Marubeni Corp.	6,223,000	53,434
Sumitomo Chemical Co.	5,934,000	52,754
Mitsui Sumitomo

		Market
		Value•
	Shares	($000)
Insurance Co.	4,568,552	52,396
Kyocera Corp.	612,800	52,087
Bridgestone Corp.	2,300,859	50,931
Sumitomo Realty &
Development Co.	1,434,272	50,623
Ricoh Co.	2,524,386	49,896
Daikin Industries Ltd.	983,089	49,514
Asahi Glass Co., Ltd.	3,572,200	49,195
Murata
Manufacturing Co., Ltd.	807,755	49,158
Daiwa Securities
Group Inc.	5,037,850	48,550
Sumitomo Metal
Mining Co.	2,070,000	46,192
Sumitomo Electric
Industries Ltd.	2,829,700	45,814
T & D Holdings, Inc.	743,810	44,767
Nippon Yusen Kabushiki
Kaisha Co.	4,179,000	43,145
Kirin Brewery Co., Ltd.	2,973,048	41,546
Nippon Oil Corp.	4,683,479	41,480
Ibiden Co., Ltd.	482,539	40,902
Secom Co., Ltd.	792,600	40,780
Eisai Co., Ltd.	951,600	39,956
TDK Corp.	477,600	39,196
Toray Industries, Inc.	5,024,740	38,790
Nikon Corp.	1,204,718	38,662
Resona Holdings Inc.	21,518	38,559
NEC Corp.	7,664,812	38,114
Aeon Co., Ltd.	2,417,100	38,049
Tokyo Electron Ltd.	647,730	38,039
Tokyo Gas Co., Ltd.	8,472,000	37,769
Sompo Japan
Insurance Inc.	3,168,000	37,259
Mitsubishi Chemical
Holdings Corp.	4,433,000	36,679
Olympus Corp.	870,464	36,250
Kobe Steel Ltd.	9,995,095	35,988
NGK Insulators Ltd.	1,010,534	35,825
Sumitomo Trust &
Banking Co., Ltd.	4,742,959	35,364
Kyushu Electric
Power Co., Inc.	1,432,600	34,930
Kubota Corp.	4,134,000	34,706
Asahi Kasei Corp.	4,502,000	34,465
Tohoku Electric Power Co.	1,612,700	34,078
Dai-Nippon
Printing Co., Ltd.	2,338,741	33,951
Yamada Denki Co., Ltd.	326,736	33,687
Inpex Holdings, Inc.	3,109	33,516

		Market
		Value•
	Shares	($000)
Rohm Co., Ltd.	381,100	33,388
West Japan Railway Co.	6,416	32,108
Bank of Yokohama Ltd.	4,472,000	31,733
Konica Minolta
Holdings, Inc.	1,806,000	31,615
Nippon Mining
Holdings Inc.	3,332,000	31,515
Terumo Corp.	636,459	31,151
Shiseido Co., Ltd.	1,277,524	30,756
Nidec Corp.	408,600	30,701
Keyence Corp.	132,419	30,516
Nitto Denko Corp.	623,100	30,420
Aisin Seiki Co., Ltd.	723,238	29,718
Osaka Gas Co., Ltd.	7,597,000	29,556
Kawasaki Kisen Kaisha Ltd.	2,121,000	29,440
SMC Corp.	217,077	29,078
Toyoda Automatic
Loom Works Ltd.	676,800	28,983
Sumitomo Heavy
Industries Ltd.	2,172,000	28,694
Ajinomoto Co., Inc.	2,512,000	28,373
Daiwa House
Industry Co., Ltd.	1,926,000	27,485
Tokyu Corp.	4,151,000	26,978
Asahi Breweries Ltd.	1,552,700	25,679
Yahoo Japan Corp.	57,090	25,414
Office Building Fund of
Japan Inc.	1,725	25,023
Mitsubishi Materials Corp.	4,254,000	24,905
Sekisui House Ltd.	1,876,858	24,011
Chiba Bank Ltd.	2,861,000	22,963
Shizuoka Bank Ltd.	2,162,000	22,699
Electric Power
Development Co., Ltd.	565,940	22,526
Mitsui Chemicals, Inc.	2,393,000	22,507
Toyota Tsusho Corp.	803,004	22,502
Mitsui Trust Holding Inc.	2,743,400	21,951
Japan Steel Works Ltd.	1,333,832	21,818
NTT Data Corp.	4,765	21,729
Nippon Electric
Glass Co., Ltd.	1,267,097	21,536
Yamato Holdings Co., Ltd.	1,460,000	21,535
Hankyu Corp.	4,563,958	21,413
Nikko Securities Co., Ltd.	1,475,253	21,241
Makita Corp.	435,300	20,971
Toppan Printing Co., Ltd.	2,112,000	20,605
Yamaha Motor Co., Ltd.	702,800	20,069
Omron Corp.	800,100	19,678
Credit Saison Co., Ltd.	616,052	19,644
Kawasaki Heavy

		Market
		Value•
	Shares	($000)
Industries Ltd.	5,338,000	19,340
Dentsu Inc.	7,364	19,313
Shionogi & Co., Ltd.	1,127,362	19,213
Kintetsu Corp.	6,134,150	18,648
Japan Real Estate
Investment Corp.	1,472	18,307
Chugai
Pharmaceutical Co., Ltd.	1,056,200	18,296
Fukuoka Financial
Group, Inc.	2,836,600	18,282
Kuraray Co., Ltd.	1,373,000	17,928
Sojitz Holdings Corp.	3,835,400	17,606
JSR Corp.	677,700	17,597
Advantest Corp.	603,236	17,501
Trend Micro Inc.	387,000	17,280
Shinsei Bank, Ltd.	5,297,046	17,169
Tokyu Land Corp.	1,614,000	16,721
Hitachi Construction
Machinery Co.	405,878	16,647
Showa Denko K.K.	4,231,000	16,596
Odakyu Electric
Railway Co.	2,370,000	16,573
Mitsui Engineering &
Shipbuilding Co., Ltd.	2,813,000	16,564
JS Group Corp.	1,004,808	16,277
Teijin Ltd.	3,328,000	16,058
Sumco Corp.	433,016	15,804
Matsushita Electric
Works, Ltd.	1,409,000	15,683
Joyo Bank Ltd.	2,528,000	15,677
JGC Corp.	782,000	15,660
Yamaha Corp.	663,900	15,442
Leopalace21 Corp.	481,700	15,377
Nippon Express Co., Ltd.	3,014,000	15,158
Nomura Research
Institute, Ltd.	425,780	15,050
Hokkaido Electric
Power Co., Ltd.	691,861	14,930
NSK Ltd.	1,668,000	14,789
OJI Paper Co., Ltd.	3,213,740	14,680
Mitsubishi Gas
Chemical Co.	1,464,000	14,658
J. Front Retailing Co., Ltd.	1,623,400	14,564
Tobu Railway Co., Ltd.	3,085,000	14,560
Hirose Electric Co., Ltd.	120,800	14,486
NTN Corp.	1,497,000	14,232
Mitsumi Electric Co., Ltd.	307,600	14,174
Kurita Water Industries Ltd.	422,900	14,127
Daito Trust
Construction Co., Ltd.	304,184	14,104

		Market
		Value•
	Shares	($000)
Amada Co., Ltd.	1,385,000	14,014
JTEKT Corp.	726,923	13,975
Citizen Watch Co., Ltd.	1,295,400	13,955
Nippon Sheet
Glass Co., Ltd.	2,276,000	13,895
Hokuhoku Financial
Group, Inc.	4,477,400	13,831
Tokyo Tatemono Co., Ltd.	1,075,000	13,830
^Bank of Kyoto Ltd.	1,072,000	13,695
Takashimaya Co.	1,118,972	13,588
Keio Electric
Railway Co., Ltd.	2,169,000	13,192
^Kyowa Hakko Kogyo Co.	1,196,000	13,057
Ube Industries Ltd.	3,595,000	12,909
Stanley Electric Co.	568,600	12,645
*^Elpida Memory Inc.	366,300	12,636
Namco Bandai
Holdings Inc.	788,100	12,151
Rakuten, Inc.	24,725	12,092
Dowa Mining Co., Ltd.	1,032,000	12,090
Kajima Corp.	3,398,000	12,035
IHI Corp.	4,990,000	11,961
Sekisui Chemical Co.	1,737,000	11,888
Sony Financial
Holdings, Inc.	3,275	11,781
Ohbayashi Corp.	2,321,000	11,696
Sapporo Hokuyo
Holdings, Inc.	1,135	11,682
Shimizu Corp.	2,217,000	11,604
Marui Co., Ltd.	1,116,400	11,581
Nisshin Steel Co.	3,003,000	11,560
Tokuyama Corp.	827,000	11,551
Tosoh Corp.	1,803,000	11,540
Fast Retailing Co., Ltd.	200,300	11,530
Furukawa Electric Co.	2,399,000	11,523
Mitsubishi Rayon Co., Ltd.	2,028,000	11,509
The Hachijuni Bank Ltd.	1,506,550	11,508
Seiko Epson Corp.	481,900	11,387
Dai-Nippon Ink &
Chemicals, Inc.	2,373,000	11,386
Oriental Land Co., Ltd.	189,500	11,250
SBI Holdings, Inc.	35,230	11,177
Toyo Seikan Kaisha Ltd.	613,600	11,092
Yaskawa Electric Corp.	823,380	11,077
^TonenGeneral Sekiyu K.K.	1,091,000	10,991
NGK Spark Plug Co.	650,682	10,947
Taisei Corp.	3,618,000	10,885
Taiheiyo Cement Corp.	3,409,000	10,741
Takefuji Corp.	418,940	10,720
^Nissin Food

		Market
		Value•
	Shares	($000)
Products Co., Ltd.	337,000	10,604
THK Co., Inc.	477,600	10,532
Taisho Pharmaceutical Co.	545,000	10,477
Konami Corp.	352,849	10,417
Sega Sammy Holdings Inc.	749,032	10,342
The Hiroshima Bank, Ltd.	1,896,650	10,305
Denki Kagaku Kogyo K.K.	1,751,000	10,301
Kaneka Corp.	1,151,982	10,238
Yokogawa Electric Corp.	811,997	10,231
Shinko Securities Co., Ltd.	1,973,000	10,218
Chiyoda Corp.	545,000	10,121
Gunma Bank Ltd.	1,418,000	10,073
Nippon Paper Group, Inc.	3,340	10,001
*^Sanyo Electric Co., Ltd.	6,018,000	9,962
^Keihin Electric Express
Railway Co., Ltd.	1,612,000	9,888
NTT Urban
Development Corp.	4,352	9,817
Isetan Co.	724,500	9,789
Benesse Corp.	261,457	9,786
Japan Retail Fund
Investment Corp.	1,315	9,765
The Suruga Bank, Ltd.	743,000	9,754
* Haseko Corp.	4,000,155	9,635
Asics Corp.	604,139	9,634
Hitachi Chemical Co., Ltd.	391,400	9,595
Shimano, Inc.	258,100	9,421
NOK Corp.	421,400	9,414
Nippon Sanso Corp.	1,056,000	9,381
^All Nippon
Airways Co., Ltd.	2,428,000	9,362
Uni-Charm Corp.	156,500	9,336
CSK Corp.	237,700	9,313
Tanabe Seiyaku Co., Ltd.	808,000	9,310
Minebea Co., Ltd.	1,343,000	9,297
^Yakult Honsha Co., Ltd.	398,800	9,259
Nomura Real Estate
Office Fund, Inc.	905	9,192
Mitsui Mining &
Smelting Co., Ltd.	2,169,000	9,132
Toyoda Gosei Co., Ltd.	246,200	8,843
77 Bank Ltd.	1,307,000	8,827
Idemitsu Kosan Co. Ltd.	75,747	8,821
Ushio Inc.	421,500	8,699
Sankyo Co., Ltd.	203,200	8,675
Fujikura Ltd.	1,338,000	8,627
Toho Co., Ltd.	429,100	8,585
Japan Prime Realty
Investment Corp.	2,128	8,562
Casio Computer Co.	899,800	8,484

		Market
		Value•
	Shares	($000)
^Promise Co., Ltd.	281,250	8,460
Showa Shell Sekiyu K.K.	714,000	8,406
Daido Steel Co., Ltd.	1,220,000	8,326
Japan Petroleum
Exploration Co., Ltd.	108,485	8,266
Toyota Boshoku Corp.	248,800	8,178
Alps Electric Co., Ltd.	651,900	8,162
Lawson Inc.	234,700	8,114
Fuji Electric
Holdings Co., Ltd.	2,125,000	8,101
Shimamura Co., Ltd.	82,800	8,062
Susuken Co., Ltd.	248,720	8,030
MEDICEO
Holdings Co., Ltd.	551,961	8,022
Kamigumi Co., Ltd.	984,000	8,012
Sumitomo Rubber
Industries Ltd.	647,000	7,924
*^Japan Airlines System Co.	3,409,000	7,687
^Toto Ltd.	1,058,000	7,657
The Nishi-Nippon
City Bank, Ltd.	2,564,307	7,636
Okuma Corp.	541,711	7,633
Daicel Chemical
Industries Ltd.	1,034,000	7,615
Nissan Chemical
Industries, Ltd.	553,000	7,604
Nisshinbo Industries, Inc.	557,000	7,602
Glory Ltd.	221,600	7,359
^Sapporo Holdings Ltd.	972,000	7,317
^Mitsukoshi, Ltd.	1,555,000	7,206
Mabuchi Motor Co.	105,900	7,152
^Kikkoman Corp.	560,000	7,105
Hino Motors, Ltd.	980,000	7,065
^Aiful Corp.	297,500	7,020
Nippon Meat Packers, Inc.	693,000	6,984
Jupiter Telecommunications
Co., Ltd.	8,496	6,849
Ebara Corp.	1,438,000	6,786
^Oracle Corp. Japan	144,200	6,622
Santen
Pharmaceutical Co., Ltd.	280,100	6,584
Nisshin Seifun Group Inc.	727,100	6,557
FamilyMart Co., Ltd.	222,600	6,487
Pioneer Corp.	577,500	6,435
Taiyo Yuden Co., Ltd.	387,000	6,420
Hakuhodo DY Holdings Inc.	88,200	6,389
Nitori Co., Ltd.	139,568	6,378
Mitsubishi Logistics Corp.	433,000	6,259
AEON Mall Co., Ltd.	239,800	6,236
Kansai Paint Co., Ltd.	826,000	6,201

		Market
		Value•
	Shares	($000)
Alfresa Holdings Corp.	106,600	6,196
^Osaka Titanium
Technologies Co.	69,726	6,139
Keisei Electric
Railway Co., Ltd.	1,110,000	6,116
USS Co., Ltd.	92,390	6,052
ZEON Corp.	639,527	6,039
Uny Co., Ltd.	682,000	5,913
Shinko Electric
Industries Co., Ltd.	255,553	5,907
Hitachi
High-Technologies Corp.	260,275	5,865
Toyo Suisan Kaisha, Ltd.	336,000	5,841
Tokai Rika Co., Ltd.	197,124	5,830
^SBI E*Trade
Securities Co., Ltd.	5,420	5,819
^Acom Co., Ltd.	241,650	5,787
Otsuka Corp.	60,064	5,756
Nomura Real Estate
Holdings Inc.	198,200	5,739
Tokyo Steel
Manufacturing Co.	411,000	5,699
Aoyama Trading Co., Ltd.	216,300	5,654
^Toyobo Ltd.	2,394,000	5,638
Canon Sales Co. Inc.	284,000	5,565
Ryohin Keikaku Co., Ltd.	87,200	5,488
Onward Kashiyama Co., Ltd.	524,000	5,402
Komori Corp.	203,000	5,369
Obic Co., Ltd.	26,350	5,293
Meiji Dairies Corp.	1,001,000	5,288
Diamond Lease Co., Ltd.	152,170	5,272
^Meiji Seika Kaisha Ltd.	1,185,000	5,214
Aeon Credit
Service Co. Ltd.	327,990	5,046
JAFCO Co., Ltd.	118,700	4,892
Coca-Cola West
Japan Co., Ltd.	210,700	4,878
Dai-Nippon Screen
Manufacturing Co., Ltd.	816,000	4,851
NHK Spring Co.	554,000	4,758
Nippon Shokubai Co., Ltd.	481,000	4,754
Ito En, Ltd.	223,900	4,732
Sumitomo Bakelite Co. Ltd.	756,000	4,636
Shimachu Co.	156,836	4,515
Nippon Kayaku Co., Ltd.	545,000	4,400
Seino
Transportation Co., Ltd.	507,000	4,353
Hitachi Cable Ltd.	637,000	4,259
Itochu Techno-Science Corp.	117,400	4,191
^Rinnai Corp.	133,300	4,150

		Market
		Value•
	Shares	($000)
Hankyu Department
Stores, Inc.	494,000	4,123
House Foods Industry Corp.	259,900	4,116
Kinden Corp.	456,000	4,054
Comsys Holdings Corp.	410,000	4,020
* K.K. DaVinci Advisors	3,851	4,018
^Wacoal Corp.	329,000	4,011
Sanwa Shutter Corp.	760,000	4,008
Asatsu-DK Inc.	119,200	3,983
*^Access Co., Ltd.	825	3,964
Nichirei Corp.	907,000	3,878
Tokyo Broadcasting
System, Inc.	144,800	3,865
Toda Corp.	737,000	3,862
*^NEC Electronics Corp.	140,800	3,858
Nippon Light Metal Co.	1,834,000	3,784
^Toho Titanium Co., Ltd.	103,342	3,777
*^Oki Electric
Industry Co. Ltd.	2,163,000	3,681
^Matsui Securities Co., Ltd.	461,800	3,669
Yamazaki Baking Co., Ltd.	417,000	3,651
^Park24 Co., Ltd.	366,374	3,647
^Meitec Corp.	122,900	3,622
Fuji Television Network, Inc.	1,786	3,607
^Takara Holdings Inc.	612,000	3,597
Daifuku Co., Ltd.	299,427	3,577
^OSG Corp.	278,011	3,517
Q.P. Corp.	349,200	3,447
Sumitomo Osaka
Cement Co., Ltd.	1,351,000	3,386
EDION Corp.	277,045	3,182
Gunze Ltd.	640,000	3,096
Hikari Tsushin, Inc.	100,100	3,057
^Tokyo Seimitsu Co., Ltd.	126,966	2,995
^Okumura Corp.	561,000	2,969
Kose Corp.	114,770	2,946
^Nishimatsu
Construction Co.	952,000	2,933
Central Glass Co., Ltd.	604,000	2,855
^eAccess Ltd.	4,498	2,851
Round One Corp.	1,184	2,812
Kokuyo Co., Ltd.	293,900	2,591
Circle K Sunkus Co., Ltd.	166,500	2,547
^Autobacs Seven Co., Ltd.	106,800	2,482
Matsumotokiyoshi
Holdings Co., Ltd.	131,700	2,335
TIS Inc.	127,400	2,220
Hitachi Capital Corp.	165,700	2,202
^Sanken Electric Co., Ltd.	375,000	2,147
Fuji Soft ABC Inc.	105,500	2,090

		Market
		Value•
	Shares	($000)
^Aderans Co. Ltd.	117,200	1,887
^The Goodwill Group, Inc.	4,472	1,026
* Dowa Mining Co., Ltd.
Rights Exp. 1/29/10	805,000	465
		11,088,156
New Zealand (0.5%)
Telecom Corp. of
New Zealand Ltd.	6,733,646	22,619
Fletcher Building Ltd.	1,881,499	17,287
Auckland International
Airport Ltd.	3,701,499	8,238
Contact Energy Ltd.	1,092,522	7,659
Sky City Entertainment
Group Ltd.	1,770,631	7,359
Fisher & Paykel
Healthcare Corp. Ltd.	1,817,144	4,566
Sky Network Television Ltd.	670,915	2,990
Kiwi Income Property Trust	2,507,899	2,827
Fisher & Paykel
Appliances Holdings Ltd.	939,413	2,552
Vector Ltd.	853,124	1,576
		77,673
Singapore (3.8%)
Singapore
Telecommunications Ltd.	30,004,290	85,323
United Overseas
Bank Ltd.	4,598,567	68,984
DBS Group Holdings Ltd.	4,288,161	67,117
Oversea–Chinese
Banking Corp., Ltd.	9,437,068	60,587
Keppel Corp., Ltd.	4,147,500	42,633
Singapore Exchange Ltd.	3,005,000	32,928
Capitaland Ltd.	5,821,895	32,780
Singapore Airlines Ltd.	1,984,010	27,083
City Developments Ltd.	1,870,412	20,652
Singapore Press
Holdings Ltd.	5,691,833	18,117
Cosco Corp.
Singapore Ltd.	2,924,000	15,880
Sembcorp Industries Ltd.	3,332,393	13,764
Singapore Technologies
Engineering Ltd.	5,049,407	13,358
Fraser & Neave Ltd.	3,139,500	13,148
CapitaMall Trust	3,837,148	9,794
SembCorp Marine Ltd.	3,107,800	9,649
ComfortDelGro Corp. Ltd.	7,083,586	9,514
Venture Corp. Ltd.	878,250	8,520
Keppel Land Ltd.	1,364,000	7,890
Jardine Cycle N
Carriage Ltd.	515,128	7,552

					Market
					Value•
				Shares	($000)
United Overseas Land Ltd.				1,952,556	7,165
Capitacommercial Trust				3,667,365	6,867
Ascendas REIT				3,774,000	6,806
Parkway Holdings Ltd.				2,339,072	6,784
Noble Group Ltd.				3,887,000	6,404
Neptune Orient Lines Ltd.				1,670,000	5,982
	Olam International Ltd.			2,351,000	5,741
	Suntec REIT			3,771,142	4,753
	Singapore Post Ltd.			5,052,800	4,285
	Wing Tai Holdings Ltd.			1,608,000	3,887
	Singapore
	Petroleum Co. Ltd.			635,000	3,626
	Singapore Land Ltd.			470,000	3,179
*	Chartered Semiconductor
	Manufacturing Ltd.			3,861,000	3,072
	Allgreen Properties Ltd.			2,714,500	2,994
	SMRT Corp. Ltd.			2,390,000	2,931
	Haw Par Brothers
	International Ltd.			358,193	1,970
					641,719
Total Common Stocks
(Cost $12,571,799)					16,916,618
Temporary Cash Investments (2.3%)¹
Money Market Fund (2.2%)
²		Vanguard Market
		Liquidity Fund,
		4.955%—Note E		323,074,624	323,075
²		Vanguard Market
		Liquidity Fund, 4.955%		50,950,165	50,950
					374,025
				Face
				Amount
				($000)
U.S. Agency Obligations (0.1%)
³		Federal Home Loan Bank
⁴		4.923%, 1/25/08		6,000	5,936
³			Federal National Mortgage Assn.
⁴		4.917%, 1/18/08		3,000	2,971
					8,907
Total Temporary Cash Investments
(Cost $382,925)					382,932
Total Investments (101.5%)
(Cost $12,954,724)					17,299,550
Other Assets and Liabilities (–1.5%)
Other Assets—Note B					281,149
Security Lending Collateral
		Payable to Brokers—Note E			(323,075)
Other Liabilities					(214,712)
					(256,638)
Net Assets (100%)					17,042,912

Pacific Stock Index Fund

At October 31, 2007, net assets consisted of:⁵
	Amount
	($000)
Paid-in Capital	12,643,831
Undistributed Net Investment Income	131,063
Accumulated Net Realized Losses	(81,056)
Unrealized Appreciation
Investment Securities	4,344,826
Futures Contracts	3,464
Foreign Currencies and
Forward Currency Contracts	784
Net Assets	17,042,912

Investor Shares—Net Assets
Applicable to 795,174,867 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	11,280,720
Net Asset Value Per Share—
Investor Shares	$14.19

Admiral Shares—Net Assets
Applicable to 13,902,735 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	1,292,183
Net Asset Value Per Share—
Admiral Shares	$92.94

	Amount
	($000)
Signal Shares—Net Assets
Applicable to 7,655,056 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	247,087
Net Asset Value Per Share—
Signal Shares	$32.28

Institutional Shares—Net Assets
Applicable to 191,310,711 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	2,720,091
Net Asset Value Per Share—
Institutional Shares	$14.22

ETF Shares—Net Assets
Applicable to 19,992,596 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	1,502,831
Net Asset Value Per Share—
ETF Shares	$75.17

• See Note A in Notes to Financial Statements.

* Non-income-producing security.

^ Part of security position is on loan to broker-dealers. See Note E in Notes to Financial Statements.

1 The fund invests a portion of its cash reserves in equity markets through the use of index futures contracts. After giving effect to futures investments, the fund’s effective common stock and temporary cash investment positions represent 99.9% and 1.6%, respectively, of net assets. See Note C in Notes to Financial Statements.

2 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.

4 Securities with a value of $8,907,000 have been segregated as initial margin for open futures contracts.

5 See Note C in Notes to Financial Statements for the tax-basis components of net assets.

REIT—Real Estate Investment Trust.

Pacific Stock Index Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Dividends¹	278,796
Interest²	3,839
Security Lending	3,889
Total Income	286,524
Expenses
The Vanguard Group—Note B
Investment Advisory Services	401
Management and Administrative—Investor Shares	16,241
Management and Administrative—Admiral Shares	1,054
Management and Administrative—Signal Shares	23
Management and Administrative—Institutional Shares	960
Management and Administrative—ETF Shares	775
Marketing and Distribution—Investor Shares	2,363
Marketing and Distribution—Admiral Shares	211
Marketing and Distribution—Signal Shares	—
Marketing and Distribution—Institutional Shares	558
Marketing and Distribution—ETF Shares	260
Custodian Fees	2,561
Auditing Fees	38
Shareholders’ Reports—Investor Shares	135
Shareholders’ Reports—Admiral Shares	5
Shareholders’ Reports—Signal Shares	1
Shareholders’ Reports—Institutional Shares	1
Shareholders’ Reports—ETF Shares	31
Trustees’ Fees and Expenses	15
Total Expenses	25,633
Net Investment Income	260,891
Realized Net Gain (Loss)
Investment Securities Sold	26,144
Futures Contracts	(3,371)
Foreign Currencies and Forward Currency Contracts	7,554
Realized Net Gain (Loss)	30,327
Change in Unrealized Appreciation (Depreciation)
Investment Securities	2,248,333
Futures Contracts	3,506
Foreign Currencies and Forward Currency Contracts	536
Change in Unrealized Appreciation (Depreciation)	2,252,375
Net Increase (Decrease) in Net Assets Resulting from Operations	2,543,593

1 Dividends are net of foreign withholding taxes of $11,775,000.

2 Interest income from an affiliated company of the fund was $3,621,000.

Pacific Stock Index Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	260,891	172,443
Realized Net Gain (Loss)	30,327	386,020
Change in Unrealized Appreciation (Depreciation)	2,252,375	899,705
Net Increase (Decrease) in Net Assets Resulting from Operations	2,543,593	1,458,168
Distributions
Net Investment Income
Investor Shares	(176,611)	(82,959)
Admiral Shares	(25,966)	(13,155)
Signal Shares	—	—
Institutional Shares	(42,679)	(22,834)
ETF Shares	(18,129)	(4,454)
Realized Capital Gain
Investor Shares	—	—
Admiral Shares	—	—
Signal Shares	—	—
Institutional Shares	—	—
ETF Shares	—	—
Total Distributions	(263,385)	(123,402)
Capital Share Transactions—Note F
Investor Shares	1,937,377	1,678,857
Admiral Shares	(42,070)	272,087
Signal Shares	242,515	—
Institutional Shares	573,669	289,594
ETF Shares	628,365	481,727
Net Increase (Decrease) from Capital Share Transactions	3,339,856	2,722,265
Total Increase (Decrease)	5,620,064	4,057,031
Net Assets
Beginning of Period	11,422,848	7,365,817
End of Period¹	17,042,912	11,422,848

1 Net Assets—End of Period includes undistributed net investment income of $131,063,000 and $127,047,000.

Pacific Stock Index Fund

Financial Highlights

Investor Shares


	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$12.13	$10.39	$8.63	$7.80	$5.90
Investment Operations
Net Investment Income	.236	.19	.156	.121	.082
Net Realized and Unrealized Gain (Loss)
on Investments	2.091	1.71	1.761	.814	1.885
Total from Investment Operations	2.327	1.90	1.917	.935	1.967
Distributions
Dividends from Net Investment Income	(.267)	(.16)	(.157)	(.105)	(.067)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.267)	(.16)	(.157)	(.105)	(.067)
Net Asset Value, End of Period	$14.19	$12.13	$10.39	$8.63	$7.80


Total Return¹	19.52%	18.39%	22.48%	12.15%	33.75%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$11,281	$7,814	$5,202	$3,471	$2,265
Ratio of Total Expenses to
Average Net Assets	0.22%	0.27%	0.32%	0.34%	0.39%
Ratio of Net Investment Income to
Average Net Assets	1.80%	1.73%	1.76%	1.57%	1.49%
Portfolio Turnover Rate²	3%	2%	7%	3%	3%

1 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months or the account service fee that may be applicable to certain accounts with balances below $10,000.

2 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

Pacific Stock Index Fund

Admiral Shares


			Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$79.43	$68.05	$56.47	$51.05	$38.63
Investment Operations
Net Investment Income	1.613	1.302	1.069	.835	.575
Net Realized and Unrealized Gain (Loss)
on Investments	13.714	11.185	11.583	5.318	12.318
Total from Investment Operations	15.327	12.487	12.652	6.153	12.893
Distributions
Dividends from Net Investment Income	(1.817)	(1.107)	(1.072)	(.733)	(.473)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(1.817)	(1.107)	(1.072)	(.733)	(.473)
Net Asset Value, End of Period	$92.94	$79.43	$68.05	$56.47	$51.05


Total Return¹	19.64%	18.46%	22.68%	12.23%	33.82%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$1,292	$1,128	$720	$314	$198
Ratio of Total Expenses to
Average Net Assets	0.12%	0.17%	0.20%	0.25%	0.30%
Ratio of Net Investment Income to
Average Net Assets	1.90%	1.83%	1.90%	1.69%	1.59%
Portfolio Turnover Rate²	3%	2%	7%	3%	3%

1 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

2 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

Pacific Stock Index Fund

Signal Shares
	June 4,
	2007¹to
	Oct. 31,
For a Share Outstanding Throughout the Period	2007
Net Asset Value, Beginning of Period	$30.53
Investment Operations
Net Investment Income	.25
Net Realized and Unrealized Gain (Loss) on Investments	1.50
Total from Investment Operations	1.75
Distributions
Dividends from Net Investment Income	—
Distributions from Realized Capital Gains	—
Total Distributions	—
Net Asset Value, End of Period	$32.28


Total Return²	5.73%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$247
Ratio of Total Expenses to Average Net Assets	0.12%*
Ratio of Net Investment Income to Average Net Assets	1.90%*
Portfolio Turnover Rate³	3%

1 Inception.

2 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than two months.

3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

* Annualized.

Pacific Stock Index Fund

Institutional Shares


	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$12.15	$10.41	$8.64	$7.81	$5.91
Investment Operations
Net Investment Income	.251	.206	.18	.134	.090
Net Realized and Unrealized Gain (Loss)
on Investments	2.102	1.710	1.76	.814	1.885
Total from Investment Operations	2.353	1.916	1.94	.948	1.975
Distributions
Dividends from Net Investment Income	(.283)	(.176)	(.17)	(.118)	(.075)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.283)	(.176)	(.17)	(.118)	(.075)
Net Asset Value, End of Period	$14.22	$12.15	$10.41	$8.64	$7.81


Total Return¹	19.72%	18.52%	22.74%	12.32%	33.88%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$2,720	$1,788	$1,280	$754	$369
Ratio of Total Expenses to
Average Net Assets	0.09%	0.12%	0.14%	0.17%	0.22%
Ratio of Net Investment Income to
Average Net Assets	1.93%	1.88%	1.95%	1.76%	1.70%
Portfolio Turnover Rate²	3%	2%	7%	3%	3%

1 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

2 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

Pacific Stock Index Fund

ETF Shares

			March 4,
	Year Ended		2005¹to
	October 31,		Oct. 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005
Net Asset Value, Beginning of Period	$64.24	$55.09	$50.71
Investment Operations
Net Investment Income	1.314	1.06	.75
Net Realized and Unrealized Gain (Loss) on Investments	11.089	9.02	3.63
Total from Investment Operations	12.403	10.08	4.38
Distributions
Dividends from Net Investment Income	(1.473)	(.93)	—
Distributions from Realized Capital Gains	—	—	—
Total Distributions	(1.473)	(.93)	—
Net Asset Value, End of Period	$75.17	$64.24	$55.09


Total Return	19.65%	18.43%	8.64%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$1,503	$693	$164
Ratio of Total Expenses to Average Net Assets	0.12%	0.18%	0.18%*
Ratio of Net Investment Income to Average Net Assets	1.90%	1.82%	1.89%*
Portfolio Turnover Rate²	3%	2%	7%

1 Inception.

2 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

* Annualized.

See accompanying Notes, which are an integral part of the Financial Statements.

Pacific Stock Index Fund

Notes to Financial Statements

Vanguard Pacific Stock Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard International Equity Index Funds. The fund invests in securities of foreign issuers, which may subject it to investment risks not normally associated with investing in securities of U.S. corporations. The fund offers five classes of shares: Investor Shares, Admiral Shares, Signal Shares, Institutional Shares, and ETF Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. Admiral Shares are designed for investors who meet certain administrative, service, tenure, and account-size criteria. Signal Shares are designed for institutional investors who meet certain administrative, service, and account-size criteria. Signal Shares were first issued on June 4, 2007. Institutional Shares are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million. ETF Shares are listed for trading on the American Stock Exchange; they can be purchased and sold through a broker.

1 Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued at their fair values calculated according to procedures adopted by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value. 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.

Pacific Stock Index Fund

cash balance for liquidity. The fund

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 fund and the prices of futures contracts, and the possibility of an illiquid market.

5. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At October 31, 2007, the fund had contributed capital of $1,375,000 to Vanguard (included in Other Assets), representing 0.01% of the fund’s net assets and 1.37% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

Pacific Stock Index Fund

During the year ended October 31, 2007, the fund realized net foreign currency gains of $1,097,000, which increased distributable net income for tax purposes; accordingly, such gains have been reclassified from accumulated net realized losses to undistributed net investment income. Certain of the fund’s investments are in securities considered to be “passive foreign investment companies,” for which any unrealized appreciation and/or realized gains are required to be included in distributable net income for tax purposes. During the year ended October 31, 2007, the fund realized gains on the sale of passive foreign investment companies of $5,344,000, which have been included in current and prior periods’ taxable income; accordingly, such gains have been reclassified from accumulated net realized losses to undistributed net investment income. Unrealized appreciation on the fund’s passive foreign investment company holdings at October 31, 2007, was $194,526,000, of which $104,173,000 has been distributed and is reflected in the balance of undistributed net income.

During the year ended October 31, 2007, the fund realized $10,913,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at October 31, 2007, the fund had $337,040,000 of ordinary income available for distribution. The fund had available realized losses of $79,725,000 to offset future net capital gains of $1,920,000 through October 31, 2009, $68,660,000 through October 31, 2010, $4,471,000 through October 31, 2011, and $4,674,000 through October 31, 2013.

At October 31, 2007, the cost of investment securities for tax purposes was $13,149,250,000. Net unrealized appreciation of investment securities for tax purposes was $4,150,300,000, consisting of unrealized gains of $4,757,661,000 on securities that had risen in value since their purchase and $607,361,000 in unrealized losses on securities that had fallen in value since their purchase.

At October 31, 2007, the aggregate settlement value of open futures contracts expiring in December 2007 and the related unrealized appreciation (depreciation) were:

			($000)
		Aggregate	Unrealized
	Number of	Settlement	Appreciation
Futures Contracts	Long Contracts	Value	(Depreciation)
Topix Index	530	74,315	2,456
ASX 200 Index	174	27,389	1,008

Pacific Stock Index Fund

At October 31, 2007, the fund had open forward currency contracts to receive and deliver currencies as follows:

					Unrealized
					Appreciation
		Contract Amount (000)			(Depreciation)
Contract Settlement Date		Receive		Deliver	($000)
12/28/2007	AUD	29,571	USD	27,315	1,333
12/19/2007	JPY	2,898,091	USD	25,286	(3)

AUD—Australian dollar.
JPY—Japanese yen.
USD—U.S. dollar.

Unrealized appreciation (depreciation) on open forward currency contracts is treated as realized gain (loss) for tax purposes.

The fund had net unrealized foreign currency losses of $546,000 resulting from the translation of other assets and liabilities at October 31, 2007.

D. During the year ended October 31, 2007, the fund purchased $3,698,629,000 of investment securities and sold $411,782,000 of investment securities, other than temporary cash investments.

E. The market value of securities on loan to broker-dealers at October 31, 2007, was $307,796,000, for which the fund received cash collateral of $323,075,000.

Pacific Stock Index Fund

F. Capital share transactions for each class of shares were:

	Year Ended October 31,
		2007		2006
	Amount	Shares	Amount	Shares
	($000)	(000)	($000)	(000)
Investor Shares
Issued	2,509,485	193,872	2,349,884	201,048
Issued in Lieu of Cash Distributions	174,133	14,134	80,759	7,090
Redeemed¹	(746,241)	(57,211)	(751,786)	(64,382)
Net Increase (Decrease)—Investor Shares	1,937,377	150,795	1,678,857	143,756
Admiral Shares
Issued	364,227	4,302	465,655	6,139
Issued in Lieu of Cash Distributions	22,198	275	11,005	148
Redeemed¹	(428,495)	(4,870)	(204,573)	(2,672)
Net Increase (Decrease)—Admiral Shares	(42,070)	(293)	272,087	3,615
Signal Shares
Issued	249,314	7,875	—	—
Issued in Lieu of Cash Distributions	—	—	—	—
Redeemed¹	(6,799)	(220)	—	—
Net Increase (Decrease)—Signal Shares	242,515	7,655	—	—
Institutional Shares
Issued	963,535	73,688	1,168,762	99,284
Issued in Lieu of Cash Distributions	36,590	2,965	20,167	1,769
Redeemed¹	(426,456)	(32,512)	(899,335)	(76,780)
Net Increase (Decrease)—Institutional Shares	573,669	44,141	289,594	24,273
ETF Shares
Issued	628,365	9,203	481,727	7,812
Issued in Lieu of Cash Distributions	—	—	—	—
Redeemed	—	—	—	—
Net Increase (Decrease)—ETF Shares	628,365	9,203	481,727	7,812

1 Net of redemption fees of $508,000 and $548,000 (fund totals).

Emerging Markets Stock Index Fund

Fund Profile

As of October 31, 2007

Portfolio Characteristics
		Target	Broad
	Fund	Index¹	Index²
Number of Stocks	859	826	2,067
Turnover Rate	9%	—	—
Expense Ratio		—	—
Investor Shares	0.37%
Admiral Shares	0.25%
Signal Shares	0.25%³
Institutional Shares	0.20%
ETF Shares	0.25%
Short-Term Reserves	0.2%	—	—

Sector Diversification (% of equity exposure)
		Target	Broad
	Fund	Index¹	Index²
Consumer Discretionary	5.1%	5.1%	9.8%
Consumer Staples	4.5	4.5	7.6
Energy	16.6	16.5	10.7
Financials	21.8	21.6	24.8
Health Care	1.5	1.5	6.6
Industrials	9.9	10.1 ��	11.3
Information Technology	10.9	10.9	9.6
Materials	15.3	15.3	9.2
Telecommunication
Services	11.1	11.1	6.1
Utilities	3.3	3.4	4.3

Volatility Measures⁴
	Fund Versus	Fund Versus
	Target Index¹	Broad Index²
R-Squared	0.99	0.85
Beta	0.99	1.59

Ten Largest Holdings⁵(% of total net assets)

China Mobile	wireless
(Hong Kong) Ltd.	telecommunication
	services	3.3%
Petroleo Brasileiro SA	integrated
	oil and gas	3.2
OAO Gazprom ADR	integrated
	oil and gas	3.1
Companhia Vale do
Rio Doce Pfd.	steel	2.7
Samsung
Electronics Co., Ltd.	semiconductors	2.0
America Movil SA de CV	wireless
	telecommunication
	services	1.5
Posco	steel	1.4
PetroChina Co. Ltd.	integrated
	oil and gas	1.3
China Life	life and
Insurance Co., Ltd.	health insurance	1.2
Reliance Industries Ltd.	oil and gas refining
	and marketing	1.2
Top Ten		20.9%

1 MSCI Emerging Markets Index.

2 MSCI All Country World Index ex USA.

3 Annualized.

4 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 165.

5 “Ten Largest Holdings” excludes any temporary cash investments and equity index products.

Emerging Markets Stock Index Fund

Market Diversification (% of equity exposure)
		Target
	Fund	Index¹
China	17.2%	17.2%
South Korea	15.2	15.0
Brazil	12.3	12.4
Taiwan	10.8	10.8
Russia	9.0	8.9
India	7.3	7.3
South Africa	7.0	7.0
Mexico	4.6	4.6
Malaysia	2.3	2.3
Israel	2.1	2.0
Turkey	1.8	1.7
Indonesia	1.7	1.6
Poland	1.7	1.7
Thailand	1.5	1.4
Chile	1.4	1.4
Other Emerging Markets	4.1	4.7

1 MSCI Emerging Markets Index.

Emerging Markets Stock Index Fund

Performance Summary

Cumulative Performance: October 31, 1997–October 31, 2007

Initial Investment of $10,000



	Average Annual Total Returns			Final Value of
	Periods Ended October 31, 2007			a $10,000
	One Year	Five Years	Ten Years	Investment
Emerging Markets Stock Index Fund
Investor Shares¹	67.91%	39.49%	15.95%	$43,933
MSCI All Country World Index ex USA	32.97	26.39	10.75	27,762
Spliced Emerging Markets Index²	67.84	39.93	16.09	44,467
Average Emerging Markets Fund³	63.25	38.54	14.30	38,071

			Final Value of
		Since	a $100,000
	One Year	Inception⁴	Investment
Emerging Markets Stock Index Fund Admiral Shares¹	68.14%	63.78%	$195,248
MSCI All Country World Index ex USA	32.97	35.38	150,797
Spliced Emerging Markets Index²	67.84	63.64	195,008

1 Performance figures are adjusted for the 0.5% transaction fee on purchases and redemptions. Total returns do not reflect the 2% fee assessed until March 23, 2005, on redemptions of shares purchased on or after June 27, 2003, and held for less than two months, or, for Investor Shares, the account service fee that may be applicable to certain accounts with balances below $10,000.

2 Select Emerging Markets Index through August 23, 2006; MSCI Emerging Markets Index thereafter.

3 Derived from data provided by Lipper Inc.

4 Performance for the fund’s Admiral Shares and comparative standards is calculated since the Admiral Shares’ inception: June 23, 2006.

Emerging Markets Stock Index Fund

		Final Value of
	Since	a $10,000,000
	Inception¹	Investment
Emerging Markets Stock Index Fund Signal Shares²	51.90%	$15,189,672
MSCI All Country World Index ex USA	24.66	12,465,993
MSCI Emerging Markets Index	51.99	15,199,247

				Final Value of
			Since	a $5,000,000
	One Year	Five Years	Inception¹	Investment
Emerging Markets Stock Index Fund
Institutional Shares²	68.23%	39.74%	19.74%	$18,816,427
MSCI All Country World Index ex USA	32.97	26.39	9.51	9,757,395
Spliced Emerging Markets Index³	67.84	39.93	19.89	18,995,675

			Final Value
		Since	of a $10,000
	One Year	Inception¹	Investment
Emerging Markets Stock Index Fund ETF Shares	69.78%	38.75%	$23,901
MSCI All Country World Index ex USA	32.97	24.17	17,789
Spliced Emerging Markets Index³	67.84	38.45	23,762

Cumulative Returns: ETF Shares, March 4, 2005–October 31, 2007

		Since
	One Year	Inception¹
Emerging Markets Stock Index Fund ETF Shares Market Price	68.74%	139.95%
Emerging Markets Stock Index Fund Shares Net Asset Value	69.78	139.01
Spliced Emerging Markets Index³	67.84	137.62

1 Performance for the fund and its comparative standards is calculated since the following inception dates: January 19, 2007, for the Signal Shares; June 22, 2000, for the Institutional Shares; and March 4, 2005, for the ETF Shares.

2 Performance figures are adjusted for the 0.5% transaction fee on purchases and redemptions. Total returns do not reflect the 2% fee assessed until March 23, 2005, on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

3 Select Emerging Markets Index through August 23, 2006; MSCI Emerging Markets Index thereafter.

Emerging Markets Stock Index Fund

Fiscal-Year Total Returns (%): October 31, 1997–October 31, 2007

Average Annual Total Returns: Periods Ended September 30, 2007

	Inception Date	One Year	Five Years	Ten Years
Emerging Markets Stock Index Fund
Investor Shares²	5/4/1994	58.18%	38.30%	12.45%
Fee-Adjusted Returns³		56.62	38.04	12.35
Admiral Shares	6/23/2006	58.29	55.66⁴	—
Fee-Adjusted Returns³		56.73	54.45⁴	—
Signal Shares	1/19/2007	36.57⁴	—	—
Fee-Adjusted Returns³		35.21⁴	—	—
Institutional Shares	6/22/2000	58.37	38.52	18.23⁴
Fee-Adjusted Returns³		56.81	38.26	18.08⁴
ETF Shares	3/4/2005
Market Price		57.20	33.96⁴	—
Net Asset Value		58.30	34.06⁴	—

1 Select Emerging Markets Index through August 23, 2006; MSCI Emerging Markets Index thereafter.

2 Returns do not reflect the account service fee that may be applicable to certain accounts with balances below $10,000.

3 Performance figures are adjusted for the 0.5% transaction fee on purchases and redemptions.

4 Returns since inception.

Note: See Financial Highlights tables on pages 118-122 for dividend and capital gains information.

Emerging Markets Stock Index Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

			Market
			Value^•
		Shares	($000)
Common Stocks (99.5%)
Argentina (0.6%)
	Tenaris SA ADR	870,005	46,806
	Tenaris SA	1,531,436	41,440
	Banco Macro Bansud
	SA ADR	317,764	8,786
	Siderar SA Class A	883,933	7,879
	Petrobras Energia
	Participaciones SA ADR	651,995	7,791
*	Telecom Argentina SA ADR	321,157	7,711
*	Telecom Argentina SA	1,507,786	7,320
*	Grupo Financiero
	Galicia SA ADR	639,100	5,094
	Petrobras Energia
	Participaciones SA	3,164,909	3,778
*	IRSA Inversiones y
	Representaciones SA GDR	207,075	3,698
*^	Transportadora de
	Gas del SA ADR	481,610	3,419
	Cresud SA ADR	106,745	2,634
	BBVA Banco
	Frances SA ADR	272,544	2,597
*	Transportadora de
	Gas Sur SA	953,920	1,351
	BBVA Banco Frances SA	424,248	1,351
	Solvay Indupa S.A.I.C.	782,532	1,044
*	IRSA Inversiones y
	Representaciones SA	563,918	1,005
	Cresud SA	209,663	522
			154,226
Brazil (12.2%)
	Petroleo Brasileiro SA Pfd.	8,542,456	356,131
	Companhia Vale do
	Rio Doce Pfd. Class A	10,463,318	330,106
	Petroleo Brasileiro SA	6,189,448	295,408
	Companhia Vale do

			Market
			Value•
		Shares	($000)
	Rio Doce	7,305,070	272,676
	Banco Bradesco SA	5,259,800	178,705
	Banco Itau Holding
	Financeira SA	5,402,600	153,276
	Unibanco-Uniao de
	Bancos Brasileiros SA	5,802,183	91,794
	Petroleo Brasileiro
	Series A ADR	1,086,232	90,364
	Companhia de Bebidas
	das Americas Pfd.	1,089,009	89,353
	Companhia Vale do
	Rio Doce ADR	2,582,642	81,534
	Petroleo Brasileiro SA ADR	770,996	73,730
	Cia Vale do Rio Doce ADR	1,835,880	69,176
	Usiminas-Usinas
	Siderugicas de Minas
	Gerais SA Pfd.	735,925	57,700
	Gerdau SA Pfd.	1,723,700	53,713
	Companhia Siderurgica
	Nacional SA	669,920	53,593
	All America Latina
	Logistica	2,601,913	41,194
	Banco Bradesco SA ADR	1,186,210	40,509
	Banco Itau Holding
	Financeira SA ADR	1,241,216	35,437
	Companhia Energetica de
	Minas Gerais Pfd.	1,628,941	35,098
	Tele Norte Leste
	Participacoes SA Pfd.	1,568,763	34,155
	Lojas Americanas SA Pfd.	2,308,360	26,863
	Empresa Brasileira de
	Aeronautica SA	2,120,449	25,742
	Centrais Electricas
	Brasileiras SA	1,621,483	25,297
	Uniao de Bancos
	Brasileiros SA GDR	154,541	24,424
	Cyrela Brazil Realty SA	1,292,344	22,156
	Vivo Participacoes SA Pfd.	3,639,723	21,599
	Centrais Electricas
	Brasileiras SA Pfd.
	B Shares	1,382,718	21,093
^*	Redecard SA	995,192	21,046
	Votorantim Celulose e
	Papel SA Pfd.	668,295	21,022
	Companhia de Bebidas
	das Americas ADR	248,130	20,275
^*	CESP–Companhia
	Energetica de Sao Paulo	1,069,508	20,270
	CPFL Energia SA	878,300	19,336
	B2W Com Global Do Varejo	356,653	19,248
	Lojas Renner SA	777,348	19,090

			Market
			Value^•
		Shares	($000)
	Tele Norte Leste
	Participacoes SA	479,371	18,420
	Brasil Telecom
	Participacoes SA Pfd.	1,225,126	18,299
	Aracruz Celulose SA Pfd.
	B Shares	2,295,505	17,575
	Tim Participacoes SA Pfd.	3,690,132	17,186
*	Net Servicos
	de Comunicacao SA	1,066,141	17,113
	Companhia de
	Concessoes Rodoviarias	884,165	16,251
	Companhia de
	Saneamento Basico do
	Estado de Sao Paulo	622,882	16,239
	Perdigao SA	584,279	15,834
	Souza Cruz SA	523,115	14,965
	Duratex SA Pfd.	444,250	14,860
	Tractebel Energia SA	966,091	13,487
	Klabin SA	3,154,400	13,160
	Tam SA	442,771	13,045
	Sadia SA Pfd.	1,842,877	12,565
^	Companhia Siderurgica
	Nacional SA ADR	148,778	11,887
	Braskem SA	1,227,560	11,633
	Gerdau SA	445,810	11,409
	Electropaulo
	Metropolitana SA	147,138,437	11,350
	Brasil Telecom
	Participacoes SA	370,194	11,337
	Gerdau SA ADR	361,319	11,237
	Embraer-Empresa
	Brasileira de Aeronautica
	SA ADR	211,578	10,319
	Gol - Linhas Aereas
	Inteligentes SA Pfd.	337,967	9,294
	Companhia Paranaense
	de Energia–COPEL	558,539	9,214
	Natura Cosmeticos SA	713,133	8,468
	Energias do Brasil SA	521,377	8,432
	Gafisa SA	459,162	8,251
	Aracruz Celulose SA ADR	100,981	7,764
	Diagnosticos da America	297,853	6,953
	Companhia Energetica
	de Minas Gerais ADR	279,516	6,038
	Tele Norte Leste
	Participacoes ADR	251,610	5,485
	Cosan SA Industria
	e Comercio	345,977	5,408
Companhia de Saneamento
Basico do Estado de

		Market
		Value^•
	Shares	($000)
Sao Paulo ADR	103,485	5,383
Brasil Telecom
Participacoes ADR	70,724	5,261
Banco Nossa Caixa SA	293,656	5,218
^Sadia SA ADR	65,262	4,453
Companhia Brasileira
de Distribuicao Grupo
Pao de Acucar Pfd.	273,669	4,394
Companhia de Tecidos
Norte de Minas Pfd.	548,057	4,364
Tim Participacoes SA ADR	78,696	3,651
Companhia Brasileira de
Distribuicao Grupo Pao
de Acucar ADR	110,533	3,557
^Companhia Paranaense
de Energia–COPEL ADR	178,340	2,943
* Bovespa Holding SA	144,700	2,755
Votorantim Celulose e
Papel SA ADR	2,038	64
Vivo Participacoes SA ADR	9,939	59
Braskem SA ADR	2,279	43
		3,156,736
Chile (1.4%)
Empresas Copec SA	2,832,115	50,579
Empresa Nacional de
Electricidad SA	16,954,457	26,491
Enersis SA	67,237,979	26,472
Empresas CMPC SA	634,291	25,487
Cencosud SA	5,118,549	22,074
CAP SA	539,543	17,388
Lan Airlines SA	921,001	15,056
Sociedad Quimica y
Minera de Chile SA	719,057	13,673
S.A.C.I. Falabella, SA	2,125,200	12,637
Empresa Nacional de
Telecomunicaciones SA	695,585	12,422
Colburn SA	44,864,530	11,108
Banco Santander
Chile SA	196,905,081	9,990
Enersis SA ADR	475,081	9,416
Empresa Nacional de
Electricidad SA ADR	196,350	9,193
Distribucion y Servicio
D&S SA	14,026,707	8,540
* Compania SudAmericana
de Vapores SA	2,867,885	8,323
Banco de Credito
e Inversiones	232,480	7,738
Compania de
Telecomunicaciones

			Market
			Value^•
		Shares	($000)
de Chile SA		3,102,241	7,554
Banco Santander
Chile SA ADR		139,889	7,413
	Compania Cervecerias
	Unidas SA	846,858	6,971
	Vina Concha y Toro SA	2,423,308	6,295
	Masisa SA	24,369,868	5,836
	Corpbanca	690,247,924	5,323
	Parque Arauco SA	4,039,018	5,205
	Inversiones Aguas
	Metropolitanas SA	3,957,677	4,899
	Cristalerias de Chile	333,516	4,670
	Embotelladora Andina
	SA Pfd. Class B	1,150,697	3,853
*	Madeco SA	29,489,212	3,719
	Embotelladora Andina SA	1,075,533	3,275
	Sociedad Quimica y
	Minera de Chile ADR	15,230	2,924
	Compania de
	Telecomunicaciones
	de Chile SA ADR	226,400	2,212
	Distribucion y Servicio
	SA ADR	45,745	1,666
	Empresas Iansa SA	7,756,599	749
			359,151
China (17.2%)
	China Mobile
	(Hong Kong) Ltd.	40,787,267	843,214
	PetroChina Co. Ltd.	128,624,724	332,098
	China Life
	Insurance Co., Ltd.	47,912,460	319,816
	CNOOC Ltd.	103,038,552	222,678
	China Construction Bank	169,871,848	193,121
	Industrial and Commercial
	Bank of China	199,584,219	190,625
	China Petroleum &
	Chemical Corp.	113,973,180	181,472
	China Shenhua
	Energy Co. Ltd.
	H–Shares	22,224,000	143,220
	Ping An Insurance
	(Group) Co. of
	China Ltd.	9,588,536	134,220
	Bank of China	155,975,575	102,838
	China Communications
	Construction Co., Ltd.	28,805,534	91,400
	China Telecom Corp. Ltd.	95,098,790	82,227
	China COSCO
	Holdings Co., Ltd.	17,131,000	76,402
	Bank of Communications
	Ltd. Class H	39,757,692	72,542

			Market
			Value^•
		Shares	($000)
	Aluminum Corp. of
	China Ltd.	21,920,280	62,515
	China Overseas Land &
	Investment Ltd.	24,231,968	58,002
	China Merchants Holdings
	International Co. Ltd.	7,304,452	51,522
	Fujian Zijin Mining
	Industry Co., Ltd.	27,488,120	47,994
	CITIC Pacific Ltd.	7,607,828	47,974
	China Resources Power
	Holdings Co., Ltd.	10,168,040	38,038
	China Resources
	Enterprise Ltd.	8,277,681	36,309
	Guangzhou R&F
	Properties Co. Ltd.	6,712,800	35,341
	PICC Property and
	Casualty Co., Ltd.	16,551,551	35,076
	Jiangxi Copper Co. Ltd.	9,837,502	34,795
*	Country Garden
	Holdings Co.	20,789,307	34,257
	Shimao Property
	Holdings Ltd.	9,344,826	33,455
	Anhui Conch
	Cement Co. Ltd.	3,079,638	30,759
	China Shipping
	Development Co.	8,907,904	30,438
	China Shipping Container
	Lines Co. Ltd.	22,408,618	29,723
	Yanzhou Coal Mining Co.
	Ltd. H Shares	13,493,972	29,086
	Lenovo Group Ltd.	23,894,762	27,213
	China Mengniu
	Dairy Co., Ltd.	6,290,036	26,721
	China Resources
	Land Ltd.	10,470,000	26,489
*	China Citic Bank	32,015,100	26,050
	Agile Property
	Holdings, Inc.	10,667,670	25,891
	Air China Ltd.	16,716,243	25,507
	Angang Steel Co., Ltd.	6,848,976	25,217
	Huaneng Power
	International, Inc.
	H Shares	21,228,252	24,944
	Nine Dragons Paper
	Holdings Ltd.	9,196,150	24,911
	Beijing Datang Power
	Generation Co., Ltd.	21,841,406	24,859
	Denway Motors Ltd.	34,140,443	24,092
	Cosco Pacific Ltd.	7,661,752	23,876
*	China Everbright Ltd.	5,148,220	23,155

			Market
			Value^•
		Shares	($000)
	GOME Electrical
	Appliances Holdings Ltd.	10,017,960	22,530
	Shanghai Industrial
	Holding Ltd.	3,739,145	22,059
	Beijing Capital International
	Airport Co., Ltd.	10,253,604	20,421
	Shanghai Electric
	Group Co., Ltd. Class H	20,424,492	20,282
	Li Ning Co., Ltd.	4,950,568	18,605
	Beijing Enterprises
	Holdings Ltd.	2,788,000	17,342
	China Travel International	21,366,200	17,166
	Hopson Development
	Holdings Ltd.	4,222,211	16,359
	Dongfeng Motor Corp.	16,781,522	15,474
	Sinofert Holdings, Ltd.	16,244,000	15,323
	Hengan International
	Group Co. Ltd.	3,824,000	14,914
	Zhejiang
	Expressway Co., Ltd.	10,025,088	14,478
	Sinopec Shanghai
	Petrochemical Co. Ltd.	16,117,528	13,175
	Shenzhen Investment Ltd.	13,181,784	12,743
	China International
	Marine Containers
	(Group) Co.,Ltd.	5,957,532	12,340
	Guangdong
	Investment Ltd.	17,380,384	11,946
*	China Southern
	Airlines Co. Ltd.	8,343,658	11,636
	Maanshan Iron and
	Steel Co. Ltd.	12,843,612	11,446
	Chaoda Modern
	Agriculture Holdings Ltd.	12,342,890	11,265
*	China Eastern
	Airlines Corp. Ltd.	10,292,936	11,203
	BYD Co. Ltd.	1,142,650	10,775
*	Semiconductor
	Manufacturing
	International Corp.	87,977,340	10,038
	Hunan Non-Ferrous
	Metal Corp., Ltd.	10,862,000	9,961
	Jiangsu Expressway Co.
	Ltd. H Shares	8,215,342	9,504
	Weichai Power Co., Ltd.
	Class H	865,920	8,918
	Xinao Gas Holdings Ltd.	4,538,695	8,639
	Tsingtao
	Brewery Co., Ltd.	2,414,228	8,617
	The Guangshen
	Railway Co., Ltd.	10,004,035	8,540

			Market
			Value^•
		Shares	($000)
	Guangzhou
	Investment Co. Ltd.	19,830,000	8,448
	ZTE Corp.	1,179,148	7,207
	Huadian Power
	International Corp. Ltd.	10,362,428	7,179
	TPV Technology Ltd.	10,179,354	6,855
	Sinotrans Ltd.	10,707,580	6,851
	Zhejiang Southeast
	Electric Power Co., Ltd.	4,690,591	5,845
	Weiqiao Textile Co. Ltd.	3,004,887	5,662
*	Brilliance China Automotive
	Holdings Ltd.	19,139,402	5,179
	Shenzhen
	Expressway Co. Ltd.	4,975,298	5,173
*	China Agri-Industries
	Holdings Ltd.	6,934,534	5,117
	Shanghai Forte
	Land Co., Ltd.	6,424,000	5,017
	TravelSky Technology Ltd.	3,965,608	4,748
	FU JI Food &
	Catering Services	1,812,000	4,590
	Guangdong Electric Power
	Development Co., Ltd.	4,358,567	4,565
*	Sinopec Yizheng Chemical
	Fibre Co., Ltd.	8,454,000	4,409
	Global Bio-chem
	Technology Group
	Co. Ltd.	11,659,986	4,323
*	China Foods Ltd.	5,232,750	4,004
*	Longtop Financial
	Technologies, Ltd. ADR	48,500	1,377
*	Alibaba.com, Ltd.	36,187	63
			4,432,393
Colombia (0.1%)
	Bancolombia SA ADR	1,042,402	38,308

Czech Republic (0.7%)
	Ceske Energeticke
	Zavody a.s.	1,414,443	102,665
	Komercni Banka a.s.	112,302	25,911
	Cesky Telecom a.s.	788,769	24,414
*	Central European
	Media Enterprises Ltd.	200,071	23,470
	Zentiva NV	159,218	8,524
*	Unipetrol a.s.	344,984	6,174
	Philip Morris CR a.s.	110	57
			191,215
Egypt (0.5%)
	Orascom Construction
	Industries GDR	407,017	74,948
	Orascom Telecom
	Holding SAE GDR	897,379	64,368

			Market
			Value^•
		Shares	($000)
			139,316
Hungary (0.8%)
	OTP Bank Rt.	1,838,088	100,002
	MOL Hungarian Oil and
	Gas Nyrt.	417,969	64,718
	Richter Gedeon Rt.	105,326	22,955
	Magyar Tavkozlesi Rt.	3,440,915	18,555
			206,230
India (7.3%)
	Reliance Industries Ltd.	4,230,322	300,974
	Infosys Technologies Ltd.	3,051,073	144,311
	ICICI Bank Ltd.	3,388,981	109,923
	Housing Development
	Finance Corp. Ltd.	1,296,311	92,137
	Reliance Communication
	Ventures	4,237,441	83,806
	Larsen & Toubro Ltd.	701,295	76,425
	ICICI Bank Ltd. ADR	951,625	66,081
	Oil and Natural
	Gas Corp. Ltd.	1,793,788	57,155
	HDFC Bank Ltd.	1,219,450	52,904
	Bharat Heavy
	Electricals Ltd.	783,732	52,287
	Reliance Capital Ltd.	786,781	42,853
	ITC Ltd.	7,593,459	34,815
	Reliance Energy Ltd.	719,197	34,415
	Satyam Computer
	Services Ltd.	2,631,209	32,235
	Axis Bank Ltd.	1,362,377	32,008
	Hindustan Lever Ltd.	5,551,487	29,340
	Jindal Steel & Power Ltd.	91,355	27,834
	Tata Iron and Steel Co. Ltd.	1,003,948	25,764
	Tata Motors Ltd.	1,284,692	25,063
	Infrastructure Development
	Finance Co., Ltd.	4,615,981	22,845
	Tata Consultancy
	Services Ltd.	859,196	22,834
	Grasim Industries Ltd.	237,255	22,524
	Jaiprakash Associates Ltd.	587,018	21,963
	Wipro Ltd.	1,645,860	21,226
	Unitech, Ltd.	2,101,657	20,725
*	Indiabulls Real Estate Ltd.	1,198,610	20,022
	Kotak Mahindra Bank	748,767	19,168
	Mahindra & Mahindra Ltd.	955,411	18,440
	Indiabulls Financial
	Services Ltd.	992,876	17,197
	Gail India Ltd.	1,608,003	16,965
	Hindalco Industries Ltd.	3,347,617	16,854
	Ambuja Cements Ltd.	4,447,408	16,457
	Tata Power Co. Ltd.	489,743	15,252
	Zee Entertainment

			Market
			Value^•
		Shares	($000)
	Enterprises	1,591,839	13,504
	Siemens India Ltd.	267,075	13,470
	Asea Brown Boveri
	India Ltd.	329,154	13,275
	HDFC Bank Ltd. ADR	95,451	13,268
	Bajaj Auto Ltd.	207,524	13,160
	Maruti Udyog Ltd.	466,081	12,814
	Ranbaxy Laboratories Ltd.	1,111,466	12,120
	State Bank of India	222,262	11,780
	Cipla Ltd.	2,436,163	11,136
	Dr. Reddy’s
	Laboratories Ltd.	687,942	10,873
	Sun Pharmaceutical
	Industries Ltd.	384,560	10,391
	Hero Honda Motors Ltd.	551,063	10,224
	Glenmark
	Pharmaceuticals Ltd.	759,425	9,552
	Associated
	Cement Cos. Ltd.	342,509	9,456
	Aditya Birla Nuvo Ltd.	223,965	9,267
	Satyam Computer
	Services Ltd. ADR	305,110	9,260
Indian Hotels Co. Ltd.		2,057,351	7,674
Nestle India Ltd.		185,909	7,423
Bharat Forge Ltd.		699,102	6,742
Mahanagar Telephone
Nigam Ltd.		1,462,662	6,718
Bharat Petroleum Corp. Ltd.		733,231	6,437
State Bank of India GDR		49,983	6,316
Ultratech Cemco Ltd.		237,480	6,085
Videsh Sanchar Nigam Ltd.		377,375	5,341
Asian Paints (India) Ltd.		201,867	5,338
GlaxoSmithKline
Pharmaceuticals (India) Ltd.		190,332	5,303
Videocon Industries Ltd.		534,289	5,044
Bharat Electronics Ltd.		101,046	4,742
Tata Tea Ltd.		221,463	4,666
Hindustan
Petroleum Corp., Ltd.		617,025	3,773
^Wipro Ltd. ADR		225,257	3,710
^Dr. Reddy’s
Laboratories Ltd. ADR		182,906	2,899
Ashok Leyland Ltd.		2,398,268	2,465
* Dish TV India Ltd.		999,109	1,550
^Videsh Sanchar
Nigam Ltd. ADR		54,182	1,490
Tata Iron and
Steel Co. Ltd.
Rights Exp. 12/21/07		201,077	623
Mahanagar Telephone
Nigam Ltd. ADR		58,134	535
Infosys

			Market
			Value^•
		Shares	($000)
Technologies Ltd. ADR		5,765	294
Reliance
Industries Ltd. GDR		1,795	258
			1,871,778
Indonesia (1.7%)
PT Telekomunikasi
Indonesia Tbk		69,005,979	82,846
PT Bumi Resources Tbk		121,766,000	65,273
PT Astra International Tbk		14,380,468	40,951
PT Bank Central Asia Tbk		43,370,288	35,233
PT Bank Rakyat
Indonesia Tbk		38,950,592	33,633
PT Perusahaan Gas
Negara Tbk		14,759,504	23,024
PT Bank Mandiri Tbk		46,999,968	19,820
PT Indonesian
Satellite Corp. Tbk		18,112,033	17,457
PT International Nickel
Indonesia Tbk		1,505,760	15,112
PT Bank Danamon Tbk		13,133,678	12,637
PT United Tractors Tbk		9,881,592	12,050
PT Aneka Tambang Tbk		26,346,075	9,872
PT Semen Gresik Tbk		12,100,820	8,332
PT Unilever Indonesia Tbk		11,207,010	8,277
PT Indofood Sukses
Makmur Tbk		31,333,208	7,673
	PT Indocement Tunggal
	Prakarsa Tbk (Local)	7,759,754	7,062
	PT Kalbe Farma Tbk	42,951,838	6,477
	PT Astra Agro Lestari Tbk	2,414,180	6,042
*	PT Energi Mega
	Persada Tbk	39,545,905	5,524
	PT Bank International
	Indonesia Tbk	176,471,500	5,115
	PT Gudang Garam Tbk	4,561,100	5,061
*	PT Bank Indonesia Tbk	57,076,119	4,660
	PT Berlian Laju Tanker Tbk	12,934,574	3,129
	PT Ramayana Lestari
	Sentosa Tbk	30,396,620	2,970
*	PT Bank Pan
	Indonesia Tbk
	Warrants Exp. 7/10/09	7,066,431	249
			438,479
Israel (2.1%)
	Teva Pharmaceutical
	Industries Ltd.	4,956,329	218,050
	Israel Chemicals Ltd.	3,594,810	39,778
	Bank Hapoalim Ltd.	6,608,209	36,586
*	Check Point Software
	Technologies Ltd.	1,278,793	32,302
	Bank Leumi Le-Israel	5,991,327	28,830

			Market
			Value^•
		Shares	($000)
*	Makhteshim–Agan
	Industries Ltd.	2,054,995	19,778
	The Israel Corp. Ltd.	16,594	16,954
*	NICE Systems Ltd.	365,270	14,478
	Bezeq Israeli
	Telecommunication
	Corp., Ltd.	7,734,686	13,777
	Partner Communications
	Co. Ltd.	596,228	11,313
	Africa–Israel
	Investments Ltd.	95,945	9,946
	Elbit Systems Ltd.	180,090	9,599
*	Israel Discount Bank Ltd.	3,439,268	8,781
	United Mizrahi Bank Ltd.	969,209	7,572
*^	Alvarion Ltd.	517,890	6,515
	Discount
	Investment Corp. Ltd.	195,187	6,105
	IDB Development Corp. Ltd.	148,737	5,954
	Clal Insurance Enterprise
	Holdings Ltd.	168,325	5,271
	Migdal Insurance
	Holdings Ltd.	2,500,561	4,743
*	Orbotech Ltd.	227,661	4,713
	Koor Industries Ltd.	54,213	4,705
	Harel Insurance
	Investments Ltd.	71,118	4,196
*	Aladdin
	Knowledge Systems	171,646	4,111
*	Given Imaging Ltd.	140,286	4,002
*	Super Sol Ltd.	884,025	3,513
*	Radware Ltd.	195,213	3,303
*	Retalix Ltd.	136,463	2,769
*	Audiocodes Ltd.	422,168	2,748
*	Syneron Medical Ltd.	148,243	2,711
	Clal Industries and
	Investments Ltd.	383,946	2,345
*	Strauss Group Ltd.	91,542	1,264
			536,712
Malaysia (2.3%)
	Bumiputra–Commerce
	Holdings Bhd.	15,228,432	52,961
	IOI Corp. Bhd.	23,047,255	52,581
	Malayan Banking Bhd.	13,182,674	44,556
	Sime Darby Bhd.	10,253,700	34,435
	Genting Bhd.	12,198,090	30,361
	Public Bank Bhd.	6,989,760	24,036
	Malaysia International
	Shipping Corp., Bhd.
	(Foreign)	7,838,268	23,125
	Telekom Malaysia Bhd.	6,909,340	21,224
	Tenaga Nasional Bhd.	7,301,146	20,596

			Market
			Value^•
		Shares	($000)
	Resorts World Bhd.	17,209,610	19,939
	British American
	Tobacco Bhd.	1,085,692	13,134
	Kuala Lumpur
	Kepong Bhd.	2,911,508	12,894
	PPB Group Bhd.	4,231,944	12,320
	AMMB Holdings Bhd.	9,313,858	11,862
	Petronas Gas Bhd.	3,482,628	11,757
	PLUS Expressways Bhd.	10,733,582	10,787
	YTL Corp., Bhd.	4,493,162	10,178
	Gamuda Bhd.	7,380,888	10,177
	Golden Hope
	Plantations Bhd.	3,582,000	9,774
	Bursa Malaysia Bhd.	2,040,152	9,702
	IJM Corp. Bhd.	3,489,550	9,167
	Tanjong Public Ltd. Co.	1,641,236	8,648
	SP Setia Bhd.	3,223,968	7,589
	RHB Capital Bhd.	3,956,400	7,585
	Berjaya Sports Toto Bhd.	4,851,156	7,450
	UMW Holdings
	Malaysia Bhd.	1,594,080	7,105
	Hong Leong Bank Bhd.	3,313,436	6,537
	Petronas Dagangan Bhd.	2,425,200	6,489
	Magnum Corp., Bhd.	5,872,042	5,202
	Highlands &
	Lowlands Bhd.	2,027,800	5,108
	Malaysia
	Mining Corp., Bhd.	1,917,700	4,994
	Shell Refining Co.
	Malaysia Bhd.	1,402,648	4,854
	Lafarge Malayan
	Cement Bhd.	8,314,400	4,573
	UEM World Bhd.	3,445,783	4,505
	Star Publications Bhd.	4,212,226	4,254
*	Malaysian
	Resources Corp., Bhd.	4,550,900	4,010
	Astro All Asia
	Networks PLC	3,806,490	3,871
*	Airasia Bhd.	6,300,748	3,702
	Media Prima Bhd.	4,187,900	3,366
	IGB Corp., Bhd.	4,274,500	3,331
	IOI Properties Bhd.	751,800	3,189
	Scomi Group Bhd.	6,092,400	3,051
*	Proton Holdings Bhd.	1,922,500	3,049
	Malaysian Bulk
	Carriers Bhd.	1,798,475	2,933
	KLCC Property
	Holdings Bhd.	2,701,300	2,883
	Guinness Anchor Bhd.	1,588,900	2,824
	Multi-Purpose
	Holdings Bhd.	3,769,100	2,623

			Market
			Value^•
		Shares	($000)
	DRB–Hicom Bhd.	4,381,600	2,575
*	Malaysian Airline
	System Bhd.	1,530,200	2,491
	Hong Leong
	Financial Group Bhd.	1,354,600	2,436
	TA Enterprise Bhd.	4,608,900	2,111
*	Mulpha International Bhd.	4,627,200	2,001
	Pos Malaysia & Services
	Holding Bhd.	2,065,100	1,704
	Malaysian Pacific
	Industries Bhd.	550,000	1,515
			584,124
Mexico (4.6%)
	America Movil SA de CV	124,505,983	395,266
	Cemex SA CPO	48,080,080	147,453
	Telefonos de Mexico SA	51,756,165	94,654
	Wal-Mart de Mexico SA	21,154,960	85,909
	Grupo Televisa SA CPO	16,494,405	81,617
	Grupo Mexico SA de CV	7,878,077	71,669
	Fomento Economico
	Mexicano UBD	15,166,498	53,910
	Grupo Financerio
	Banorte SA de CV	9,335,407	43,864
	Grupo Carso SA de CV
	Series A1	4,634,454	20,124
*	Empresas ICA SA de CV	2,697,514	18,944
	Industrias Penoles SA
	Series CP	797,916	18,918
	Grupo Modelo SA	4,021,880	18,766
	Alfa SA de CV Series A	2,620,517	17,693
	Kimberly Clark de Mexico
	SA de CV Series A	3,712,473	16,156
	Grupo Bimbo SA	2,462,888	14,021
*	Corporacion GEO,
	SA de CV	2,960,101	10,910
	Coca-Cola Femsa
	SA de CV	2,349,545	10,908
	Grupo Aeroportuario
	del Pacifico SA ADR	200,593	10,521
*	Desarrolladora Homex
	SA de CV	1,002,380	9,470
	Controladora Comercial
	Mexicana SA de
	CV (Units)	3,022,983	9,438
*	URBI Desarrollos Urbanos
	SA de CV	1,754,189	6,777
	Consorcio ARA SA de CV	5,835,824	6,754
*	Carso Infraestructura y
	Construccion, SA	5,746,392	6,192
	Grupo Aeroportuario
	del Pacifico SA	1,110,807	5,848
	Grupo Aeroportuario

100

			Market
			Value^•
		Shares	($000)
	del Sureste SA de CV	443,990	2,661
*	Cemex SAB de CV ADR	12,499	383
			1,178,826
Peru (0.7%)
	Southern Copper Corp.
	(U.S. Shares)	336,692	47,036
	Southern Copper Corp.	276,269	38,691
	Credicorp Ltd.	459,113	34,066
	Compania de Minas
	Buenaventura SA	471,947	28,044
	Volcan Compania
	Minera SA	2,796,943	13,143
	Minsur SA	2,955,977	9,950
	Compania de Minas
	Buenaventura S.A.u. ADR	165,751	9,516
			180,446
Philippines (0.6%)
	Philippine Long Distance
	Telephone Co.	402,424	28,057
	Ayala Corp.	1,087,742	15,636
	Ayala Land, Inc.	38,763,909	13,548
	Bank of Philippine Islands	8,403,955	12,726
	SM Investments Corp.	1,230,043	10,833
	SM Prime Holdings, Inc.	33,586,606	9,406
	Globe Telecom, Inc.	211,789	8,295
	Megaworld Corp.	71,817,573	7,395
	PNOC Energy
	Development Corp.	41,392,000	7,316
	Metropolitan Bank &
	Trust Co.	4,594,341	6,625
	Manila Electric Co.	3,266,032	6,251
	Banco De Oro	4,101,491	5,930
	San Miguel Corp. Class B	4,069,089	5,825
	Jollibee Foods Corp.	4,043,843	4,777
	Petron Corp.	25,962,950	4,222
	First Philippine
	Holdings Corp.	1,831,003	3,644
*	Filinvest Land, Inc.	81,209,058	3,564
			154,050
Poland (1.7%)
	Powszechna Kasa
	Oszczednosci Bank
	Polski SA	3,376,752	75,111
	Bank Polska Kasa Opieki
	Grupa Pekao SA	530,677	56,418
	Polski Koncern Naftowy SA	2,079,934	48,187
	Telekomunikacja Polska SA	4,767,218	45,165
	KGHM Polska Miedz SA	773,740	42,213
	Bank Przemyslowo
	Handlowy PBK SA	58,806	23,013
*	Globe Trade Centre SA	924,108	19,159

101

			Market
			Value^•
		Shares	($000)
	Bank Zachodni WBK SA	169,311	18,865
	Polish Oil & Gas	7,425,581	16,861
*	Bank Rozwoju Eksportu SA	69,808	16,035
	TVN SA	1,012,015	10,130
	Grupa Kety SA	96,986	7,318
*	Echo Investment S.A.	153,933	6,123
*	PBG S.A.	42,684	5,825
	Asseco Poland SA	177,330	5,658
	Orbis SA	188,775	5,309
	Polska Grupa
	Farmaceutyczna	120,392	4,964
	Agora SA	198,089	4,433
	Prokom Software SA	73,068	4,221
	Mondi Packaging Paper
	Swieci SA	122,506	4,081
*	Budimex SA	117,653	3,496
	Debica SA	63,449	2,650
*	Bioton S.A.	3,180,742	1,434
	Sygnity SA	49,782	1,014
*	Boryszew SA	42,582	303
			427,986
Russia (9.0%)
	OAO Gazprom ADR	16,213,989	810,622
	LUKOIL Sponsored ADR	3,263,721	299,494
	Sberbank	59,042,085	255,259
	Mining and Metallurgical
	Co. Norilsk Nickel ADR	605,022	186,952
	Mobile TeleSystems ADR	1,361,664	113,018
	OAO Vimpel–
	Communications
	Sponsored ADR	3,177,102	105,067
*	RAO Unified Energy
	System GDR	693,594	90,306
	Surgutneftegaz
	OJSC ADR	1,193,097	78,293
	Tatneft GDR	498,240	62,362
*	VTB Bank OJSC GDR	6,343,204	61,096
	Cherepovets MK
	Severstal GDR	1,633,566	38,879
	NovaTek OAO GDR	535,329	30,853
	^Rostelecom ADR	508,649	30,366
	Polyus Gold ADR	653,452	29,895
	Sistema JSFC GDR	692,719	27,749
	Novolipetsk Steel GDR	559,199	23,131
	Transneft OAO	11,300	22,051
	^Mechel OAO ADR	249,003	20,954
	Comstar United
	Telesystems GDR	1,244,161	15,286
	Wimm-Bill-Dann
	Foods ADR	115,603	13,843
			2,315,476

102

			Market
			Value^•
		Shares	($000)
South Africa (7.0%)
	Sasol Ltd.	4,014,601	205,174
	MTN Group Ltd.	10,019,537	195,292
	Standard Bank Group Ltd.	8,384,181	152,107
	Impala Platinum
	Holdings Ltd.	3,587,964	135,532
	Anglo Platinum Ltd.	475,963	81,962
	FirstRand Ltd.	19,293,194	76,761
	Gold Fields Ltd.	4,088,689	73,821
	Naspers Ltd.	2,296,311	73,002
	Sanlan Ltd.	15,773,526	57,888
	Telkom South Africa Ltd.	2,060,657	56,385
	AngloGold Ltd.	985,216	46,075
	Bidvest Group Ltd.	1,659,979	34,952
	ArcelorMittal
	South Africa, Ltd.	1,457,372	32,853
	Murray & Roberts
	Holdings Ltd.	2,106,499	32,413
	Nedbank Group Ltd.	1,447,682	31,919
	Tiger Brands Ltd.	1,024,524	29,668
*	Pretoria Portland
	Cement Co. Ltd.	3,954,583	28,858
	Aveng Ltd.	2,918,907	28,811
	Barloworld Ltd.	1,433,653	27,891
*	Harmony Gold
	Mining Co., Ltd.	2,446,178	27,645
	Imperial Holdings Ltd.	1,193,046	24,200
	Sappi Ltd.	1,529,530	23,391
	Steinhoff International
	Holdings Ltd.	6,791,874	21,136
	Kumba Iron Ore Ltd.	527,783	20,688
	Shoprite Holdings Ltd.	3,108,981	19,438
	Network Healthcare
	Holdings Ltd.	9,263,865	18,734
	African Bank
	Investments Ltd.	3,277,726	18,334
	Investec Ltd.	1,349,240	16,903
	Massmart Holdings Ltd.	1,337,088	16,773
	Reunert Ltd.	1,357,423	16,249
	Truworths International Ltd.	2,929,231	14,800
	Woolworths Holdings Ltd.	4,949,627	14,403
	Liberty Group Ltd.	927,596	13,635
	JD Group Ltd.	1,394,827	13,386
	Foschini Ltd.	1,550,741	12,759
	Nampak Ltd.	3,590,757	12,006
	Aspen Pharmacare
	Holdings Ltd.	1,825,172	10,673
	Spar Group Ltd.	1,128,066	10,101
	Grindrod Ltd.	2,523,650	9,787
	AVI Ltd.	2,687,593	9,158
	Metropolitan Holdings Ltd.	3,658,384	8,972

103

			Market
			Value^•
		Shares	($000)
	Mondi Ltd.	845,282	8,568
	Ellerine Holdings Ltd.	636,375	8,533
	Fountainhead
	Property Trust	6,681,303	7,488
	Pick’n Pay Stores Ltd.	1,113,503	6,277
	Lewis Group Ltd.	593,954	5,175
	Super Group Ltd.	2,112,745	4,195
			1,794,771
South Korea (15.1%)
	Samsung
	Electronics Co., Ltd.	608,534	375,221
	POSCO	371,799	271,128
	Hyundai Heavy
	Industries Co., Inc.	279,136	156,944
	Kookmin Bank	1,863,551	152,392
	Shinhan Financial
	Group Ltd.	1,871,109	122,247
	POSCO ADR	521,758	95,873
^*	SK Energy Co., Ltd.	405,549	93,204
¹	Samsung Electronics
	Co., Ltd. GDR	278,731	85,279
^*	NHN Corp.	261,091	83,952
	Samsung Corp.	905,062	83,763
	Hyundai Motor Co., Ltd.	1,049,772	83,422
	Shinsegae Co., Ltd.	96,722	76,208
	Samsung Heavy
	Industries Co., Ltd.	1,181,250	71,316
	Samsung Fire & Marine
	Insurance Co.	247,063	68,733
	LG Electronics Inc.	644,925	67,814
	Samsung
	Electronics Co., Ltd. Pfd.	140,846	67,080
	Korea Electric Power Corp.	1,398,931	61,842
	KT & G Corp.	759,304	61,252
	GS Engineering &
	Construction Corp.	245,621	52,038
	SK Holdings Co Ltd	167,948	50,448
	Hyundai Development Co.	441,514	49,461
	Samsung Securities Co. Ltd.	368,615	46,147
	SK Telecom Co., Ltd.	184,678	43,328
	Daelim Industrial Co.	192,648	42,334
	Daewoo Shipbuilding &
	Marine Engineering
	Co., Ltd.	660,812	41,974
*	LG. Philips LCD Co., Ltd.	746,198	41,223
	Hana Financial Group Inc.	807,600	40,875
*	Doosan Heavy
	Industries and
	Construction Co., Ltd.	218,869	40,414
	Hyundai Mobis	382,376	38,485
	Hyundai Mipo

104

			Market
			Value^•
		Shares	($000)
	Dockyard Co., Ltd.	83,546	37,120
	KT Corp.	775,754	36,849
	LG Chem Ltd.	290,608	36,315
	Hyundai Steel Co.	353,925	35,293
	Kookmin Bank–
	Sponsored ADR	422,914	34,548
*	Hyundai Engineering &
	Construction Co., Ltd.	308,794	31,618
	Hanwha Corp.	316,234	31,387
	Daewoo Engineering &
	Construction Co., Ltd.	1,065,515	30,874
	Samsung
	Engineering Co., Ltd.	222,968	30,032
	Korea Exchange Bank	1,803,250	29,825
	S-Oil Corp.	316,494	28,745
	Lotte Shopping Co., Ltd.	60,888	28,565
	Mirae Asset
	Securities Co., Ltd.	145,629	27,799
	Samsung Electro-
	Mechanics Co.	417,528	27,637
	Kumkang Korea
	Chemical Co., Ltd.	37,112	27,473
	Korea Investment
	Holdings Co., Ltd.	280,724	25,181
	SK Telecom Co. Ltd. ADR	783,594	24,143
	Daewoo Securities Co., Ltd.	804,060	23,959
*	Hanjin Heavy Industries &
	Construction Co., Ltd.	218,567	23,951
	Hyundai Securities Co.	992,711	23,793
	Samsung Techwin Co., Ltd.	379,684	23,297
	Doosan Infracore Co., Ltd.	533,142	22,688
	Korean Air Co. Ltd.	256,392	22,549
	Hanjin Shipping Co., Ltd.	381,350	22,299
	Amorepacific Corp.	23,226	22,190
	^Shinhan Financial
	Group Co., Ltd. ADR	168,758	22,102
	LS Cable Ltd.	137,240	21,199
	Cheil Industrial, Inc.	319,076	21,141
	Korea Telecom Freetel	560,349	20,652
	Kangwon Land Inc.	762,288	20,440
	Samsung SDI Co. Ltd.	243,791	19,660
	Woori Investment &
	Securities Co., Ltd.	622,161	19,179
	LG Household &
	Health Care Ltd.	79,816	17,793
	Dongkuk Steel Mill Co., Ltd.	269,922	16,233
	Pusan Bank	902,079	16,192
*	CJ CheilJedang Corp.	48,552	16,091
	Daegu Bank	907,765	16,089
	Korea Electric
	Power Corp. ADR	722,842	16,083
*	Kia Motors	1,364,474	15,830

105

			Market
			Value^•
		Shares	($000)
	Honam Petrochemical Corp.	103,676	15,826
	Hyundai Merchant
	Marine Co., Ltd.	289,500	15,706
	Korea Zinc Co., Ltd.	75,935	15,336
	Hyundai Department
	Store Co., Ltd.	108,442	15,170
	Daewoo International Corp.	347,187	14,751
	Dongbu Insurance Co., Ltd.	239,565	14,574
	Hankook Tire Co. Ltd.	672,636	14,233
	Hyundai Marine & Fire
	Insurance Co., Ltd.	490,546	14,216
	Woongjin Coway Co., Ltd.	338,259	12,964
	Hite Brewery Co., Ltd.	85,077	12,740
	Hyosung Corp.	169,333	12,704
	Yuhan Corp.	57,545	12,315
	Tong Yang Investment Bank	531,788	12,232
	Hanwha Chemical Corp.	408,480	12,069
	LG Petrochemical Co., Ltd.	201,840	11,932
	Hyundai Motor Co., Ltd.
	2nd Pfd.	272,677	10,472
	S1 Corp.	148,142	9,892
	Samsung Fine
	Chemicals Co., Ltd.	129,486	9,832
	Daishin Securities Co.	311,491	9,774
	Lotte Confectionery Co., Ltd.	5,586	9,198
	ORION Corp.	27,798	8,882
	Korean Reinsurance Co.	472,781	8,433
	Cheil Communications Inc.	28,797	8,311
	KT Corp. ADR	348,201	8,190
	Asiana Airlines	699,604	7,860
	LG International Corp.	246,496	7,750
	LG Electronics Inc. Pfd.	136,859	7,618
*	Daum Communications Corp.	81,839	7,471
	LG Fashion Corp.	188,243	7,435
	Hanmi Pharm Co., Ltd.	47,148	7,206
*	NCsoft Corp.	111,979	6,955
	Lotte Chilsung
	Beverage Co., Ltd.	4,731	6,698
	Poongsan Corp.	201,580	5,694
	Pacific Corp.	24,631	5,603
	Nong Shim Co. Ltd.	24,918	5,527
	Hyundai Autonet Co., Ltd.	711,082	4,702
*	Hyundai Securities
	Rights Exp. 11/2/07	105,647	557
			3,902,039
Taiwan (10.7%)
	Hon Hai Precision
	Industry Co., Ltd.	33,826,663	259,335
	Taiwan Semiconductor
	Manufacturing Co., Ltd.	119,306,650	238,402
	MediaTek Inc.	5,399,502	106,849

106

			Market
			Value^•
		Shares	($000)
	Nan Ya Plastic Corp.	33,256,291	99,997
	Cathay Financial
	Holding Co.	36,856,431	96,401
	Formosa Plastic Corp.	26,972,289	83,720
	China Steel Corp.	57,495,126	81,620
	AU Optronics Corp.	36,279,874	78,487
	Asustek Computer Inc.	21,120,157	74,987
	Innolux Display Corp.	13,434,263	62,977
	High Tech Computer Corp.	2,939,336	60,559
	Chunghwa
	Telecom Co., Ltd.	31,048,212	59,763
	Formosa Chemicals &
	Fibre Corp.	19,138,276	51,770
	Taiwan Semiconductor
	Manufacturing Co.,
	Ltd. ADR	4,559,009	48,553
	United
	Microelectronics Corp.	69,873,843	45,828
	Formosa
	Petrochemical Corp.	12,981,000	42,370
	Delta Electronics Inc.	9,641,937	39,032
	Mega Financial
	Holding Co. Ltd.	58,267,224	38,118
	Acer Inc.	15,913,229	37,848
	Chi Mei
	Optoelectronics Corp.	25,713,666	37,243
	Foxconn
	Technology Co., Ltd.	2,924,103	35,587
	Siliconware Precision
	Industries Co.	15,393,228	32,311
*	Chinatrust Financial
	Holding	43,270,185	31,743
	Taiwan Cement Corp.	17,435,627	30,036
*	Fuhwa Financial
	Holdings Co., Ltd.	38,634,773	28,726
	Advanced Semiconductor
	Engineering Inc.	22,688,670	27,456
	Compal Electronics Inc.	21,165,191	27,037
	China Development
	Financial Holding Corp.	62,831,522	26,287
	Uni-President
	Enterprises Co.	18,009,485	26,111
	First Financial
	Holding Co., Ltd.	30,711,081	25,352
	Catcher
	Technology Co., Ltd.	3,423,747	23,663
	Lite-On Technology Corp.	12,688,254	23,525
	Fubon Financial
	Holding Co., Ltd.	23,125,100	22,542
	Far Eastern Textile Ltd.	16,450,208	21,928
	Taiwan Cellular Corp.	15,586,360	21,032

107

			Market
			Value^•
		Shares	($000)
	Inotera Memories, Inc.	21,489,620	20,608
	Powerchip
	Semiconductor Corp.	43,924,716	20,437
*	Taishin Financial Holdings	40,555,678	20,052
	Shin Kong Financial
	Holdings Co.	20,559,663	19,281
	Quanta Computer Inc.	11,324,943	19,049
	Synnex Technology
	International Corp.	5,468,729	18,393
	Hau Nan Financial
	Holdings Co., Ltd.	24,174,695	18,189
	Chang Hwa
	Commercial Bank	26,334,094	17,727
*	Chunghwa Picture
	Tubes, Ltd.	40,009,331	16,806
	SinoPac Holdings	35,913,214	16,759
	Asia Cement Corp.	9,637,375	15,748
	Novatek Microelectronics
	Corp., Ltd.	3,162,185	14,684
*	Qisda Corp.	9,094,415	12,952
*	HannStar Display Corp.	27,470,665	12,805
	AU Optronics Corp. ADR	579,538	12,593
*	Tatung Co., Ltd.	22,727,000	12,520
	Taiwan Fertilizer Co., Ltd.	4,821,000	12,447
	Macronix
	International Co., Ltd.	18,903,962	12,400
*	E.Sun Financial
	Holding Co., Ltd.	21,406,637	12,298
	Nanya Technology Corp.	18,989,397	12,033
	Pou Chen Corp.	12,500,733	11,981
	Wistron Corp.	5,743,275	11,568
	Epistar Corp.	2,509,192	11,356
	U-Ming Marine
	Transport Corp.	3,263,600	10,728
	^United Microelectronics
	Corp. ADR	2,714,121	10,232
	Chunghwa
	Telecom Co., Ltd. ADR	531,828	10,211
	President Chain
	Store Corp.	3,313,985	9,871
	D-Link Corp.	4,289,458	9,715
	Unimicron
	Technology Corp.	4,570,440	9,317
	Cheng Shin Rubber
	Industry Co., Ltd.	4,690,033	9,280
	Mitac International Corp.	7,072,772	9,239
	Realtek
	Semiconductor Corp.	2,368,853	9,175
	ProMOS
	Technologies Inc.	32,005,000	9,130
	Powertech

108

			Market
			Value^•
		Shares	($000)
	Technology Inc.	2,233,000	9,124
	Walsin Lihwa Corp.	16,553,970	8,997
*	CMC Magnetics Corp.	20,760,700	8,963
	Wintek Corp.	6,059,607	8,738
*	Polaris Securities Co., Ltd.	15,077,457	8,252
	Nan Ya Printed Circuit
	Board Corp.	1,246,670	8,248
	Largan Precision Co., Ltd.	669,328	8,228
	Evergreen Marine Corp.	8,096,879	7,986
	Tripod Technology Corp.	1,939,179	7,905
	Formosa Taffeta Co., Ltd.	6,847,868	7,813
	Mosel Vitelic Inc.	6,575,910	7,462
	Winbond
	Electronics Corp.	21,504,000	7,228
	Wan Hai Lines Ltd.	6,562,370	6,664
	Phoenix Precision
	Technology Corp.	4,880,900	6,215
	Inventec Co., Ltd.	9,665,711	6,172
	Yageo Corp.	15,626,520	6,154
	Taiwan Glass
	Industrial Corp.	4,426,594	6,086
	Yulon Motor Co., Ltd.	5,115,763	6,022
	Teco Electric &
	Machinery Co., Ltd.	10,111,000	5,628
	Micro-Star
	International Co., Ltd.	4,979,972	5,334
	Vanguard International
	Semiconductor Corp.	6,104,265	5,262
	Yang Ming Marine
	Transport	6,371,479	5,250
	China Airlines	11,348,246	5,245
	^Siliconware Precision
	Industries Co. ADR	450,409	5,216
	Compal
	Communications, Inc.	1,971,690	5,035
	Motech Industries Inc.	474,901	5,023
	Yuen Foong Yu Paper
	Manufacturing Co., Ltd.	10,656,193	4,980
*	EVA Airways Corp.	11,825,879	4,793
	Zyxel
	Communications Corp.	2,568,085	4,728
	Advantech Co., Ltd.	1,736,810	4,727
	Oriental Union
	Chemical Corp.	3,319,576	4,722
*	Via Technologies Inc.	6,560,379	4,671
	Kinsus Interconnect
	Technology Corp.	1,148,600	4,581
	^Advanced Semiconductor
	Engineering Inc. ADR	750,906	4,520
	Gigabyte
	Technology Co., Ltd.	5,376,626	4,497

109

			Market
			Value^•
		Shares	($000)
	Cheng Uei Precision
	Industry Co., Ltd.	1,579,304	4,429
	Inventec Appliances Corp.	1,964,645	4,395
	Eternal Chemical Co., Ltd.	3,389,815	4,363
*	Ritek Corp.	14,292,194	4,271
	Asia Optical Co., Inc.	1,202,853	4,225
	China Motor Co., Ltd.	4,414,588	4,088
	Yieh Phui Enterprise	9,492,861	4,061
	Cathay Construction Corp.	6,017,779	3,364
	Waterland
	Financial Holdings	9,327,100	3,098
	Compeq
	Manufacturing Co., Ltd.	6,177,750	2,772
	Kinpo Electronics, Inc.	6,845,506	2,726
	Taiwan Secom Corp., Ltd.	1,499,846	2,303
*	Ya Hsin Industrial Co., Ltd.	5,306,018	976
			2,762,319
Thailand (1.4%)
*	PTT Chemical
	Public Co. Ltd. (Foreign)	5,511,332	67,463
*	PTT Exploration &
	Production Public Co. Ltd.
	(Foreign)	8,355,662	39,830
	Kasikornbank
	Public Co. Ltd. (Foreign)	10,685,852	28,408
	Bangkok Bank
	Public Co., Ltd. (Foreign)	6,726,182	25,369
	Siam Cement
	Public Co. Ltd. (Foreign)	2,539,326	19,681
	Advanced Info Service
	Public Co. Ltd. (Foreign)	6,248,908	16,570
*	Siam Commercial Bank
	Public Co. Ltd. (Foreign)	5,851,215	16,356
*	IRPC Public Co. Ltd.
	(Foreign)	68,244,960	13,454
	Banpu Public Co. Ltd.
	(Foreign)	876,443	11,615
*	Bangkok Bank
	Public Co. Ltd. (Local)	3,089,644	11,455
	Rayong Refinery
	Public Co. Ltd. (Foreign)	11,354,590	8,436
*	PTT Chemical
	Public Co. Ltd. (Foreign)	2,076,267	8,370
	Krung Thai Bank
	Public Co. Ltd. (Foreign)	19,837,064	6,813
*	Siam Cement
	Public Co. Ltd. (Local)	724,008	5,569
*	Airports of Thailand
	Public Co. Ltd. (Foreign)	3,087,304	5,541
	BEC World Public Co. Ltd.
	(Foreign)	7,886,130	5,430

110

			Market
			Value^•
		Shares	($000)
	C.P. 7-Eleven
	Public Co. Ltd. (Foreign)	17,879,900	5,314
*	Charoen Pokphand Foods
	Public Co., Ltd. (Foreign)	35,458,635	5,217
	Land and Houses
	Public Co. Ltd. (Foreign)	19,577,999	4,830
*	Kasikornbank Public Co.,
	Ltd. (Local)	1,770,270	4,701
	Central Pattana Public Co.
	Ltd. (Foreign)	6,087,800	4,613
*	Siam City Cement
	Public Co. Ltd. (Foreign)	513,940	4,325
*	Land and Houses
	Public Co. Ltd. (Local)	19,142,100	4,206
*	Thai Airways International
	Public Co. Ltd.	3,502,312	4,071
	Glow Energy
	Public Co. Ltd. (Foreign)	3,867,000	4,039
*	Siam Commercial Bank
	Public Co. Ltd. (Local)	1,422,328	4,010
*	The Aromatics (Thailand)
	Public Co. Ltd. (Foreign)	1,849,589	3,837
	Ratchaburi Electricity
	Generating Holding
	Public Co. Ltd.	2,418,200	3,558
*	Banpu Public Co. Ltd.
	(Local)	262,560	3,457
*	Precious Shipping
	Public Co. Ltd. (Foreign)	3,781,452	3,366
	Hana Microelectronics
	Public Co. Ltd. (Foreign)	4,434,100	3,262
*	True Corp. Public Co. Ltd.
	(Foreign)	14,648,360	3,254
*	PTT Chemical Public Co.
	Ltd. (Local)	698,044	2,838
	Electricity Generating
	Public Co. Ltd. (Foreign)	767,548	2,713
*	Thanachart Capital
	Public Co. Ltd. (Foreign)	4,753,114	2,308
	Siam Makro
	Public Co. Ltd. (Foreign)	705,300	2,044
	Bangkok Expressway
	Public Co. Ltd. (Foreign)	2,216,300	1,617
*	Thanachart Capital
	Public Co. Ltd. (Local)	2,427,598	1,188
*	Electricity Generating
	Public Co. Ltd. (Local)	336,000	1,173
*	Krung Thai Bank
	Public Co. Ltd. (Local)	3,128,118	1,058
*	True Corp.
	Public Co. Ltd. (Local)	3,808,170	856

111

			Market
			Value^•
		Shares	($000)
*	PTT Public Co., Ltd. (Local)	64,570	796
*	IRPC Public Co. Ltd. (Local)	3,365,400	668
*	The Aromatics
	(Thailand) Public Co. Ltd.
	(Local)	275,089	575
*	Siam City Cement
	Public Co. Ltd. (Local)	62,258	526
*	PTT Exploration and
	Production Public Co. Ltd.
	(Local)	98,054	471
*	Advanced Info Service
	Public Co., Ltd. (Local)	97,146	256
*	Charoen Pokphand Foods
	Public Co. Ltd. (Local)	756,351	112
*	Precious Shipping
	Public Co., Ltd. (Local)	95,568	86
*	Airports of Thailand
	Public Co. Ltd. (Local)	46,838	84
*	Thai Airways International
	Public Co. Ltd. (Local)	44,264	52
*	True Corp. Public Co. Ltd.
	Warrants Exp. 4/30/10	1,020,789	—
			375,841
Turkey (1.8%)
	Turkiye Garanti
	Bankasi A.S.	7,318,827	68,009
	Akbank T.A.S.	6,295,548	57,956
	Turkiye Is Bankasi
	A.S. C Shares	6,825,237	47,016
	Turkcell Iletisim
	Hizmetleri A.S.	3,895,889	38,139
	Eregli Demir ve Celik
	Fabrikalari A.S.	3,019,385	29,571
	Tupras-Turkiye Petrol
	Rafinerileri A.S.	901,591	25,741
	Haci Omer Sabanci
	Holding A.S.	3,394,071	23,347
	Anadolu Efes Biracilik ve
	Malt Sanayii A.S.	1,714,717	21,158
	Turkiye Vakiflar
	Bankasi TAO	5,476,574	21,034
*	Yapi ve Kredi
	Bankasi A.S.	4,641,461	18,189
*	KOC Holding A.S.	2,626,708	14,476
	Migros Turk A.S.	787,357	13,881
*	Dogan Sirketler
	Grubu Holding A.S.	4,206,030	9,373
*	Dogan Yayin Holding A.S.	1,732,287	8,819
	Aksigorta A.S.	1,126,956	8,435
	Arcelik A.S.	858,095	6,613
	Tofas Turk Otomobil

112

				Market
				Value^•
			Shares	($000)
		Fabrikasi A.S.	1,231,323	6,590
		Turk Sise ve Cam
		Fabrikalari A.S.	2,885,237	6,384
*		Petkim Petrokimya
		Holding A.S.	712,468	5,932
*		Hurriyet Azteccilik ve
		Matbaacillik A.S.	1,396,191	5,051
		Adana Cimento
		Sanayii T.A.S.	557,214	4,291
		Trakya Cam Sanayii A.S.	1,626,937	4,249
		Aygaz A.S.	895,626	4,217
*		Is Gayrimenkul Yatirim
	Ortakligi A.S.		2,473,150	4,166
	Cimsa Cemento
	Sanayi ve Ticaret A.S.		471,573	4,043
	Akcansa Cimento A.S.		503,911	3,705
	Ford Otomotiv Sanayi A.S.		270,441	3,193
*	Vestel Elektronik
	Sanayi ve Ticaret A.S.		966,220	2,881
	Ulker Gida Sanayi ve
	Ticaret A.S.		447,092	2,058
*	Turk Hava Yollari
	Anonim Ortakligi		174,278	1,255
				469,772
Total Common Stocks
(Cost $13,448,998)				25,670,194
Temporary Cash Investments (0.6%)
²	Vanguard Market Liquidity
	Fund, 4.955%		44,941,610	44,942
²	Vanguard Market Liquidity
	Fund, 4.955%—Note F		95,394,300	95,394
Total Temporary Cash Investments
(Cost $140,336)				140,336
Total Investments (100.1%)
(Cost $13,589,334)				25,810,530
Other Assets and Liabilities (–0.1%)
Other Assets—Note B				395,693
Liabilities—Note F				(419,832)
				(24,139)
Net Assets (100%)				25,786,391

113

Emerging Markets Stock Index Fund

At October 31, 2007, net assets consisted of:³
	Amount
	($000)
Paid-in Capital	13,406,294
Undistributed Net Investment Income	344,566
Accumulated Net Realized Losses	(186,710)
Unrealized Appreciation
Investment Securities	12,221,196
Foreign Currencies	1,045
Net Assets	25,786,391

Investor Shares—Net Assets
Applicable to 384,663,904 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	14,149,814
Net Asset Value Per Share—
Investor Shares	$36.78

Admiral Shares—Net Assets
Applicable to 72,503,459 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	3,513,896
Net Asset Value Per Share—
Admiral Shares	$48.47

Signal Shares—Net Assets
Applicable to 8,263,104 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	385,120
Net Asset Value Per Share—
Signal Shares	$46.61

Institutional Shares—Net Assets
Applicable to 39,641,306 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	1,462,737
Net Asset Value Per Share—
Institutional Shares	$36.90

ETF Shares—Net Assets
Applicable to 53,805,371 outstanding
$.001 par value shares of beneficial
interest (unlimited authorization)	6,274,824
Net Asset Value Per Share—
ETF Shares	$116.62

114

• See Note A in Notes to Financial Statements.

* Non-income-producing security.

^ Part of security position is on loan to broker-dealers. See Note F in Notes to Financial Statements.

1 Security exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At October 31, 2007, the value of this security represented 0.3% of net assets.

2 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.

3 See Note D in Notes to Financial Statements for the tax-basis components of net assets.

ADR—American Depositary Receipt.

GDR—Global Depositary Receipt.

115

Emerging Markets Stock Index Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Dividends¹	419,477
Interest²	1,870
Security Lending	2,170
Total Income	423,517
Expenses
The Vanguard Group—Note B
Investment Advisory Services	408
Management and Administrative—Investor Shares	23,539
Management and Administrative—Admiral Shares	3,140
Management and Administrative—Signal Shares	108
Management and Administrative—Institutional Shares	810
Management and Administrative—ETF Shares	4,497
Marketing and Distribution—Investor Shares	2,265
Marketing and Distribution—Admiral Shares	275
Marketing and Distribution—Signal Shares	1
Marketing and Distribution—Institutional Shares	177
Marketing and Distribution—ETF Shares	715
Custodian Fees	14,752
Auditing Fees	37
Shareholders’ Reports
Investor Shares	246
Admiral Shares	11
Signal Shares	1
Institutional Shares	—
ETF Shares	113
Trustees’ Fees and Expenses	18
Total Expenses	51,113
Expenses Paid Indirectly—Note C	(296)
Net Expenses	50,817
Net Investment Income	372,700
Realized Net Gain (Loss)
Investment Securities Sold	168,809
Foreign Currencies	(622)
Swap Contracts	5,960
Realized Net Gain (Loss)	174,147
Change in Unrealized Appreciation (Depreciation)
Investment Securities	8,817,859
Foreign Currencies	970
Swap Contracts	(891)
Change in Unrealized Appreciation (Depreciation)	8,817,938
Net Increase (Decrease) in Net Assets Resulting from Operations	9,364,785

1 Dividends are net of foreign withholding taxes of $42,509,000.

2 Interest income from an affiliated company of the fund was $1,828,000.

116

Emerging Markets Stock Index Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	372,700	199,880
Realized Net Gain (Loss)	174,147	(148,471)
Change in Unrealized Appreciation (Depreciation)	8,817,938	1,974,410
Net Increase (Decrease) in Net Assets Resulting from Operations	9,364,785	2,025,819
Distributions
Net Investment Income
Investor Shares	(130,073)	(96,914)
Admiral Shares	(30,176)	—
Signal Shares	—	—
Institutional Shares	(11,028)	(9,315)
ETF Shares	(34,662)	(9,827)
Realized Capital Gain
Investor Shares	—	—
Admiral Shares	—	—
Signal Shares	—	—
Institutional Shares	—	—
ETF Shares	—	—
Total Distributions	(205,939)	(116,056)
Capital Share Transactions—Note G
Investor Shares	1,679,248	746,446
Admiral Shares	699,959	1,395,891
Signal Shares	330,912	—
Institutional Shares	356,607	(42,144)
ETF Shares	2,727,702	1,042,686
Net Increase (Decrease) from Capital Share Transactions	5,794,428	3,142,879
Total Increase (Decrease)	14,953,274	5,052,642
Net Assets
Beginning of Period	10,833,117	5,780,475
End of Period¹	25,786,391	10,833,117

1 Net Assets—End of Period includes undistributed net investment income of $344,566,000 and $178,233,000.

117

Emerging Markets Stock Index Fund

Financial Highlights

Investor Shares


	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$22.05	$16.91	$12.88	$11.04	$7.48
Investment Operations
Net Investment Income	.604¹	.396	.307	.263	.170
Net Realized and Unrealized Gain (Loss)
on Investments²	14.522	5.059	3.982	1.749	3.512
Total from Investment Operations	15.126	5.455	4.289	2.012	3.682
Distributions
Dividends from Net Investment Income	(.396)	(.315)	(.259)	(.172)	(.122)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.396)	(.315)	(.259)	(.172)	(.122)
Net Asset Value, End of Period	$36.78	$22.05	$16.91	$12.88	$11.04


Total Return³	69.59%	32.55%	33.66%	18.43%	49.88%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$14,150	$7,202	$4,937	$2,556	$1,589
Ratio of Total Expenses to
Average Net Assets	0.37%	0.42%	0.45%	0.48%	0.53%
Ratio of Net Investment Income to
Average Net Assets	2.24%	2.20%	2.48%	2.44%	2.26%
Portfolio Turnover Rate⁴	9%	26%	15%	11%	16%

1 Calculated based on average shares outstanding.

2 Includes increases from redemption fees of $.01, $.01, $.00, $.00, and $.00.

3 Total returns do not reflect the 0.5% transaction fee on purchases; the 2% fee assessed until March 23, 2005, on redemptions of shares purchased on or after June 27, 2003, and held for less than two months; the 0.5% fee on all other redemptions; or the account service fee that may be applicable to certain accounts with balances below $10,000.

4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

118

Emerging Markets Stock Index Fund

Admiral Shares
	Year	June 23,
	Ended	2006¹to
	Oct. 31,	Oct. 31,
For a Share Outstanding Throughout Each Period	2007	2006
Net Asset Value, Beginning of Period	$29.03	$25.00
Investment Operations
Net Investment Income	.853²	.222
Net Realized and Unrealized Gain (Loss) on Investments³	19.121	3.808
Total from Investment Operations	19.974	4.030
Distributions
Dividends from Net Investment Income	(.534)	—
Distributions from Realized Capital Gains	—	—
Total Distributions	(.534)	—
Net Asset Value, End of Period	$48.47	$29.03


Total Return⁴	69.82%	16.12%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$3,514	$1,491
Ratio of Total Expenses to Average Net Assets	0.25%	0.30%*
Ratio of Net Investment Income to Average Net Assets	2.36%	2.32%*
Portfolio Turnover Rate⁵	9%	26%

1 Inception.

2 Calculated based on average shares outstanding.

3 Includes increases from redemption fees of $.01 and $.01.

4 Total returns do not reflect the 0.5% transaction fee on purchases and redemptions.

5 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

* Annualized.

119

Emerging Markets Stock Index Fund

Signal Shares

	Jan. 19,
	2007¹to
	Oct. 31,
For a Share Outstanding Throughout the Period	2007
Net Asset Value, Beginning of Period	$30.38
Investment Operations
Net Investment Income	.58²
Net Realized and Unrealized Gain (Loss) on Investments	15.65
Total from Investment Operations	16.23
Distributions
Dividends from Net Investment Income	—
Distributions from Realized Capital Gains	—
Total Distributions	—
Net Asset Value, End of Period	$46.61


Total Return³	53.42%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$385
Ratio of Total Expenses to Average Net Assets	0.25%*
Ratio of Net Investment Income to Average Net Assets	2.36%*
Portfolio Turnover Rate⁴	9%

1 Inception.

2 Calculated based on average shares outstanding.

3 Total returns do not reflect the 0.5% transaction fee on purchases and redemptions.

4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

* Annualized.

120

Emerging Markets Stock Index Fund

Institutional Shares


	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$22.11	$16.95	$12.90	$11.05	$7.49
Investment Operations
Net Investment Income	.686¹	.443	.344	.287	.183
Net Realized and Unrealized Gain (Loss)
on Investments²	14.533	5.059	3.982	1.749	3.512
Total from Investment Operations	15.219	5.502	4.326	2.036	3.695
Distributions
Dividends from Net Investment Income	(.429)	(.342)	(.276)	(.186)	(.135)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.429)	(.342)	(.276)	(.186)	(.135)
Net Asset Value, End of Period	$36.90	$22.11	$16.95	$12.90	$11.05


Total Return³	69.90%	32.78%	33.92%	18.64%	50.06%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$1,463	$559	$468	$245	$137
Ratio of Total Expenses to
Average Net Assets	0.20%	0.25%	0.25%	0.33%	0.38%
Ratio of Net Investment Income to
Average Net Assets	2.41%	2.37%	2.64%	2.61%	2.41%
Portfolio Turnover Rate⁴	9%	26%	15%	11%	16%

1 Calculated based on average shares outstanding.

2 Includes increases from redemption fees of $.01, $.01, $.00, $.00, and $.00.

4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

121

Emerging Markets Stock Index Fund

ETF Shares

			March 4,
	Year Ended		2005¹to
	October 31,		Oct. 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005
Net Asset Value, Beginning of Period	$69.91	$53.61	$50.55
Investment Operations
Net Investment Income	2.130²	1.333	.87
Net Realized and Unrealized Gain (Loss) on Investments³	45.919	16.044	2.19
Total from Investment Operations	48.049	17.377	3.06
Distributions
Dividends from Net Investment Income	(1.339)	(1.077)	—
Distributions from Realized Capital Gains	—	—	—
Total Distributions	(1.339)	(1.077)	—
Net Asset Value, End of Period	$116.62	$69.91	$53.61


Total Return	69.78%	32.74%	6.05%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$6,275	$1,582	$375
Ratio of Total Expenses to Average Net Assets	0.25%	0.30%	0.30%*
Ratio of Net Investment Income to Average Net Assets	2.36%	2.32%	2.59%*
Portfolio Turnover Rate⁴	9%	26%	15%

1 Inception.

2 Calculated based on average shares outstanding.

3 Includes increases from redemption fees of $.03, $.03, and $.00.

4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

* Annualized.

See accompanying Notes, which are an integral part of the Financial Statements.

122

Emerging Markets Stock Index Fund

Notes to Financial Statements

Vanguard Emerging Markets Stock Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard International Equity Index Funds. The fund invests in securities of foreign issuers, which may subject it to investment risks not normally associated with investing in securities of U.S. corporations. The fund offers five classes of shares: Investor Shares, Admiral Shares, Signal Shares, Institutional Shares, and ETF Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. Admiral Shares are designed for investors who meet certain administrative, service, tenure, and account-size criteria. Signal Shares are designed for institutional investors who meet certain administrative, service, and account-size criteria. Signal Shares were first issued on January 19, 2007. Institutional Shares are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million. ETF Shares are listed for trading on the American Stock Exchange; they can be purchased and sold through a broker.

3. Swap Contracts: The fund has entered into equity swap contracts to earn the total return on selected stocks in the fund’s target index, when investing through a swap provides a return advantage over buying the individual stocks. Under the terms of each swap, the fund receives the total return (either receiving the increase or paying the decrease) on a reference stock, applied to a notional amount that is the value of a designated number of shares of the stock at the beginning of the swap. The fund agrees to pay the counterparty a floating rate that is reset periodically based on short-term interest rates, less a specified interest rate spread, applied to the notional amount. The primary risks associated with the swaps are that a counterparty will default on its obligation to pay net amounts due to the fund, or that the fund will incur fees in the

123

Emerging Markets Stock Index Fund

event it terminates a swap prior to the scheduled termination date.

The notional amounts of swap contracts are not recorded in the Statement of Net Assets. Swaps are valued daily and the change in value is recorded as unrealized appreciation (depreciation) until the termination of the swap, at which time realized gain (loss) is recorded.

5. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

7. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. 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 at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At October 31, 2007, the fund had contributed capital of $1,855,000 to Vanguard (included in Other Assets), representing 0.01% of the fund’s net assets and 1.85% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

124

Emerging Markets Stock Index Fund

During the year ended October 31, 2007, the fund realized net foreign currency losses of $622,000, which decreased distributable net income for tax purposes; accordingly such losses have been reclassified from accumulated net realized losses to undistributed net investment income. The fund’s realized losses for the year ended October 31, 2007, include realized losses on swaps of $52,000, and taxes paid on realized capital gains on Indian securities of $17,000, which are treated as decreases to taxable income; accordingly these amounts have been reclassified from accumulated net realized losses to undistributed net investment income.

Certain of the fund’s investments are in securities considered to be ”passive foreign investment companies,” for which any unrealized appreciation and/or realized gains are required to be included in distributable net income for tax purposes. During the year ended October 31, 2007, the fund realized gains on the sale of passive foreign investment companies of $263,000, which have been included in current and prior periods’ taxable income; accordingly, such gains have been reclassified from accumulated net realized losses to undistributed net investment income. Unrealized appreciation on the fund’s passive foreign investment company holdings at October 31, 2007, was $41,815,000, of which $5,764,000 has been distributed and is reflected in the balance of undistributed net investment income.

During the year ended October 31, 2007, the fund realized $16,815,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital. For tax purposes, at October 31, 2007, the fund had $397,625,000 of ordinary income available for distribution. The fund had available realized losses of $182,474,000 to offset future net capital gains of $15,143,000 through October 31, 2012, and $167,331,000 through October 31, 2014.

At October 31, 2007, the cost of investment securities for tax purposes was $13,635,382,000. Net unrealized appreciation of investment securities for tax purposes was $12,175,148,000, consisting of unrealized gains of $12,275,312,000 on securities that had risen in value since their purchase and $100,164,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended October 31, 2007, the fund purchased $7,437,186,000 of investment securities and sold $1,528,669,000 of investment securities, other than temporary cash investments.

F. The market value of securities on loan to broker-dealers at October 31, 2007, was $93,017,000, for which the fund received cash collateral of $95,394,000.

125

Emerging Markets Stock Index Fund

G. Capital share transactions for each class of shares were:

	Year Ended October 31,
		2007		2006
	Amount	Shares	Amount	Shares
	($000)	(000)	($000)	(000)
Investor Shares
Issued	3,408,393	122,527	3,240,704	156,096
Issued in Lieu of Cash Distributions	123,741	5,215	89,932	4,718
Redeemed¹	(1,852,886)	(69,648)	(2,584,190)	(126,252)
Net Increase (Decrease)—Investor Shares	1,679,248	58,094	746,446	34,562
Admiral Shares
Issued	1,276,261	35,934	1,441,290	53,000
Issued in Lieu of Cash Distributions	26,534	849	—	—
Redeemed¹	(602,836)	(15,634)	(45,399)	(1,645)
Net Increase (Decrease)—Admiral Shares	699,959	21,149	1,395,891	51,355
Signal Shares
Issued	340,696	8,511	—	—
Issued in Lieu of Cash Distributions	—	—	—	—
Redeemed¹	(9,784)	(248)	—	—
Net Increase (Decrease)—Signal Shares	330,912	8,263	—	—
Institutional Shares
Issued	515,085	20,056	105,839	5,028
Issued in Lieu of Cash Distributions	9,287	391	7,301	382
Redeemed¹	(167,765)	(6,075)	(155,284)	(7,780)
Net Increase (Decrease)—Institutional Shares	356,607	14,372	(42,144)	(2,370)
ETF Shares
Issued	2,751,033	31,381	1,139,196	17,234
Issued in Lieu of Cash Distributions	—	—	—	—
Redeemed	(23,331)	(200)	(96,510)	(1,600)
Net Increase (Decrease)—ETF Shares	2,727,702	31,181	1,042,686	15,634

H. In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes.” FIN 48 establishes the minimum threshold for recognizing, and a system for measuring, the benefits of tax-return positions in financial statements, and is effective for the fund’s fiscal year beginning November 1, 2007. Management has analyzed the fund’s tax positions taken on federal income tax returns for all open tax years (tax years ended October 31, 2004–2007) for purposes of implementing FIN 48, and has concluded that as of October 31, 2007, no provision for income tax would be required in the fund’s financial statements.

1 Net of redemption fees of $7,194,000 and $6,249,000 (fund totals).

126

Total International Stock Index Fund

Fund Profile

As of October 31, 2007

Portfolio Characteristics
	Fund
Acquired Fund Fees and Expenses¹	0.27%

Sector Diversification (% of equity exposure)
		Target	Broad
	Fund²	Index³	Index⁴
Consumer Discretionary	10.0%	10.2%	9.8%
Consumer Staples	7.5	7.4	7.6
Energy	9.4	9.3	10.7
Financials	26.6	26.5	24.8
Health Care	5.0	5.1	6.6
Industrials	11.6	11.8	11.3
Information Technology	6.8	6.7	9.6
Materials	11.0	11.0	9.2
Telecommunication
Services	7.1	7.1	6.1
Utilities	5.0	4.9	4.3

Volatility Measures⁵
	Fund Versus	Fund Versus
	Target Index³	Broad Index⁴
R-Squared	0.98	0.98
Beta	0.99	0.98

Allocation to Underlying Vanguard Funds

European Stock Index Fund Investor Shares	55.5%
Pacific Stock Index Fund Investor Shares	24.2%
Emerging Markets Stock Index Fund
Investor Shares	20.3%

2 Reflects holdings of underlying funds.

3 Total International Composite Index.

4 MSCI All Country World Index ex USA.

5 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 165.

128

Total International Stock Index Fund

Market Diversification (% of equity exposure)
		Target
	Fund¹	Index²
Europe
United Kingdom	18.3%	18.6%
France	8.2	8.2
Germany	6.9	6.9
Switzerland	5.2	5.2
Spain	3.4	3.4
Italy	3.0	3.0
Netherlands	2.3	2.3
Sweden	2.0	2.0
Finland	1.6	1.5
Belgium	1.0	1.0
Other European Markets	3.6	3.6
Subtotal	55.5%	55.7%
Pacific
Japan	15.9%	15.9%
Australia	5.5	5.5
Hong Kong	1.8	1.8
Other Pacific Markets	1.0	1.0
Subtotal	24.2%	24.2%
Emerging Markets
China	3.5%	3.5%
South Korea	3.1	3.0
Brazil	2.5	2.5
Taiwan	2.2	2.2
Russia	1.8	1.8
India	1.5	1.5
South Africa	1.4	1.4
Other Emerging Markets	4.3	4.2
Subtotal	20.3%	20.1%

1 Reflects holdings of underlying funds.

2 Total International Composite Index.

129

Total International Stock Index Fund

Performance Summary

Cumulative Performance: October 31, 1997–October 31, 2007

Initial Investment of $10,000

	Average Annual Total Returns			Final Value
	Periods Ended October 31, 2007			of a $10,000
	One Year	Five Years	Ten Years	Investment
Total International Stock Index Fund¹	32.47%	25.48%	10.17%	$26,347
MSCI All Country World Index ex USA	32.97	26.39	10.75	27,762
Total International Composite Index²	31.61	25.42	10.09	26,147
Average International Fund³	27.80	22.41	8.82	23,287

1 Returns do not reflect the 0.5% transaction fee on purchases through March 31, 2000; the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months; or the account service fee that may be applicable to certain accounts with balances below $10,000.

2 Consists of the MSCI Europe Index (56%), the MSCI Pacific Index (24%), and the MSCI Emerging Markets Index (20%) as of October 31, 2007.

3 Derived from data provided by Lipper Inc.

130

Total International Stock Index Fund

Fiscal-Year Total Returns (%): October 31, 1997–October 31, 2007

Average Annual Total Returns: Periods Ended September 30, 2007

	Inception Date	One Year	Five Years	Ten Years
Total International Stock Index Fund²	4/29/1996	30.09%	25.43%	8.50%

1 Consists of the MSCI Europe Index (55.4%), the MSCI Pacific Index (24.3%), and the MSCI Emerging Markets Index (20.3%) as of October 31, 2007.

2 Returns do not reflect the 0.5% transaction fee on purchases through March 31, 2000; the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months; or the account service fee that may be applicable to certain accounts with balances below $10,000.

Note: See Financial Highlights table on page 135 for dividend and capital gains information.

131

Total International Stock Index Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

		Market
		Value^•
	Shares	($000)
Investment Companies (100.0%)
International Stock Funds (100.0%)
Vanguard European Stock Index Fund Investor Shares	380,732,016	16,535,191
Vanguard Pacific Stock Index Fund Investor Shares	505,607,948	7,174,577
Vanguard Emerging Markets Stock Index Fund Investor Shares	163,544,487	6,015,166

Money Market Fund (0.0%)
¹Vanguard Market Liquidity Fund, 4.955%	2,951,230	2,951
Total Investment Companies (Cost $18,193,033)		29,727,885
Other Assets and Liabilities (0.0%)
Other Assets		49,485
Liabilities		(52,750)
		(3,265)
Net Assets (100%)
Applicable to 1,357,613,589 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)		29,724,620
Net Asset Value Per Share		$21.89




At October 31, 2007, net assets consisted of:²
	Amount	Per
	($000)	Share
Paid-in Capital	18,230,955	$13.42
Undistributed Net Investment Income	8,965	.01
Accumulated Net Realized Losses	(50,152)	(.04)
Unrealized Appreciation	11,534,852	8.50
Net Assets	29,724,620	$21.89

• See Note A in Notes to Financial Statements.

1 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.

2 See Note C in Notes to Financial Statements for the tax-basis components of net assets.

132

Total International Stock Index Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Income Distributions Received	452,034
Net Investment Income—Note B	452,034
Realized Net Gain (Loss)
Capital Gain Distributions Received	—
Investment Securities Sold	67,347
Realized Net Gain (Loss)	67,347
Change in Unrealized Appreciation (Depreciation)	6,193,030
Net Increase (Decrease) in Net Assets Resulting from Operations	6,712,411

133

Total International Stock Index Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	452,034	256,922
Realized Net Gain (Loss)	67,347	1,573
Change in Unrealized Appreciation (Depreciation)	6,193,030	3,233,656
Net Increase (Decrease) in Net Assets Resulting from Operations	6,712,411	3,492,151
Distributions
Net Investment Income	(446,154)	(254,606)
Realized Capital Gain	—	—
Total Distributions	(446,154)	(254,606)
Capital Share Transactions—Note E
Issued	8,204,059	5,216,842
Issued in Lieu of Cash Distributions	410,001	232,227
Redeemed¹	(3,355,766)	(1,817,473)
Net Increase (Decrease) from Capital Share Transactions	5,258,294	3,631,596
Total Increase (Decrease)	11,524,551	6,869,141
Net Assets
Beginning of Period	18,200,069	11,330,928
End of Period²	29,724,620	18,200,069

1 The fund collected redemption fees of $907,000 and $719,000, which were reallocated proportionately to the funds in which it invests.

2 Net Assets—End of Period includes undistributed net investment income of $8,965,000 and $3,085,000.

134

Total International Stock Index Fund

Financial Highlights

	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$16.90	$13.49	$11.48	$9.84	$7.79
Investment Operations
Net Investment Income	.412	.294	.255	.19	.157
Capital Gain Distributions Received	—	—	—	—	—
Net Realized and Unrealized Gain (Loss)
on Investments	4.980	3.410	2.010	1.64	2.050
Total from Investment Operations	5.392	3.704	2.265	1.83	2.207
Distributions
Dividends from Net Investment Income	(.402)	(.294)	(.255)	(.19)	(.157)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.402)	(.294)	(.255)	(.19)	(.157)
Net Asset Value, End of Period	$21.89	$16.90	$13.49	$11.48	$9.84


Total Return¹	32.47%	27.84%	19.91%	18.80%	28.94%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$29,725	$18,200	$11,331	$7,317	$4,538
Ratio of Expenses to
Average Net Assets—Note B	0%²	0%	0%	0%	0%
Ratio of Net Investment Income to
Average Net Assets	1.93%	1.71%	1.76%	1.54%	1.75%
Portfolio Turnover Rate	2%	2%	3%	3%	2%

1 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months; or the account service fee that may be applicable to certain accounts with balances below $10,000.

2 The acquired fund fees and expenses were 0.27%.

See accompanying Notes, which are an integral part of the Financial Statements.

135

Total International Stock Index Fund

Notes to Financial Statements

Vanguard Total International Stock Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard STAR^®Funds. The fund seeks to match the performance of its target index by investing in the European, Pacific, and Emerging Markets Stock Index Funds. The fund’s indirect investments in foreign securities involve investment risks not normally associated with investing in securities of U.S. corporations.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

During the year ended October 31, 2007, the fund realized $67,347,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at October 31, 2007, the fund had $8,839,000 of ordinary income available for distribution. The fund had available realized losses of $48,186,000 to offset future net capital gains of $4,316,000 through October 31, 2009, and $43,870,000 through October 31, 2010.

136

Total International Stock Index Fund

At October 31, 2007, the cost of investment securities for tax purposes was $18,194,871,000. Net unrealized appreciation of investment securities for tax purposes was $11,533,014,000, consisting entirely of unrealized gains on securities that had risen in value since their purchase.

D. During the year ended October 31, 2007, the fund purchased $5,823,633,000 of investment securities and sold $555,008,000 of investment securities, other than temporary cash investments.

E. Capital shares issued and redeemed were:

	Year Ended October 31,
	2007	2006
	Shares	Shares
	(000)	(000)
Issued	433,657	338,604
Issued in Lieu of Cash Distributions	23,151	16,161
Redeemed	(176,014)	(118,102)
Net Increase (Decrease) in Shares Outstanding	280,794	236,663

137

Developed Markets Index Fund

Fund Profile

As of October 31, 2007

Portfolio Characteristics
	Fund
Acquired Fund Fees and Expenses¹	0.22%

Sector Diversification (% of equity exposure)
		Target	Broad
	Fund²	Index³	Index⁴
Consumer Discretionary	11.0%	11.1%	9.8%
Consumer Staples	8.3	8.3	7.6
Energy	7.6	7.5	10.7
Financials	27.7	27.7	24.8
Health Care	6.0	6.1	6.6
Industrials	12.3	12.4	11.3
Information Technology	5.7	5.7	9.6
Materials	9.9	9.8	9.2
Telecommunication
Services	6.1	6.1	6.1
Utilities	5.4	5.3	4.3

Volatility Measures⁵
	Fund Versus	Fund Versus
	Target Index³	Broad Index⁴
R-Squared	0.98	0.95
Beta	0.99	0.88

Allocation to Underlying Vanguard Funds

European Stock Index Fund Investor Shares	69.7%
Pacific Stock Index Fund Investor Shares	30.3%

138

Market Diversification (% of equity exposure)
		Target
	Fund²	Index³
United Kingdom	22.7%	22.9%
Japan	20.0	20.0
France	9.9	10.3
Germany	8.7	8.7
Australia	6.8	6.9
Switzerland	6.6	6.5
Spain	4.3	4.2
Italy	3.8	3.8
Netherlands	3.5	2.9
Sweden	2.4	2.5
Hong Kong	2.2	2.3
Finland	2.0	1.9
Belgium	1.3	1.3
Norway	1.1	1.1
Singapore	1.1	1.2
Other Developed Markets	3.6	3.5

2 Reflects holdings of underlying funds.

3 MSCI EAFE Index.

4 MSCI All Country World Index ex USA.

5 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 165.

139

Developed Markets Index Fund

Performance Summary

Cumulative Performance: May 8, 2000–October 31, 2007

Initial Investment of $10,000

	Average Annual Total Returns			Final Value
	Periods Ended October 31, 2007			of a $10,000
	One Year	Five Years	Since Inception¹	Investment
Developed Markets Index Fund²	25.67%	23.33%	7.45%	$17,120
MSCI All Country World Index ex USA	32.97	26.39	9.60	19,845
MSCI EAFE Index	24.91	23.21	7.38	17,033
Average International Fund³	27.80	22.41	6.76	16,313

1 Performance for the fund and its comparative standards is calculated since the fund’s inception: May 8, 2000.

2 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months; or the account service fee that may be applicable to certain accounts with balances below $10,000.

3 Derived from data provided by Lipper Inc.

140

Developed Markets Index Fund

Fiscal-Year Total Returns (%): May 8, 2000–October 31, 2007

Average Annual Total Returns: Periods Ended September 30, 2007

				Since
	Inception Date	One Year	Five Years	Inception
Developed Markets Index Fund¹	5/8/2000	24.99%	23.58%	6.91%

Note: See Financial Highlights table on page 145 for dividend and capital gains information.

141

Developed Markets Index Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

		Market
		Value^•
	Shares	($000)
Investment Companies (100.1%)
Vanguard European Stock Index Fund Investor Shares	63,917,617	2,775,942
Vanguard Pacific Stock Index Fund Investor Shares	84,882,215	1,204,479
Total Investment Companies (Cost $2,526,709)		3,980,421
Other Assets and Liabilities (–0.1%)
Other Assets		8,851
Liabilities		(12,883)
		(4,032)
Net Assets (100%)
Applicable to 266,648,147 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)		3,976,389
Net Asset Value Per Share		$14.91




At October 31, 2007, net assets consisted of:¹
	Amount	Per
	($000)	Share
Paid-in Capital	2,520,214	$9.45
Undistributed Net Investment Income	1,437	.01
Accumulated Net Realized Gains	1,026	—
Unrealized Appreciation	1,453,712	5.45
Net Assets	3,976,389	$14.91

• See Note A in Notes to Financial Statements.

1 See Note C in Notes to Financial Statements for the tax-basis components of net assets.

142

Developed Markets Index Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Income Distributions Received	67,803
Net Investment Income—Note B	67,803
Realized Net Gain (Loss)
Capital Gain Distributions Received	—
Investment Securities Sold	1,415
Realized Net Gain (Loss)	1,415
Change in Unrealized Appreciation (Depreciation) of Investment Securities	681,973
Net Increase (Decrease) in Net Assets Resulting from Operations	751,191

143

Developed Markets Index Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	67,803	37,273
Realized Net Gain (Loss)	1,415	1,323
Change in Unrealized Appreciation (Depreciation)	681,973	440,326
Net Increase (Decrease) in Net Assets Resulting from Operations	751,191	478,922
Distributions
Net Investment Income	(66,258)	(37,455)
Realized Capital Gain¹	(1,108)	—
Total Distributions	(67,366)	(37,455)
Capital Share Transactions—Note E
Issued	1,375,081	949,160
Issued in Lieu of Cash Distributions	60,616	31,783
Redeemed²	(715,040)	(473,513)
Net Increase (Decrease) from Capital Share Transactions	720,657	507,430
Total Increase (Decrease)	1,404,482	948,897
Net Assets
Beginning of Period	2,571,907	1,623,010
End of Period³	3,976,389	2,571,907

1 Includes fiscal 2007 short-term gain distributions totaling $1,108,000. Short-term gain distributions are treated as ordinary income dividends for tax purposes.

2 The fund collected redemption fees of $202,000 and $22,000, which were reallocated proportionately to the funds in which it invests.

3 Net Assets—End of Period includes undistributed (overdistributed) net investment income of $1,437,000 and ($108,000).

144

Developed Markets Index Fund

Financial Highlights

	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$12.15	$9.75	$8.43	$7.22	$5.80
Investment Operations
Net Investment Income	.305	.219	.19	.143	.116
Capital Gain Distributions Received	—	—	—	—	—
Net Realized and Unrealized Gain (Loss)
on Investments	2.759	2.400	1.32	1.210	1.420
Total from Investment Operations	3.064	2.619	1.51	1.353	1.536
Distributions
Dividends from Net Investment Income	(.299)	(.219)	(.19)	(.143)	(.116)
Distributions from Realized Capital Gains	(.005)	—	—	—	—
Total Distributions	(.304)	(.219)	(.19)	(.143)	(.116)
Net Asset Value, End of Period	$14.91	$12.15	$9.75	$8.43	$7.22


Total Return¹	25.67%	27.27%	18.07%	18.94%	27.06%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$3,976	$2,572	$1,623	$1,038	$597
Ratio of Expenses to
Average Net Assets—Note B	0%²	0%	0%	0%	0%
Ratio of Net Investment Income to
Average Net Assets	2.05%	1.82%	1.77%	1.52%	1.48%
Portfolio Turnover Rate	7%	9%	10%	4%	7%

2 The acquired fund fees and expenses were 0.22%.

See accompanying Notes, which are an integral part of the Financial Statements.

145

Developed Markets Index Fund

Notes to Financial Statements

Vanguard Developed Markets Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard STAR Funds. The fund seeks to match the performance of its target index by investing in the European and Pacific Stock Index Funds. The fund’s indirect investments in foreign securities involve investment risks not normally associated with investing in securities of U.S. corporations.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

For tax purposes, at October 31, 2007, the fund had $2,767,000 of ordinary income and $7,000 of long-term capital gains available for distribution.

At October 31, 2007, the cost of investment securities for tax purposes was $2,527,020,000. Net unrealized appreciation of investment securities for tax purposes was $1,453,401,000, consisting entirely of unrealized gains on securities that had risen in value since their purchase.

D. During the year ended October 31, 2007, the fund purchased $950,504,000 of investment securities and sold $225,312,000 of investment securities, other than temporary cash investments.

146

Developed Markets Index Fund

E. Capital shares issued and redeemed were:

	Year Ended October 31,
	2007	2006
	Shares	Shares
	(000)	(000)
Issued	103,370	85,083
Issued in Lieu of Cash Distributions	4,803	3,089
Redeemed	(53,150)	(42,944)
Net Increase (Decrease) in Shares Outstanding	55,023	45,228

147

Institutional Developed Markets Index Fund

Fund Profile

As of October 31, 2007

Portfolio Characteristics
		Fund
Acquired Fund Fees and Expenses¹		0.09%

Sector Diversification (% of equity exposure)
		Target	Broad
	Fund²	Index³	Index⁴
Consumer Discretionary	11.0%	11.1%	9.8%
Consumer Staples	8.3	8.3	7.6
Energy	7.6	7.5	10.7
Financials	27.7	27.7	24.8
Health Care	6.0	6.1	6.6
Industrials	12.3	12.4	11.3
Information Technology	5.7	5.7	9.6
Materials	9.9	9.8	9.2
Telecommunication
Services	6.1	6.1	6.1
Utilities	5.4	5.3	4.3

Volatility Measures⁵
	Fund Versus	Fund Versus
	Target Index³	Broad Index⁴
R-Squared	0.98	0.95
Beta	0.99	0.88

Allocation to Underlying Vanguard Funds

European Stock Index Fund Investor Shares	69.7%
Pacific Stock Index Fund Investor Shares	30.3%

148

Market Diversification (% of equity exposure)
		Target
	Fund²	Index³
United Kingdom	22.7%	22.9%
Japan	20.0	20.0
France	9.9	10.3
Germany	8.7	8.7
Australia	6.8	6.9
Switzerland	6.6	6.5
Spain	4.3	4.2
Italy	3.8	3.8
Netherlands	3.5	2.9
Sweden	2.4	2.5
Hong Kong	2.2	2.3
Finland	2.0	1.9
Belgium	1.3	1.3
Norway	1.1	1.1
Singapore	1.1	1.2
Other Developed Markets	3.6	3.5

2 Reflects holdings of underlying funds.

3 MSCI EAFE Index.

4 MSCI All Country World Index ex USA.

5 For an explanation of R-squared, beta, and other terms used here, see the Glossary on page 165.

149

Institutional Developed Markets Index Fund

Performance Summary

Cumulative Performance: June 1, 2000–October 31, 2007

Initial Investment of $5,000,000

	Average Annual Total Returns			Final Value of
	Periods Ended October 31, 2007			a $5,000,000
	One Year	Five Years	Since Inception¹	Investment
Institutional Developed Markets Index Fund²	25.84%	23.49%	7.54%	$8,573,471
MSCI All Country World Index ex USA	32.97	26.39	9.58	9,853,095
MSCI EAFE Index	24.91	23.21	7.46	8,523,444
Average International Fund³	27.80	22.41	6.70	8,086,543

1 Performance for the fund and its comparative standards is calculated since the fund’s inception: June 1, 2000.

2 Returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

3 Derived from data provided by Lipper Inc.

150

Institutional Developed Markets Index Fund

Fiscal-Year Total Returns (%): June 1, 2000–October 31, 2007

Average Annual Total Returns: Periods Ended September 30, 2007

				Since
	Inception Date	One Year	Five Years	Inception
Institutional Developed Markets Index Fund¹	6/1/2000	25.15%	23.79%	7.00%

1 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

Note: See Financial Highlights table on page 155 for dividend and capital gains information.

151

Institutional Developed Markets Index Fund

Financial Statements

Statement of Net Assets

As of October 31, 2007

		Market
		Value^•
	Shares	($000)
Investment Companies (100.0%)
Vanguard European Stock Index Fund Institutional Shares	81,921,978	3,564,425
Vanguard Pacific Stock Index Fund Institutional Shares	108,762,040	1,546,596
Total Investment Companies (Cost $3,591,516)		5,111,021
Other Assets and Liabilities (0.0%)
Other Assets		7,186
Liabilities		(6,775)
		411
Net Assets (100%)
Applicable to 345,559,339 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)		5,111,432
Net Asset Value Per Share		$14.79



At October 31, 2007, net assets consisted of:¹
	Amount	Per
	($000)	Share
Paid-in Capital	3,600,207	$10.41
Undistributed Net Investment Income	1,959	.01
Accumulated Net Realized Losses	(10,239)	(.03)
Unrealized Appreciation	1,519,505	4.40
Net Assets	5,111,432	$14.79

• See Note A in Notes to Financial Statements.

1 See Note C in Notes to Financial Statements for the tax-basis components of net assets.

152

Institutional Developed Markets Index Fund

Statement of Operations

	Year Ended
	October 31, 2007
	($000)
Investment Income
Income
Income Distributions Received	98,306
Net Investment Income—Note B	98,306
Realized Net Gain (Loss)
Capital Gain Distributions Received	—
Investment Securities Sold	224,995
Realized Net Gain (Loss)	224,995
Change in Unrealized Appreciation (Depreciation) of Investment Securities	690,223
Net Increase (Decrease) in Net Assets Resulting from Operations	1,013,524

153

Institutional Developed Markets Index Fund

Statement of Changes in Net Assets

	Year Ended October 31,
	2007	2006
	($000)	($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	98,306	42,789
Realized Net Gain (Loss)	224,995	736
Change in Unrealized Appreciation (Depreciation)	690,223	523,353
Net Increase (Decrease) in Net Assets Resulting from Operations	1,013,524	566,878
Distributions
Net Investment Income	(97,353)	(41,783)
Realized Capital Gain	—	—
Total Distributions	(97,353)	(41,783)
Capital Share Transactions—Note E
Issued	1,605,380	1,734,502
Issued in Lieu of Cash Distributions	79,390	29,979
Redeemed¹	(1,096,395)	(430,784)
Net Increase (Decrease) from Capital Share Transactions	588,375	1,333,697
Total Increase (Decrease)	1,504,546	1,858,792
Net Assets
Beginning of Period	3,606,886	1,748,094
End of Period²	5,111,432	3,606,886

1 The fund collected redemption fees of $14,000 and $119,000, which were reallocated proportionately to the funds in which it invests.

2 Net Assets—End of Period includes undistributed net investment income of $1,959,000 and $1,006,000.

154

Institutional Developed Markets Index Fund

Financial Highlights

	Year Ended October 31,
For a Share Outstanding Throughout Each Period	2007	2006	2005	2004	2003
Net Asset Value, Beginning of Period	$12.05	$9.67	$8.35	$7.16	$5.76
Investment Operations
Net Investment Income	.323	.229	.20	.158	.126
Capital Gain Distributions Received	—	—	—	—	—
Net Realized and Unrealized Gain (Loss)
on Investments	2.733	2.380	1.32	1.190	1.400
Total from Investment Operations	3.056	2.609	1.52	1.348	1.526
Distributions
Dividends from Net Investment Income	(.316)	(.229)	(.20)	(.158)	(.126)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.316)	(.229)	(.20)	(.158)	(.126)
Net Asset Value, End of Period	$14.79	$12.05	$9.67	$8.35	$7.16


Total Return¹	25.84%	27.41%	18.37%	19.05%	27.13%


Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$5,111	$3,607	$1,748	$911	$567
Ratio of Expenses to
Average Net Assets—Note B	0%²	0%	0%	0%	0%
Ratio of Net Investment Income to
Average Net Assets	2.25%	1.72%	1.86%	1.81%	1.80%
Portfolio Turnover Rate	11%³	14%	6%	19%	11%

1 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months.

2 The acquired fund fees and expenses were 0.09%.

3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares.

See accompanying Notes, which are an integral part of the Financial Statements.

155

Institutional Developed Markets Index Fund

Notes to Financial Statements

Vanguard Institutional Developed Markets Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund files reports with the SEC under the company name Vanguard STAR Funds. The fund seeks to match the performance of its target index by investing in the European and Pacific Stock Index Funds. The fund’s indirect investments in foreign securities involve investment risks not normally associated with investing in securities of U.S. corporations.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

During the year ended October 31, 2007, the fund realized $225,992,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized gains to paid-in capital.

For tax purposes, at October 31, 2007, the fund had $1,959,000 of ordinary income available for distribution. The fund had available realized losses of $8,167,000 to offset future net capital gains through October 31, 2011.

At October 31, 2007, the cost of investment securities for tax purposes was $3,593,588,000. Net unrealized appreciation of investment securities for tax purposes was $1,517,433,000, consisting entirely of unrealized gains on securities that had risen in value since their purchase.

156

Institutional Developed Markets Index Fund

D. During the year ended October 31, 2007, the fund purchased $1,442,776,000 of investment securities and sold $852,649,000 of investment securities, other than temporary cash investments.

E. Capital shares issued and redeemed were:

	Year Ended October 31,
	2007	2006
	Shares	Shares
	(000)	(000)
Issued	121,169	155,289
Issued in Lieu of Cash Distributions	6,351	2,939
Redeemed	(81,220)	(39,690)
Net Increase (Decrease) in Shares Outstanding	46,300	118,538

157

Report of Independent Registered

Public Accounting Firm

To the Trustees of Vanguard International Equity Index Funds and the Shareholders of Vanguard European Stock Index Fund, Vanguard Pacific Stock Index Fund, Vanguard Emerging Markets Stock Index Fund, Vanguard Total International Stock Index Fund, Vanguard Developed Markets Index Fund and Vanguard Institutional Developed Markets 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, Vanguard Total International Stock Index Fund, Vanguard Developed Markets Index Fund and Vanguard Institutional Developed Markets Index Fund (separate portfolios of Vanguard International Equity Index Funds, hereafter referred to as the “Funds”) at October 31, 2007, 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 of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 October 31, 2007 by correspondence with the custodians and brokers, and by agreement to the underlying ownership records for the Vanguard Funds, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

December 7, 2007

Special 2007 tax information (unaudited) for Vanguard European Stock Index Fund

This information for the fiscal year ended October 31, 2007, is included pursuant to provisions of the Internal Revenue Code.

The fund distributed $501,137,000 of qualified dividend income to shareholders during the fiscal year.

The fund will pass through to shareholders foreign source income of $1,112,014,000 and foreign taxes paid of $58,203,000. The pass-through of foreign taxes paid will affect only shareholders on the dividend record date in December 2007. Shareholders will receive more detailed information along with their Form 1099-DIV in January 2008.

158

Special 2007 tax information (unaudited) for Vanguard Pacific Stock Index Fund

This information for the fiscal year ended October 31, 2007, is included pursuant to provisions of the Internal Revenue Code.

The fund distributed $149,129,000 of qualified dividend income to shareholders during the fiscal year.

The fund will pass through to shareholders foreign source income of $289,019,000 and foreign taxes paid of $10,223,000. The pass-through of foreign taxes paid will affect only shareholders on the dividend record date in December 2007. Shareholders will receive more detailed information along with their Form 1099-DIV in January 2008.

Special 2007 tax information (unaudited) for Vanguard Emerging Markets Stock Index Fund

This information for the fiscal year ended October 31, 2007, is included pursuant to provisions of the Internal Revenue Code.

The fund distributed $121,916,000 of qualified dividend income to shareholders during the fiscal year.

The fund will pass through to shareholders foreign source income of $459,007,000 and foreign taxes paid of $41,436,000. The pass-through of foreign taxes paid will affect only shareholders on the dividend record date in December 2007. Shareholders will receive more detailed information along with their Form 1099-DIV in January 2008.

Special 2007 tax information (unaudited) for Vanguard Total International Stock Index Fund

This information for the fiscal year ended October 31, 2007, is included pursuant to provisions of the Internal Revenue Code.

The fund distributed $310,478,000 of qualified dividend income to shareholders during the fiscal year.

Special 2007 tax information (unaudited) for Vanguard Developed Markets Index Fund

This information for the fiscal year ended October 31, 2007, is included pursuant to provisions of the Internal Revenue Code.

The fund distributed $18,000 as capital gain dividends (from net long-term capital gains) to shareholders during the fiscal year.

The fund distributed $47,156,000 of qualified dividend income to shareholders during the fiscal year.

Special 2007 tax information (unaudited) for Vanguard Institutional Developed Markets Index Fund

This information for the fiscal year ended October 31, 2007, is included pursuant to provisions of the Internal Revenue Code.

The fund distributed $68,166,000 of qualified dividend income to shareholders during the fiscal year.

159

Your Fund’s After-Tax Returns

The table shows returns for Investor Shares only; returns for other share classes will differ. Please note that your actual after-tax returns will depend on your tax situation and may differ from those shown. Also note that if you own the fund in a tax-deferred account, such as an individual retirement account or a 401(k) plan, this information does not apply to you. Such accounts are not subject to current taxes.

Finally, keep in mind that a fund’s performance—whether before or after taxes—does not guarantee future results.

Average Annual Total Returns: International Stock Index Funds
Periods Ended October 31, 2007
	One	Five	Ten
	Year	Years	Years
European Stock Index Fund Investor Shares¹
Returns Before Taxes	28.49%	24.38%	10.81%
Returns After Taxes on Distributions	27.95	23.79	10.16
Returns After Taxes on Distributions and Sale of Fund Shares	18.94	21.45	9.25


Pacific Stock Index Fund Investor Shares¹
Returns Before Taxes	19.52%	21.05%	6.39%
Returns After Taxes on Distributions	18.97	20.63	6.05
Returns After Taxes on Distributions and Sale of Fund Shares	12.93	18.49	5.41


Emerging Markets Stock Index Fund Investor Shares²
Returns Before Taxes	67.91%	39.49%	15.95%
Returns After Taxes on Distributions	67.50	39.12	15.28
Returns After Taxes on Distributions and Sale of Fund Shares	44.41	35.67	13.98

1 Total returns do not reflect the 0.5% transaction fee on purchases through March 31, 2000; the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months; or the account service fee that may be applicable to certain accounts with balances below $10,000.

2 Performance figures are adjusted for the 0.5% transaction fee on purchases and redemptions. Returns do not reflect the 2% fee assessed until March 23, 2005, on redemptions of shares purchased on or after June 27, 2003, and held for less than two months, or the account service fee that may be applicable to certain accounts with balances below $10,000.

160

Average Annual Total Returns: International Stock Index Funds
Periods Ended October 31, 2007
	One	Five	Ten
	Year	Years	Years
Total International Stock Index Fund¹
Returns Before Taxes	32.47%	25.48%	10.17%
Returns After Taxes on Distributions	31.85	24.86	9.51
Returns After Taxes on Distributions and Sale of Fund Shares	21.36	22.40	8.60


Developed Markets Index Fund²
Returns Before Taxes	25.67%	23.33%	7.45%³
Returns After Taxes on Distributions	25.05	22.71	6.90³
Returns After Taxes on Distributions and Sale of Fund Shares	16.98	20.44	6.16³


Institutional Developed Markets Index Fund²
Returns Before Taxes	25.84%	23.49%	7.54%³
Returns After Taxes on Distributions	25.19	22.82	6.95³
Returns After Taxes on Distributions and Sale of Fund Shares	17.10	20.55	6.21³

2 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than two months, or for the Developed Markets Index Fund, the account service fee that may be applicable to certain accounts with balances below $10,000.

3 Returns since inception. Inception dates are May 8, 2000, for the Developed Markets Index Fund and June 1, 2000, for the Institutional Developed Markets Index Fund.

161

About Your Fund’s Expenses

A typical fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. “Funds of funds,” such as the Developed Markets Index Fund, Institutional Developed Markets Index Fund, and Total International Stock Index Fund, have no direct expenses, but each fund bears its proportionate share of the expenses of the underlying funds in which it invests. These indirect expenses make up the fund’s acquired fund fees and expenses, also expressed as a percentage of average net assets.

The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The costs are calculated using each fund’s acquired fund fees and expenses.

The table on pages 123 and 124 illustrates your fund’s costs in two ways:

• Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.

• Based on hypothetical 5% yearly return. This section is intended to help you compare your fund’s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include the transaction fees or the account service fee described in the prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”

162

Six Months Ended October 31, 2007¹
	Beginning	Ending	Expenses
	Account Value	Account Value	Paid During
International Stock Index Fund	4/30/2007	10/31/2007	Period²
Based on Actual Fund Return
European
Investor Shares	$1,000.00	$1,095.06	$1.06
Admiral Shares	1,000.00	1,095.39	0.53
Signal Shares	1,000.00	1,095.40	0.53
Institutional Shares	1,000.00	1,095.42	0.37
ETF Shares	1,000.00	1,095.52	0.53
Pacific
Investor Shares	$1,000.00	$1,097.45	$1.22
Admiral Shares	1,000.00	1,097.93	0.53
Institutional Shares	1,000.00	1,098.07	0.42
ETF Shares	1,000.00	1,098.01	0.69
Emerging Markets
Investor Shares³	$1,000.00	$1,422.82	$2.14
Admiral Shares³	1,000.00	1,424.33	1.28
Signal Shares³	1,000.00	1,423.64	1.53
Institutional Shares³	1,000.00	1,424.16	1.04
ETF Shares	1,000.00	1,423.93	1.34
Total International	$1,000.00	$1,147.88	$1.41
Developed Markets	$1,000.00	$1,095.52	$1.16
Institutional Developed Markets	$1,000.00	$1,096.37	$0.48

1 This table does not include data for funds or share classes of funds with fewer than six months of history.

2 The calculations are based on expenses incurred in the most recent six-month period. Annualized six-month expense ratios for the European, Pacific, and Emerging Markets funds are as follows: European Stock Index Fund—0.20% for Investor Shares, 0.10% for Admiral Shares, 0.10% for Signal Shares, 0.07% for Institutional Shares, and 0.10% for ETF Shares; Pacific Stock Index Fund—0.23% for Investor Shares, 0.10% for Admiral Shares, 0.08% for Institutional Shares, and 0.13% for ETF Shares; Emerging Markets Stock Index Fund—0.35% for Investor Shares, 0.21% for Admiral Shares, 0.25% for Signal Shares, 0.17% for Institutional Shares, and 0.22% for ETF Shares. The other funds’ annualized acquired fund fees and expenses as of October 31, 2007, were (in top-to-bottom order as listed above) 0.26%, 0.22%, and 0.09%. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period.

3 Calculations do not reflect the fund’s 0.5% purchase fee, which is deducted from all purchases (including exchanges from other Vanguard funds) but not from reinvested dividends and capital gains.

163

Six Months Ended October 31, 2007¹
	Beginning	Ending	Expenses
	Account Value	Account Value	Paid During
International Stock Index Fund	4/30/2007	10/31/2007	Period²
Based on Hypothetical 5% Yearly Return
European
Investor Shares	$1,000.00	$1,024.20	$1.02
Admiral Shares	1,000.00	1,024.70	0.51
Signal Shares	1,000.00	1,024.70	0.51
Institutional Shares	1,000.00	1,024.85	0.36
ETF Shares	1,000.00	1,024.70	0.51
Pacific
Investor Shares	$1,000.00	$1,024.05	$1.17
Admiral Shares	1,000.00	1,024.70	0.51
Institutional Shares	1,000.00	1,024.80	0.41
ETF Shares	1,000.00	1,024.55	0.66
Emerging Markets
Investor Shares³	$1,000.00	$1,023.44	$1.79
Admiral Shares³	1,000.00	1,024.15	1.07
Signal Shares³	1,000.00	1,023.95	1.28
Institutional Shares³	1,000.00	1,024.35	0.87
ETF Shares	1,000.00	1,024.10	1.12
Total International	$1,000.00	$1,023.89	$1.33
Developed Markets	$1,000.00	$1,024.10	$1.12
Institutional Developed Markets	$1,000.00	$1,024.75	$0.46

1 This table does not include data for funds or share classes of funds with fewer than six months of history.

3 Calculations do not reflect the fund’s 0.5% purchase fee, which is deducted from all purchases (including exchanges from other Vanguard funds) but not from reinvested dividends and capital gains.

164

Glossary

Acquired Fund Fees and Expenses. Funds that invest in other Vanguard funds incur no direct expenses, but they do bear proportionate shares of the operating, administrative, and advisory expenses of the underlying funds, and they must pay any fees charged by those funds. The figure for acquired fund fees and expenses represents a weighted average of these underlying costs. Acquired is a term that the Securities and Exchange Commission applies to any mutual fund whose shares are owned by another fund.

Beta. A measure of the magnitude of a fund’s past share-price fluctuations in relation to the ups and downs of a given market index. The index is assigned a beta of 1.00. Compared with a given index, a fund with a beta of 1.20 typically would have seen its share price rise or fall by 12% when the index rose or fell by 10%. A fund’s beta should be reviewed in conjunction with its R-squared (see definition below). The lower the R-squared, the less correlation there is between the fund and the index, and the less reliable beta is as an indicator of volatility.

Equity Exposure. A measure that reflects a fund’s investments in stocks and stock futures. Any holdings in short-term reserves are excluded.

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.

Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund’s investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is measured from the inception date.

R-Squared. A measure of how much of a fund’s past returns can be explained by the returns from the market in general, as measured by a given index. If a fund’s total returns were precisely synchronized with an index’s returns, its R-squared would be 1.00. If the fund’s returns bore no relationship to the index’s returns, its R-squared would be 0.

Short-Term Reserves. The percentage of a fund invested in highly liquid, short-term securities that can be readily converted to cash.

Turnover Rate. An indication of the fund’s trading activity. Funds with high turnover rates incur higher transaction costs and may be more likely to distribute capital gains (which may be taxable to investors). The turnover rate excludes in-kind transactions, which have minimal impact on costs.

165

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The People Who Govern Your Fund

Chairman of the Board, Chief Executive Officer, and Trustee

John J. Brennan¹
Born 1954	Principal Occupation(s) During the Past Five Years: Chairman of the Board, Chief Executive
Trustee since May 1987;	Officer, and Director/Trustee of The Vanguard Group, Inc., and of each of the investment
Chairman of the Board and	companies served by The Vanguard Group.
Chief Executive Officer
148 Vanguard Funds Overseen

Independent Trustees

Charles D. Ellis
Born 1937	Principal Occupation(s) During the Past Five Years: Applecore Partners (pro bono ventures
Trustee since January 2001	in education); Senior Advisor to Greenwich Associates (international business strategy
148 Vanguard Funds Overseen	consulting); Successor Trustee of Yale University; Overseer of the Stern School of Business
	at New York University; Trustee of the Whitehead Institute for Biomedical Research.

Rajiv L. Gupta
Born 1945	Principal Occupation(s) During the Past Five Years: Chairman, President, and
Trustee since December 2001²	Chief Executive Officer of Rohm and Haas Co. (chemicals); Board Member of
148 Vanguard Funds Overseen	the American Chemistry Council; Director of Tyco International, Ltd. (diversified
	manufacturing and services) since 2005; Trustee of Drexel University and of the
	Chemical Heritage Foundation.

Amy Gutmann
Born 1949	Principal Occupation(s) During the Past Five Years: President of the University of
Trustee since June 2006	Pennsylvania since 2004; Professor in the School of Arts and Sciences, Annenberg School
148 Vanguard Funds Overseen	for Communication, and Graduate School of Education of the University of Pennsylvania
	since 2004; Provost (2001–2004) and Laurance S. Rockefeller Professor of Politics and
	the University Center for Human Values (1990–2004), Princeton University; Director of
	Carnegie Corporation of New York since 2005 and of Schuylkill River Development
	Corporation and Greater Philadelphia Chamber of Commerce since 2004.

JoAnn Heffernan Heisen
Born 1950	Principal Occupation(s) During the Past Five Years: Corporate Vice President and
Trustee since July 1998	Chief Global Diversity Officer since 2006, Vice President and Chief Information
148 Vanguard Funds Overseen	Officer (1997–2005), and Member of the Executive Committee of Johnson &
	Johnson (pharmaceuticals/consumer products); Director of the University Medical
	Center at Princeton and Women’s Research and Education Institute.

André F. Perold
Born 1952	Principal Occupation(s) During the Past Five Years: George Gund Professor of Finance
Trustee since December 2004	and Banking, Harvard Business School; Senior Associate Dean, Director of Faculty
148 Vanguard Funds Overseen	Recruiting, and Chair of Finance Faculty, Harvard Business School; Director and Chairman
	of UNX, Inc. (equities trading firm) since 2003; Chair of the Investment Committee of
	HighVista Strategies LLC (private investment firm) since 2005.

Alfred M. Rankin, Jr.
Born 1941	Principal Occupation(s) During the Past Five Years: Chairman, President, Chief Executive
Trustee since January 1993	Officer, and Director of NACCO Industries, Inc. (forklift trucks/housewares/lignite); Director
148 Vanguard Funds Overseen	of Goodrich Corporation (industrial products/aircraft systems and services).


J. Lawrence Wilson
Born 1936	Principal Occupation(s) During the Past Five Years: Retired Chairman and Chief Executive
Trustee since April 1985	Officer of Rohm and Haas Co. (chemicals); Director of Cummins Inc. (diesel engines) and
148 Vanguard Funds Overseen	AmerisourceBergen Corp. (pharmaceutical distribution); Trustee of Vanderbilt University
	and of Culver Educational Foundation.

Executive Officers¹

Thomas J. Higgins
Born 1957	Principal Occupation(s) During the Past Five Years: Principal of The Vanguard Group, Inc.;
Treasurer since July 1998	Treasurer of each of the investment companies served by The Vanguard Group.
148 Vanguard Funds Overseen


Heidi Stam
Born 1956	Principal Occupation(s) During the Past Five Years: Managing Director of The Vanguard
Secretary since July 2005	Group, Inc., since 2006; General Counsel of The Vanguard Group since 2005; Secretary of
148 Vanguard Funds Overseen	The Vanguard Group, and of each of the investment companies served by The Vanguard
	Group, since 2005; Principal of The Vanguard Group (1997–2006).

Vanguard Senior Management Team

R. Gregory Barton	Kathleen C. Gubanich	F. William McNabb, III	Ralph K. Packard
Mortimer J. Buckley	Paul A. Heller	Michael S. Miller	George U. Sauter

Founder

John C. Bogle

Chairman and Chief Executive Officer, 1974–1996

1 Officers of the funds are “interested persons” as defined in the Investment Company Act of 1940.

2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard State Tax-Exempt Funds.

More information about the trustees is in the Statement of Additional Information, available from The Vanguard Group.

P.O. Box 2600

Valley Forge, PA 19482-2600

Connect with Vanguard^®> www.vanguard.com

Fund Information > 800-662-7447	Vanguard, Admiral, Vanguard ETF, Signal, STAR,
	Connect with Vanguard, and the ship logo are
Direct Investor Account Services > 800-662-2739	trademarks of The Vanguard Group, Inc.

Institutional Investor Services > 800-523-1036
	All other marks are the exclusive property of their
Text Telephone for People	respective owners.
With Hearing Impairment > 800-952-3335
	All comparative mutual fund data are from Lipper Inc.
	or Morningstar, Inc., unless otherwise noted.

	You can obtain a free copy of Vanguard’s proxy voting
This material may be used in conjunction	guidelines by visiting our website, www.vanguard.com,
with the offering of shares of any Vanguard	and searching for “proxy voting guidelines,” or by calling
fund only if preceded or accompanied by	Vanguard at 800-662-2739. The guidelines are also
the fund’s current prospectus.	available from the SEC’s website, www.sec.gov. In
	addition, you may obtain a free report on how your fund
	voted the proxies for securities it owned during the 12
	months ended June 30. To get the report, visit either
	www.vanguard.com or www.sec.gov.

The funds or securities referred to herein are not
sponsored, endorsed, or promoted by MSCI, and
MSCI bears no liability with respect to any such funds
or securities. For any such funds or securities, the
prospectus or the Statement of Additional Information
contains a more detailed description of the limited	You can review and copy information about your fund
relationship MSCI has with The Vanguard Group and	at the SEC’s Public Reference Room in Washington, D.C.
any related funds.	To find out more about this public service, call the SEC
	at 202-551-8090. Information about your fund is also
	available on the SEC’s website, and you can receive
	copies of this information, for a fee, by sending a
	request in either of two ways: via e-mail addressed to
	publicinfo@sec.gov or via regular mail addressed to the
	Public Reference Section, Securities and Exchange
	Commission, Washington, DC 20549-0102.




	© 2007 The Vanguard Group, Inc.
	All rights reserved.
	Vanguard Marketing Corporation, Distributor.

	Q720 122007

Item 2: Code of Ethics. The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Ethics was amended during the reporting period covered by this report to make certain technical, non-material changes.

Item 3: Audit Committee Financial Expert. The following members of the Audit Committee have been determined by the Registrant’s Board of Trustees to be Audit Committee Financial Experts serving on its Audit Committee, and to be independent: Charles D. Ellis, Rajiv L. Gupta, JoAnn Heffernan Heisen, André F. Perold, Alfred M. Rankin, Jr., and J. Lawrence Wilson.

Item 4: Principal Accountant Fees and Services.

(a) Audit Fees.

Audit Fees of the Registrant

Fiscal Year Ended October 31, 2007: $108,100

Fiscal Year Ended October 31, 2006: $110,700

Aggregate Audit Fees of Registered Investment Companies in the Vanguard Group.

Fiscal Year Ended October 31, 2007: $2,835,320

Fiscal Year Ended October 31, 2006: $2,347,620

(b) Audit-Related Fees.

Fiscal Year Ended October 31, 2007: $630,400

Fiscal Year Ended October 31, 2006: $530,000

Includes fees billed in connection with assurance and related services provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group.

Fiscal Year Ended October 31, 2007: $215,900

Fiscal Year Ended October 31, 2006: $101,300

Includes fees billed in connection with tax compliance, planning and advice services provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group and related to income and excise taxes.

(d) All Other Fees.

Fiscal Year Ended October 31, 2007: $0

Fiscal Year Ended October 31, 2006: $0

Includes fees billed for services related to risk management and privacy matters. Services were provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group.

(e) (1) Pre-Approval Policies. The policy of the Registrant’s Audit Committee is to consider and, if appropriate, approve before the principal accountant is engaged for such services, all specific audit and non-audit services provided to: (1) the Registrant; (2) The Vanguard Group, Inc.; (3) other entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant; and (4) other

registered investment companies in the Vanguard Group. In making a determination, the Audit Committee considers whether the services are consistent with maintaining the principal accountant’s independence.

In the event of a contingency situation in which the principal accountant is needed to provide services in between scheduled Audit Committee meetings, the Chairman of the Audit Committee would be called on to consider and, if appropriate, pre-approve audit or permitted non-audit services in an amount sufficient to complete services through the next Audit Committee meeting, and to determine if such services would be consistent with maintaining the accountant’s independence. At the next scheduled Audit Committee meeting, services and fees would be presented to the Audit Committee for formal consideration, and, if appropriate, approval by the entire Audit Committee. The Audit Committee would again consider whether such services and fees are consistent with maintaining the principal accountant’s independence.

The Registrant’s Audit Committee is informed at least annually of all audit and non-audit services provided by the principal accountant to the Vanguard complex, whether such services are provided to: (1) the Registrant; (2) The Vanguard Group, Inc.; (3) other entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant; or (4) other registered investment companies in the Vanguard Group.

(2) No percentage of the principal accountant’s fees or services were approved pursuant to the waiver provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) For the most recent fiscal year, over 50% of the hours worked under the principal accountant’s engagement were not performed by persons other than full-time, permanent employees of the principal accountant.

(g) Aggregate Non-Audit Fees.

Fiscal Year Ended October 31, 2007: $215,900

Fiscal Year Ended October 31, 2006: $101,300

Includes fees billed for non-audit services provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group.

(h) For the most recent fiscal year, the Audit Committee has determined that the provision of all non-audit services was consistent with maintaining the principal accountant’s independence.

Item 5: Not Applicable.

Item 6: Not Applicable.

Item 7: Not Applicable.

Item 8: Not Applicable.

Item 9: Not Applicable.

Item 10: Not Applicable.

Item 11: Controls and Procedures.

(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant's Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.

(b) Internal Control Over Financial Reporting. There were no significant changes in Registrant’s Internal Control Over Financial Reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Item 12: Exhibits.

(a) Code of Ethics.

(b) Certifications.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VANGUARD STAR FUNDS
BY:	(signature)
	(HEIDI STAM)
	JOHN J. BRENNAN*
	CHIEF EXECUTIVE OFFICER

Date: December 11, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

VANGUARD STAR FUNDS
BY:	(signature)
	(HEIDI STAM)
	JOHN J. BRENNAN*
	CHIEF EXECUTIVE OFFICER

Date: December 11, 2007

VANGUARD STAR FUNDS
BY:	(signature)
	(HEIDI STAM)
	THOMAS J. HIGGINS*
	TREASURER

Date: December 11, 2007

*By Power of Attorney. See File Number 333-145624, filed on August 22, 2007. Incorporated by Reference.

Vanguard STAR Fund (VGSTX) N-CSRCertified annual shareholder report (management investment company)