UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
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 31
Date of reporting period: November 1, 2009 – April 30, 2010
Item 1: Reports to Shareholders
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| Vanguard STAR® Fund |
| Semiannual Report |
| April 30, 2010 |
 |
> For the six months ended April 30, 2010, Vanguard STAR Fund returned 9.90%.
> The fund’s return was slightly lower than that of its market benchmark and also trailed the average returns of fund peer groups weighted to match STAR’s asset allocation.
> With domestic equity funds leading the way, each of STAR’s 11 underlying funds recorded positive returns for the six months.
| Contents | |
| Your Fund’s Total Returns. | 1 |
| Chairman’s Letter. | 2 |
| Fund Profile. | 7 |
| Performance Summary. | 8 |
| Financial Statements. | 9 |
| About Your Fund’s Expenses. | 16 |
| Trustees Approve Advisory Arrangement. | 18 |
| Glossary. | 19 |
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 front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.
See the Glossary for definitions of investment terms used in this report.
Cover photograph: Veronica Coia.
| Your Fund’s Total Returns | |
| Six Months Ended April 30, 2010 | |
| Total | |
| Returns | |
| Vanguard STAR Fund | 9.90% |
| STAR Composite Index | 10.15 |
| STAR Composite Average | 11.39 |
STAR Composite Index: Weighted 62.5% Dow Jones Wilshire 5000 Index, 25% Lehman U.S. Aggregate Bond Index, and 12.5% Citigroup 3-Month Treasury 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% Barclays Capital U.S. Aggregate Bond Index, 12.5% Barclays Capital U.S.1–5 Year Credit Bond Index, and 12.5% MSCI EAFE Index through December 31, 2009, after which the Barclays Capital U.S. Aggregate Bond Index was replaced by the Barclays Capital U.S. Aggregate Float Adjusted Index. MSCI EAFE Index returns are adjusted for withholding taxes applicable to Luxembourg holding companies.
STAR Composite Average: Weighted 62.5% general equity funds average, 25% fixed income funds average, and 12.5% money market funds average through December 31, 2002; 50% general equity funds average, 25% fixed income funds average, 12.5% 1–5 year investment-grade funds average, and 12.5% international funds average thereafter. Derived from data provided by Lipper Inc.
| Your Fund’s Performance at a Glance | ||||
| October 31, 2009 , Through April 30, 2010 | ||||
| Distributions Per Share | ||||
| Starting | Ending | Income | Capital | |
| Share Price | Share Price | Dividends | Gains | |
| Vanguard STAR Fund | $16.96 | $18.36 | $0.257 | $0.011 |
1
Chairman’s Letter
Dear Shareholder,
Vanguard STAR Fund generated a return of 9.90% for the six months ended April 30, 2010, as the financial markets benefited from largely favorable conditions. The fund’s return was slightly lower than that of its benchmark index and also behind the average return of a composite of fund peer groups weighted to approximate STAR’s asset allocation.
STAR is a “fund of funds” that invests in 11 actively managed Vanguard mutual funds. Its portfolio consists of six domestic stock funds, two international stock funds, and three bond funds, all of which posted positive returns. For the six months, the gains of the domestic stock funds surpassed those of the international stock funds and the bond funds.
U.S. stocks extended their post-crisis rally
Despite a few minor setbacks, stocks continued to climb during much of the six months ended April 30. The broad U.S. stock market ended the period up about 18%. Since scraping bottom in March 2009, U.S. equities have rebounded dramatically, returning more than 80%.
2
For the half-year, stocks of small-capitalization companies significantly outperformed both the broad market and larger-cap issues, returning about 28%. Large-cap stocks returned about 17%, slightly behind the broad-market gain. Value stocks generally trumped their growth counterparts for the period, though the differences weren’t all that noteworthy.
International stocks considerably lagged U.S. stocks, but still ended the half-year in positive territory. In Europe, Greece’s financial woes continued to make headlines, precipitating unusual market volatility that continued after the close of the fiscal period. In Asia, the larger developed markets returned about 8%. Most emerging market stocks, which made a quick and substantial recovery from the global economic slowdown, continued to outperform those in developed markets. China, however, was held back by the prospect of monetary policy tightening.
Corporate bonds remained attractive to investors
The broad U.S. taxable bond market returned about 3% for the period as investors continued to favor higher-risk corporate bonds over U.S. government issues. The broad municipal bond market posted strong results, returning almost 4%. The yields of longer-term Treasury bonds rose during the six months, while those of the shortest-term securities remained around 0%.
| Market Barometer | |||
| Total Returns | |||
| Periods Ended April 30, 2010 | |||
| Six | One | Five Years | |
| Months | Year | (Annualized) | |
| Stocks | |||
| Russell 1000 Index (Large-caps) | 16.77% | 40.21% | 3.07% |
| Russell 2000 Index (Small-caps) | 28.17 | 48.95 | 5.74 |
| Dow Jones U.S. Total Stock Market Index | 17.91 | 41.12 | 3.73 |
| MSCI All Country World Index ex USA (International) | 5.95 | 40.97 | 6.94 |
| Bonds | |||
| Barclays Capital U.S. Aggregate Bond Index | |||
| (Broad taxable market) | 2.54% | 8.30% | 5.38% |
| Barclays Capital Municipal Bond Index | 3.68 | 8.85 | 4.51 |
| Citigroup Three-Month U.S. Treasury Bill Index | 0.04 | 0.12 | 2.72 |
| CPI | |||
| Consumer Price Index | 0.85% | 2.24% | 2.30% |
3
The Federal Reserve Board has kept its target for short-term interest rates unchanged at 0% to 0.25% since December 2008. The Fed’s April statement noted economic improvements, but said officials still thought that “economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The Fed has, however, begun to wind down credit programs established during the financial crisis.
STAR’s domestic stocks garnered the best returns
The STAR Fund is characterized by its balanced investment approach and the active management of its 11 underlying funds. These underlying funds are selected to offer diversified exposure to the stock and bond markets and to give investors the opportunity to benefit from the portfolio management talents of a broad range of experienced investment advisors.
Despite some setbacks earlier in the year, the investing environment was generally positive for stocks and bonds. While domestic stocks fared better than their international counterparts, value stocks generally edged growth, and small-and mid-capitalization stocks outpaced large-caps, STAR’s performance couldn’t be pegged to a specific group or style. All 11 underlying funds posted positive returns, although STAR didn’t quite keep
| Expense Ratios | ||
| Your Fund Compared With Its Peer Group | ||
| Acquired Fund Fees | Peer Group | |
| and Expenses | Average | |
| STAR Fund | 0.37% | 1.22% |
The acquired fund fees and expenses—drawn from the prospectus dated February 26, 2010—represent an estimate of the weighted average of the expense ratios and any transaction fees charged by the underlying mutual funds (the ”acquired” funds) in which the STAR Fund invests. The STAR Fund does not charge any expenses or fees of its own. For the six months ended April 30, 2010, the annualized acquired fund fees and expenses were 0.36%.
The peer group is the STAR Composite Average, derived by weighting the average expense ratios of the following mutual fund groups: General equity funds (50%), fixed income funds (25%), 1–5 year investment-grade funds (12.5%), and international funds (12.5%). Average expense ratios for these groups are derived from data provided by Lipper Inc. and capture information through year-end 2009.
4
up with its benchmark index or the combined average return of relevant peer funds.
The returns generated by STAR’s domestic growth funds varied across the board. Vanguard Explorer™ Fund, STAR’s smallest holding, had the best return, at about 25%. A small- and mid-cap fund, Explorer was powered by its holdings in the recovering consumer discretionary and technology sectors. Vanguard Morgan™ Growth and PRIMECAP Funds, both large-cap growth portfolios, returned about 17% and 15%, respectively. Vanguard U.S. Growth Fund didn’t keep up with its large-cap brethren and was STAR’s weakest domestic stock fund with a return of not quite 12%, a factor in STAR’s modest shortfall relative to its benchmark index.
STAR’s two domestic value funds, the predominantly large-cap Windsor™ and Windsor II Funds, returned about 18% and 15%, respectively. Both funds benefited from their consumer discretionary and industrial holdings; these cyclical sectors have fared well as the U.S. economy regained some strength.
Although investors favored international stocks early on in the recovery of the global financial markets, domestic stocks took the lead during the past six months. As noted earlier, emerging markets continued to outpace the Pacific and European regions, the latter of which was plagued by the credit problems of several countries. Vanguard International Growth Fund was STAR’s top international holding,
| Underlying Funds: Allocations and Returns | ||
| Six Months Ended April 30, 2010 | ||
| Percentage of | ||
| Vanguard Fund | STAR Fund Assets | Total Returns |
| Vanguard Windsor II Fund Investor Shares | 16.1% | 14.67% |
| Vanguard Long-Term Investment-Grade Fund | ||
| Investor Shares | 12.9 | 3.39 |
| Vanguard GNMA Fund Investor Shares | 12.6 | 2.47 |
| Vanguard Short-Term Investment-Grade Fund | ||
| Investor Shares | 12.6 | 3.19 |
| Vanguard Windsor Fund Investor Shares | 8.8 | 18.15 |
| Vanguard Morgan Growth Fund Investor Shares | 6.9 | 17.44 |
| Vanguard PRIMECAP Fund Investor Shares | 6.9 | 15.55 |
| Vanguard U.S. Growth Fund Investor Shares | 6.8 | 11.72 |
| Vanguard International Growth Fund Investor | ||
| Shares | 6.1 | 7.44 |
| Vanguard International Value Fund | 6.0 | 3.48 |
| Vanguard Explorer Fund Investor Shares | 4.3 | 25.01 |
| Combined | 100.0% | 9.90% |
5
with a return of about 7%, while the International Value Fund returned about 3%.
Returns in the bond market were mixed during the half-year, but STAR’s three bond funds all finished in positive territory. With investors favoring corporate bonds over government issues during the period, Vanguard Long-Term Investment-Grade Fund and Short-Term Investment-Grade Fund fared relatively well, each returning about 3%. Vanguard GNMA Fund returned about 2%, with its holdings getting a boost from the Federal Reserve’s Mortgage-Backed Securities Purchase Program.
Amid the markets’ uncertainty, a diversified approach can help
Although the financial crisis of 2008 and 2009 seems increasingly distant, with global stock markets having extended their impressive recovery to 13 months and the credit markets functioning again, stocks and bonds still face challenges. And the markets will always be surrounded by uncertainty.
As a thoughtfully constructed “fund of funds,” the STAR Fund offers a way for investors to address the markets’ unpredictability. STAR’s diversification within and across asset classes can provide a smoother, less volatile path for your portfolio. With its low costs, simplified approach, and long-term focus, the fund can serve as a useful component of your investment program or even stand alone as a well-balanced, all-in-one portfolio
On another matter, I would like to inform you that on January 1, 2010, we completed a leadership transition that began in March 2008. I succeeded Jack Brennan as chairman of Vanguard and each of the funds. Jack has agreed to serve as chairman emeritus and senior advisor.
Under Jack’s leadership, Vanguard has grown to become a preeminent firm in the mutual fund industry. Jack’s energy, his relentless pursuit of perfection, and his unwavering focus on always doing the right thing for our clients are evident in every facet of Vanguard policy today.
Thank you for entrusting your assets to Vanguard.
Sincerely,
F. William McNabb III
Chairman and Chief Executive Officer
May 13, 2010
6
| STAR Fund | |
| Fund Profile | |
| As of April 30, 2010 | |
| Total Fund Characteristics | |
| Ticker Symbol | VGSTX |
| 30-Day SEC Yield | 2.89% |
| Acquired Fund Fees and Expenses1 | 0.37% |
| Allocation to Underlying Vanguard Funds | |
| Vanguard Windsor II Fund Investor Shares | 16.1% |
| Vanguard Long-Term Investment-Grade | |
| Fund Investor Shares | 12.9 |
| Vanguard GNMA Fund Investor Shares | 12.6 |
| Vanguard Short-Term Investment-Grade | |
| Fund Investor Shares | 12.6 |
| Vanguard Windsor Fund Investor Shares | 8.8 |
| Vanguard Morgan Growth Fund Investor | |
| Shares | 6.9 |
| Vanguard PRIMECAP Fund Investor | |
| Shares | 6.9 |
| Vanguard U.S. Growth Fund Investor | |
| Shares | 6.8 |
| Vanguard International Growth Fund | |
| Investor Shares | 6.1 |
| Vanguard International Value Fund | 6.0 |
| Vanguard Explorer Fund Investor Shares | 4.3 |
| Total Fund Volatility Measures | ||
| DJ | ||
| STAR | U.S. Total | |
| Composite | Market | |
| Index | Index | |
| R-Squared | 0.99 | 0.96 |
| Beta | 1.04 | 0.68 |
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
Fund Asset Allocation
1 This figure—drawn from the prospectus dated February 26, 2010—represents an estimate of the weighted average of the expense ratios and any transaction fees charged by the underlying mutual funds (the ”acquired” funds) in which the STAR Fund invests. The STAR Fund does not charge any expenses or fees of its own. For the six months ended April 30, 2010, the annualized acquired fund fees and expenses were 0.36%.
7
STAR Fund
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.
Fiscal-Year Total Returns (%): October 31, 1999, Through April 30, 2010
STAR Composite Index: Weighted 62.5% Dow Jones Wilshire 5000 Index, 25% Lehman U.S. Aggregate Bond Index, and 12.5% Citigroup 3-Month Treasury 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% Barclays Capital U.S. Aggregate Bond Index, 12.5% Barclays Capital U.S.1–5 Year Credit Bond Index, and 12.5% MSCI EAFE Index through December 31, 2009, after which the Barclays Capital U.S. Aggregate Bond Index was replaced by the Barclays Capital U.S. Aggregate Float Adjusted Index. MSCI EAFE Index returns are adjusted for withholding taxes applicable to Luxembourg holding companies.
Note: For 2010, performance data reflect the six months ended April 30, 2010.
Average Annual Total Returns: Periods Ended March 31, 2010
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 | Income | Capital | Total | |
| STAR Fund | 3/29/1985 | 37.68% | 4.62% | 3.03% | 2.07% | 5.10% |
See Financial Highlights for dividend and capital gains information.
8
STAR Fund
Financial Statements (unaudited)
Statement of Net Assets
As of April 30, 2010
The fund reports a complete list of its holdings in regulatory filings 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 | 85,216,225 | 2,148,301 |
| Vanguard Windsor Fund Investor Shares | 91,928,272 | 1,180,359 |
| Vanguard Morgan Growth Fund Investor Shares | 56,640,299 | 926,635 |
| Vanguard PRIMECAP Fund Investor Shares | 14,895,542 | 919,353 |
| Vanguard U.S. Growth Fund Investor Shares | 53,774,191 | 917,388 |
| Vanguard Explorer Fund Investor Shares | 8,981,701 | 580,397 |
| 6,672,433 | ||
| International Stock Funds (12.2%) | ||
| Vanguard International Growth Fund Investor Shares | 47,777,142 | 822,722 |
| Vanguard International Value Fund | 26,743,424 | 809,524 |
| 1,632,246 | ||
| Bond Funds (25.4%) | ||
| Vanguard Long-Term Investment-Grade Fund Investor Shares | 187,671,869 | 1,722,828 |
| Vanguard GNMA Fund Investor Shares | 156,963,977 | 1,688,932 |
| 3,411,760 | ||
| Short-Term Bond Fund (12.6%) | ||
| Vanguard Short-Term Investment-Grade Fund Investor Shares | 156,915,267 | 1,686,839 |
| Total Investment Companies (Cost $11,164,650) | 13,403,278 | |
| Temporary Cash Investment (0.0%) | ||
| Money Market Fund (0.0%) | ||
| 1 Vanguard Market Liquidity Fund, 0.210% (Cost $1,594) | 1,593,803 | 1,594 |
| Total Investments (100.0%) (Cost $11,166,244) | 13,404,872 | |
| Other Assets and Liabilities (0.0%) | ||
| Other Assets | 24,103 | |
| Liabilities | (24,039) | |
| 64 | ||
| Net Assets (100%) | ||
| Applicable to 730,181,355 outstanding $.001 par value shares of | ||
| beneficial interest (unlimited authorization) | 13,404,936 | |
| Net Asset Value Per Share | $18.36 |
9
| STAR Fund | |
| At April 30, 2010, net assets consisted of: | |
| Amount | |
| ($000) | |
| Paid-in Capital | 11,434,711 |
| Undistributed Net Investment Income | 67,239 |
| Accumulated Net Realized Losses | (335,642) |
| Unrealized Appreciation (Depreciation) | 2,238,628 |
| Net Assets | 13,404,936 |
• 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.
See accompanying Notes, which are an integral part of the Financial Statements.
10
| STAR Fund | |
| Statement of Operations | |
| Six Months Ended | |
| April 30, 2010 | |
| ($000) | |
| Investment Income | |
| Income | |
| Income Distributions Received | 181,817 |
| Net Investment Income—Note B | 181,817 |
| Realized Net Gain (Loss) | |
| Capital Gain Distributions Received | 17,220 |
| Investment Securities Sold | (38,667) |
| Realized Net Gain (Loss) | (21,447) |
| Change in Unrealized Appreciation (Depreciation) of Investment Securities | 1,036,309 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 1,196,679 |
See accompanying Notes, which are an integral part of the Financial Statements.
11
| STAR Fund | ||
| Statement of Changes in Net Assets | ||
| Six Months Ended | Year Ended | |
| April 30, | October 31, | |
| 2010 | 2009 | |
| ($000) | ($000) | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net Investment Income | 181,817 | 354,756 |
| Realized Net Gain (Loss) | (21,447) | (209,045) |
| Change in Unrealized Appreciation (Depreciation) | 1,036,309 | 1,805,741 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 1,196,679 | 1,951,452 |
| Distributions | ||
| Net Investment Income | (183,162) | (376,099) |
| Realized Capital Gain1 | (7,840) | (420,804) |
| Total Distributions | (191,002) | (796,903) |
| Capital Share Transactions | ||
| Issued | 776,766 | 1,031,935 |
| Issued in Lieu of Cash Distributions | 184,669 | 772,281 |
| Redeemed | (638,389) | (1,310,111) |
| Net Increase (Decrease) from Capital Share Transactions | 323,046 | 494,105 |
| Total Increase (Decrease) | 1,328,723 | 1,648,654 |
| Net Assets | ||
| Beginning of Period | 12,076,213 | 10,427,559 |
| End of Period2 | 13,404,936 | 12,076,213 |
1 Includes fiscal 2010 and 2009 short-term gain distributions totaling $7,840,000 and $0, respectively. 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 $67,239,000 and $68,584,000.
See accompanying Notes, which are an integral part of the Financial Statements.
12
| STAR Fund | ||||||
| Financial Highlights | ||||||
| Six Months | ||||||
| Ended | ||||||
| For a Share Outstanding | April 30, | Year Ended October 31, | ||||
| Throughout Each Period | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Net Asset Value, Beginning of Period | $16.96 | $15.33 | $22.80 | $21.04 | $19.14 | $17.92 |
| Investment Operations | ||||||
| Net Investment Income | .253 | .516 | .600 | .626 | .533 | .460 |
| Capital Gain Distributions Received | .024 | .142 | .967 | .669 | .378 | .010 |
| Net Realized and Unrealized Gain (Loss) | ||||||
| on Investments | 1.391 | 2.150 | (7.578) | 1.392 | 1.554 | 1.190 |
| Total from Investment Operations | 1.668 | 2.808 | (6.011) | 2.687 | 2.465 | 1.660 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.257) | (.552) | (.634) | (.600) | (.510) | (.440) |
| Distributions from Realized Capital Gains | (.011) | (.626) | (.825) | (.327) | (.055) | — |
| Total Distributions | (.268) | (1.178) | (1.459) | (.927) | (.565) | (.440) |
| Net Asset Value, End of Period | $18.36 | $16.96 | $15.33 | $22.80 | $21.04 | $19.14 |
| Total Return1 | 9.90% | 19.74% | -27.94% | 13.14% | 13.13% | 9.33% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $13,405 | $12,076 | $10,428 | $15,210 | $13,522 | $11,547 |
| Ratio of Total Expenses to | ||||||
| Average Net Assets | 0%2 | 0% | 0% | 0% | 0% | 0% |
| Ratio of Net Investment Income to | ||||||
| Average Net Assets | 2.45%3 | 3.35% | 3.00% | 2.85% | 2.64% | 2.44% |
| Portfolio Turnover Rate | 8%3 | 21% | 24% | 8% | 9% | 6% |
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 0.36% (annualized).
3 Annualized.
See accompanying Notes, which are an integral part of the Financial Statements.
13
STAR Fund
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. Security 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. Management has analyzed the fund’s tax positions taken for all open federal income tax years (October 31, 2006–2009), and for the period ended April 30, 2010, and has concluded that no provision for federal income tax is required in the fund’s 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 investment advisory, corporate management, administrative, marketing, and distribution services to the fund. The service agreement provides that the fund’s expenses may be reduced or eliminated to the extent of savings realized by the Vanguard funds by the operation of the fund. Accordingly, all incremental expenses for services provided by Vanguard and all other expenses incurred by the fund during the period ended April 30, 2010, were borne by the funds in which the fund invests. The fund’s trustees and officers are also directors and officers of Vanguard and the funds in which the fund invests.
C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).
At April 30, 2010, 100% of the fund’s investments were valued based on Level 1 inputs.
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.
14
STAR Fund
The fund’s tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2009, the fund had available capital loss carryforwards totaling $299,655,000 to offset future net capital gains through October 31, 2017. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2010; should the fund realize net capital losses for the year, the losses will be added to the loss carryforward balance above.
At April 30, 2010, the cost of investment securities for tax purposes was $11,166,244,000. Net unrealized appreciation of investment securities for tax purposes was $2,238,628,000, consisting of unrealized gains of $2,294,654,000 on securities that had risen in value since their purchase and $56,026,000 in unrealized losses on securities that had fallen in value since their purchase.
E. During the six months ended April 30, 2010, the fund purchased $841,586,000 of investment securities and sold $510,537,000 of investment securities, other than temporary cash investments.
| F. Capital shares issued and redeemed were: | ||
| Six Months Ended | Year Ended | |
| April 30, 2010 | October 31, 2009 | |
| Shares | Shares | |
| (000) | (000) | |
| Issued | 43,515 | 68,174 |
| Issued in Lieu of Cash Distributions | 10,469 | 53,393 |
| Redeemed | (35,870) | (89,493) |
| Net Increase (Decrease) in Shares Outstanding | 18,114 | 32,074 |
G. In preparing the financial statements as of April 30, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements.
15
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 cost (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 the STAR Fund.
The accompanying table 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.
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.” 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.
16
| Six Months Ended April 30, 2010 | |||
| Beginning | Ending | Expenses | |
| Account Value | Account Value | Paid During | |
| STAR Fund | 10/31/2009 | 4/30/2010 | Period |
| Based on Actual Fund Return | $1,000.00 | $1,098.99 | $1.87 |
| Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,023.01 | 1.81 |
The calculations are based on acquired fund fees and expenses charged by the underlying mutual funds in which the STAR Fund invests. The STAR Fund’s annualized expense figure for the period is 0.36%. 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.
17
Trustees Approve Advisory Arrangement
The board of trustees of Vanguard STAR Fund has renewed the fund’s investment advisory arrangement with The Vanguard Group, Inc. Vanguard—through its Quantitative Equity Group—serves as the investment advisor for the limited purpose of investing the fund’s cash in futures. The board determined that continuing the fund’s limited-purpose investment management arrangement with Vanguard was in the best interests of the fund and its shareholders.
The board based its decision upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. The trustees considered the factors discussed below, among others. However, no single factor determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of services
The board considered the quality of the limited-purpose investment management services provided to the fund since 2009, and took into account the organizational depth and stability of the advisor. Vanguard has been managing investments for more than three decades. The Quantitative Equity Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.
The board concluded that Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the arrangement.
Investment performance
The board considered the fund’s performance since 2009, including its performance compared with that of its relevant benchmark and peer group. The board concluded that Vanguard has performed its cash management duties in line with expectations, and that the results have been consistent with the fund’s investment strategy. Information about the fund’s most recent performance can be found in the Performance Summary section of this report.
Cost
The board concluded that the fund’s acquired fund fees and expenses were well below the average expense ratio charged by funds in its peer group. The fund does not incur advisory expenses directly; however; the board noted that each of the underlying funds in which the fund invests has advisory expenses well below the relevant peer-group average. Information about the fund’s expense ratio appears in the About Your Fund’s Expenses section of this report as well as in the Financial Statements section.
The board does not conduct a profitability analysis of Vanguard because of Vanguard’s unique “at-cost” structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees, and produces “profits” only in the form of reduced expenses for fund shareholders.
The benefit of economies of scale
The board concluded that the fund’s low-cost arrangement with Vanguard ensures that the fund will realize economies of scale as it grows, with the cost to shareholders declining as the fund’s assets increase.
The board will consider whether to renew the advisory arrangement again after a one-year period.
18
Glossary
30-Day SEC Yield. A fund’s 30-day SEC yield is derived using a formula specified by the U.S. Securities and Exchange Commission. Under the formula, data related to the fund’s security holdings in the previous 30 days are used to calculate the fund’s hypothetical net income for that period, which is then annualized and divided by the fund’s estimated average net assets over the calculation period. For the purposes of this calculation, a security’s income is based on its current market yield to maturity (in the case of bonds) or its projected dividend yield (for stocks). Because the SEC yield represents hypothetical annualized income, it will differ—at times significantly—from the fund’s actual experience. As a result, the fund’s income distributions may be higher or lower than implied by the SEC yield.
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%. For this report, beta is based on returns over the past 36 months for both the fund and the index. Note that a fund’s beta should be reviewed in conjunction with its R-squared (see definition). 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. For this report, R-squared is based on returns over the past 36 months for both the fund and the index.
19
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. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 162 Vanguard funds.
The following table provides information for each trustee and executive officer of the fund. More information about the trustees is in the Statement of Additional Information, which can be obtained, without charge, by contacting Vanguard at 800-662-7447, or online at www.vanguard.com.
| Interested Trustee1 | Rajiv L. Gupta |
| Born 1945. Trustee Since December 2001.2 | |
| F. William McNabb III | Principal Occupation(s) During the Past Five Years: |
| Born 1957. Trustee Since July 2009. Chairman of the | Chairman and Chief Executive Officer (retired 2009) |
| Board. Principal Occupation(s) During the Past Five | and President (2006–2008) of Rohm and Haas Co. |
| Years: Chairman of the Board of The Vanguard Group, | (chemicals); Director of Tyco International, Ltd. |
| Inc., and of each of the investment companies served | (diversified manufacturing and services) and Hewlett- |
| by The Vanguard Group, since January 2010; Director | Packard Co. (electronic computer manufacturing); |
| of The Vanguard Group since 2008; Chief Executive | Trustee of The Conference Board; Member of the |
| Officer and President of The Vanguard Group and of | Board of Managers of Delphi Automotive LLP |
| each of the investment companies served by The | (automotive components). |
| Vanguard Group since 2008; Director of Vanguard | |
| Marketing Corporation; Managing Director of The | Amy Gutmann |
| Vanguard Group (1995–2008). | Born 1949. Trustee Since June 2006. Principal |
| Occupation(s) During the Past Five Years: President | |
| of the University of Pennsylvania; Christopher H. | |
| Independent Trustees | Browne Distinguished Professor of Political Science |
| in the School of Arts and Sciences with secondary | |
| Emerson U. Fullwood | appointments at the Annenberg School for Commu- |
| Born 1948. Trustee Since January 2008. Principal | nication and the Graduate School of Education of |
| Occupation(s) During the Past Five Years: Executive | the University of Pennsylvania; Director of Carnegie |
| Chief Staff and Marketing Officer for North America | Corporation of New York, Schuylkill River Development |
| and Corporate Vice President (retired 2008) of Xerox | Corporation, and Greater Philadelphia Chamber of |
| Corporation (document management products and | Commerce; Trustee of the National Constitution Center; |
| services); Director of SPX Corporation (multi-industry | Chair of the Presidential Commission for the Study of |
| manufacturing), the United Way of Rochester, | Bioethical Issues. |
| Amerigroup Corporation (managed health care), | |
| the University of Rochester Medical Center, and | |
| Monroe Community College Foundation. |
| JoAnn Heffernan Heisen | Executive Officers | |
| Born 1950. Trustee Since July 1998. Principal | ||
| Occupation(s) During the Past Five Years: Corporate | Thomas J. Higgins | |
| Vice President and Chief Global Diversity Officer since | Born 1957. Chief Financial Officer Since September | |
| 2006 (retired 2008) and Member of the Executive | 2008. Principal Occupation(s) During the Past Five | |
| Committee (retired 2008) of Johnson & Johnson | Years: Principal of The Vanguard Group, Inc.; Chief | |
| (pharmaceuticals/consumer products); Vice President | Financial Officer of each of the investment companies | |
| and Chief Information Officer of Johnson & Johnson | served by The Vanguard Group since 2008; Treasurer | |
| (1997–2005); Director of the University Medical Center | of each of the investment companies served by The | |
| at Princeton and Women’s Research and Education | Vanguard Group (1998–2008). | |
| Institute; Member of the Advisory Board of the | ||
| Maxwell School of Citizenship and Public Affairs | Kathryn J. Hyatt | |
| at Syracuse University. | Born 1955. Treasurer Since November 2008. Principal | |
| Occupation(s) During the Past Five Years: Principal | ||
| F. Joseph Loughrey | of The Vanguard Group, Inc.; Treasurer of each of | |
| Born 1949. Trustee Since October 2009. Principal | the investment companies served by The Vanguard | |
| Occupation(s) During the Past Five Years: President | Group since 2008; Assistant Treasurer of each of the | |
| and Chief Operating Officer since 2005 (retired 2009) | investment companies served by The Vanguard Group | |
| and Vice Chairman of the Board (2008–2009) of | (1988–2008). | |
| Cummins Inc. (industrial machinery); Director of | ||
| SKF AB (industrial machinery), Hillenbrand, Inc. | Heidi Stam | |
| (specialized consumer services), Sauer-Danfoss Inc. | Born 1956. Secretary Since July 2005. Principal | |
| (machinery), the Lumina Foundation for Education, | Occupation(s) During the Past Five Years: Managing | |
| and Oxfam America; Chairman of the Advisory Council | Director of The Vanguard Group, Inc., since 2006; | |
| for the College of Arts and Letters at the University of | General Counsel of The Vanguard Group since 2005; | |
| Notre Dame. | Secretary of The Vanguard Group and of each of the | |
| investment companies served by The Vanguard Group | ||
| André F. Perold | since 2005; Director and Senior Vice President of | |
| Born 1952. Trustee Since December 2004. Principal | Vanguard Marketing Corporation since 2005; | |
| Occupation(s) During the Past Five Years: George | Principal of The Vanguard Group (1997–2006). | |
| Gund Professor of Finance and Banking at the Harvard | ||
| Business School; Chair of the Investment Committee | ||
| of HighVista Strategies LLC (private investment firm). | Vanguard Senior Management Team | |
| Alfred M. Rankin, Jr. | R. Gregory Barton | Michael S. Miller |
| Born 1941. Trustee Since January 1993. Principal | Mortimer J. Buckley | James M. Norris |
| Occupation(s) During the Past Five Years: Chairman, | Kathleen C. Gubanich | Glenn W. Reed |
| President, and Chief Executive Officer of NACCO | Paul A. Heller | George U. Sauter |
| Industries, Inc. (forklift trucks/housewares/lignite); | ||
| Director of Goodrich Corporation (industrial products/ | ||
| aircraft systems and services); Chairman of the Federal | Chairman Emeritus and Senior Advisor | |
| Reserve Bank of Cleveland; Trustee of The Cleveland | ||
| Museum of Art. | John J. Brennan | |
| Chairman, 1996–2009 | ||
| Peter F. Volanakis | Chief Executive Officer and President, 1996–2008 | |
| Born 1955. Trustee Since July 2009. Principal | ||
| Occupation(s) During the Past Five Years: President | ||
| since 2007 and Chief Operating Officer since 2005 | Founder | |
| of Corning Incorporated (communications equipment); | ||
| President of Corning Technologies (2001–2005); | John C. Bogle | |
| Director of Corning Incorporated and Dow Corning; | Chairman and Chief Executive Officer, 1974–1996 | |
| Trustee of the Corning Incorporated Foundation and | ||
| the Corning Museum of Glass; Overseer of the | ||
| Amos Tuck School of Business Administration at | ||
| Dartmouth College. | ||
1 Mr. McNabb is considered an “interested person,” as defined in the Investment Company Act of 1940, because he is an officer of the Vanguard funds.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard State Tax-Exempt Funds.
 | |
| P.O. Box 2600 | |
| Valley Forge, PA 19482-2600 | |
| Connect with Vanguard® > www.vanguard.com | |
| Fund Information > 800-662-7447 | |
| Direct Investor Account Services > 800-662-2739 | |
| Institutional Investor Services > 800-523-1036 | |
| Text Telephone for People With Hearing Impairment > 800-749-7273 | |
| This material may be used in conjunction with the offering of shares of any Vanguard | |
| fund only if preceded or accompanied by the fund’s current prospectus. | |
| 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, | |
| and searching for “proxy voting guidelines,” or by calling Vanguard at 800-662-2739. The guidelines are 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 20549-1520. | |
| © 2010 The Vanguard Group, Inc. | |
| All rights reserved. | |
| Vanguard Marketing Corporation, Distributor. | |
| Q562 062010 | |
 |
| Vanguard LifeStrategy® Funds |
| Semiannual Report |
| April 30, 2010 |
 |
| Vanguard LifeStrategy Income Fund |
| Vanguard LifeStrategy Conservative Growth Fund |
| Vanguard LifeStrategy Moderate Growth Fund |
| Vanguard LifeStrategy Growth Fund |
> For the six months ended April 30, 2010, returns for the Vanguard LifeStrategy Funds ranged from more than 12% for the Growth Fund, the most aggressive fund in the series, to more than 5% for the Income Fund, the most conservative.
> Boosted by rising corporate earnings and continued improvement in the economy, stocks significantly outpaced bonds.
> Returns for the five underlying Vanguard funds represented in the LifeStrategy portfolios ranged from about 18% for Total Stock Market Index Fund to about 2% for Total Bond Market II Index Fund.
| Contents | |
| Your Fund’s Total Returns. | 1 |
| Chairman’s Letter. | 2 |
| LifeStrategy Income Fund. | 8 |
| LifeStrategy Conservative Growth Fund. | 16 |
| LifeStrategy Moderate Growth Fund. | 25 |
| LifeStrategy Growth Fund. | 34 |
| About Your Fund’s Expenses. | 43 |
| Glossary. | 45 |
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 front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.
See the Glossary for definitions of investment terms used in this report.
Cover photograph: Veronica Coia.
| Your Fund’s Total Returns | |
| Six Months Ended April 30, 2010 | |
| Total | |
| Returns | |
| Vanguard LifeStrategy Income Fund | 5.43% |
| Income Composite Index | 5.55 |
| Income Composite Average | 6.37 |
| Vanguard LifeStrategy Conservative Growth Fund | 7.79% |
| Conservative Growth Composite Index | 7.79 |
| Conservative Growth Composite Average | 8.50 |
| Vanguard LifeStrategy Moderate Growth Fund | 10.03% |
| Moderate Growth Composite Index | 10.04 |
| Moderate Growth Composite Average | 11.61 |
| Vanguard LifeStrategy Growth Fund | 12.51% |
| Growth Composite Index | 12.30 |
| Growth Composite Average | 13.76 |
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 MSCI US Broad Market Index; for international stocks, the MSCI EAFE Index; for bonds, the Barclays Capital U.S. Aggregate Bond Index through December 31, 2009, and the Barclays Capital U.S. Aggregate Float Adjusted Index thereafter; and for short-term investments, the Barclays Capital U.S. 1–3 Year Credit Index.
Each average is a blended composite that weights the return of the comparable mutual funds average 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% fixed income funds average, 20% general equity funds average, and 20% money market funds average. The Conservative Growth Composite Average is weighted 40% fixed income funds average, 35% general equity funds average, 20% money market funds average, and 5% international funds average. The Moderate Growth Composite Average is weighted 50% general equity funds average, 40% fixed income funds average, and 10% international funds average. The Growth Composite Average is weighted 65% general equity funds average, 20% fixed income funds average, and 15% international funds average.
1
Chairman’s Letter
Dear Shareholder,
Reflecting the financial markets’ overall strength, returns were positive across most asset classes for the six months ended April 30, 2010. The balanced Vanguard LifeStrategy Funds shared in these gains, posting returns ranging from more than 12% for the Growth Fund, the most aggressive fund in the series, to more than 5% for the Income Fund, the most conservative fund. All four funds performed in line with their benchmark composite indexes, but fell short of their respective peer-group averages.
Each LifeStrategy Fund’s potential margin of superiority or shortfall relative to its unmanaged composite index rests largely with Vanguard Asset Allocation Fund, which represents about 25% of assets for each fund in the series. For the six-month period, the Asset Allocation Fund’s return was in line with that of its index, muting its impact on the LifeStrategy Funds’ relative performance.
On April 30, the yields of the two more conservative funds––the Income Fund and the Conservative Growth Fund––were both 2.36%, down from 4.22% and 3.82%, respectively, a year ago.
U.S. stocks extended their post-crisis rally
Despite a few minor setbacks, stocks continued to climb during much of the six months ended April 30. The broad
2
U.S. stock market ended the period up about 18%. Since scraping bottom in March 2009, U.S. equities have rebounded dramatically, returning more than 80%.
For the half-year, stocks of small-capitalization companies significantly outperformed both the broad market and larger-cap issues, returning about 28%. Large-cap stocks returned about 17%, slightly behind the broad-market gain. Value stocks generally trumped their growth counterparts for the period, though the differences weren’t all that noteworthy.
International stocks considerably lagged U.S. stocks, but still ended the half-year in positive territory. In Europe, Greece’s financial woes continued to make headlines, precipitating unusual market volatility that continued after the close of the fiscal period. In Asia, the larger developed markets returned about 8%. Most emerging market stocks, which made a quick and substantial recovery from the global economic slowdown, continued to outperform those in developed markets. China, however, was held back by the prospect of monetary policy tightening.
Corporate bonds remained attractive to investors
The broad U.S. taxable bond market returned about 3% for the period as investors continued to favor higher-risk corporate bonds over U.S. government issues. The broad municipal bond market posted strong results, returning almost 4%. The yields of longer-term Treasury
| Market Barometer | |||
| Total Returns | |||
| Periods Ended April 30, 2010 | |||
| Six | One | Five Years | |
| Months | Year | (Annualized) | |
| Stocks | |||
| Russell 1000 Index (Large-caps) | 16.77% | 40.21% | 3.07% |
| Russell 2000 Index (Small-caps) | 28.17 | 48.95 | 5.74 |
| Dow Jones U.S. Total Stock Market Index | 17.91 | 41.12 | 3.73 |
| MSCI All Country World Index ex USA (International) | 5.95 | 40.97 | 6.94 |
| Bonds | |||
| Barclays Capital U.S. Aggregate Bond Index | |||
| (Broad taxable market) | 2.54% | 8.30% | 5.38% |
| Barclays Capital Municipal Bond Index | 3.68 | 8.85 | 4.51 |
| Citigroup Three-Month U.S. Treasury Bill Index | 0.04 | 0.12 | 2.72 |
| CPI | |||
| Consumer Price Index | 0.85% | 2.24% | 2.30% |
3
bonds rose during the six months, while those of the shortest-term securities remained around 0%.
The Federal Reserve Board has kept its target for short-term interest rates unchanged at 0% to 0.25% since December 2008. The Fed’s April statement noted economic improvements, but said officials still thought that “economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The Fed has, however, begun to wind down credit programs established during the financial crisis.
Favorable stock market spurred growth-oriented funds
The four Vanguard LifeStrategy Funds are “funds of funds” that offer long- term investors balanced and diversified portfolios with different levels of risk. Up to five underlying Vanguard funds make up each of the four LifeStrategy Fund portfolios. These five underlying funds include a U.S. stock fund (the Total Stock Market Index Fund), an international equity fund (the Total International Stock Index Fund), two U.S. bond funds (the Short-Term Investment-Grade Fund and the Total Bond Market II Index Fund), and a balanced fund whose assets can shift among stocks, bonds, and short-term reserves (the Asset Allocation Fund).
| Expense Ratios | ||
| Your Fund Compared With Its Peer Group | ||
| Acquired Fund Fees | Peer Group | |
| and Expenses | Average | |
| LifeStrategy Income Fund | 0.23% | 1.02% |
| LifeStrategy Conservative Growth | ||
| Fund | 0.24 | 1.10 |
| LifeStrategy Moderate Growth Fund | 0.23 | 1.22 |
| LifeStrategy Growth Fund | 0.23 | 1.30 |
The fund expense figures shown—drawn from the prospectus dated February 26, 2010—represent an estimate of the weighted average of the expense ratios and any transaction fees charged by the underlying mutual funds (the ”acquired” funds) in which the LifeStrategy Funds invest. The LifeStrategy Funds do not charge any expenses or fees of their own. For the six months ended April 30, 2010, the annualized acquired fund fees and expenses were 0.19% for the LifeStrategy Income Fund, 0.20% for the LifeStrategy Conservative Growth Fund, 0.20% for the LifeStrategy Moderate Growth Fund, and 0.21% for the LifeStrategy Growth Fund.
Peer groups are the composite averages listed on page 1. Their expense figures are derived by applying the appropriate allocations to average expense ratios of these mutual fund peer groups: fixed income funds, general equity funds, international funds, and money market funds. Average expense ratios for these groups are derived from data provided by Lipper Inc. and capture information through year-end 2009.
4
As companies repaired their balance sheets, the U.S. economy gained strength, and corporate profits improved, U.S. equities outperformed bonds as well as international stocks over the six-month period. The LifeStrategy Funds with the heaviest weightings in domestic stocks produced the best results: the Growth Fund returned more than 12%, the Moderate Growth Fund returned about 10%, the Conservative Growth Fund returned more than 7%, and the Income Fund returned more than 5%.
Of the underlying funds, the Total Stock Market Index Fund was the top performer for the half-year, returning about 18%, followed by the Asset Allocation Fund at about 11%, the Total International Stock Index Fund at about 5%, the Short-Term Investment-Grade Fund at about 3%, and the Total Bond Market II Index Fund at about 2%. (All returns are for the Investor Shares.)
The actively managed Asset Allocation Fund, which may hold up to 100% of its assets in cash, bonds, stocks, or a combination of asset classes, seeks to outperform a static allocation of stocks and bonds. Its success largely determines whether the LifeStrategy Funds outperform, match, or underperform their respective indexes. For the six months, the Asset Allocation Fund more or less matched its benchmark, as did all four of the LifeStrategy Funds.
Diversification is vital to long-term investing
Despite some dips in early 2010, investors experienced solid gains in the financial markets for the six months ended April 30. The period extended the markets’ recovery to more than 13 months after the low point of the financial crisis of 2008 and early 2009. What’s next is anybody’s guess. Even the most seasoned investment professionals can’t predict the future with certainty.
That’s why Vanguard encourages investors to keep a long-term focus, diversify within and across asset classes, and be aware of costs. These core principles are always relevant and become even more significant when markets are most volatile.
The LifeStrategy Funds epitomize these values and provide investors with both the opportunity to capture the gains of the top-performing asset classes and a possible cushion from turbulence. Each LifeStrategy Fund benefits from Vanguard’s low expense ratios and can function as a stand-alone balanced portfolio. With four options, you can pick the fund that’s best suited for your risk tolerance, time horizon, and investment objectives.
On another matter, I would like to inform you that on January 1, 2010, we completed a leadership transition that began in March 2008. I succeeded Jack Brennan
5
as chairman of Vanguard and each of the funds. Jack has agreed to serve as chairman emeritus and senior advisor. Under Jack’s leadership, Vanguard has grown to become a preeminent firm in the mutual fund industry. Jack’s energy, his relentless pursuit of perfection, and his unwavering focus on always doing the right thing for our clients are evident in every facet of Vanguard policy today.
Thank you for entrusting your assets to Vanguard.
F. William McNabb III
Chairman and Chief Executive Officer May 13, 2010
6
| Your Fund’s Performance at a Glance | ||||
| October 31, 2009 , Through April 30, 2010 | ||||
| Distributions Per Share | ||||
| Starting | Ending | Income | Capital | |
| Share Price | Share Price | Dividends | Gains | |
| Vanguard LifeStrategy Income Fund | $13.20 | $13.71 | $0.202 | $0.000 |
| Vanguard LifeStrategy Conservative Growth | ||||
| Fund | $14.81 | $15.74 | $0.217 | $0.000 |
| Vanguard LifeStrategy Moderate Growth Fund | $17.16 | $18.62 | $0.250 | $0.000 |
| Vanguard LifeStrategy Growth Fund | $18.66 | $20.73 | $0.252 | $0.000 |
| Target and Actual Asset Allocations | ||||||
| Percentages as of April 30, 2010 | ||||||
| Stocks | Bonds | Short-Term Reserves | ||||
| Target | Actual | Target | Actual | Target | Actual | |
| LifeStrategy Income Fund | 22.5% | 22.4% | 57.5% | 57.6% | 20.0% | 20.0% |
| LifeStrategy Conservative | 42.5% | 42.3% | 37.5% | 37.6% | 20.0% | 20.1% |
| Growth Fund | ||||||
| LifeStrategy Moderate Growth | 62.5% | 62.2% | 37.5% | 37.8% | 0.0% | 0.0% |
| Fund | ||||||
| LifeStrategy Growth Fund | 82.5% | 82.2% | 17.5% | 17.8% | 0.0% | 0.0% |
Actual international stock positions for the Income, Conservative Growth, Moderate Growth, and Growth Funds equaled 0%, 5%, 10%, and 15% of assets, respectively.
7
LifeStrategy Income Fund
Fund Profile
As of April 30, 2010
| Total Fund Characteristics | |
| Ticker Symbol | VASIX |
| 30-Day SEC Yield | 2.36% |
| Acquired Fund Fees and Expenses1 | 0.23% |
| Allocation to Underlying Vanguard Funds | |
| Vanguard Total Bond Market II Index Fund | |
| Investor Shares | 50.1% |
| Vanguard Asset Allocation Fund Investor | |
| Shares | 24.9 |
| Vanguard Short-Term Investment-Grade | |
| Fund Investor Shares | 20.0 |
| Vanguard Total Stock Market Index Fund | |
| Investor Shares | 5.0 |
| Total Fund Volatility Measures | ||
| Income | Barclays | |
| Composite | Aggregate | |
| Index | Bond Index | |
| R-Squared | 0.98 | 0.39 |
| Beta | 1.19 | 1.07 |
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
Fund Asset Allocation
1 This figure—drawn from the prospectus dated February 26, 2010—represents an estimate of the weighted average of the expense ratios and any transaction fees charged by the underlying mutual funds (the ”acquired” funds) in which the LifeStrategy Income Fund invests. The LifeStrategy Income Fund does not charge any expenses or fees of its own. For the six months ended April 30, 2010, the annualized acquired fund fees and expenses were 0.19%.
8
LifeStrategy Income Fund
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.
Fiscal-Year Total Returns (%): October 31, 1999, Through April 30, 2010
Income Composite Index: Weighted 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% Barclays Capital U.S. Aggregate Bond Index, 20% MSCI US Broad Market Index, and 20% Barclays Capital U.S. 1–3 Year Credit Bond Index through December 31, 2009, after which the Barclays Capital U.S. Aggregate Bond Index was replaced by the Barclays Capital U.S. Aggregate Float Adjusted Index.
Note: For 2010, performance data reflect the six months ended April 30, 2010.
Average Annual Total Returns: Periods Ended March 31, 2010
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 | Income | Capital | Total | |
| LifeStrategy Income Fund | 9/30/1994 | 17.72% | 4.30% | 4.11% | 0.49% | 4.60% |
See Financial Highlights for dividend and capital gains information.
9
LifeStrategy Income Fund
Financial Statements (unaudited)
Statement of Net Assets
As of April 30, 2010
The fund reports a complete list of its holdings in regulatory filings 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 (99.9%) | ||
| U.S. Stock Fund (4.9%) | ||
| Vanguard Total Stock Market Index Fund Investor Shares | 3,334,251 | 98,761 |
| Balanced Fund (24.8%) | ||
| Vanguard Asset Allocation Fund Investor Shares | 21,678,199 | 495,780 |
| Bond Fund (50.2%) | ||
| 1 Vanguard Total Bond Market II Index Fund Investor Shares | 96,145,072 | 1,000,870 |
| Short-Term Bond Fund (20.0%) | ||
| Vanguard Short-Term Investment-Grade Fund Investor Shares | 37,120,234 | 399,043 |
| Total Investment Companies (Cost $1,859,035) | 1,994,454 | |
| Other Assets and Liabilities (0.1%) | ||
| Other Assets | 9,569 | |
| Liabilities | (8,547) | |
| 1,022 | ||
| Net Assets (100%) | ||
| Applicable to 145,572,082 outstanding $.001 par value | ||
| shares of beneficial interest (unlimited authorization) | 1,995,476 | |
| Net Asset Value Per Share | $13.71 | |
| At April 30, 2010, net assets consisted of: | ||
| Amount | ||
| ($000) | ||
| Paid-in Capital | 1,887,138 | |
| Undistributed Net Investment Income | 4,495 | |
| Accumulated Net Realized Losses | (31,576) | |
| Unrealized Appreciation (Depreciation) | 135,419 | |
| Net Assets | 1,995,476 | |
• See Note A in Notes to Financial Statements.
1 Affiliated fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard.
See accompanying Notes, which are an integral part of the Financial Statements.
10
| LifeStrategy Income Fund | |
| Statement of Operations | |
| Six Months Ended | |
| April 30, 2010 | |
| ($000) | |
| Investment Income | |
| Income | |
| Income Distributions Received | 28,071 |
| Net Investment Income—Note B | 28,071 |
| Realized Net Gain (Loss) on Investment Securities Sold | 180 |
| Change in Unrealized Appreciation (Depreciation) of Investment Securities | 70,483 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 98,734 |
See accompanying Notes, which are an integral part of the Financial Statements.
11
| LifeStrategy Income Fund | ||
| Statement of Changes in Net Assets | ||
| Six Months Ended | Year Ended | |
| April 30, | October 31, | |
| 2010 | 2009 | |
| ($000) | ($000) | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net Investment Income | 28,071 | 59,138 |
| Realized Net Gain (Loss) | 180 | (8,606) |
| Change in Unrealized Appreciation (Depreciation) | 70,483 | 154,183 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 98,734 | 204,715 |
| Distributions | ||
| Net Investment Income | (28,175) | (60,637) |
| Realized Capital Gain | — | — |
| Total Distributions | (28,175) | (60,637) |
| Capital Share Transactions | ||
| Issued | 298,381 | 476,437 |
| Issued in Lieu of Cash Distributions | 26,295 | 56,502 |
| Redeemed | (184,229) | (534,663) |
| Net Increase (Decrease) from Capital Share Transactions | 140,447 | (1,724) |
| Total Increase (Decrease) | 211,006 | 142,354 |
| Net Assets | ||
| Beginning of Period | 1,784,470 | 1,642,116 |
| End of Period1 | 1,995,476 | 1,784,470 |
| 1 Net Assets—End of Period includes undistributed net investment income of $4,495,000 and $4,599,000. | ||
See accompanying Notes, which are an integral part of the Financial Statements.
12
| LifeStrategy Income Fund | ||||||
| Financial Highlights | ||||||
| Six Months | ||||||
| Ended | ||||||
| For a Share Outstanding | April 30, | Year Ended October 31, | ||||
| Throughout Each Period | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Net Asset Value, Beginning of Period | $13.20 | $12.13 | $14.44 | $13.97 | $13.38 | $13.39 |
| Investment Operations | ||||||
| Net Investment Income | .199 | .440 | .555 | .570 | .530 | .470 |
| Capital Gain Distributions Received | — | — | — | — | — | — |
| Net Realized and Unrealized Gain (Loss) | ||||||
| on Investments | .513 | 1.081 | (2.266) | .538 | .580 | (.020) |
| Total from Investment Operations | .712 | 1.521 | (1.711) | 1.108 | 1.110 | .450 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.202) | (.451) | (.570) | (.570) | (.520) | (.460) |
| Distributions from Realized Capital Gains | — | — | (.029) | (.068) | — | — |
| Total Distributions | (.202) | (.451) | (.599) | (.638) | (.520) | (.460) |
| Net Asset Value, End of Period | $13.71 | $13.20 | $12.13 | $14.44 | $13.97 | $13.38 |
| Total Return1 | 5.43% | 12.83% | -12.29% | 8.14% | 8.49% | 3.39% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $1,995 | $1,784 | $1,642 | $1,885 | $1,666 | $1,752 |
| Ratio of Total Expenses to | ||||||
| Average Net Assets | 0%2 | 0% | 0% | 0% | 0% | 0% |
| Ratio of Net Investment Income to | ||||||
| Average Net Assets | 3.01%3 | 3.55% | 4.00% | 4.07% | 3.85% | 3.47% |
| Portfolio Turnover Rate | 6%3 | 27%4 | 22% | 8% | 14% | 6% |
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 0.19% (annualized).
3 Annualized.
4 Excludes the value of mutual fund shares delivered and received in connection with a change in the fund’s bond investments from Vanguard Total Bond Market Index Fund to Vanguard Total Bond Market II Index Fund because those transactions were effected in kind and did not cause the fund to incur transaction costs.
See accompanying Notes, which are an integral part of the Financial Statements.
13
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 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.
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. Security 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. Management has analyzed the fund’s tax positions taken for all open federal income tax years (October 31, 2006–2009), and for the period ended April 30, 2010, and has concluded that no provision for federal income tax is required in the fund’s 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 the fund’s expenses may be reduced or eliminated to the extent of savings realized by the Vanguard funds by the operation of the fund. Accordingly, all incremental expenses for services provided by Vanguard and all other expenses incurred by the fund during the period ended April 30, 2010, were borne by the funds in which the fund invests. The fund’s trustees and officers are also directors and officers of Vanguard and the funds in which the fund invests.
C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).
At April 30, 2010, 100% of the fund’s investments were valued based on Level 1 inputs.
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.
14
LifeStrategy Income Fund
The fund’s tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2009, the fund had available capital loss carryforwards totaling $31,665,000 to offset future net capital gains of $9,060,000 through October 31, 2016, and $22,605,000 through October 31, 2017. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2010; should the fund realize net capital losses for the year, the losses will be added to the loss carryforward balance above.
At April 30, 2010, the cost of investment securities for tax purposes was $1,859,035,000. Net unrealized appreciation of investment securities for tax purposes was $135,419,000, consisting entirely of unrealized gains on securities that had risen in value since their purchase.
E. During the six months ended April 30, 2010, the fund purchased $192,459,000 of investment securities and sold $52,987,000 of investment securities, other than temporary cash investments.
| F. Capital shares issued and redeemed were: | ||
| Six Months Ended | Year Ended | |
| April 30, 2010 | October 31, 2009 | |
| Shares | Shares | |
| (000) | (000) | |
| Issued | 22,143 | 38,458 |
| Issued in Lieu of Cash Distributions | 1,962 | 4,554 |
| Redeemed | (13,686) | (43,288) |
| Net Increase (Decrease) in Shares Outstanding | 10,419 | (276) |
G. In preparing the financial statements as of April 30, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements.
15
LifeStrategy Conservative Growth Fund
| Fund Profile | |
| As of April 30, 2010 | |
| Total Fund Characteristics | |
| Ticker Symbol | VSCGX |
| 30-Day SEC Yield | 2.36% |
| Acquired Fund Fees and Expenses1 | 0.24% |
| Allocation to Underlying Vanguard Funds | |
| Vanguard Total Bond Market II Index Fund | |
| Investor Shares | 30.1% |
| Vanguard Asset Allocation Fund Investor | |
| Shares | 24.9 |
| Vanguard Short-Term Investment-Grade | |
| Fund Investor Shares | 20.1 |
| Vanguard Total Stock Market Index Fund | |
| Investor Shares | 19.9 |
| Vanguard Total International Stock Index | |
| Fund | 5.0 |
| Total Fund Volatility Measures | ||
| Conservative | DJ | |
| Growth | U.S. Total | |
| Composite | Market | |
| Index | Index | |
| R-Squared | 0.99 | 0.95 |
| Beta | 1.15 | 0.51 |
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
Fund Asset Allocation
1 This figure—drawn from the prospectus dated February 26, 2010—represents an estimate of the weighted average of the expense ratios and any transaction fees charged by the underlying mutual funds (the ”acquired” funds) in which the LifeStrategy Conservative Growth Fund invests. The LifeStrategy Conservative Growth Fund does not charge any expenses or fees of its own. For the six months ended April 30, 2010, the annualized acquired fund fees and expenses were 0.20%.
16
LifeStrategy Conservative Growth Fund
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.
Fiscal-Year Total Returns (%): October 31, 1999, Through April 30, 2010
Conservative Growth Composite Index: Weighted 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% Barclays Capital U.S. Aggregate Bond Index, 35% MSCI US Broad Market Index, 20% Barclays Capital U.S. 1–3 Year Credit Bond Index, and 5% MSCI EAFE Index through December 31, 2009, after which the Barclays Capital U.S. Aggregate Bond Index was replaced by the Barclays Capital U.S. Aggregate Float Adjusted Index. MSCI EAFE Index returns are adjusted for withholding taxes applicable to Luxembourg holding companies.
Note: For 2010, performance data reflect the six months ended April 30, 2010.
Average Annual Total Returns: Periods Ended March 31, 2010
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 | Income | Capital | Total | |
| LifeStrategy Conservative | ||||||
| Growth Fund | 9/30/1994 | 26.94% | 4.00% | 3.47% | 0.19% | 3.66% |
See Financial Highlights for dividend and capital gains information.
17
LifeStrategy Conservative Growth Fund
Financial Statements (unaudited)
Statement of Net Assets
As of April 30, 2010
The fund reports a complete list of its holdings in regulatory filings 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 Fund (19.9%) | ||
| Vanguard Total Stock Market Index Fund Investor Shares | 40,193,428 | 1,190,529 |
| International Stock Fund (5.0%) | ||
| Vanguard Total International Stock Index Fund | 20,676,489 | 297,328 |
| Balanced Fund (24.9%) | ||
| Vanguard Asset Allocation Fund Investor Shares | 65,326,142 | 1,494,009 |
| Bond Fund (30.1%) | ||
| 1 Vanguard Total Bond Market II Index Fund Investor Shares | 173,642,050 | 1,807,614 |
| Short-Term Bond Fund (20.1%) | ||
| Vanguard Short-Term Investment-Grade Fund Investor Shares | 111,963,487 | 1,203,607 |
| Total Investment Companies (Cost $5,453,607) | 5,993,087 | |
| Other Assets and Liabilities (0.0%) | ||
| Other Assets | 39,850 | |
| Liabilities | (38,967) | |
| 883 | ||
| Net Assets (100%) | ||
| Applicable to 380,726,082 outstanding $.001 par value | ||
| shares of beneficial interest (unlimited authorization) | 5,993,970 | |
| Net Asset Value Per Share | $15.74 | |
18
| LifeStrategy Conservative Growth Fund | |
| At April 30, 2010, net assets consisted of: | |
| Amount | |
| ($000) | |
| Paid-in Capital | 5,578,987 |
| Undistributed Net Investment Income | 9,834 |
| Accumulated Net Realized Losses | (134,331) |
| Unrealized Appreciation (Depreciation) | 539,480 |
| Net Assets | 5,993,970 |
• See Note A in Notes to Financial Statements.
1 Affiliated fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard.
See accompanying Notes, which are an integral part of the Financial Statements.
19
| LifeStrategy Conservative Growth Fund | |
| Statement of Operations | |
| Six Months Ended | |
| April 30, 2010 | |
| ($000) | |
| Investment Income | |
| Income | |
| Income Distributions Received | 81,249 |
| Net Investment Income—Note B | 81,249 |
| Realized Net Gain (Loss) on Investment Securities Sold | (4,436) |
| Change in Unrealized Appreciation (Depreciation) of Investment Securities | 352,901 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 429,714 |
See accompanying Notes, which are an integral part of the Financial Statements.
20
| LifeStrategy Conservative Growth Fund | ||
| Statement of Changes in Net Assets | ||
| Six Months Ended | Year Ended | |
| April 30, | October 31, | |
| 2010 | 2009 | |
| ($000) | ($000) | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net Investment Income | 81,249 | 158,914 |
| Realized Net Gain (Loss) | (4,436) | (26,937) |
| Change in Unrealized Appreciation (Depreciation) | 352,901 | 519,397 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 429,714 | 651,374 |
| Distributions | ||
| Net Investment Income | (81,454) | (161,858) |
| Realized Capital Gain | — | — |
| Total Distributions | (81,454) | (161,858) |
| Capital Share Transactions | ||
| Issued | 638,133 | 1,104,538 |
| Issued in Lieu of Cash Distributions | 78,953 | 156,702 |
| Redeemed | (558,288) | (1,106,905) |
| Net Increase (Decrease) from Capital Share Transactions | 158,798 | 154,335 |
| Total Increase (Decrease) | 507,058 | 643,851 |
| Net Assets | ||
| Beginning of Period | 5,486,912 | 4,843,061 |
| End of Period1 | 5,993,970 | 5,486,912 |
| 1 Net Assets—End of Period includes undistributed net investment income of $9,834,000 and $10,039,000. | ||
See accompanying Notes, which are an integral part of the Financial Statements.
21
| LifeStrategy Conservative Growth Fund | ||||||
| Financial Highlights | ||||||
| Six Months | ||||||
| Ended | ||||||
| For a Share Outstanding | April 30, | Year Ended October 31, | ||||
| Throughout Each Period | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Net Asset Value, Beginning of Period | $14.81 | $13.46 | $17.61 | $16.43 | $15.24 | $14.83 |
| Investment Operations | ||||||
| Net Investment Income | .216 | .439 | .568 | .580 | .500 | .440 |
| Capital Gain Distributions Received | — | — | — | — | — | — |
| Net Realized and Unrealized Gain (Loss) | ||||||
| on Investments | .931 | 1.359 | (4.116) | 1.170 | 1.180 | .410 |
| Total from Investment Operations | 1.147 | 1.798 | (3.548) | 1.750 | 1.680 | .850 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.217) | (.448) | (.592) | (.570) | (.490) | (.440) |
| Distributions from Realized Capital Gains | — | — | (.010) | — | — | — |
| Total Distributions | (.217) | (.448) | (.602) | (.570) | (.490) | (.440) |
| Net Asset Value, End of Period | $15.74 | $14.81 | $13.46 | $17.61 | $16.43 | $15.24 |
| Total Return1 | 7.79% | 13.72% | -20.71% | 10.84% | 11.23% | 5.77% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $5,994 | $5,487 | $4,843 | $7,044 | $5,326 | $4,079 |
| Ratio of Total Expenses to | ||||||
| Average Net Assets | 0%2 | 0% | 0% | 0% | 0% | 0% |
| Ratio of Net Investment Income to | ||||||
| Average Net Assets | 2.72%3 | 3.23% | 3.52% | 3.40% | 3.21% | 2.95% |
| Portfolio Turnover Rate | 11%3 | 29%4 | 22% | 10% | 4% | 7% |
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 0.20% (annualized).
3 Annualized.
4 Excludes the value of mutual fund shares delivered and received in connection with a change in the fund’s bond investments from Vanguard Total Bond Market Index Fund to Vanguard Total Bond Market II Index Fund because those transactions were effected in kind and did not cause the fund to incur transaction costs.
.
See accompanying Notes, which are an integral part of the Financial Statements.
22
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 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.
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. Security 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. Management has analyzed the fund’s tax positions taken for all open federal income tax years (October 31, 2006–2009), and for the period ended April 30, 2010, and has concluded that no provision for federal income tax is required in the fund’s 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 the fund’s expenses may be reduced or eliminated to the extent of savings realized by the Vanguard funds by the operation of the fund. Accordingly, all incremental expenses for services provided by Vanguard and all other expenses incurred by the fund during the period ended April 30, 2010, were borne by the funds in which the fund invests. The fund’s trustees and officers are also directors and officers of Vanguard and the funds in which the fund invests.
C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).
At April 30, 2010, 100% of the fund’s investments were valued based on Level 1 inputs.
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.
23
LifeStrategy Conservative Growth Fund
The fund’s tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2009, the fund had available capital loss carryforwards totaling $127,702,000 to offset future net capital gains of $58,575,000 through October 31, 2016, and $69,127,000 through October 31, 2017. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2010; should the fund realize net capital losses for the year, the losses will be added to the loss carryforward balance above.
At April 30, 2010, the cost of investment securities for tax purposes was $5,453,607,000. Net unrealized appreciation of investment securities for tax purposes was $539,480,000, consisting entirely of unrealized gains on securities that had risen in value since their purchase.
E. During the six months ended April 30, 2010, the fund purchased $478,893,000 of investment securities and sold $315,400,000 of investment securities, other than temporary cash investments.
| F. Capital shares issued and redeemed were: | ||
| Six Months Ended | Year Ended | |
| April 30, 2010 | October 31, 2009 | |
| Shares | Shares | |
| (000) | (000) | |
| Issued | 41,577 | 81,675 |
| Issued in Lieu of Cash Distributions | 5,158 | 11,572 |
| Redeemed | (36,451) | (82,611) |
| Net Increase (Decrease) in Shares Outstanding | 10,284 | 10,636 |
G. In preparing the financial statements as of April 30, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements.
24
LifeStrategy Moderate Growth Fund
| Fund Profile | |
| As of April 30, 2010 | |
| Total Fund Characteristics | |
| Ticker Symbol | VSMGX |
| 30-Day SEC Yield | 1.89% |
| Acquired Fund Fees and Expenses1 | 0.23% |
| Allocation to Underlying Vanguard Funds | |
| Vanguard Total Stock Market Index Fund | |
| Investor Shares | 34.8% |
| Vanguard Total Bond Market II Index Fund | |
| Investor Shares | 30.3 |
| Vanguard Asset Allocation Fund Investor | |
| Shares | 25.1 |
| Vanguard Total International Stock Index | |
| Fund | 9.8 |
| Total Fund Volatility Measures | ||
| Moderate | DJ | |
| Growth | U.S. Total | |
| Composite | Market | |
| Index | Index | |
| R-Squared | 1.00 | 0.98 |
| Beta | 1.11 | 0.70 |
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
Fund Asset Allocation
1 This figure—drawn from the prospectus dated February 26, 2010—represents an estimate of the weighted average of the expense ratios and any transaction fees charged by the underlying mutual funds (the ”acquired” funds) in which the LifeStrategy Moderate Growth Fund invests. The LifeStrategy Moderate Growth Fund does not charge any expenses or fees of its own. For the six months ended April 30, 2010, the annualized acquired fund fees and expenses were 0.20%.
25
LifeStrategy Moderate Growth Fund
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.
Fiscal-Year Total Returns (%): October 31, 1999, Through April 30, 2010
Moderate Growth Composite Index: Weighted 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% Barclays Capital U.S. Aggregate Bond Index, and 10% MSCI EAFE Index through December 31, 2009, after which the Barclays index was replaced by the Barclays Capital U.S. Aggregate Float Adjusted Index. MSCI EAFE Index returns are adjusted for withholding taxes applicable to Luxembourg holding companies.
Note: For 2010, performance data reflect the six months ended April 30, 2010.
Average Annual Total Returns: Periods Ended March 31, 2010
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 | Income | Capital | Total | |
| LifeStrategy Moderate | ||||||
| Growth Fund | 9/30/1994 | 34.79% | 3.67% | 2.86% | -0.11% | 2.75% |
See Financial Highlights for dividend and capital gains information.
26
LifeStrategy Moderate Growth Fund
Financial Statements (unaudited)
Statement of Net Assets
As of April 30, 2010
The fund reports a complete list of its holdings in regulatory filings 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 (99.9%) | ||
| U.S. Stock Fund (34.8%) | ||
| Vanguard Total Stock Market Index Fund Investor Shares | 96,755,334 | 2,865,893 |
| International Stock Fund (9.7%) | ||
| Vanguard Total International Stock Index Fund | 55,783,688 | 802,170 |
| Balanced Fund (25.1%) | ||
| Vanguard Asset Allocation Fund Investor Shares | 90,316,764 | 2,065,544 |
| Bond Fund (30.3%) | ||
| 1 Vanguard Total Bond Market II Index Fund Investor Shares | 239,446,031 | 2,492,633 |
| Total Investment Companies (Cost $7,098,512) | 8,226,240 | |
| Temporary Cash Investment (0.1%) | ||
| Money Market Fund (0.1%) | ||
| 1 Vanguard Market Liquidity Fund, 0.210% (Cost $7,903) | 7,902,575 | 7,903 |
| Total Investments (100.0%) (Cost $7,106,415) | 8,234,143 | |
| Other Assets and Liabilities (0.0%) | ||
| Other Assets | 16,215 | |
| Liabilities | (18,503) | |
| (2,288) | ||
| Net Assets (100%) | ||
| Applicable to 442,003,072 outstanding $.001 par value | ||
| shares of beneficial interest (unlimited authorization) | 8,231,855 | |
| Net Asset Value Per Share | $18.62 | |
27
| LifeStrategy Moderate Growth Fund | |
| At April 30, 2010, net assets consisted of: | |
| Amount | |
| ($000) | |
| Paid-in Capital | 7,269,884 |
| Undistributed Net Investment Income | 37,863 |
| Accumulated Net Realized Losses | (203,620) |
| Unrealized Appreciation (Depreciation) | 1,127,728 |
| Net Assets | 8,231,855 |
• See Note A in Notes to Financial Statements.
1 Affiliated fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown for Vanguard Market Liquidity Fund is the 7-day yield.
See accompanying Notes, which are an integral part of the Financial Statements.
28
| LifeStrategy Moderate Growth Fund | |
| Statement of Operations | |
| Six Months Ended | |
| April 30, 2010 | |
| ($000) | |
| Investment Income | |
| Income | |
| Income Distributions Received | 106,182 |
| Net Investment Income—Note B | 106,182 |
| Realized Net Gain (Loss) on Investment Securities Sold | (9,363) |
| Change in Unrealized Appreciation (Depreciation) of Investment Securities | 658,544 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 755,363 |
See accompanying Notes, which are an integral part of the Financial Statements.
29
| LifeStrategy Moderate Growth Fund | ||
| Statement of Changes in Net Assets | ||
| Six Months Ended | Year Ended | |
| April 30, | October 31, | |
| 2010 | 2009 | |
| ($000) | ($000) | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net Investment Income | 106,182 | 207,758 |
| Realized Net Gain (Loss) | (9,363) | (58,372) |
| Change in Unrealized Appreciation (Depreciation) | 658,544 | 802,770 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 755,363 | 952,156 |
| Distributions | ||
| Net Investment Income | (111,147) | (225,842) |
| Realized Capital Gain | — | — |
| Total Distributions | (111,147) | (225,842) |
| Capital Share Transactions | ||
| Issued | 647,384 | 1,203,383 |
| Issued in Lieu of Cash Distributions | 109,366 | 222,292 |
| Redeemed | (795,169) | (1,933,510) |
| Net Increase (Decrease) from Capital Share Transactions | (38,419) | (507,835) |
| Total Increase (Decrease) | 605,797 | 218,479 |
| Net Assets | ||
| Beginning of Period | 7,626,058 | 7,407,579 |
| End of Period1 | 8,231,855 | 7,626,058 |
| 1 Net Assets—End of Period includes undistributed net investment income of $37,863,000 and $42,828,000. | ||
See accompanying Notes, which are an integral part of the Financial Statements.
30
| LifeStrategy Moderate Growth Fund | ||||||
| Financial Highlights | ||||||
| Six Months | ||||||
| Ended | ||||||
| For a Share Outstanding | April 30, | Year Ended October 31, | ||||
| Throughout Each Period | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Net Asset Value, Beginning of Period | $17.16 | $15.56 | $22.21 | $20.09 | $18.09 | $17.17 |
| Investment Operations | ||||||
| Net Investment Income | .240 | .450 | .607 | .580 | .510 | .470 |
| Capital Gain Distributions Received | — | — | — | — | — | — |
| Net Realized and Unrealized Gain (Loss) | ||||||
| on Investments | 1.470 | 1.632 | (6.606) | 2.100 | 1.990 | .890 |
| Total from Investment Operations | 1.710 | 2.082 | (5.999) | 2.680 | 2.500 | 1.360 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.250) | (.482) | (.627) | (.560) | (.500) | (.440) |
| Distributions from Realized Capital Gains | — | — | (.024) | — | — | — |
| Total Distributions | (.250) | (.482) | (.651) | (.560) | (.500) | (.440) |
| Net Asset Value, End of Period | $18.62 | $17.16 | $15.56 | $22.21 | $20.09 | $18.09 |
| Total Return1 | 10.03% | 13.82% | -27.69% | 13.55% | 14.09% | 7.97% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $8,232 | $7,626 | $7,408 | $11,272 | $9,463 | $7,778 |
| Ratio of Total Expenses to | ||||||
| Average Net Assets | 0%2 | 0% | 0% | 0% | 0% | 0% |
| Ratio of Net Investment Income to | ||||||
| Average Net Assets | 2.44%3 | 2.89% | 2.98% | 2.81% | 2.70% | 2.61% |
| Portfolio Turnover Rate | 12%3 | 25%4 | 18% | 7% | 8% | 8% |
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 0.20% (annualized).
3 Annualized.
4 Excludes the value of mutual fund shares delivered and received in connection with a change in the fund’s bond investments from Vanguard Total Bond Market Index Fund to Vanguard Total Bond Market II Index Fund because those transactions were effected in kind and did not cause the fund to incur transaction costs.
See accompanying Notes, which are an integral part of the Financial Statements.
31
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 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.
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. Security 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. Management has analyzed the fund’s tax positions taken for all open federal income tax years (October 31, 2006–2009), and for the period ended April 30, 2010, and has concluded that no provision for federal income tax is required in the fund’s 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 the fund’s expenses may be reduced or eliminated to the extent of savings realized by the Vanguard funds by the operation of the fund. Accordingly, all incremental expenses for services provided by Vanguard and all other expenses incurred by the fund during the period ended April 30, 2010, were borne by the funds in which the fund invests. The fund’s trustees and officers are also directors and officers of Vanguard and the funds in which the fund invests.
C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).
At April 30, 2010, 100% of the fund’s investments were valued based on Level 1 inputs.
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.
32
LifeStrategy Moderate Growth Fund
The fund’s tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2009, the fund had available capital loss carryforwards totaling $191,824,000 to offset future net capital gains of $45,186,000 through October 31, 2016, and $146,638,000 through October 31, 2017. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2010; should the fund realize net capital losses for the year, the losses will be added to the loss carryforward balance above.
At April 30, 2010, the cost of investment securities for tax purposes was $7,106,415,000. Net unrealized appreciation of investment securities for tax purposes was $1,127,728,000, consisting entirely of unrealized gains on securities that had risen in value since their purchase.
E. During the six months ended April 30, 2010, the fund purchased $486,833,000 of investment securities and sold $531,843,000 of investment securities, other than temporary cash investments.
| F. Capital shares issued and redeemed were: | ||
| Six Months Ended | Year Ended | |
| April 30, 2010 | October 31, 2009 | |
| Shares | Shares | |
| (000) | (000) | |
| Issued | 35,979 | 79,071 |
| Issued in Lieu of Cash Distributions | 6,144 | 14,687 |
| Redeemed | (44,459) | (125,352) |
| Net Increase (Decrease) in Shares Outstanding | (2,336) | (31,594) |
G. In preparing the financial statements as of April 30, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements.
33
LifeStrategy Growth Fund
Fund Profile
As of April 30, 2010
| Total Fund Characteristics | |
| Ticker Symbol | VASGX |
| 30-Day SEC Yield | 1.88% |
| Acquired Fund Fees and Expenses1 | 0.23% |
| Allocation to Underlying Vanguard Funds | |
| Vanguard Total Stock Market Index Fund | |
| Investor Shares | 50.1% |
| Vanguard Asset Allocation Fund Investor | |
| Shares | 25.1 |
| Vanguard Total International Stock Index | |
| Fund | 14.6 |
| Vanguard Total Bond Market II Index Fund | |
| Investor Shares | 10.2 |
| Total Fund Volatility Measures | ||
| DJ | ||
| Growth | U.S. Total | |
| Composite | Market | |
| Index | Index | |
| R-Squared | 1.00 | 0.99 |
| Beta | 1.09 | 0.90 |
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
Fund Asset Allocation
1 This figure—drawn from the prospectus dated February 26, 2010—represents an estimate of the weighted average of the expense ratios and any transaction fees charged by the underlying mutual funds (the ”acquired” funds) in which the LifeStrategy Growth Fund invests. The LifeStrategy Growth Fund does not charge any expenses or fees of its own. For the six months ended April 30, 2010, the annualized acquired fund fees and expenses were 0.21%.
34
LifeStrategy Growth Fund
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.
Fiscal-Year Total Returns (%): October 31, 1999, Through April 30, 2010
Growth Composite Index: Weighted 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% Barclays Capital U.S. Aggregate Bond Index, and 15% MSCI EAFE Index through December 31, 2009, after which the Barclays index was replaced by the Barclays Capital U.S. Aggregate Float Adjusted Index. MSCI EAFE Index returns are adjusted for withholding taxes applicable to Luxembourg holding companies.
Note: For 2010, performance data reflect the six months ended April 30, 2010.
Average Annual Total Returns: Periods Ended March 31, 2010
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 | Income | Capital | Total | |
| LifeStrategy Growth Fund | 9/30/1994 | 44.73% | 3.05% | 2.18% | -0.70% | 1.48% |
See Financial Highlights for dividend and capital gains information.
35
LifeStrategy Growth Fund
Financial Statements (unaudited)
Statement of Net Assets
As of April 30, 2010
The fund reports a complete list of its holdings in regulatory filings 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 Fund (50.0%) | ||
| Vanguard Total Stock Market Index Fund Investor Shares | 125,186,829 | 3,708,034 |
| International Stock Fund (14.7%) | ||
| Vanguard Total International Stock Index Fund | 75,444,460 | 1,084,891 |
| Balanced Fund (25.1%) | ||
| Vanguard Asset Allocation Fund Investor Shares | 81,384,029 | 1,861,253 |
| Bond Fund (10.2%) | ||
| 1 Vanguard Total Bond Market II Index Fund Investor Shares | 72,686,467 | 756,666 |
| Total Investment Companies (Cost $6,419,961) | 7,410,844 | |
| Temporary Cash Investment (0.0%) | ||
| Money Market Fund (0.0%) | ||
| 1 Vanguard Market Liquidity Fund, 0.210% (Cost $1,045) | 1,045,081 | 1,045 |
| Total Investments (100.0%) (Cost $6,421,006) | 7,411,889 | |
| Other Assets and Liabilities (0.0%) | ||
| Other Assets | 20,878 | |
| Liabilities | (17,270) | |
| 3,608 | ||
| Net Assets (100%) | ||
| Applicable to 357,770,643 outstanding $.001 par value | ||
| shares of beneficial interest (unlimited authorization) | 7,415,497 | |
| Net Asset Value Per Share | $20.73 | |
36
| LifeStrategy Growth Fund | |
| At April 30, 2010, net assets consisted of: | |
| Amount | |
| ($000) | |
| Paid-in Capital | 6,554,620 |
| Undistributed Net Investment Income | 22,603 |
| Accumulated Net Realized Losses | (152,609) |
| Unrealized Appreciation (Depreciation) | 990,883 |
| Net Assets | 7,415,497 |
• See Note A in Notes to Financial Statements.
1 Affiliated fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown for Vanguard Market Liquidity Fund is the 7-day yield.
See accompanying Notes, which are an integral part of the Financial Statements.
37
| LifeStrategy Growth Fund | |
| Statement of Operations | |
| Six Months Ended | |
| April 30, 2010 | |
| ($000) | |
| Investment Income | |
| Income | |
| Income Distributions Received | 87,740 |
| Net Investment Income—Note B | 87,740 |
| Realized Net Gain (Loss) on Investment Securities Sold | 25,295 |
| Change in Unrealized Appreciation (Depreciation) of Investment Securities | 706,740 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 819,775 |
See accompanying Notes, which are an integral part of the Financial Statements.
38
| LifeStrategy Growth Fund | ||
| Statement of Changes in Net Assets | ||
| Six Months Ended | Year Ended | |
| April 30, | October 31, | |
| 2010 | 2009 | |
| ($000) | ($000) | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net Investment Income | 87,740 | 155,405 |
| Realized Net Gain (Loss) | 25,295 | (85,614) |
| Change in Unrealized Appreciation (Depreciation) | 706,740 | 754,889 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 819,775 | 824,680 |
| Distributions | ||
| Net Investment Income | (89,220) | (163,404) |
| Realized Capital Gain | — | — |
| Total Distributions | (89,220) | (163,404) |
| Capital Share Transactions | ||
| Issued | 539,422 | 960,129 |
| Issued in Lieu of Cash Distributions | 88,059 | 161,307 |
| Redeemed | (563,456) | (1,428,334) |
| Net Increase (Decrease) from Capital Share Transactions | 64,025 | (306,898) |
| Total Increase (Decrease) | 794,580 | 354,378 |
| Net Assets | ||
| Beginning of Period | 6,620,917 | 6,266,539 |
| End of Period1 | 7,415,497 | 6,620,917 |
| 1 Net Assets—End of Period includes undistributed net investment income of $22,603,000 and $24,083,000. | ||
See accompanying Notes, which are an integral part of the Financial Statements.
39
| LifeStrategy Growth Fund | ||||||
| Financial Highlights | ||||||
| Six Months | ||||||
| Ended | ||||||
| For a Share Outstanding | April 30, | Year Ended October 31, | ||||
| Throughout Each Period | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Net Asset Value, Beginning of Period | $18.66 | $16.86 | $26.56 | $23.32 | $20.37 | $18.84 |
| Investment Operations | ||||||
| Net Investment Income | .247 | .423 | .571 | .540 | .450 | .420 |
| Capital Gain Distributions Received | — | — | — | — | — | — |
| Net Realized and Unrealized Gain (Loss) | ||||||
| on Investments | 2.075 | 1.818 | (9.690) | 3.220 | 2.950 | 1.510 |
| Total from Investment Operations | 2.322 | 2.241 | (9.119) | 3.760 | 3.400 | 1.930 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.252) | (.441) | (.581) | (.520) | (.450) | (.400) |
| Distributions from Realized Capital Gains | — | — | — | — | — | — |
| Total Distributions | (.252) | (.441) | (.581) | (.520) | (.450) | (.400) |
| Net Asset Value, End of Period | $20.73 | $18.66 | $16.86 | $26.56 | $23.32 | $20.37 |
| Total Return1 | 12.51% | 13.74% | -34.98% | 16.32% | 16.94% | 10.30% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $7,415 | $6,621 | $6,267 | $10,372 | $8,422 | $6,605 |
| Ratio of Total Expenses to | ||||||
| Average Net Assets | 0%2 | 0% | 0% | 0% | 0% | 0% |
| Ratio of Net Investment Income to | ||||||
| Average Net Assets | 2.14%3 | 2.57% | 2.47% | 2.15% | 2.07% | 2.09% |
| Portfolio Turnover Rate | 8%3 | 12%4 | 10% | 4% | 3% | 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 0.21% (annualized).
3 Annualized.
4 Excludes the value of mutual fund shares delivered and received in connection with a change in the fund’s bond investments from Vanguard Total Bond Market Index Fund to Vanguard Total Bond Market II Index Fund because those transactions were effected in kind and did not cause the fund to incur transaction costs.
See accompanying Notes, which are an integral part of the Financial Statements.
40
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 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.
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. Security 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. Management has analyzed the fund’s tax positions taken for all open federal income tax years (October 31, 2006–2009), and for the period ended April 30, 2010, and has concluded that no provision for federal income tax is required in the fund’s 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 the fund’s expenses may be reduced or eliminated to the extent of savings realized by the Vanguard funds by the operation of the fund. Accordingly, all incremental expenses for services provided by Vanguard and all other expenses incurred by the fund during the period ended April 30, 2010, were borne by the funds in which the fund invests. The fund’s trustees and officers are also directors and officers of Vanguard and the funds in which the fund invests.
C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).
At April 30, 2010, 100% of the fund’s investments were valued based on Level 1 inputs.
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.
41
LifeStrategy Growth Fund
The fund’s tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2009, the fund had available capital loss carryforwards totaling $175,512,000 to offset future net capital gains of $9,185,000 through October 31, 2010, $2,953,000 through October 31, 2011, $46,739,000 through October 31, 2016, and $116,635,000 through October 31, 2017. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2010; should the fund realize net capital losses for the year, the losses will be added to the loss carryforward balance above.
At April 30, 2010, the cost of investment securities for tax purposes was $6,421,006,000. Net unrealized appreciation of investment securities for tax purposes was $990,883,000, consisting entirely of unrealized gains on securities that had risen in value since their purchase.
E. During the six months ended April 30, 2010, the fund purchased $349,703,000 of investment securities and sold $286,937,000 of investment securities, other than temporary cash investments.
| F. Capital shares issued and redeemed were: | ||
| Six Months Ended | Year Ended | |
| April 30, 2010 | October 31, 2009 | |
| Shares | Shares | |
| (000) | (000) | |
| Issued | 27,070 | 59,731 |
| Issued in Lieu of Cash Distributions | 4,465 | 10,050 |
| Redeemed | (28,508) | (86,682) |
| Net Increase (Decrease) in Shares Outstanding | 3,027 | (16,901) |
G. In preparing the financial statements as of April 30, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements.
42
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 LifeStrategy Funds have no direct expenses, but each fund 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 cost (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 each LifeStrategy Fund.
The accompanying table 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.
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.” 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.
43
| Six Months Ended April 30, 2010 | |||
| Beginning | Ending | Expenses | |
| Account Value | Account Value | Paid During | |
| 10/31/2009 | 4/30/2010 | Period | |
| Based on Actual Fund Return | |||
| LifeStrategy Income Fund | $1,000.00 | $1,054.35 | $0.97 |
| LifeStrategy Conservative Growth Fund | $1,000.00 | $1,077.91 | $1.03 |
| LifeStrategy Moderate Growth Fund | $1,000.00 | $1,100.32 | $1.04 |
| LifeStrategy Growth Fund | $1,000.00 | $1,125.13 | $1.11 |
| Based on Hypothetical 5% Yearly Return | |||
| LifeStrategy Income Fund | $1,000.00 | $1,023.85 | $0.95 |
| LifeStrategy Conservative Growth Fund | $1,000.00 | $1,023.80 | $1.00 |
| LifeStrategy Moderate Growth Fund | $1,000.00 | $1,023.80 | $1.00 |
| LifeStrategy Growth Fund | $1,000.00 | $1,023.75 | $1.05 |
The calculations are based on acquired fund fees and expenses charged by the underlying mutual funds in which the LifeStrategy Funds invest. The LifeStrategy Funds’ annualized expense figures for the period are (in order as listed from top to bottom above) 0.19%, 0.20%, 0.20%, and 0.21%. 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.
44
Glossary
30-Day SEC Yield. A fund’s 30-day SEC yield is derived using a formula specified by the U.S. Securities and Exchange Commission. Under the formula, data related to the fund’s security holdings in the previous 30 days are used to calculate the fund’s hypothetical net income for that period, which is then annualized and divided by the fund’s estimated average net assets over the calculation period. For the purposes of this calculation, a security’s income is based on its current market yield to maturity (in the case of bonds) or its projected dividend yield (for stocks). Because the SEC yield represents hypothetical annualized income, it will differ—at times significantly—from the fund’s actual experience. As a result, the fund’s income distributions may be higher or lower than implied by the SEC yield.
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%. For this report, beta is based on returns over the past 36 months for both the fund and the index. Note that a fund’s beta should be reviewed in conjunction with its R-squared (see definition). 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. For this report, R-squared is based on returns over the past 36 months for both the fund and the index.
45
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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. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 162 Vanguard funds.
The following table provides information for each trustee and executive officer of the fund. More information about the trustees is in the Statement of Additional Information, which can be obtained, without charge, by contacting Vanguard at 800-662-7447, or online at www.vanguard.com.
| Interested Trustee1 | Rajiv L. Gupta |
| Born 1945. Trustee Since December 2001.2 | |
| F. William McNabb III | Principal Occupation(s) During the Past Five Years: |
| Born 1957. Trustee Since July 2009. Chairman of the | Chairman and Chief Executive Officer (retired 2009) |
| Board. Principal Occupation(s) During the Past Five | and President (2006–2008) of Rohm and Haas Co. |
| Years: Chairman of the Board of The Vanguard Group, | (chemicals); Director of Tyco International, Ltd. |
| Inc., and of each of the investment companies served | (diversified manufacturing and services) and Hewlett- |
| by The Vanguard Group, since January 2010; Director | Packard Co. (electronic computer manufacturing); |
| of The Vanguard Group since 2008; Chief Executive | Trustee of The Conference Board; Member of the |
| Officer and President of The Vanguard Group and of | Board of Managers of Delphi Automotive LLP |
| each of the investment companies served by The | (automotive components). |
| Vanguard Group since 2008; Director of Vanguard | |
| Marketing Corporation; Managing Director of The | Amy Gutmann |
| Vanguard Group (1995–2008). | Born 1949. Trustee Since June 2006. Principal |
| Occupation(s) During the Past Five Years: President | |
| of the University of Pennsylvania; Christopher H. | |
| Independent Trustees | Browne Distinguished Professor of Political Science |
| in the School of Arts and Sciences with secondary | |
| Emerson U. Fullwood | appointments at the Annenberg School for Commu- |
| Born 1948. Trustee Since January 2008. Principal | nication and the Graduate School of Education of |
| Occupation(s) During the Past Five Years: Executive | the University of Pennsylvania; Director of Carnegie |
| Chief Staff and Marketing Officer for North America | Corporation of New York, Schuylkill River Development |
| and Corporate Vice President (retired 2008) of Xerox | Corporation, and Greater Philadelphia Chamber of |
| Corporation (document management products and | Commerce; Trustee of the National Constitution Center; |
| services); Director of SPX Corporation (multi-industry | Chair of the Presidential Commission for the Study of |
| manufacturing), the United Way of Rochester, | Bioethical Issues. |
| Amerigroup Corporation (managed health care), | |
| the University of Rochester Medical Center, and | |
| Monroe Community College Foundation. |
| JoAnn Heffernan Heisen | Executive Officers | |
| Born 1950. Trustee Since July 1998. Principal | ||
| Occupation(s) During the Past Five Years: Corporate | Thomas J. Higgins | |
| Vice President and Chief Global Diversity Officer since | Born 1957. Chief Financial Officer Since September | |
| 2006 (retired 2008) and Member of the Executive | 2008. Principal Occupation(s) During the Past Five | |
| Committee (retired 2008) of Johnson & Johnson | Years: Principal of The Vanguard Group, Inc.; Chief | |
| (pharmaceuticals/consumer products); Vice President | Financial Officer of each of the investment companies | |
| and Chief Information Officer of Johnson & Johnson | served by The Vanguard Group since 2008; Treasurer | |
| (1997–2005); Director of the University Medical Center | of each of the investment companies served by The | |
| at Princeton and Women’s Research and Education | Vanguard Group (1998–2008). | |
| Institute; Member of the Advisory Board of the | ||
| Maxwell School of Citizenship and Public Affairs | Kathryn J. Hyatt | |
| at Syracuse University. | Born 1955. Treasurer Since November 2008. Principal | |
| Occupation(s) During the Past Five Years: Principal | ||
| F. Joseph Loughrey | of The Vanguard Group, Inc.; Treasurer of each of | |
| Born 1949. Trustee Since October 2009. Principal | the investment companies served by The Vanguard | |
| Occupation(s) During the Past Five Years: President | Group since 2008; Assistant Treasurer of each of the | |
| and Chief Operating Officer since 2005 (retired 2009) | investment companies served by The Vanguard Group | |
| and Vice Chairman of the Board (2008–2009) of | (1988–2008). | |
| Cummins Inc. (industrial machinery); Director of | ||
| SKF AB (industrial machinery), Hillenbrand, Inc. | Heidi Stam | |
| (specialized consumer services), Sauer-Danfoss Inc. | Born 1956. Secretary Since July 2005. Principal | |
| (machinery), the Lumina Foundation for Education, | Occupation(s) During the Past Five Years: Managing | |
| and Oxfam America; Chairman of the Advisory Council | Director of The Vanguard Group, Inc., since 2006; | |
| for the College of Arts and Letters at the University of | General Counsel of The Vanguard Group since 2005; | |
| Notre Dame. | Secretary of The Vanguard Group and of each of the | |
| investment companies served by The Vanguard Group | ||
| André F. Perold | since 2005; Director and Senior Vice President of | |
| Born 1952. Trustee Since December 2004. Principal | Vanguard Marketing Corporation since 2005; | |
| Occupation(s) During the Past Five Years: George | Principal of The Vanguard Group (1997–2006). | |
| Gund Professor of Finance and Banking at the Harvard | ||
| Business School; Chair of the Investment Committee | ||
| of HighVista Strategies LLC (private investment firm). | Vanguard Senior Management Team | |
| Alfred M. Rankin, Jr. | R. Gregory Barton | Michael S. Miller |
| Born 1941. Trustee Since January 1993. Principal | Mortimer J. Buckley | James M. Norris |
| Occupation(s) During the Past Five Years: Chairman, | Kathleen C. Gubanich | Glenn W. Reed |
| President, and Chief Executive Officer of NACCO | Paul A. Heller | George U. Sauter |
| Industries, Inc. (forklift trucks/housewares/lignite); | ||
| Director of Goodrich Corporation (industrial products/ | ||
| aircraft systems and services); Chairman of the Federal | Chairman Emeritus and Senior Advisor | |
| Reserve Bank of Cleveland; Trustee of The Cleveland | ||
| Museum of Art. | John J. Brennan | |
| Chairman, 1996–2009 | ||
| Peter F. Volanakis | Chief Executive Officer and President, 1996–2008 | |
| Born 1955. Trustee Since July 2009. Principal | ||
| Occupation(s) During the Past Five Years: President | ||
| since 2007 and Chief Operating Officer since 2005 | Founder | |
| of Corning Incorporated (communications equipment); | ||
| President of Corning Technologies (2001–2005); | John C. Bogle | |
| Director of Corning Incorporated and Dow Corning; | Chairman and Chief Executive Officer, 1974–1996 | |
| Trustee of the Corning Incorporated Foundation and | ||
| the Corning Museum of Glass; Overseer of the | ||
| Amos Tuck School of Business Administration at | ||
| Dartmouth College. | ||
1 Mr. McNabb is considered an “interested person,” as defined in the Investment Company Act of 1940, because he is an officer of the Vanguard funds.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard State Tax-Exempt Funds.
 | |
| P.O. Box 2600 | |
| Valley Forge, PA 19482-2600 | |
| Connect with Vanguard® > www.vanguard.com | |
| Fund Information > 800-662-7447 | |
| Direct Investor Account Services > 800-662-2739 | |
| Institutional Investor Services > 800-523-1036 | |
| Text Telephone for People With Hearing Impairment > 800-749-7273 | |
| This material may be used in conjunction with the offering of shares of any Vanguard | |
| fund only if preceded or accompanied by the fund’s current prospectus. | |
| 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, | |
| and searching for “proxy voting guidelines,” or by calling Vanguard at 800-662-2739. The guidelines are 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 20549-1520. | |
| © 2010 The Vanguard Group, Inc. | |
| All rights reserved. | |
| Vanguard Marketing Corporation, Distributor. | |
| Q882 062010 | |
 |
| Vanguard Total International Stock |
| Index Fund Semiannual Report |
| April 30, 2010 |
 |
> For the six months ended April 30, Vanguard Total International Stock Index Fund returned about 5%, in line with its target index result and the average return of international peer funds.
> After early gains, mounting fiscal problems pushed several developed European markets into negative territory for the six months, but most emerging and Pacific Rim markets posted gains.
> The information technology, materials, and industrial sectors benefited from the economic rebound around much of the world and were among the best performers.
| Contents | |
| Your Fund’s Total Returns. | 1 |
| Chairman’s Letter. | 2 |
| Fund Profile. | 8 |
| Performance Summary. | 10 |
| Financial Statements. | 11 |
| About Your Fund’s Expenses. | 45 |
| Trustees Approve Advisory Arrangement. | 47 |
| Glossary. | 48 |
Total International Stock Index Fund
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 front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.
See the Glossary for definitions of investment terms used in this report.
Cover photograph: Veronica Coia.
| Your Fund’s Total Returns | ||||
| Six Months Ended April 30, 2010 | ||||
| Total | ||||
| Returns | ||||
| Vanguard Total International Stock Index Fund | 5.23% | |||
| MSCI EAFE + Emerging Markets Index | 4.78 | |||
| International Funds Average | 5.43 | |||
| International Funds Average: Derived from data provided by Lipper Inc. | ||||
| Your Fund’s Performance at a Glance | ||||
| October 31, 2009 , Through April 30, 2010 | ||||
| Distributions Per Share | ||||
| Starting | Ending | Income | Capital | |
| Share Price | Share Price | Dividends | Gains | |
| Vanguard Total International Stock Index Fund | $13.99 | $14.38 | $0.344 | $0.000 |
1
Chairman’s Letter
Dear Shareholder,
International markets had some ups and downs during the first six months of the fiscal year. After early gains, developed European markets—representing about half of the fund’s value—lost ground in January and February, rallied in March, then slipped again as the debt and budget crisis in Greece worsened. Emerging markets were stronger out of the gate and held their lead, dipping in only one month, with the Pacific Rim not far behind.
For the six months ended April 30, 2010, Vanguard Total International Stock Index Fund returned 5.23%, near the 5.43% average return of international peer funds. However, temporary price differences arising from fair-value pricing policies (please see the text box on page 6 for an explanation) made it appear that the fund’s return had diverged from the 4.78% return of its benchmark, which is not adjusted for fair value.
Please note: The name of the fund’s benchmark has been changed from the Total International Composite Index to the MSCI EAFE + Emerging Markets Index. The index continues to consist of the MSCI Europe Index, which represents about half of its weighting, and the MSCI Pacific and MSCI Emerging Markets Indexes, which each represent about one-quarter.
2
Most stock markets extended their post-crisis rally
Despite a few setbacks, most markets around the world continued to climb during the six months ended April 30.
International markets, while considerably lagging the broad U.S. market, generally still ended the half-year in positive territory. In Europe, Greece’s financial woes continued to make headlines, precipitating unusual market volatility that continued after the close of the fiscal half-year. In Asia, the larger developed markets returned about 8%. Most emerging market stocks, which made a quick and substantial recovery from the global economic slowdown, continued to outperform those in developed markets. China, however, was held back by the prospect of monetary policy tightening.
The broad U.S. stock market ended the period up about 18%. Since scraping bottom in March 2009, U.S. equities have rebounded dramatically, returning more than 80%.
For the half-year, stocks of small-capitalization companies significantly outperformed both the broad market and larger-cap issues, returning about 28%. Large-cap stocks returned about 17%, slightly behind the broad market’s gain. Value stocks generally trumped their growth counterparts for the period, though the differences weren’t all that noteworthy.
| Market Barometer | |||
| Total Returns | |||
| Periods Ended April 30, 2010 | |||
| Six | One | Five Years | |
| Months | Year | (Annualized) | |
| Stocks | |||
| Russell 1000 Index (Large-caps) | 16.77% | 40.21% | 3.07% |
| Russell 2000 Index (Small-caps) | 28.17 | 48.95 | 5.74 |
| Dow Jones U.S. Total Stock Market Index | 17.91 | 41.12 | 3.73 |
| MSCI All Country World Index ex USA (International) | 5.95 | 40.97 | 6.94 |
| Bonds | |||
| Barclays Capital U.S. Aggregate Bond Index | |||
| (Broad taxable market) | 2.54% | 8.30% | 5.38% |
| Barclays Capital Municipal Bond Index | 3.68 | 8.85 | 4.51 |
| Citigroup Three-Month U.S. Treasury Bill Index | 0.04 | 0.12 | 2.72 |
| CPI | |||
| Consumer Price Index | 0.85% | 2.24% | 2.30% |
3
Corporate bonds remained attractive to investors
The broad U.S. taxable bond market returned about 3% for the period as investors continued to favor higher-risk, higher-yielding corporate bonds over U.S. government issues. The broad municipal bond market posted strong results, returning almost 4%. The yields of longer-term Treasury bonds rose during the six months, while those of the shortest-term securities remained around 0%.
The Federal Reserve Board has kept its target for short-term interest rates unchanged at 0% to 0.25% since December 2008. The Fed’s April statement noted economic improvements, but said officials still thought that “economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The Fed has, however, begun to wind down credit programs established during the financial crisis.
Debt and fiscal woes beset European markets
Although many European economies appeared to be well on track to continue the economic recovery that began in 2009, their convalescence was interrupted when long-simmering fiscal problems and a potential debt default bubbled up to a crisis level in Greece. To a lesser extent, Spain, Portugal, and Ireland were also struggling, and consumer confidence dipped in Germany and other major
| Expense Ratios | ||
| Your Fund Compared With Its Peer Group | ||
| Peer Group | ||
| Fund | Average | |
| Total International Stock Index Fund | 0.32% | 1.44% |
The fund expense ratio shown is from the prospectus dated February 26, 2010, and represents estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the six months ended April 30, 2010, the fund’s annualized expense ratio was 0.26%. The peer-group expense ratio is derived from data provided by Lipper Inc. and captures information through year-end 2009.
Peer group: International Funds.
4
markets. Adding to unease about the market, the sovereign credit ratings of Greece, Portugal, and Spain were downgraded by at least one major rating agency; Greece is no longer rated investment-grade. Despite an emergency loan package for Greece from the European Union and the International Monetary Fund, approved just after the close of the period, markets remained unsettled in Europe and beyond.
The fiscal dramas restrained stock market returns in Europe’s developed markets, while the weakness of the euro and the British pound turned modest six-month gains into losses when measured in U.S. dollars. The dollar’s relative strength was a stiff headwind for U.S.-based investors: The local-currency return of the MSCI Europe Index was several percentage points higher than its –0.20% dollar-denominated return.
Greece, one of Europe’s smallest markets, was understandably the worst performer for the six months, returning about –41%. Italy, Spain, and Portugal declined less steeply. On the bright side, the larger European bourses—including the United Kingdom, representing almost one-sixth of the fund—posted single-digit gains. France, however, suffered a small loss.
Emerging markets led again, but with smaller gains
Last year’s remarkable emerging markets rally continued into the first half of the new fiscal year, but at a much slower pace, as the MSCI Emerging Markets Index returned 12.37% for the period. All of the countries represented in the index posted gains except Egypt and the Czech Republic.
In a departure from recent periods, China—the largest emerging market—was not the best performer, returning only about 1%. In part, the country appears to be a victim of the success of its government’s massive stimulus program to shore up the economy during the global slowdown. In early 2010, as the nation’s economic engine gathered steam, the government—concerned about inflation—began to try to apply the brakes by tightening credit, which also put pressure on stock prices.
Some of the smaller emerging countries (measured by market value) posted exceptional returns, including Indonesia (up more than 27%) and Turkey (up 25%). Among larger markets, South Korea and India each notched gains of about 20% and Brazil was up 9% for the half-year.
Pacific Rim countries in the middle of the pack
The MSCI Pacific Index returned 7.73% for the six months, mirroring the returns of its two largest markets. Japan (representing almost two-thirds of the index) gained almost 8%; Australia’s return was closer to 9%. Although the Japanese economy contracted for calendar-year 2009, it achieved better-than-expected growth in the December quarter and appears on track for growth in 2010. Japan’s stock market reached an 18-month high this spring as investors were encouraged by a pickup in exports.
5
A note on fair-value pricing
An index fund’s return sometimes may appear to diverge from the return of its benchmark index a bit more than would be expected. This may be the result of a fair-value pricing adjustment.
These adjustments address pricing discrepancies that may arise because of time-zone differences among global stock markets. Foreign stocks may trade on exchanges that close many hours before a fund’s closing share price is calculated in the United States, generally at 4 p.m., Eastern time. In the hours between the foreign close and the U.S. close, the value of these foreign securities may change—because of company-specific announcements or market-wide developments, for example. Such price changes are not immediately reflected in international index values.
Fair-value pricing takes such changes into account in calculating the fund’s daily net asset value, thus ensuring that the NAV doesn’t include “stale” prices. The result can be a temporary divergence between the return of the fund and that of its benchmark index—a difference that usually corrects itself when the foreign markets reopen.
Most sectors advanced along with economic growth
Eight of the ten industry sectors posted six-month gains, led by information technology with a return of about 17%. Materials and industrial stocks also notched double-digit advances. The corporate fortunes of these three sectors tend to be somewhat more exposed to the ups and downs of the business cycle, so they benefited as many economies around the world emerged from their slumps. Financials—the largest sector, at about one-quarter of the Total International Stock Index Fund’s value—declined slightly, along with telecommunication services. Several banks were hit especially hard by concerns about exposure to Greek and other sovereign debt.
Diversification and globalization can be partners in your portfolio
Last year, international stocks vaulted over the broad U.S. market to the top of the performance charts, a position they had enjoyed for several years until most stocks fell into the bear market’s grip. But in the most recent six months, the broad U.S. market reclaimed the lead.
This seemingly perpetual game of leapfrog helps to explain why Vanguard continually reminds its clients about two pillars of investing: a long-term perspective and diversification. A case in point: Many investors have been drawn to the allure of emerging market funds, following the
6
MSCI Emerging Markets Index’s return of almost 79% in calendar-year 2009. While such returns are tempting, history has shown that chasing yesterday’s winners is often a losing strategy.
Instead, we encourage you to establish a target asset allocation that is appropriate for your long-term goals and risk tolerance, and then try to stick with it. A portfolio that is diversified across and within stocks and bonds—with an allocation to money market funds to help meet short-term or unexpected needs—can help cushion your exposure to inevitable market swings. And although international markets sometimes rise and fall in tandem with the broad U.S. market, a low-cost international equity index fund can help diversify your portfolio. This is usually more apparent in the long run, as differences emerge in the economic and financial performances of various countries.
On another matter, I would like to inform you that as of January 1, 2010, we completed a leadership transition that began in March 2008. I succeeded Jack Brennan as chairman of Vanguard and each of the funds. Jack has agreed to serve as chairman emeritus and senior advisor. Under Jack’s leadership, Vanguard has grown to become a preeminent firm in the mutual fund industry. Jack’s energy, his relentless pursuit of perfection, and his unwavering focus on always doing the right thing for our clients are evident in every facet of Vanguard policy today.
Thank you for entrusting your assets to Vanguard.
Sincerely,
F. William McNabb III
Chairman and Chief Executive Officer
May 13, 2010
7
Total International Stock Index Fund
| Fund Profile | |||
| As of April 30, 2010 | |||
| Portfolio Characteristics | |||
| MSCI AC | |||
| MSCI | World | ||
| EAFE + | Index | ||
| Fund | EM Index | ex USA | |
| Number of Stocks | 1,782 | 1,716 | 1,816 |
| Median Market Cap $28.8B | $28.8B | $28.4B | |
| Price/Earnings Ratio | 23.3x | 23.2x | 23.2x |
| Price/Book Ratio | 1.7x | 1.7x | 1.7x |
| Return on Equity | 18.4% | 18.4% | 18.3% |
| Earnings Growth Rate | 5.5% | 5.8% | 5.8% |
| Dividend Yield | 2.7% | 2.7% | 2.7% |
| Turnover Rate | |||
| (Annualized) | 5% | — | — |
| Ticker Symbol | VGTSX | — | — |
| Expense Ratio1 | 0.32% | — | — |
| Short-Term Reserves | -0.2% | — | — |
| Sector Diversification (% of equity exposure) | |||
| MSCI AC | |||
| MSCI | World | ||
| EAFE + | Index | ||
| Fund | EM Index | ex USA | |
| Consumer | |||
| Discretionary | 9.1% | 9.1% | 8.7% |
| Consumer Staples | 9.0 | 9.0 | 8.5 |
| Energy | 9.6 | 9.6 | 10.9 |
| Financials | 24.9 | 25.0 | 25.7 |
| Health Care | 6.6 | 6.6 | 6.1 |
| Industrials | 10.8 | 10.7 | 10.3 |
| Information | |||
| Technology | 7.5 | 7.4 | 7.1 |
| Materials | 11.4 | 11.5 | 12.1 |
| Telecommunication | |||
| Services | 6.1 | 6.1 | 5.9 |
| Utilities | 5.0 | 5.0 | 4.7 |
| Volatility Measures | ||
| MSCI | MSCI AC | |
| EAFE + | World Index | |
| EM Index | ex USA | |
| R-Squared | 0.98 | 0.98 |
| Beta | 1.02 | 1.01 |
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
Ten Largest Holdings (% of total net assets)
| Royal Dutch Shell PLC | Integrated Oil & | |
| Gas | 1.4% | |
| BHP Billiton | Diversified Metals | |
| & Mining | 1.4 | |
| HSBC Holdings PLC | Diversified Banks | 1.3 |
| Nestle SA | Packaged Foods & | |
| Meats | 1.3 | |
| BP PLC | Integrated Oil & | |
| Gas | 1.2 | |
| Vodafone Group PLC | Wireless | |
| Telecommunication | ||
| Services | 0.9 | |
| Total SA | Integrated Oil & | |
| Gas | 0.9 | |
| Toyota Motor Corp. | Automobile | |
| Manufacturers | 0.8 | |
| Roche Holdings AG | Pharmaceuticals | 0.8 |
| Petroleo Brasileiro SA | Integrated Oil & | |
| Gas | 0.8 | |
| Top Ten | 10.8% |
The holdings listed exclude any temporary cash investments and equity index products.
Allocation by Region (% of equity exposure)
1 The expense ratio shown is from the prospectus dated February 26, 2010, and represents estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the six months ended April 30, 2010, the annualized expense ratio was 0.26%.
8
Total International Stock Index Fund
Market Diversification (% of equity exposure)
| MSCI AC | |||
| MSCI | World | ||
| EAFE + | Index | ||
| Fund | EM Index | ex USA | |
| Europe | |||
| United Kingdom | 16.0% | 15.8% | 14.6% |
| France | 7.8 | 7.7 | 7.1 |
| Germany | 5.9 | 5.9 | 5.4 |
| Switzerland | 5.7 | 5.7 | 5.3 |
| Spain | 2.9 | 2.8 | 2.6 |
| Italy | 2.3 | 2.3 | 2.1 |
| Sweden | 2.2 | 2.2 | 2.0 |
| Netherlands | 2.0 | 2.0 | 1.8 |
| Other | 4.0 | 4.0 | 3.6 |
| Subtotal | 48.8% | 48.4% | 44.5% |
| Pacific | |||
| Japan | 17.1% | 17.1% | 15.7% |
| Australia | 6.5 | 6.6 | 6.1 |
| Hong Kong | 1.8 | 1.8 | 1.6 |
| Singapore | 1.2 | 1.2 | 1.1 |
| Other | 0.1 | 0.1 | 0.1 |
| Subtotal | 26.7% | 26.8% | 24.6% |
| Emerging Markets | |||
| China | 4.3% | 4.3% | 4.0% |
| Brazil | 4.0 | 4.0 | 3.7 |
| South Korea | 3.4 | 3.4 | 3.1 |
| Taiwan | 2.7 | 2.7 | 2.5 |
| India | 1.9 | 1.9 | 1.8 |
| South Africa | 1.7 | 1.8 | 1.6 |
| Russia | 1.6 | 1.6 | 1.5 |
| Mexico | 1.1 | 1.1 | 1.0 |
| Other | 3.8 | 4.0 | 3.9 |
| Subtotal | 24.5% | 24.8% | 23.1% |
| North America | 0.0% | 0.0% | 7.8% |
9
Total International Stock Index Fund
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.
Fiscal-Year Total Returns (%): October 31, 1999, Through April 30, 2010
Average Annual Total Returns: Periods Ended March 31, 2010
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.
| Inception | One | Five | Ten | |
| Date | Year | Years | Years | |
| Total International Stock Index | ||||
| Fund | 4/29/1996 | 59.51% | 5.60% | 2.46% |
Fund returns do not reflect the 2% fee assessed on redemptions of shares held for less than two months.
See Financial Highlights for dividend and capital gains information.
10
Total International Stock Index Fund
Financial Statements (unaudited)
Statement of Net Assets
As of April 30, 2010
The fund reports a complete list of its holdings in regulatory filings 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) | ||
| Common Stocks (99.3%)1 | |||
| Argentina (0.0%) | |||
| * | Siderar SAIC Class A | 30 | — |
| Australia (6.5%) | |||
| BHP Billiton Ltd. | 6,783,386 | 247,975 | |
| Commonwealth Bank | |||
| of Australia | 3,101,052 | 165,920 | |
| Westpac Banking Corp. | 5,947,223 | 148,185 | |
| Australia & New Zealand | |||
| Banking Group Ltd. | 5,063,272 | 112,148 | |
| National Australia | |||
| Bank Ltd. | 4,236,683 | 108,243 | |
| Woolworths Ltd. | 2,504,948 | 62,574 | |
| Rio Tinto Ltd. | 881,094 | 57,571 | |
| Wesfarmers Ltd. | 2,034,031 | 54,527 | |
| Westfield Group | 4,203,346 | 49,647 | |
| Woodside Petroleum Ltd. | 1,099,201 | 45,583 | |
| QBE Insurance Group Ltd. | 2,068,354 | 40,073 | |
| CSL Ltd. | 1,138,092 | 34,008 | |
| Macquarie Group Ltd. | 671,166 | 30,605 | |
| Newcrest Mining Ltd. | 978,010 | 29,522 | |
| Origin Energy Ltd. | 1,773,855 | 26,678 | |
| Telstra Corp. Ltd. | 8,792,711 | 25,762 | |
| AMP Ltd. | 4,135,964 | 23,735 | |
| Santos Ltd. | 1,679,237 | 21,304 | |
| Suncorp-Metway Ltd. | 2,572,988 | 21,264 | |
| Foster’s Group Ltd. | 3,900,970 | 19,549 | |
| Brambles Ltd. | 2,845,344 | 18,918 | |
| Orica Ltd. | 726,822 | 17,626 | |
| Stockland | 4,823,290 | 17,582 | |
| Amcor Ltd. | 2,470,920 | 14,953 | |
| Insurance Australia | |||
| Group Ltd. | 4,211,276 | 14,808 | |
| AGL Energy Ltd. | 904,840 | 12,530 | |
| AXA Asia Pacific | |||
| Holdings Ltd. | 2,099,449 | 11,909 | |
| Coca-Cola Amatil Ltd. | 1,127,791 | 11,643 | |
| Transurban Group | 2,342,818 | 11,026 | |
| ASX Ltd. | 350,341 | 10,592 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| * | Fortescue Metals | ||
| Group Ltd. | 2,515,863 | 10,470 | |
| ^ | Leighton Holdings Ltd. | 302,996 | 10,209 |
| GPT Group | 18,670,897 | 9,977 | |
| Computershare Ltd. | 898,282 | 9,755 | |
| Incitec Pivot Ltd. | 3,245,882 | 9,597 | |
| Sonic Healthcare Ltd. | 746,212 | 9,482 | |
| BlueScope Steel Ltd. | 3,672,289 | 8,811 | |
| * | Asciano Group | 5,646,812 | 8,763 |
| Toll Holdings Ltd. | 1,337,806 | 8,738 | |
| OneSteel Ltd. | 2,697,247 | 8,675 | |
| Lend Lease Group | 1,081,064 | 8,509 | |
| Mirvac Group | 6,613,468 | 8,487 | |
| Wesfarmers Ltd. Price | |||
| Protected Shares | 307,640 | 8,267 | |
| WorleyParsons Ltd. | 332,187 | 8,101 | |
| Goodman Group | 12,265,700 | 7,974 | |
| Cochlear Ltd. | 113,563 | 7,739 | |
| TABCORP Holdings Ltd. | 1,224,264 | 7,732 | |
| Crown Ltd. | 997,422 | 7,521 | |
| Dexus Property Group | 9,591,983 | 7,114 | |
| Alumina Ltd. | 4,904,096 | 6,926 | |
| ^ | Fairfax Media Ltd. | 4,257,342 | 6,719 |
| * | OZ Minerals Ltd. | 6,277,410 | 6,608 |
| Boral Ltd. | 1,199,619 | 6,485 | |
| Bendigo and | |||
| Adelaide Bank Ltd. | 711,897 | 6,438 | |
| * | James Hardie Industries | ||
| SE | 882,507 | 6,187 | |
| CFS Retail Property Trust | 3,494,489 | 6,162 | |
| Sims Metal | |||
| Management Ltd. | 325,306 | 6,115 | |
| * | Qantas Airways Ltd. | 2,234,837 | 5,787 |
| Metcash Ltd. | 1,529,992 | 5,750 | |
| Tatts Group Ltd. | 2,451,461 | 5,594 | |
| * | Arrow Energy Ltd. | 1,178,081 | 5,558 |
| Intoll Group | 4,639,643 | 4,788 | |
| * | Paladin Energy Ltd. | 1,312,664 | 4,780 |
| CSR Ltd. | 2,896,819 | 4,617 | |
| Billabong International Ltd. | 411,042 | 4,317 |
11
Total International Stock Index Fund
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| MAp Group | 1,499,089 | 4,297 | |
| Goodman Fielder Ltd. | 2,599,970 | 3,490 | |
| Harvey Norman | |||
| Holdings Ltd. | 1,070,970 | 3,344 | |
| Aristocrat Leisure Ltd. | 825,550 | 3,240 | |
| Caltex Australia Ltd. | 270,659 | 2,889 | |
| Nufarm Ltd. | 355,077 | 2,493 | |
| SP AusNet | 2,628,780 | 2,145 | |
| Energy Resources of | |||
| Australia Ltd. | 131,905 | 1,907 | |
| 1,749,017 | |||
| Austria (0.3%) | |||
| Erste Group Bank AG | 383,166 | 17,012 | |
| OMV AG | 303,303 | 10,838 | |
| Voestalpine AG | 238,516 | 8,872 | |
| * | IMMOFINANZ AG | 1,998,870 | 8,523 |
| Telekom Austria AG | 620,189 | 8,239 | |
| Verbund–Oesterreichische | |||
| Elektrizitaetswirtschafts | |||
| AG Class A | 154,058 | 5,731 | |
| Raiffeisen International | |||
| Bank Holding AG | 109,143 | 5,314 | |
| Vienna Insurance Group | 77,411 | 3,784 | |
| 68,313 | |||
| Belgium (0.7%) | |||
| Anheuser-Busch InBev NV | 1,458,895 | 70,773 | |
| Delhaize Group SA | 203,605 | 16,838 | |
| * | KBC Groep NV | 326,278 | 14,598 |
| ^ | Groupe Bruxelles Lambert | ||
| SA | 163,398 | 13,828 | |
| *,^ | Ageas | 4,487,870 | 13,785 |
| Solvay SA Class A | 119,852 | 11,445 | |
| ^ | Belgacom SA | 308,975 | 10,851 |
| Umicore | 231,308 | 8,458 | |
| ^ | UCB SA | 202,726 | 7,853 |
| Colruyt SA | 30,595 | 7,533 | |
| * | Dexia SA | 1,055,771 | 5,705 |
| Mobistar SA | 59,314 | 3,646 | |
| ^ | Cie Nationale a Portefeuille | 65,840 | 3,416 |
| 188,729 | |||
| Brazil (4.0%) | |||
| Petroleo Brasileiro SA | |||
| Prior Pfd. | 4,981,200 | 93,907 | |
| Vale SA Prior Pfd. | 3,081,800 | 82,690 | |
| Petroleo Brasileiro SA | 3,817,100 | 80,657 | |
| Vale SA | 2,081,500 | 63,382 | |
| Itau Unibanco Holding SA | |||
| Prior Pfd. | 2,921,181 | 63,322 | |
| Banco Bradesco SA | 2,815,780 | 51,756 | |
| Vale SA Class B Pfd. ADR | 1,180,207 | 31,759 | |
| Investimentos Itau SA | |||
| Prior Pfd. | 4,588,000 | 31,700 | |
| Itau Unibanco Holding | |||
| SA ADR | 1,229,384 | 26,653 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Petroleo Brasileiro | |||
| SA ADR Type A | 688,432 | 26,119 | |
| OGX Petroleo e | |||
| Gas Participacoes SA | 2,607,600 | 26,072 | |
| Cia de Bebidas das | |||
| Americas Prior Pfd. | 247,046 | 24,120 | |
| Cia Siderurgica Nacional | |||
| SA | 1,129,800 | 21,124 | |
| Banco do Brasil SA | 1,034,800 | 17,847 | |
| Petroleo Brasileiro | |||
| SA ADR | 397,231 | 16,855 | |
| Vale SA Class B ADR | 549,718 | 16,838 | |
| Usinas Siderurgicas de | |||
| Minas Gerais | |||
| SA Prior Pfd. | 512,700 | 16,756 | |
| BRF–Brasil Foods SA | 1,255,400 | 16,409 | |
| BM&FBOVESPA SA | 2,477,378 | 16,319 | |
| Gerdau SA Prior Pfd. | 978,900 | 16,084 | |
| Cielo SA | 1,245,058 | 12,026 | |
| Banco Santander Brasil | |||
| SA/Brazil ADR | 1,002,996 | 11,665 | |
| Redecard SA | 680,710 | 11,302 | |
| Banco Bradesco SA ADR | 599,811 | 11,168 | |
| Metalurgica Gerdau SA | |||
| Class A | 552,200 | 10,868 | |
| Bradespar SA Prior Pfd. | 456,500 | 10,471 | |
| Cia Energetica de | |||
| Minas Gerais Prior Pfd. | 626,037 | 9,940 | |
| Cia de Concessoes | |||
| Rodoviarias | 399,253 | 9,187 | |
| Vivo Participacoes | |||
| SA Prior Pfd. | 301,525 | 7,979 | |
| Cia Siderurgica Nacional | |||
| SA ADR | 398,892 | 7,439 | |
| * | Hypermarcas SA | 542,880 | 7,436 |
| Natura Cosmeticos SA | 348,500 | 7,398 | |
| All America Latina | |||
| Logistica SA | 819,600 | 7,332 | |
| Usinas Siderurgicas de | |||
| Minas Gerais SA | 228,000 | 7,242 | |
| Cyrela Brazil Realty SA | 593,235 | 7,116 | |
| PDG Realty SA | |||
| Empreendimentos e | |||
| Participacoes | 782,586 | 7,113 | |
| Ultrapar Participacoes | |||
| SA Prior Pfd. | 149,469 | 7,047 | |
| Centrais Eletricas | |||
| Brasileiras SA Prior Pfd. | 390,400 | 6,805 | |
| Tele Norte Leste | |||
| Participacoes | |||
| SA Prior Pfd. | 418,900 | 6,266 | |
| Centrais Eletricas | |||
| Brasileiras SA | 436,200 | 6,186 | |
| Lojas Renner SA | 246,898 | 6,122 | |
| Souza Cruz SA | 153,300 | 5,944 | |
| Gerdau SA ADR | 345,478 | 5,666 |
12
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Cia de Bebidas das | |||
| Americas ADR | 53,865 | 5,268 | |
| Cia Energetica de | |||
| Sao Paulo Prior Pfd. | 359,025 | 5,226 | |
| Gafisa SA | 750,310 | 5,137 | |
| * | Fibria Celulose SA | 255,675 | 5,042 |
| Lojas Americanas | |||
| SA Prior Pfd. | 672,500 | 4,921 | |
| JBS SA | 1,025,422 | 4,885 | |
| Marfrig Alimentos SA | 401,852 | 4,217 | |
| Cia Brasileira de | |||
| Distribuicao Grupo Pao | |||
| de Acucar ADR | 61,206 | 4,193 | |
| Eletropaulo Metropolitana | |||
| Eletricidade de Sao Paulo | |||
| SA Prior Pfd. | 187,800 | 4,167 | |
| * | NET Servicos de | ||
| Comunicacao | |||
| SA Prior Pfd. | 344,600 | 4,070 | |
| CPFL Energia SA | 195,300 | 4,009 | |
| Empresa Brasileira de | |||
| Aeronautica SA | 643,100 | 3,822 | |
| MRV Engenharia e | |||
| Participacoes SA | 533,084 | 3,732 | |
| Duratex SA | 408,901 | 3,726 | |
| Suzano Papel e Celulose | |||
| SA Prior Pfd. | 287,560 | 3,668 | |
| Tractebel Energia SA | 267,700 | 3,417 | |
| * | BR Malls Participacoes SA | 266,148 | 3,375 |
| Cia de Saneamento Basico | |||
| do Estado de Sao Paulo | 171,000 | 3,299 | |
| * | Cosan SA Industria e | ||
| Comercio | 238,600 | 2,999 | |
| Brasil Telecom | |||
| SA Prior Pfd. | 452,020 | 2,871 | |
| Banco do Estado do | |||
| Rio Grande do | |||
| Sul Prior Pfd. | 371,089 | 2,856 | |
| Localiza Rent a Car SA | 246,202 | 2,728 | |
| * | LLX Logistica SA | 560,633 | 2,693 |
| Klabin SA Prior Pfd. | 858,300 | 2,681 | |
| Tam SA Prior Pfd. | 152,383 | 2,678 | |
| B2W Cia Global Do Varejo | 116,718 | 2,574 | |
| Cia Paranaense de | |||
| Energia Prior Pfd. | 124,100 | 2,530 | |
| Rossi Residencial SA | 339,076 | 2,497 | |
| Empresa Brasileira de | |||
| Aeronautica SA ADR | 102,873 | 2,477 | |
| Gol Linhas Aereas | |||
| Inteligentes SA Prior Pfd. | 188,100 | 2,475 | |
| Gerdau SA | 197,300 | 2,449 | |
| Tim Participacoes | |||
| SA Prior Pfd. | 952,400 | 2,449 | |
| Cia Energetica de | |||
| Minas Gerais ADR | 149,358 | 2,412 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Braskem SA | 337,000 | 2,408 | |
| EDP–Energias do | |||
| Brasil SA | 124,800 | 2,387 | |
| Tele Norte Leste | |||
| Participacoes SA | 134,200 | 2,382 | |
| AES Tiete SA Prior Pfd. | 209,700 | 2,342 | |
| Multiplan | |||
| Empreendimentos | |||
| Imobiliarios SA | 132,828 | 2,318 | |
| Brookfield Incorporacoes | |||
| SA | 431,900 | 1,943 | |
| Porto Seguro SA | 180,400 | 1,865 | |
| * | Fertilizantes Fosfatados | ||
| SA Prior Pfd. | 199,849 | 1,848 | |
| Cia Brasileira de | |||
| Distribuicao Grupo Pao | |||
| de Acucar Prior Pfd. | 52,991 | 1,804 | |
| Cia Paranaense de | |||
| Energia ADR | 85,756 | 1,773 | |
| Tele Norte Leste | |||
| Participacoes SA ADR | 112,449 | 1,671 | |
| Cia de Transmissao de | |||
| Energia Electrica | |||
| Paulista Prior Pfd. | 61,000 | 1,636 | |
| Brasil Telecom SA ADR | 79,490 | 1,508 | |
| Banco Santander Brasil | |||
| SA | 127,500 | 1,475 | |
| *,^ | Fibria Celulose SA ADR | 73,562 | 1,460 |
| Telemar Norte Leste | |||
| SA Prior Pfd. | 53,000 | 1,403 | |
| Cia de Saneamento | |||
| Basico do Estado de | |||
| Sao Paulo ADR | 29,165 | 1,148 | |
| BRF–Brasil Foods | |||
| SA ADR | 68,800 | 918 | |
| Tim Participacoes | |||
| SA ADR | 29,591 | 769 | |
| Vivo Participacoes | |||
| SA ADR | 17,341 | 459 | |
| * | NET Servicos de | ||
| Comunicacao SA ADR | 23,000 | 270 | |
| Centrais Eletricas | |||
| Brasileiras SA ADR | 18,000 | 257 | |
| Braskem SA ADR | 412 | 6 | |
| 1,079,680 | |||
| Chile (0.4%) | |||
| Empresas COPEC SA | 923,264 | 14,765 | |
| Empresas CMPC SA | 221,214 | 9,421 | |
| Enersis SA | 19,191,993 | 7,674 | |
| Empresa Nacional de | |||
| Electricidad SA/Chile | 4,803,909 | 7,461 | |
| Centros Comerciales | |||
| Sudamericanos SA | 1,763,579 | 7,222 | |
| Lan Airlines SA | 275,276 | 5,251 | |
| CAP SA | 150,952 | 4,858 | |
13
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Sociedad Quimica y | |||
| Minera de Chile SA | |||
| Class B | 130,816 | 4,739 | |
| Colbun SA | 14,220,434 | 3,645 | |
| SACI Falabella | 571,648 | 3,617 | |
| Banco Santander Chile | |||
| ADR | 52,540 | 3,462 | |
| ENTEL Chile SA | 217,063 | 3,074 | |
| Enersis SA ADR | 143,095 | 2,846 | |
| Empresa Nacional de | |||
| Electricidad SA/ | |||
| Chile ADR | 59,905 | 2,783 | |
| Banco de Credito e | |||
| Inversiones | 62,551 | 2,585 | |
| Banco Santander Chile | 39,519,433 | 2,513 | |
| Cia Cervecerias Unidas | |||
| SA | 263,378 | 2,258 | |
| AES Gener SA | 4,979,694 | 2,197 | |
| Vina Concha y Toro SA | 966,492 | 2,142 | |
| Sociedad Quimica y | |||
| Minera de Chile SA ADR | 53,346 | 1,920 | |
| 94,433 | |||
| China (4.3%) | |||
| China Mobile Ltd. | 12,164,000 | 119,074 | |
| China Construction | |||
| Bank Corp. | 90,830,000 | 73,761 | |
| China Life | |||
| Insurance Co. Ltd. | 15,054,000 | 69,316 | |
| Industrial & Commercial | |||
| Bank of China | 92,415,000 | 67,356 | |
| CNOOC Ltd. | 36,138,000 | 63,566 | |
| Bank of China Ltd. | 115,350,188 | 59,381 | |
| PetroChina Co. Ltd. | 42,656,000 | 49,121 | |
| Tencent Holdings Ltd. | 1,838,949 | 38,030 | |
| China Shenhua | |||
| Energy Co. Ltd. | 6,527,500 | 28,010 | |
| China Petroleum & | |||
| Chemical Corp. | 32,232,000 | 25,844 | |
| Ping An Insurance | |||
| Group Co. of China Ltd. | 2,581,000 | 22,096 | |
| China Merchants | |||
| Bank Co. Ltd. | 7,876,551 | 19,309 | |
| China Overseas Land & | |||
| Investment Ltd. | 8,257,680 | 16,034 | |
| China Unicom | |||
| Hong Kong Ltd. | 11,851,694 | 14,762 | |
| Bank of Communications | |||
| Co. Ltd. | 11,637,000 | 13,253 | |
| China Telecom Corp. Ltd. | 28,108,000 | 12,896 | |
| Yanzhou Coal | |||
| Mining Co. Ltd. | 3,956,000 | 11,004 | |
| China Coal Energy Co. | 7,016,000 | 10,587 | |
| Belle International | |||
| Holdings Ltd. | 7,631,000 | 10,464 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Hengan International | |||
| Group Co. Ltd. | 1,361,500 | 10,452 | |
| ^ | Byd Co. Ltd. | 1,040,500 | 9,239 |
| China Resources | |||
| Enterprise Ltd. | 2,402,000 | 8,474 | |
| Tingyi Cayman Islands | |||
| Holding Corp. | 3,390,000 | 8,422 | |
| China Communications | |||
| Construction Co. Ltd. | 8,570,000 | 8,080 | |
| China Yurun Food | |||
| Group Ltd. | 2,662,413 | 8,073 | |
| Dongfeng Motor | |||
| Group Co. Ltd. | 5,518,000 | 7,837 | |
| *,^ | Aluminum Corp. of | ||
| China Ltd. | 7,960,000 | 7,702 | |
| China Merchants Holdings | |||
| International Co. Ltd. | 2,204,000 | 7,656 | |
| China Resources | |||
| Land Ltd. | 4,100,000 | 7,502 | |
| * | China Minsheng | ||
| Banking Corp. Ltd. | 6,759,000 | 7,236 | |
| Lenovo Group Ltd. | 9,628,000 | 7,098 | |
| Inner Mongolia Yitai | |||
| Coal Co. Class B | 1,283,000 | 7,063 | |
| China Pacific Insurance | |||
| Group Co. Ltd. | 1,642,738 | 6,866 | |
| * | China Mengniu | ||
| Dairy Co. Ltd. | 2,284,000 | 6,852 | |
| China Resources Power | |||
| Holdings Co. Ltd. | 3,287,600 | 6,665 | |
| China Citic | |||
| Bank Corp. Ltd. | 10,121,539 | 6,654 | |
| Kunlun Energy Co. Ltd. | 4,998,000 | 6,624 | |
| Beijing Enterprises | |||
| Holdings Ltd. | 1,027,500 | 6,620 | |
| Kingboard Chemical | |||
| Holdings Ltd. | 1,203,500 | 6,452 | |
| Zijin Mining Group Co. Ltd. | 8,128,000 | 6,334 | |
| China COSCO | |||
| Holdings Co. Ltd. | 4,960,500 | 6,317 | |
| ^ | Jiangxi Copper Co. Ltd. | 2,791,000 | 5,854 |
| Denway Motors Ltd. | 9,822,000 | 5,769 | |
| Li Ning Co. Ltd. | 1,499,500 | 5,755 | |
| Chaoda Modern | |||
| Agriculture Holdings Ltd. | 4,875,825 | 5,575 | |
| Nine Dragons Paper | |||
| Holdings Ltd. | 3,225,669 | 5,441 | |
| Anhui Conch | |||
| Cement Co. Ltd. | 1,652,000 | 5,275 | |
| * | China Railway Group Ltd. | 7,563,000 | 5,213 |
| * | China Taiping Insurance | ||
| Holdings Co. Ltd. | 1,568,600 | 5,192 | |
| * | Air China Ltd. | 4,644,000 | 5,132 |
| Sinopharm Group Co. | 1,120,800 | 5,052 |
14
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Shimao Property | |||
| Holdings Ltd. | 3,194,500 | 4,889 | |
| * | GOME | ||
| Electrical Appliances | |||
| Holdings Ltd. | 15,137,980 | 4,879 | |
| ^ | Alibaba.com Ltd. | 2,556,500 | 4,870 |
| Citic Pacific Ltd. | 2,196,000 | 4,787 | |
| China Railway | |||
| Construction Corp. Ltd. | 3,833,800 | 4,773 | |
| Sino-Ocean Land | |||
| Holdings Ltd. | 6,211,500 | 4,762 | |
| Shanghai Industrial | |||
| Holdings Ltd. | 1,087,000 | 4,696 | |
| *,^ | PICC Property & | ||
| Casualty Co. Ltd. | 4,904,000 | 4,650 | |
| Xinao Gas Holdings Ltd. | 1,480,000 | 4,467 | |
| China Oilfield | |||
| Services Ltd. | 3,054,000 | 4,259 | |
| China High Speed | |||
| Transmission Equipment | |||
| Group Co. Ltd. | 1,769,000 | 4,192 | |
| Parkson Retail Group Ltd. | 2,545,000 | 4,157 | |
| China Agri-Industries | |||
| Holdings Ltd. | 3,156,000 | 4,135 | |
| Want Want China | |||
| Holdings Ltd. | 5,378,500 | 4,038 | |
| China National Building | |||
| Material Co. Ltd. | 2,404,000 | 3,940 | |
| China Shipping | |||
| Development Co. Ltd. | 2,622,000 | 3,901 | |
| Fushan International | |||
| Energy Group Ltd. | 5,536,000 | 3,889 | |
| Renhe Commercial | |||
| Holdings Co. Ltd. | 15,799,635 | 3,856 | |
| ^ | Agile Property | ||
| Holdings Ltd. | 3,234,000 | 3,747 | |
| *,^ | Semiconductor | ||
| Manufacturing | |||
| International Corp. | 34,285,000 | 3,683 | |
| ^ | ZTE Corp. | 1,012,918 | 3,629 |
| China Everbright Ltd. | 1,464,000 | 3,610 | |
| ^ | Huaneng Power | ||
| International Inc. | 6,168,000 | 3,552 | |
| Weichai Power Co. Ltd. | 413,400 | 3,380 | |
| Shandong Weigao Group | |||
| Medical Polymer Co. Ltd. | 724,000 | 3,357 | |
| ^ | Angang Steel Co. Ltd. | 2,164,000 | 3,338 |
| Tsingtao Brewery Co. Ltd. | 666,000 | 3,290 | |
| *,^ | China Longyuan Power | ||
| Group Corp. | 3,083,000 | 3,280 | |
| China Dongxiang | |||
| Group Co. | 4,680,000 | 3,177 | |
| ^ | Geely Automobile | ||
| Holdings Ltd. | 7,335,000 | 3,127 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Yantai Changyu Pioneer | |||
| Wine Co. Class B | 356,450 | 3,035 | |
| COSCO Pacific Ltd. | 2,240,000 | 3,020 | |
| Poly Hong Kong | |||
| Investments Ltd. | 3,010,000 | 2,964 | |
| *,^ | China Zhongwang | ||
| Holdings Ltd. | 3,342,400 | 2,874 | |
| China South Locomotive | |||
| and Rolling Stock Corp. | 3,805,000 | 2,865 | |
| Huabao International | |||
| Holdings Ltd. | 2,455,000 | 2,837 | |
| *,^ | China Shipping Container | ||
| Lines Co. Ltd. | 6,800,000 | 2,822 | |
| Anta Sports Products Ltd. | 1,526,000 | 2,717 | |
| Zhejiang | |||
| Expressway Co. Ltd. | 2,862,000 | 2,670 | |
| * | Skyworth Digital | ||
| Holdings Ltd. | 2,951,000 | 2,663 | |
| Shanghai Electric | |||
| Group Co. Ltd. | 5,600,000 | 2,657 | |
| Golden Eagle Retail | |||
| Group Ltd. | 1,371,000 | 2,641 | |
| ^ | Guangzhou R&F | ||
| Properties Co. Ltd. | 2,004,400 | 2,618 | |
| ^ | Country Garden | ||
| Holdings Co. | 8,447,000 | 2,609 | |
| ^ | Datang | ||
| International Power | |||
| Generation Co. Ltd. | 6,244,000 | 2,603 | |
| * | Metallurgical Corp. of | ||
| China Ltd. | 4,944,000 | 2,556 | |
| Guangdong | |||
| Investment Ltd. | 4,912,000 | 2,547 | |
| Shui On Land Ltd. | 5,455,199 | 2,473 | |
| Fosun International | 3,165,000 | 2,458 | |
| Soho China Ltd. | 4,173,000 | 2,371 | |
| China Vanke Co. Ltd. | |||
| Class B | 2,429,500 | 2,354 | |
| * | Hidili Industry | ||
| International | |||
| Development Ltd. | 2,098,000 | 2,287 | |
| * | Beijing Capital | ||
| International | |||
| Airport Co. Ltd. | 3,702,000 | 2,227 | |
| ^ | Sinofert Holdings Ltd. | 4,150,000 | 2,223 |
| Dongfang | |||
| Electric Corp. Ltd. | 335,800 | 2,177 | |
| Jiangsu | |||
| Expressway Co. Ltd. | 2,316,000 | 2,175 | |
| ^ | Wumart Stores Inc. | 998,000 | 2,133 |
| China BlueChemical Ltd. | 3,354,000 | 2,074 | |
| Hopson Development | |||
| Holdings Ltd. | 1,468,000 | 1,910 | |
| *,^ | Sinopec Shanghai | ||
| Petrochemical Co. Ltd. | 4,898,000 | 1,880 |
15
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| China | |||
| International Marine | |||
| Containers Co. Ltd. | |||
| Class B | 1,451,553 | 1,835 | |
| Franshion Properties | |||
| China Ltd. | 6,338,000 | 1,800 | |
| * | BBMG Corp. | 1,830,000 | 1,795 |
| China Communications | |||
| Services Corp. Ltd. | 3,550,000 | 1,782 | |
| *,^ | Maanshan Iron & Steel | 3,374,000 | 1,770 |
| Sinotruk Hong Kong Ltd. | 1,519,500 | 1,471 | |
| Shanghai Lujiazui | |||
| Finance & Trade Zone | |||
| Development Co. Ltd. | |||
| Class B | 893,200 | 1,458 | |
| China Travel | |||
| International Inv HK | 5,610,000 | 1,385 | |
| Greentown China | |||
| Holdings Ltd. | 1,106,000 | 1,181 | |
| Shanghai Zhenhua | |||
| Heavy Industry Co. Ltd. | |||
| Class B | 1,762,479 | 1,079 | |
| Harbin Power | |||
| Equipment Co. Ltd. | 1,326,000 | 1,038 | |
| 1,154,684 | |||
| Colombia (0.0%) | |||
| BanColombia SA ADR | 141,364 | 6,607 | |
| Czech Republic (0.1%) | |||
| CEZ AS | 326,595 | 15,660 | |
| Komercni Banka AS | 30,547 | 6,270 | |
| Telefonica O2 Czech | |||
| Republic AS | 231,172 | 5,124 | |
| 27,054 | |||
| Denmark (0.8%) | |||
| Novo Nordisk A/S Class B | 879,452 | 72,360 | |
| * | Vestas Wind Systems A/S | 412,132 | 25,147 |
| * | Danske Bank A/S | 914,257 | 23,869 |
| AP Moller–Maersk A/S | |||
| Class B | 2,667 | 22,393 | |
| Carlsberg A/S Class B | 216,416 | 17,491 | |
| Novozymes A/S | 93,511 | 11,243 | |
| AP Moller–Maersk A/S | 1,113 | 9,016 | |
| DSV A/S | 423,841 | 7,576 | |
| Coloplast A/S Class B | 45,213 | 5,010 | |
| * | Topdanmark A/S | 28,728 | 3,547 |
| * | William Demant Holding AS 48,401 | 3,301 | |
| TrygVesta AS | 52,333 | 3,231 | |
| H Lundbeck A/S | 117,934 | 1,943 | |
| 206,127 | |||
| Egypt (0.1%) | |||
| Orascom Construction | |||
| Industries GDR | 175,162 | 8,345 | |
| Orascom Telecom Holding | |||
| SAE GDR | 1,093,763 | 6,681 | |
| 15,026 | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Finland (0.9%) | |||
| ^ | Nokia Oyj | 7,574,446 | 92,602 |
| Fortum Oyj | 899,653 | 23,246 | |
| ^ | Sampo Oyj | 849,478 | 20,880 |
| UPM-Kymmene Oyj | 1,046,520 | 15,019 | |
| Kone Oyj Class B | 309,633 | 13,624 | |
| Metso Oyj | 258,723 | 9,980 | |
| Stora Enso Oyj | 1,174,891 | 9,809 | |
| Wartsila Oyj | 170,888 | 8,702 | |
| Kesko Oyj Class B | 134,169 | 5,201 | |
| Elisa Oyj | 266,876 | 5,108 | |
| Nokian Renkaat Oyj | 215,168 | 5,058 | |
| Outokumpu Oyj | 240,018 | 5,048 | |
| Neste Oil Oyj | 258,898 | 4,191 | |
| Rautaruukki Oyj | 168,306 | 3,529 | |
| Orion Oyj Class B | 180,779 | 3,425 | |
| Pohjola Bank PLC | 283,570 | 3,097 | |
| Sanoma Oyj | 159,243 | 3,082 | |
| 231,601 | |||
| France (7.7%) | |||
| Total SA | 4,269,442 | 232,289 | |
| Sanofi-Aventis SA | 2,128,202 | 145,183 | |
| BNP Paribas | 1,914,753 | 131,517 | |
| ^ | GDF Suez | 2,512,523 | 89,354 |
| France Telecom SA | 3,744,810 | 81,980 | |
| ^ | AXA SA | 3,431,285 | 68,188 |
| Societe Generale | 1,271,023 | 67,872 | |
| ArcelorMittal | 1,735,239 | 67,527 | |
| ^ | Danone | 1,110,705 | 65,443 |
| ^ | Vivendi SA | 2,483,193 | 65,140 |
| ^ | Carrefour SA | 1,282,983 | 62,884 |
| ^ | Air Liquide SA | 507,682 | 59,226 |
| LVMH Moet Hennessy | |||
| Louis Vuitton SA | 495,890 | 57,068 | |
| ^ | Schneider Electric SA | 476,026 | 54,043 |
| ^ | L’Oreal SA | 483,911 | 50,290 |
| ^ | Vinci SA | 893,563 | 49,794 |
| Cie de St-Gobain | 777,786 | 38,396 | |
| Unibail-Rodamco SE | 184,444 | 34,860 | |
| Pernod-Ricard SA | 399,251 | 33,969 | |
| Lafarge SA | 404,225 | 29,307 | |
| Credit Agricole SA | 1,875,932 | 26,816 | |
| EDF SA | 479,170 | 25,681 | |
| ^ | Veolia Environnement | 799,589 | 25,119 |
| Cie Generale d’Optique | |||
| Essilor International SA | 407,465 | 24,839 | |
| Alstom SA | 407,875 | 23,933 | |
| Vallourec SA | 115,703 | 23,046 | |
| ^ | Bouygues SA | 452,748 | 22,434 |
| ^ | Cie Generale des | ||
| Etablissements Michelin | |||
| Class B | 296,863 | 21,506 | |
| PPR | 153,117 | 20,579 | |
| * | Renault SA | 375,317 | 17,388 |
| Accor SA | 294,521 | 16,828 | |
| ^ | Technip SA | 210,274 | 16,814 |
16
Total International Stock Index Fund
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| European Aeronautic | |||
| Defence and | |||
| Space Co. NV | 823,960 | 15,303 | |
| * | Alcatel-Lucent | 4,673,511 | 14,897 |
| Cap Gemini SA | 295,148 | 14,866 | |
| Hermes International | 106,452 | 14,075 | |
| Christian Dior SA | 128,096 | 13,637 | |
| SES SA | 571,686 | 13,102 | |
| STMicroelectronics NV | 1,386,529 | 12,839 | |
| Suez Environnement Co. | 545,772 | 11,829 | |
| Sodexo | 190,994 | 11,735 | |
| Publicis Groupe SA | 238,749 | 10,534 | |
| ^ | Casino Guichard Perrachon | ||
| SA | 110,942 | 9,793 | |
| Safran SA | 377,941 | 9,603 | |
| ^ | Lagardere SCA | 237,384 | 9,574 |
| * | Peugeot SA | 309,304 | 9,135 |
| * | Natixis | 1,767,614 | 9,040 |
| Groupe Eurotunnel SA | 968,518 | 8,844 | |
| * | Cie Generale de | ||
| Geophysique-Veritas | 290,614 | 8,749 | |
| Dassault Systemes SA | 130,601 | 8,486 | |
| ^ | SCOR SE | 332,710 | 7,848 |
| Eutelsat Communications | 199,309 | 7,095 | |
| Legrand SA | 211,671 | 6,892 | |
| Thales SA | 181,511 | 6,760 | |
| * | CNP Assurances | 75,563 | 6,361 |
| ^ | Klepierre | 182,160 | 6,277 |
| Bureau Veritas SA | 99,683 | 5,613 | |
| ^ | Fonciere Des Regions | 47,697 | 4,936 |
| Aeroports de Paris | 59,527 | 4,899 | |
| Neopost SA | 61,359 | 4,880 | |
| * | Atos Origin SA | 91,270 | 4,625 |
| ^ | ICADE | 47,196 | 4,588 |
| ^ | Societe Television | ||
| Francaise 1 | 240,209 | 4,454 | |
| * | Air France-KLM | 273,737 | 4,307 |
| ^ | Eiffage SA | 82,196 | 4,243 |
| ^ | Imerys SA | 68,557 | 4,179 |
| Societe BIC SA | 53,087 | 4,127 | |
| * | JC Decaux SA | 135,499 | 3,896 |
| ^ | Eurazeo | 56,072 | 3,888 |
| ^ | Gecina SA | 37,807 | 3,887 |
| Eramet | 10,659 | 3,846 | |
| ^ | Metropole Television SA | 131,291 | 3,395 |
| ^ | Iliad SA | 32,961 | 3,296 |
| * | Societe Des Autoroutes | ||
| Paris-Rhin-Rhone | 45,574 | 3,199 | |
| PagesJaunes Groupe | 260,355 | 3,119 | |
| BioMerieux | 27,350 | 2,964 | |
| Ipsen SA | 51,347 | 2,453 | |
| 2,081,381 | |||
| Germany (5.9%) | |||
| Siemens AG | 1,663,027 | 164,018 | |
| ^ | E.ON AG | 3,842,242 | 141,693 |
| ^ | BASF SE | 1,856,643 | 107,943 |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| ^ | Bayer AG | 1,671,763 | 106,787 |
| *,^ | Allianz SE | 917,710 | 105,211 |
| * | Daimler AG | 1,793,679 | 92,291 |
| SAP AG | 1,733,438 | 83,635 | |
| Deutsche Bank AG | 1,192,154 | 83,210 | |
| Deutsche Telekom AG | 5,729,877 | 74,605 | |
| ^ | RWE AG | 846,498 | 69,631 |
| ^ | Muenchener | ||
| Rueckversicherungs AG | 398,958 | 56,227 | |
| ^ | Linde AG | 307,100 | 36,759 |
| ^ | Volkswagen AG Prior Pfd. | 344,123 | 33,247 |
| ^ | Bayerische Motoren | ||
| Werke AG | 670,200 | 33,146 | |
| Deutsche Boerse AG | 393,919 | 30,581 | |
| Deutsche Post AG | 1,709,074 | 27,720 | |
| ^ | Adidas AG | 423,504 | 24,955 |
| ThyssenKrupp AG | 673,654 | 21,905 | |
| ^ | Fresenius Medical Care | ||
| AG & Co. KGaA | 387,875 | 21,001 | |
| MAN SE | 213,891 | 20,187 | |
| K&S AG | 349,001 | 20,071 | |
| ^ | Henkel AG & Co. | ||
| KGaA Prior Pfd. | 359,002 | 19,249 | |
| ^ | HeidelbergCement AG | 283,140 | 17,532 |
| * | Infineon Technologies AG | 2,204,013 | 15,605 |
| ^ | Metro AG | 228,255 | 13,722 |
| ^ | Henkel AG & Co. KGaA | 261,449 | 11,824 |
| ^ | Fresenius SE Prior Pfd. | 162,499 | 11,781 |
| * | Commerzbank AG | 1,426,522 | 11,202 |
| ^ | Merck KGAA | 130,817 | 10,753 |
| * | QIAGEN NV | 464,276 | 10,714 |
| Porsche Automobil | |||
| Holding SE Prior Pfd. | 177,141 | 10,251 | |
| ^ | Beiersdorf AG | 176,973 | 10,029 |
| * | Deutsche Lufthansa AG | 465,165 | 7,735 |
| Hochtief AG | 85,068 | 7,022 | |
| GEA Group AG | 313,812 | 6,964 | |
| Salzgitter AG | 79,617 | 6,470 | |
| ^ | RWE AG Prior Pfd. | 79,755 | 6,109 |
| * | Deutsche Postbank AG | 176,651 | 6,071 |
| ^ | Celesio AG | 173,280 | 5,673 |
| ^ | Volkswagen AG | 59,755 | 5,651 |
| *,^ | Hannover | ||
| Rueckversicherung AG | 120,379 | 5,650 | |
| Wacker Chemie AG | 31,695 | 4,630 | |
| ^ | Fresenius SE | 57,063 | 4,060 |
| *,^ | United Internet AG | 256,000 | 3,849 |
| Fraport AG Frankfurt | |||
| Airport Services | |||
| Worldwide | 74,043 | 3,839 | |
| Bayerische Motoren | |||
| Werke AG Prior Pfd. | 106,932 | 3,810 | |
| ^ | Puma AG Rudolf | ||
| Dassler Sport | 10,538 | 3,524 | |
| *,^ | TUI AG | 273,464 | 3,026 |
| Suedzucker AG | 136,005 | 2,765 |
17
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| ^ | Solarworld AG | 164,884 | 2,384 |
| * | Daimler AG | 30,446 | 1,551 |
| 1,588,268 | |||
| Greece (0.3%) | |||
| * | National Bank of | ||
| Greece SA | 1,195,970 | 19,229 | |
| Coca Cola Hellenic | |||
| Bottling Co. SA | 371,324 | 10,069 | |
| OPAP SA | 452,728 | 9,195 | |
| * | Alpha Bank AE | 941,256 | 7,624 |
| Bank of | |||
| Cyprus Public Co. Ltd. | 1,152,420 | 6,649 | |
| * | EFG Eurobank Ergasias SA | 659,059 | 5,298 |
| * | Piraeus Bank SA | 602,604 | 4,538 |
| Hellenic | |||
| Telecommunications | |||
| Organization SA | 402,722 | 4,442 | |
| * | Public Power Corp. SA | 232,519 | 3,806 |
| Titan Cement Co. SA | 116,809 | 3,108 | |
| Marfin Investment Group | |||
| SA | 1,320,646 | 2,532 | |
| Hellenic Petroleum SA | 183,634 | 1,978 | |
| Hellenic | |||
| Telecommunications | |||
| Organization SA ADR | 86,880 | 492 | |
| * | National Bank of Greece | ||
| SA ADR | 144,000 | 469 | |
| 79,429 | |||
| Hong Kong (1.7%) | |||
| Sun Hung Kai | |||
| Properties Ltd. | 2,852,000 | 39,540 | |
| Cheung Kong | |||
| Holdings Ltd. | 2,802,000 | 34,554 | |
| Hong Kong Exchanges | |||
| and Clearing Ltd. | 2,067,800 | 33,791 | |
| Hutchison Whampoa Ltd. | 4,299,000 | 29,504 | |
| CLP Holdings Ltd. | 4,140,500 | 29,006 | |
| Li & Fung Ltd. | 4,566,000 | 22,012 | |
| Hang Seng Bank Ltd. | 1,540,900 | 21,001 | |
| Hong Kong & | |||
| China Gas Co. Ltd. | 7,916,000 | 19,209 | |
| Swire Pacific Ltd. | 1,556,500 | 18,120 | |
| BOC Hong Kong | |||
| Holdings Ltd. | 7,446,000 | 17,820 | |
| Esprit Holdings Ltd. | 2,328,669 | 16,681 | |
| Hongkong Electric | |||
| Holdings Ltd. | 2,813,000 | 16,599 | |
| Hang Lung Properties Ltd. | 4,207,000 | 15,134 | |
| Wharf Holdings Ltd. | 2,769,000 | 14,976 | |
| Henderson Land | |||
| Development Co. Ltd. | 2,165,000 | 13,646 | |
| Link REIT | 4,394,500 | 10,781 | |
| Bank of East Asia Ltd. | 3,000,820 | 10,647 | |
| MTR Corp. | 2,902,500 | 10,171 | |
| New World | |||
| Development Ltd. | 5,063,000 | 8,980 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Hang Lung Group Ltd. | 1,608,000 | 7,855 | |
| Kerry Properties Ltd. | 1,427,500 | 6,585 | |
| * | Sands China Ltd. | 4,019,800 | 6,526 |
| Sino Land Co. Ltd. | 3,442,000 | 6,177 | |
| Wheelock & Co. Ltd. | 1,827,000 | 5,687 | |
| Shangri-La Asia Ltd. | 2,606,000 | 5,029 | |
| * | Cathay Pacific | ||
| Airways Ltd. | 2,380,000 | 4,958 | |
| Yue Yuen Industrial | |||
| Holdings Ltd. | 1,347,500 | 4,695 | |
| *,^ | Foxconn International | ||
| Holdings Ltd. | 4,226,000 | 3,793 | |
| ASM Pacific | |||
| Technology Ltd. | 398,400 | 3,756 | |
| Hysan | |||
| Development Co. Ltd. | 1,274,000 | 3,738 | |
| Wing Hang Bank Ltd. | 353,000 | 3,578 | |
| Cheung Kong | |||
| Infrastructure | |||
| Holdings Ltd. | 924,000 | 3,450 | |
| Hopewell Holdings Ltd. | 1,143,000 | 3,331 | |
| Orient Overseas | |||
| International Ltd. | 433,500 | 3,297 | |
| NWS Holdings Ltd. | 1,661,000 | 2,903 | |
| Television Broadcasts Ltd. | 588,000 | 2,836 | |
| Chinese Estates | |||
| Holdings Ltd. | 1,659,000 | 2,825 | |
| * | Mongolia Energy Co. Ltd. | 6,036,000 | 2,774 |
| Lifestyle International | |||
| Holdings Ltd. | 1,263,500 | 2,459 | |
| PCCW Ltd. | 7,488,000 | 2,264 | |
| ^ | Hong Kong Aircraft | ||
| Engineering Co. Ltd. | 130,000 | 1,648 | |
| * | Kingboard Chemical | ||
| Holdings Ltd. | |||
| Warrants Exp. | |||
| 10/31/2012 | 117,650 | 35 | |
| 472,371 | |||
| Hungary (0.1%) | |||
| * | OTP Bank PLC | 564,487 | 19,842 |
| * | MOL Hungarian Oil | ||
| and Gas NyRt | 106,506 | 10,785 | |
| Richter Gedeon Nyrt. | 28,668 | 6,081 | |
| Magyar Telekom | |||
| Telecommunications PLC | 947,590 | 3,372 | |
| 40,080 | |||
| India (1.9%) | |||
| Reliance Industries Ltd. | 2,656,892 | 61,440 | |
| Infosys Technologies Ltd. | 924,599 | 56,434 | |
| Housing Development | |||
| Finance Corp. | 425,858 | 26,805 | |
| ICICI Bank Ltd. | 1,095,036 | 23,226 | |
| HDFC Bank Ltd. | 443,218 | 19,736 | |
| Tata Consultancy | |||
| Services Ltd. | 948,033 | 16,252 | |
18
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Larsen & Toubro Ltd. | 412,666 | 14,903 | |
| Sterlite Industries | |||
| India Ltd. | 765,669 | 14,072 | |
| ITC Ltd. | 2,212,921 | 13,226 | |
| Bharat Heavy | |||
| Electricals Ltd. | 236,524 | 13,193 | |
| Axis Bank Ltd. | 449,280 | 12,735 | |
| Jindal Steel & Power Ltd. | 752,114 | 12,514 | |
| Oil & Natural Gas Corp. Ltd. | 517,362 | 12,219 | |
| ICICI Bank Ltd. ADR | 239,874 | 10,199 | |
| Hindustan Unilever Ltd. | 1,756,826 | 9,476 | |
| Tata Motors Ltd. | 439,154 | 8,506 | |
| NTPC Ltd. | 1,828,386 | 8,500 | |
| Tata Steel Ltd. | 577,359 | 7,966 | |
| Hindalco Industries Ltd. | 1,924,445 | 7,625 | |
| Wipro Ltd. | 496,755 | 7,476 | |
| GAIL India Ltd. | 766,587 | 7,383 | |
| Hero Honda Motors Ltd. | 162,698 | 6,987 | |
| Mahindra & Mahindra Ltd. | 558,026 | 6,575 | |
| Sesa Goa Ltd. | 675,818 | 6,455 | |
| Jaiprakash Associates Ltd. | 1,904,271 | 6,256 | |
| Tata Power Co. Ltd. | 196,651 | 5,977 | |
| HDFC Bank Ltd. ADR | 39,831 | 5,940 | |
| DLF Ltd. | 817,174 | 5,667 | |
| State Bank of India Ltd. | 102,814 | 5,295 | |
| Cipla Ltd. | 672,207 | 5,176 | |
| Sun Pharmaceutical | |||
| Industries Ltd. | 144,607 | 5,124 | |
| Reliance Infrastructure Ltd. | 201,270 | 5,103 | |
| Infrastructure | |||
| Development | |||
| Finance Co. Ltd. | 1,292,557 | 4,923 | |
| Reliance | |||
| Communications Ltd. | 1,263,486 | 4,607 | |
| Unitech Ltd. | 2,427,423 | 4,562 | |
| United Spirits Ltd. | 161,707 | 4,547 | |
| JSW Steel Ltd. | 164,904 | 4,512 | |
| Steel Authority of | |||
| India Ltd. | 911,950 | 4,451 | |
| Kotak Mahindra Bank Ltd. | 260,885 | 4,276 | |
| Bajaj Auto Ltd. | 88,560 | 4,173 | |
| Dr Reddys | |||
| Laboratories Ltd. | 147,702 | 4,166 | |
| * | Cairn India Ltd. | 576,085 | 4,059 |
| Maruti Suzuki India Ltd. | 140,998 | 4,033 | |
| Reliance Capital Ltd. | 210,735 | 3,468 | |
| Ambuja Cements Ltd. | 1,250,999 | 3,395 | |
| Zee Entertainment | |||
| Enterprises Ltd. | 438,894 | 2,985 | |
| HCL Technologies Ltd. | 320,535 | 2,826 | |
| * | GMR Infrastructure Ltd. | 1,880,550 | 2,793 |
| Siemens India Ltd. | 164,948 | 2,624 | |
| * | Indiabulls Real Estate Ltd. | 625,991 | 2,359 |
| Grasim Industries Ltd. | 37,348 | 2,285 | |
| * | Satyam Computer | ||
| Services Ltd. | 1,074,104 | 2,247 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| ^ | Wipro Ltd. ADR | 96,956 | 2,178 |
| ACC Ltd. | 104,447 | 2,120 | |
| * | Ranbaxy Laboratories Ltd. | 204,789 | 2,033 |
| * | Reliance Natural | ||
| Resources Ltd. | 1,269,108 | 1,981 | |
| * | Suzlon Energy Ltd. | 1,286,979 | 1,971 |
| Bharat | |||
| Petroleum Corp. Ltd. | 168,194 | 1,959 | |
| ABB Ltd./India | 98,298 | 1,746 | |
| * | Idea Cellular Ltd. | 1,274,418 | 1,745 |
| United Phosphorus Ltd. | 446,486 | 1,703 | |
| ^ | Dr Reddys | ||
| Laboratories Ltd. ADR | 58,777 | 1,651 | |
| * | Housing Development & | ||
| Infrastructure Ltd. | 232,440 | 1,396 | |
| State Bank of India Ltd. | |||
| GDR | 12,622 | 1,285 | |
| Aditya Birla Nuvo Ltd. | 66,147 | 1,216 | |
| Infosys Technologies Ltd. | |||
| ADR | 1,296 | 78 | |
| 524,794 | |||
| Indonesia (0.5%) | |||
| Astra International | |||
| Tbk PT | 4,098,500 | 21,179 | |
| Telekomunikasi Indonesia | |||
| Tbk PT | 20,376,500 | 17,591 | |
| Bank Central Asia | |||
| Tbk PT | 24,785,500 | 14,837 | |
| Bank Rakyat Indonesia | 11,105,000 | 10,869 | |
| Perusahaan Gas Negara | |||
| PT | 22,166,000 | 9,955 | |
| Bank Mandiri Tbk PT | 14,613,000 | 9,255 | |
| Bumi Resources Tbk PT | 35,203,000 | 9,035 | |
| United Tractors Tbk PT | 2,993,500 | 6,397 | |
| Indocement Tunggal | |||
| Prakarsa Tbk PT | 2,996,500 | 5,192 | |
| Unilever Indonesia | |||
| Tbk PT | 3,058,500 | 4,664 | |
| Adaro Energy Tbk PT | 16,116,500 | 3,863 | |
| Indofood Sukses | |||
| Makmur Tbk PT | 8,726,000 | 3,723 | |
| Bank Danamon Indonesia | |||
| Tbk PT | 5,861,901 | 3,718 | |
| Tambang Batubara Bukit | |||
| Asam Tbk PT | 1,618,000 | 3,293 | |
| Indo Tambangraya | |||
| Megah PT | 694,300 | 2,972 | |
| Semen Gresik Persero | |||
| Tbk PT | 3,071,500 | 2,766 | |
| Bank Negara Indonesia | |||
| Persero Tbk PT | 7,941,000 | 2,260 | |
| International Nickel | |||
| Indonesia Tbk PT | 4,128,500 | 2,241 | |
| Astra Agro Lestari | |||
| Tbk PT | 823,500 | 2,000 | |
| Indosat Tbk PT | 2,724,000 | 1,767 | |
19
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Aneka Tambang Tbk PT | 6,621,500 | 1,763 | |
| * | Lippo Karawaci Tbk PT | 19,856,500 | 1,275 |
| 140,615 | |||
| Ireland (0.2%) | |||
| CRH PLC | 1,407,986 | 40,264 | |
| Kerry Group PLC Class A | 284,995 | 9,159 | |
| * | Elan Corp. PLC | 1,013,100 | 6,858 |
| * | Ryanair Holdings PLC | 641,474 | 3,197 |
| * | Ryanair Holdings PLC ADR | 104,494 | 2,943 |
| * | Anglo Irish Bank Corp. Ltd. | 698,992 | 202 |
| 62,623 | |||
| Israel (0.7%) | |||
| Teva Pharmaceutical | |||
| Industries Ltd. | 1,817,693 | 106,935 | |
| Israel Chemicals Ltd. | 1,017,686 | 12,181 | |
| * | Check Point Software | ||
| Technologies | 335,298 | 11,943 | |
| * | Bank Leumi Le-Israel BM | 2,359,108 | 10,074 |
| * | Bank Hapoalim BM | 1,967,549 | 7,922 |
| Bezeq Israeli | |||
| Telecommunication | |||
| Corp. Ltd. | 2,389,116 | 5,835 | |
| * | NICE Systems Ltd. | 119,424 | 3,810 |
| * | Israel Corp. Ltd. | 4,380 | 3,451 |
| Partner | |||
| Communications Co. Ltd. | 157,601 | 3,092 | |
| Cellcom Israel Ltd. | 92,433 | 2,801 | |
| Elbit Systems Ltd. | 42,005 | 2,576 | |
| Teva Pharmaceutical | |||
| Industries Ltd. ADR | 42,703 | 2,508 | |
| Makhteshim-Agan | |||
| Industries Ltd. | 544,112 | 2,284 | |
| * | Mizrahi Tefahot Bank Ltd. | 239,479 | 2,129 |
| * | Israel Discount Bank Ltd. | ||
| Class A | 972,889 | 1,985 | |
| Delek Group Ltd. | 7,688 | 1,671 | |
| Discount Investment Corp. | 55,339 | 1,273 | |
| Ormat Industries | 136,815 | 1,090 | |
| Cellcom Israel Ltd. | 6,994 | 214 | |
| 183,774 | |||
| Italy (2.3%) | |||
| ENI SPA | 5,262,218 | 117,607 | |
| * | UniCredit SPA | 33,086,686 | 86,711 |
| Enel SPA | 13,298,992 | 69,672 | |
| * | Intesa Sanpaolo SPA | ||
| (Registered) | 15,548,489 | 51,247 | |
| Assicurazioni Generali | |||
| SPA | 2,357,692 | 49,766 | |
| * | Telecom Italia SPA | ||
| (Registered) | 20,316,040 | 28,404 | |
| Fiat SPA | 1,543,707 | 20,262 | |
| Saipem SPA | 536,367 | 20,029 | |
| Unione di Banche Italiane | |||
| SCPA | 1,162,456 | 14,396 | |
| * | Telecom Italia SPA | ||
| (Bearer) | 12,236,835 | 13,809 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Snam Rete Gas SPA | 2,897,256 | 13,759 | |
| Tenaris SA | 672,112 | 13,496 | |
| Mediaset SPA | 1,425,607 | 11,289 | |
| Atlantia SPA | 523,848 | 11,149 | |
| Terna Rete Elettrica | |||
| Nazionale SPA | 2,619,932 | 10,620 | |
| Finmeccanica SPA | 815,807 | 10,452 | |
| Parmalat SPA | 3,419,032 | 9,000 | |
| * | Mediobanca SPA | 950,143 | 8,770 |
| Banco Popolare SC | 1,291,453 | 8,269 | |
| Luxottica Group SPA | 233,548 | 6,399 | |
| Banca Monte dei Paschi | |||
| di Siena SPA | 4,444,924 | 6,154 | |
| Tenaris SA ADR | 139,938 | 5,683 | |
| Intesa Sanpaolo SPA | |||
| (Bearer) | 1,890,017 | 5,017 | |
| Banca Popolare di | |||
| Milano Scarl | 796,457 | 4,479 | |
| A2A SPA | 2,310,239 | 3,905 | |
| Prysmian SPA | 197,490 | 3,556 | |
| ^ | Banca Carige SPA | 1,321,017 | 3,356 |
| * | Pirelli & C SPA | 5,325,897 | 3,064 |
| Exor SPA | 155,917 | 2,855 | |
| * | Autogrill SPA | 205,609 | 2,505 |
| Mediolanum SPA | 429,418 | 2,183 | |
| ^ | Fondiaria-Sai SPA | 125,972 | 1,745 |
| ^ | Italcementi SPA | 144,407 | 1,642 |
| *,^ | Unipol Gruppo Finanziario | ||
| SPA | 1,515,627 | 1,587 | |
| 622,837 | |||
| Japan (17.0%) | |||
| Toyota Motor Corp. | 5,923,800 | 228,884 | |
| Mitsubishi UFJ Financial | |||
| Group Inc. | 25,440,899 | 132,573 | |
| Honda Motor Co. Ltd. | 3,338,187 | 112,956 | |
| Canon Inc. | 2,155,355 | 98,593 | |
| Sumitomo Mitsui | |||
| Financial Group Inc. | 2,607,049 | 86,220 | |
| Sony Corp. | 2,030,900 | 69,536 | |
| Nintendo Co. Ltd. | 200,400 | 67,320 | |
| Takeda | |||
| Pharmaceutical Co. Ltd. | 1,516,500 | 65,111 | |
| Tokyo Electric | |||
| Power Co. Inc. | 2,462,700 | 61,805 | |
| Mitsubishi Corp. | 2,571,036 | 60,902 | |
| Panasonic Corp. | 3,970,900 | 58,193 | |
| Mizuho Financial | |||
| Group Inc. | 27,662,392 | 53,265 | |
| Mitsui & Co. Ltd. | 3,507,400 | 52,713 | |
| Nomura Holdings Inc. | 7,461,190 | 51,573 | |
| NTT DoCoMo Inc. | 31,119 | 48,415 | |
| Shin-Etsu | |||
| Chemical Co. Ltd. | 830,600 | 47,880 | |
| Toshiba Corp. | 8,123,000 | 46,825 | |
| East Japan Railway Co. | 687,900 | 46,016 | |
| Fanuc Ltd. | 387,600 | 45,770 | |
20
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| * | Nissan Motor Co. Ltd. | 5,026,700 | 43,738 |
| Tokio Marine Holdings Inc. | 1,463,800 | 43,578 | |
| Mitsubishi Estate Co. Ltd. | 2,388,000 | 43,050 | |
| Nippon Telegraph & | |||
| Telephone Corp. | 1,050,000 | 42,739 | |
| Seven & | |||
| I Holdings Co. Ltd. | 1,556,500 | 39,801 | |
| Hitachi Ltd. | 8,993,161 | 39,526 | |
| Komatsu Ltd. | 1,915,000 | 38,601 | |
| Nippon Steel Corp. | 10,333,000 | 36,660 | |
| JFE Holdings Inc. | 995,200 | 35,491 | |
| Mitsubishi Electric Corp. | 3,902,000 | 34,777 | |
| Kansai Electric | |||
| Power Co. Inc. | 1,542,300 | 34,317 | |
| Softbank Corp. | 1,532,700 | 34,279 | |
| Kyocera Corp. | 328,100 | 32,943 | |
| Astellas Pharma Inc. | 915,400 | 32,053 | |
| FUJIFILM Holdings Corp. | 934,648 | 32,032 | |
| MS&AD Insurance Group | |||
| Holdings | 1,098,384 | 31,570 | |
| Japan Tobacco Inc. | 9,076 | 31,452 | |
| Mitsui Fudosan Co. Ltd. | 1,694,000 | 31,372 | |
| Chubu Electric | |||
| Power Co. Inc. | 1,339,400 | 31,119 | |
| Denso Corp. | 983,700 | 28,708 | |
| KDDI Corp. | 5,904 | 28,466 | |
| Dai-ichi Life | |||
| Insurance Co. Ltd. | 16,130 | 27,560 | |
| Sumitomo Corp. | 2,270,700 | 27,344 | |
| Kao Corp. | 1,092,700 | 26,642 | |
| Fujitsu Ltd. | 3,765,000 | 26,475 | |
| ITOCHU Corp. | 3,047,000 | 26,398 | |
| Sharp Corp. | 2,023,000 | 26,202 | |
| Murata | |||
| Manufacturing Co. Ltd. | 432,400 | 25,589 | |
| * | JX Holdings Inc. | 4,527,970 | 25,258 |
| Central Japan Railway Co. | 3,050 | 24,836 | |
| Mitsubishi Heavy | |||
| Industries Ltd. | 6,151,000 | 24,777 | |
| Kirin Holdings Co. Ltd. | 1,686,000 | 24,155 | |
| Asahi Glass Co. Ltd. | 2,044,000 | 24,153 | |
| Daiichi Sankyo Co. Ltd. | 1,362,200 | 23,673 | |
| Hoya Corp. | 833,700 | 23,059 | |
| Ricoh Co. Ltd. | 1,351,000 | 22,950 | |
| Tokyo Electron Ltd. | 347,200 | 22,763 | |
| Nidec Corp. | 220,300 | 22,603 | |
| * | NKSJ Holdings Inc. | 2,851,400 | 20,702 |
| Bridgestone Corp. | 1,230,800 | 20,513 | |
| Keyence Corp. | 84,010 | 20,074 | |
| Tokyo Gas Co. Ltd. | 4,664,000 | 19,820 | |
| Marubeni Corp. | 3,330,000 | 19,648 | |
| Kubota Corp. | 2,213,000 | 19,437 | |
| ORIX Corp. | 211,141 | 19,298 | |
| Sumitomo Electric | |||
| Industries Ltd. | 1,528,000 | 18,803 | |
| Market | ||
| Value• | ||
| Shares | ($000) | |
| Secom Co. Ltd. | 424,600 | 18,434 |
| Sumitomo Metal | ||
| Industries Ltd. | 6,788,000 | 18,425 |
| Daikin Industries Ltd. | 474,800 | 17,905 |
| Tohoku Electric | ||
| Power Co. Inc. | 863,300 | 17,605 |
| Daiwa Securities | ||
| Group Inc. | 3,366,000 | 17,410 |
| Eisai Co. Ltd. | 508,900 | 17,393 |
| Mitsui OSK Lines Ltd. | 2,324,000 | 17,375 |
| Sumitomo Trust & | ||
| Banking Co. Ltd. | 2,870,000 | 17,356 |
| Terumo Corp. | 340,500 | 17,347 |
| NEC Corp. | 5,201,000 | 17,124 |
| Dai Nippon | ||
| Printing Co. Ltd. | 1,137,000 | 15,752 |
| Sumitomo Realty & | ||
| Development Co. Ltd. | 767,000 | 15,738 |
| Sumitomo Metal | ||
| Mining Co. Ltd. | 1,059,000 | 15,667 |
| SMC Corp. | 109,300 | 15,666 |
| Kyushu Electric | ||
| Power Co. Inc. | 766,300 | 15,503 |
| Toray Industries Inc. | 2,685,000 | 15,431 |
| TDK Corp. | 236,400 | 15,130 |
| Sumitomo | ||
| Chemical Co. Ltd. | 3,180,000 | 15,027 |
| Suzuki Motor Corp. | 712,000 | 14,966 |
| T&D Holdings Inc. | 570,500 | 14,903 |
| Aeon Co. Ltd. | 1,297,100 | 14,851 |
| Nikon Corp. | 650,900 | 14,776 |
| Shiseido Co. Ltd. | 704,700 | 14,773 |
| Rohm Co. Ltd. | 197,200 | 14,614 |
| Fast Retailing Co. Ltd. | 96,300 | 14,593 |
| Asahi Kasei Corp. | 2,563,000 | 14,408 |
| Asahi Breweries Ltd. | 784,900 | 14,099 |
| Yamada Denki Co. Ltd. | 175,930 | 13,757 |
| Osaka Gas Co. Ltd. | 3,935,000 | 13,693 |
| Olympus Corp. | 437,900 | 13,251 |
| Mitsubishi Chemical | ||
| Holdings Corp. | 2,448,500 | 13,068 |
| Nitto Denko Corp. | 334,300 | 13,062 |
| Bank of Yokohama Ltd. | 2,486,000 | 12,926 |
| Ajinomoto Co. Inc. | 1,343,000 | 12,614 |
| Nippon Yusen KK | 3,034,000 | 12,473 |
| West Japan Railway Co. | 3,423 | 12,442 |
| Konica Minolta | ||
| Holdings Inc. | 963,000 | 12,181 |
| Resona Holdings Inc. | 986,300 | 12,046 |
| Aisin Seiki Co. Ltd. | 389,300 | 11,830 |
| Inpex Corp. | 1,675 | 11,787 |
| Yamato Holdings Co. Ltd. | 807,300 | 11,536 |
| Rakuten Inc. | 14,528 | 11,264 |
| Kobe Steel Ltd. | 5,044,000 | 11,258 |
| Yahoo! Japan Corp. | 29,218 | 11,187 |
21
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Daiwa House | |||
| Industry Co. Ltd. | 1,032,000 | 11,104 | |
| Shionogi & Co. Ltd. | 602,300 | 10,873 | |
| Chugoku Electric | |||
| Power Co. Inc. | 562,300 | 10,742 | |
| Hankyu Hanshin | |||
| Holdings Inc. | 2,303,000 | 10,729 | |
| Nippon Electric | |||
| Glass Co. Ltd. | 701,000 | 10,690 | |
| Toyota Industries Corp. | 360,900 | 10,531 | |
| Odakyu Electric | |||
| Railway Co. Ltd. | 1,261,000 | 10,526 | |
| Sekisui House Ltd. | 1,095,000 | 10,438 | |
| ^ | Kintetsu Corp. | 3,271,000 | 10,345 |
| Toppan Printing Co. Ltd. | 1,130,000 | 10,305 | |
| Shizuoka Bank Ltd. | 1,227,000 | 10,296 | |
| NGK Insulators Ltd. | 508,000 | 10,012 | |
| JS Group Corp. | 509,700 | 9,996 | |
| *,^ | Mitsubishi Motors Corp. | 7,281,000 | 9,971 |
| Chiba Bank Ltd. | 1,547,000 | 9,797 | |
| Shikoku Electric | |||
| Power Co. Inc. | 361,100 | 9,678 | |
| Tokyu Corp. | 2,297,000 | 9,593 | |
| Omron Corp. | 408,700 | 9,502 | |
| Ibiden Co. Ltd. | 260,800 | 9,391 | |
| NTT Data Corp. | 2,568 | 9,272 | |
| Panasonic Electric | |||
| Works Co. Ltd. | 753,000 | 9,270 | |
| Dentsu Inc. | 337,800 | 9,194 | |
| Kuraray Co. Ltd. | 698,000 | 9,138 | |
| Kawasaki Heavy | |||
| Industries Ltd. | 2,873,000 | 9,007 | |
| Mazda Motor Corp. | 3,048,000 | 9,001 | |
| Tobu Railway Co. Ltd. | 1,661,000 | 8,763 | |
| Nippon Building Fund Inc. | |||
| Class A | 1,044 | 8,757 | |
| Daito Trust | |||
| Construction Co. Ltd. | 158,200 | 8,433 | |
| Advantest Corp. | 324,200 | 8,377 | |
| Electric Power | |||
| Development Co. Ltd. | 270,500 | 8,336 | |
| Japan Real Estate | |||
| Investment Corp. | 988 | 8,240 | |
| Isetan Mitsukoshi | |||
| Holdings Ltd. | 711,700 | 8,219 | |
| Chugai | |||
| Pharmaceutical Co. Ltd. | 450,600 | 8,152 | |
| OJI Paper Co. Ltd. | 1,723,000 | 8,117 | |
| Unicharm Corp. | 82,900 | 8,058 | |
| Nippon Express Co. Ltd. | 1,700,000 | 8,009 | |
| Hokuriku Electric | |||
| Power Co. | 377,000 | 7,802 | |
| Sumitomo Heavy | |||
| Industries Ltd. | 1,162,000 | 7,639 | |
| Keio Corp. | 1,179,000 | 7,624 | |
| Isuzu Motors Ltd. | 2,393,000 | 7,614 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| * | Yamaha Motor Co. Ltd. | 514,200 | 7,586 |
| * | Elpida Memory Inc. | 355,504 | 7,573 |
| Keihin Electric Express | |||
| Railway Co. Ltd. | 882,000 | 7,395 | |
| Japan Steel Works Ltd. | 675,000 | 7,393 | |
| JSR Corp. | 360,200 | 7,292 | |
| SBI Holdings Inc. | 33,907 | 7,272 | |
| Trend Micro Inc. | 214,200 | 7,266 | |
| Hokkaido Electric | |||
| Power Co. Inc. | 373,100 | 7,240 | |
| JGC Corp. | 419,000 | 7,235 | |
| Chuo Mitsui Trust | |||
| Holdings Inc. | 1,888,000 | 7,204 | |
| Oriental Land Co. Ltd. | 101,700 | 7,202 | |
| NSK Ltd. | 942,000 | 7,186 | |
| Ono | |||
| Pharmaceutical Co. Ltd. | 171,400 | 7,100 | |
| Makita Corp. | 226,900 | 7,033 | |
| Benesse Holdings Inc. | 149,200 | 6,860 | |
| * | Mitsubishi Materials Corp. | 2,262,000 | 6,780 |
| Fuji Heavy Industries Ltd. | 1,210,000 | 6,772 | |
| Fukuoka Financial | |||
| Group Inc. | 1,549,000 | 6,721 | |
| Kurita Water | |||
| Industries Ltd. | 226,900 | 6,561 | |
| Showa Denko KK | 2,879,000 | 6,544 | |
| Hirose Electric Co. Ltd. | 60,100 | 6,488 | |
| Toyota Tsusho Corp. | 428,100 | 6,385 | |
| Furukawa Electric Co. Ltd. | 1,284,000 | 6,365 | |
| Sony Financial | |||
| Holdings Inc. | 1,748 | 6,304 | |
| Shimano Inc. | 137,100 | 6,258 | |
| Teijin Ltd. | 1,895,000 | 6,047 | |
| Mitsubishi Tanabe | |||
| Pharma Corp. | 454,000 | 6,007 | |
| Sekisui Chemical Co. Ltd. | 877,000 | 5,989 | |
| * | Sanyo Electric Co. Ltd. | 3,770,000 | 5,988 |
| Obayashi Corp. | 1,327,000 | 5,929 | |
| Nitori Co. Ltd. | 74,600 | 5,866 | |
| Stanley Electric Co. Ltd. | 284,700 | 5,821 | |
| * | Kawasaki Kisen | ||
| Kaisha Ltd. | 1,368,000 | 5,814 | |
| Takashimaya Co. Ltd. | 608,000 | 5,764 | |
| Bank of Kyoto Ltd. | 655,000 | 5,755 | |
| Lawson Inc. | 130,000 | 5,739 | |
| J Front Retailing Co. Ltd. | 972,000 | 5,661 | |
| Amada Co. Ltd. | 677,000 | 5,558 | |
| Kyowa Hakko | |||
| Kirin Co. Ltd. | 529,000 | 5,551 | |
| Joyo Bank Ltd. | 1,323,000 | 5,503 | |
| Suzuken Co. Ltd. | 142,900 | 5,465 | |
| Brother Industries Ltd. | 449,300 | 5,457 | |
| THK Co. Ltd. | 244,900 | 5,377 | |
| All Nippon | |||
| Airways Co. Ltd. | 1,691,978 | 5,367 | |
| ^ | GS Yuasa Corp. | 749,000 | 5,337 |
22
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| IHI Corp. | 2,662,000 | 5,328 | |
| Nippon Paper Group Inc. | 188,800 | 5,302 | |
| Toyo Seikan Kaisha Ltd. | 306,400 | 5,272 | |
| Nomura Research | |||
| Institute Ltd. | 206,300 | 5,264 | |
| Mitsui Chemicals Inc. | 1,601,000 | 5,259 | |
| * | Sumco Corp. | 235,800 | 5,216 |
| Sega Sammy | |||
| Holdings Inc. | 397,300 | 5,194 | |
| Taiyo Nippon Sanso Corp. | 574,000 | 5,157 | |
| Yakult Honsha Co. Ltd. | 194,600 | 5,087 | |
| Hokuhoku Financial | |||
| Group Inc. | 2,555,000 | 5,080 | |
| Ube Industries Ltd. | 2,009,000 | 5,078 | |
| MEIJI Holdings Co. Ltd. | 137,941 | 4,980 | |
| Seiko Epson Corp. | 280,500 | 4,969 | |
| Sankyo Co. Ltd. | 107,000 | 4,939 | |
| ^ | Jupiter | ||
| Telecommunications | |||
| Co. Ltd. | 4,875 | 4,935 | |
| Hisamitsu | |||
| Pharmaceutical Co. Inc. | 133,000 | 4,902 | |
| TonenGeneral Sekiyu KK | 566,000 | 4,830 | |
| Hachijuni Bank Ltd. | 859,000 | 4,819 | |
| Santen | |||
| Pharmaceutical Co. Ltd. | 148,900 | 4,755 | |
| Shimizu Corp. | 1,187,000 | 4,755 | |
| Mitsubishi Gas | |||
| Chemical Co. Inc. | 787,000 | 4,746 | |
| Nissin Foods | |||
| Holdings Co. Ltd. | 139,700 | 4,699 | |
| Nippon Meat Packers Inc. | 368,000 | 4,649 | |
| Taisei Corp. | 2,039,000 | 4,645 | |
| Credit Saison Co. Ltd. | 317,600 | 4,645 | |
| Nisshin Seifun Group Inc. | 377,000 | 4,634 | |
| Hitachi Chemical Co. Ltd. | 212,800 | 4,621 | |
| Hitachi Construction | |||
| Machinery Co. Ltd. | 217,100 | 4,616 | |
| Toho Gas Co. Ltd. | 911,000 | 4,610 | |
| Iyo Bank Ltd. | 494,000 | 4,598 | |
| Mitsubishi UFJ Lease & | |||
| Finance Co. Ltd. | 118,570 | 4,591 | |
| Shimamura Co. Ltd. | 44,800 | 4,513 | |
| Chugoku Bank Ltd. | 352,000 | 4,513 | |
| Sojitz Corp. | 2,492,400 | 4,495 | |
| JTEKT Corp. | 390,100 | 4,482 | |
| Taisho | |||
| Pharmaceutical Co. Ltd. | 245,000 | 4,456 | |
| NGK Spark Plug Co. Ltd. | 325,000 | 4,410 | |
| Kamigumi Co. Ltd. | 533,000 | 4,403 | |
| Dena Co. Ltd. | 539 | 4,370 | |
| Yaskawa Electric Corp. | 491,000 | 4,340 | |
| Kajima Corp. | 1,704,000 | 4,330 | |
| Gunma Bank Ltd. | 797,000 | 4,299 | |
| Market | ||
| Value• | ||
| Shares | ($000) | |
| Japan Retail Fund | ||
| Investment Corp. | ||
| Class A | 3,182 | 4,283 |
| Minebea Co. Ltd. | 737,000 | 4,277 |
| Yamaguchi Financial | ||
| Group Inc. | 425,000 | 4,256 |
| Denki Kagaku Kogyo KK | 953,000 | 4,247 |
| NTN Corp. | 967,000 | 4,246 |
| Toyo Suisan Kaisha Ltd. | 176,000 | 4,243 |
| Nippon Sheet | ||
| Glass Co. Ltd. | 1,287,000 | 4,228 |
| Shimadzu Corp. | 510,000 | 4,225 |
| Hiroshima Bank Ltd. | 1,023,000 | 4,194 |
| FamilyMart Co. Ltd. | 120,000 | 4,135 |
| Namco Bandai | ||
| Holdings Inc. | 409,600 | 4,087 |
| Suruga Bank Ltd. | 416,000 | 4,082 |
| Mitsui Engineering & | ||
| Shipbuilding Co. Ltd. | 1,521,000 | 4,052 |
| Toho Co. Ltd. | 232,600 | 4,010 |
| 77 Bank Ltd. | 705,000 | 4,006 |
| Sysmex Corp. | 66,600 | 3,995 |
| Citizen Holdings Co. Ltd. | 567,700 | 3,943 |
| Nishi-Nippon City | ||
| Bank Ltd. | 1,352,000 | 3,891 |
| Alfresa Holdings Corp. | 77,300 | 3,879 |
| Yokogawa Electric Corp. | 453,500 | 3,876 |
| Nissan Chemical | ||
| Industries Ltd. | 286,000 | 3,863 |
| Kaneka Corp. | 612,000 | 3,862 |
| Tokyu Land Corp. | 899,000 | 3,843 |
| Yamaha Corp. | 313,100 | 3,830 |
| Kikkoman Corp. | 343,000 | 3,812 |
| NOK Corp. | 223,000 | 3,791 |
| Rinnai Corp. | 77,100 | 3,781 |
| Oracle Corp. Japan | 76,100 | 3,771 |
| Casio Computer Co. Ltd. | 479,100 | 3,767 |
| Daihatsu Motor Co. Ltd. | 388,000 | 3,741 |
| Medipal Holdings Corp. | 296,000 | 3,690 |
| Ushio Inc. | 222,100 | 3,668 |
| Toyoda Gosei Co. Ltd. | 132,300 | 3,667 |
| Idemitsu Kosan Co. Ltd. | 44,100 | 3,653 |
| Mitsumi Electric Co. Ltd. | 166,000 | 3,612 |
| Konami Corp. | 185,900 | 3,607 |
| Hitachi Metals Ltd. | 335,000 | 3,595 |
| Tokyo Tatemono Co. Ltd. | 773,000 | 3,565 |
| Marui Group Co. Ltd. | 447,200 | 3,535 |
| Daicel Chemical | ||
| Industries Ltd. | 550,000 | 3,526 |
| Tsumura & Co. | 120,200 | 3,512 |
| Aeon Mall Co. Ltd. | 166,300 | 3,486 |
| TOTO Ltd. | 517,000 | 3,480 |
| Fuji Electric | ||
| Holdings Co. Ltd. | 1,133,000 | 3,403 |
| Nomura Real Estate | ||
| Holdings Inc. | 191,997 | 3,401 |
23
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Tokuyama Corp. | 604,000 | 3,383 | |
| UNY Co. Ltd. | 365,800 | 3,318 | |
| Kansai Paint Co. Ltd. | 435,000 | 3,297 | |
| Keisei Electric | |||
| Railway Co. Ltd. | 555,000 | 3,286 | |
| Cosmo Oil Co. Ltd. | 1,218,000 | 3,283 | |
| Koito | |||
| Manufacturing Co. Ltd. | 193,888 | 3,193 | |
| Mabuchi Motor Co. Ltd. | 57,800 | 3,186 | |
| USS Co. Ltd. | 46,200 | 3,164 | |
| Nomura Real Estate | |||
| Office Fund Inc. Class A | 559 | 3,147 | |
| Mizuho Securities Co. Ltd. | 1,134,000 | 3,141 | |
| Mitsui Mining & | |||
| Smelting Co. Ltd. | 1,145,000 | 3,138 | |
| Japan Prime Realty | |||
| Investment Corp. | 1,315 | 3,134 | |
| NHK Spring Co. Ltd. | 324,000 | 3,113 | |
| Air Water Inc. | 281,124 | 3,111 | |
| Sumitomo Rubber | |||
| Industries Ltd. | 345,900 | 3,092 | |
| Hitachi High- | |||
| Technologies Corp. | 141,600 | 3,087 | |
| Yamazaki Baking Co. Ltd. | 240,000 | 3,065 | |
| Asics Corp. | 319,000 | 3,052 | |
| Mitsubishi Logistics Corp. | 232,000 | 3,033 | |
| Nisshin Steel Co. Ltd. | 1,417,000 | 2,996 | |
| * | Mizuho Trust & | ||
| Banking Co. Ltd. | 3,043,000 | 2,995 | |
| Japan Petroleum | |||
| Exploration Co. | 57,700 | 2,946 | |
| Tosoh Corp. | 1,034,000 | 2,911 | |
| Chiyoda Corp. | 315,191 | 2,894 | |
| Dowa Holdings Co. Ltd. | 521,000 | 2,892 | |
| Sapporo Hokuyo | |||
| Holdings Inc. | 615,600 | 2,833 | |
| McDonald’s Holdings Co. | |||
| Japan Ltd. | 131,900 | 2,808 | |
| Obic Co. Ltd. | 13,690 | 2,746 | |
| Nisshinbo Holdings Inc. | 257,000 | 2,730 | |
| Yamato Kogyo Co. Ltd. | 85,800 | 2,727 | |
| Square Enix | |||
| Holdings Co. Ltd. | 129,100 | 2,727 | |
| Hakuhodo DY | |||
| Holdings Inc. | 47,730 | 2,711 | |
| Hino Motors Ltd. | 533,000 | 2,683 | |
| Tokyo Steel | |||
| Manufacturing Co. Ltd. | 199,700 | 2,676 | |
| Dainippon Sumitomo | |||
| Pharma Co. Ltd. | 319,900 | 2,649 | |
| Showa Shell Sekiyu KK | 384,700 | 2,609 | |
| Sapporo Holdings Ltd. | 516,000 | 2,535 | |
| Shinko Electric | |||
| Industries Co. Ltd. | 138,300 | 2,456 | |
| Kinden Corp. | 275,000 | 2,440 | |
| Taiheiyo Cement Corp. | 1,711,000 | 2,420 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| ^ | Shinsei Bank Ltd. | 1,847,000 | 2,397 |
| Daido Steel Co. Ltd. | 560,000 | 2,380 | |
| NTT Urban | |||
| Development Corp. | 2,412 | 2,340 | |
| Otsuka Corp. | 32,600 | 2,318 | |
| ^ | Toyota Boshoku Corp. | 128,400 | 2,277 |
| Itochu Techno- | |||
| Solutions Corp. | 60,000 | 2,266 | |
| ^ | Senshu Ikeda | ||
| Holdings Inc. | 1,274,400 | 2,188 | |
| Aozora Bank Ltd. | 1,512,000 | 2,168 | |
| Seven Bank Ltd. | 1,089 | 2,135 | |
| Canon Marketing | |||
| Japan Inc. | 134,200 | 2,098 | |
| ^ | Ito En Ltd. | 129,300 | 2,006 |
| Coca-Cola West Co. Ltd. | 110,500 | 1,955 | |
| ^ | Nissha Printing Co. Ltd. | 55,666 | 1,943 |
| ^ | Jafco Co. Ltd. | 61,200 | 1,876 |
| Matsui Securities Co. Ltd. | 244,800 | 1,839 | |
| ABC-Mart Inc. | 51,600 | 1,838 | |
| Aeon Credit | |||
| Service Co. Ltd. | 162,100 | 1,768 | |
| Fuji Media Holdings Inc. | 972 | 1,561 | |
| Maruichi Steel Tube Ltd. | 75,500 | 1,451 | |
| ^ | Acom Co. Ltd. | 85,080 | 1,344 |
| 4,597,908 | |||
| Malaysia (0.7%) | |||
| CIMB Group | |||
| Holdings Bhd. | 3,968,600 | 17,573 | |
| Malayan Banking Bhd. | 7,145,490 | 17,060 | |
| Sime Darby Bhd. | 6,037,600 | 16,542 | |
| IOI Corp. Bhd. | 7,401,286 | 12,563 | |
| Tenaga Nasional Bhd. | 3,955,500 | 10,514 | |
| Genting Bhd. | 4,490,100 | 9,707 | |
| Public Bank Bhd. | 2,123,394 | 7,992 | |
| * | Malaysia International | ||
| Shipping Corp., Bhd. | |||
| (Local) | 2,706,880 | 7,559 | |
| Maxis Bhd. | 3,792,350 | 6,312 | |
| * | Axiata Group Bhd. | 5,090,700 | 6,200 |
| AMMB Holdings Bhd. | 3,984,100 | 6,186 | |
| PPB Group Bhd. | 1,076,800 | 5,992 | |
| Genting Malaysia Bhd. | 6,570,200 | 5,931 | |
| Kuala Lumpur | |||
| Kepong Bhd. | 976,900 | 5,039 | |
| DiGi.Com Bhd. | 702,400 | 4,998 | |
| British American Tobacco | |||
| Malaysia Bhd. | 288,200 | 3,967 | |
| YTL Corp. Bhd. | 1,652,460 | 3,831 | |
| IJM Corp. Bhd. | 2,248,860 | 3,463 | |
| PLUS Expressways Bhd. | 3,030,500 | 3,260 | |
| Petronas Gas Bhd. | 1,003,300 | 3,135 | |
| Gamuda Bhd. | 3,307,000 | 3,095 | |
| YTL Power | |||
| International Bhd. | 4,124,358 | 2,827 | |
24
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Hong Leong Bank Bhd. | 976,000 | 2,653 | |
| Telekom Malaysia Bhd. | 2,100,100 | 2,279 | |
| Tanjong PLC | 400,200 | 2,240 | |
| UMW Holdings Bhd. | 1,128,900 | 2,232 | |
| SP Setia Bhd. | 1,679,400 | 2,205 | |
| Berjaya Sports Toto Bhd. | 1,489,928 | 2,127 | |
| Parkson Holdings Bhd. | 1,063,971 | 1,929 | |
| Alliance Financial | |||
| Group Bhd. | 1,926,500 | 1,878 | |
| Bursa Malaysia Bhd. | 710,400 | 1,700 | |
| RHB Capital Bhd. | 857,400 | 1,654 | |
| Hong Leong Financial | |||
| Group Bhd. | 548,300 | 1,488 | |
| Lafarge Malayan | |||
| Cement Bhd. | 699,300 | 1,474 | |
| Petronas Dagangan Bhd. | 482,100 | 1,367 | |
| MMC Corp. Bhd. | 1,632,400 | 1,267 | |
| Astro All Asia Networks | |||
| PLC | 904,800 | 1,192 | |
| * | Malaysian Airline | ||
| System Bhd. | 1,706,600 | 1,156 | |
| * | AirAsia Bhd. | 2,638,800 | 1,112 |
| IGB Corp. Bhd. | 1,859,200 | 1,064 | |
| Genting Plantations Bhd. | 481,100 | 1,020 | |
| KLCC Property | |||
| Holdings Bhd. | 983,300 | 990 | |
| * | Public Bank Bhd. | 30,642 | 115 |
| * | Gamuda Berhad | ||
| Rights Exp. 5/11/2010 | 413,375 | 31 | |
| 196,919 | |||
| Mexico (1.1%) | |||
| America Movil SAB | |||
| de CV | 36,732,879 | 94,814 | |
| Wal-Mart de Mexico | |||
| SAB de CV | 11,865,300 | 27,620 | |
| * | Cemex SAB de CV | 18,092,451 | 21,630 |
| Fomento Economico | |||
| Mexicano SAB de CV | 4,367,100 | 20,711 | |
| Grupo Televisa SA | 4,910,900 | 20,434 | |
| Grupo Mexico SAB | |||
| de CV Class B | 7,727,217 | 20,303 | |
| Grupo Financiero Banorte | |||
| SAB de CV | 2,853,000 | 11,845 | |
| Telmex Internacional | |||
| SAB de CV | 10,573,005 | 10,124 | |
| Telefonos de Mexico | |||
| SAB de CV | 10,824,500 | 8,352 | |
| * | Carso Global Telecom | ||
| SAB de CV | 1,409,100 | 7,135 | |
| Grupo Elektra SA de CV | 148,060 | 7,044 | |
| Kimberly-Clark de Mexico | |||
| SAB de CV Class A | 1,075,500 | 6,238 | |
| Grupo Bimbo SAB de | |||
| CV Class A | 706,400 | 5,646 | |
| Grupo Modelo SAB | |||
| de CV | 1,016,200 | 5,604 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Mexichem SAB de CV | 1,812,264 | 5,188 | |
| Alfa SAB de CV Class A | 622,900 | 4,846 | |
| Grupo Financiero Inbursa | |||
| SA | 1,350,814 | 4,544 | |
| Grupo Carso SAB de CV | 1,185,100 | 4,331 | |
| Industrias Penoles SAB | |||
| de CV | 199,845 | 4,213 | |
| Coca-Cola Femsa SAB | |||
| de CV | 532,900 | 3,734 | |
| * | Urbi Desarrollos Urbanos | ||
| SAB de CV | 960,000 | 2,214 | |
| * | Desarrolladora Homex | ||
| SAB de CV | 435,700 | 2,102 | |
| Grupo Aeroportuario del | |||
| Pacifico SAB de CV | |||
| Class B | 554,300 | 1,962 | |
| Grupo Aeroportuario del | |||
| Pacifico SAB de | |||
| CV ADR | 41,026 | 1,453 | |
| * | Cemex SAB de CV ADR | 2,829 | 34 |
| 302,121 | |||
| Netherlands (2.0%) | |||
| Unilever NV | 3,290,245 | 100,099 | |
| Koninklijke Philips | |||
| Electronics NV | 1,964,982 | 65,982 | |
| * | ING Groep NV | 7,358,826 | 64,951 |
| Koninklijke KPN NV | 3,376,322 | 50,655 | |
| Koninklijke Ahold NV | 2,411,545 | 33,067 | |
| ASML Holding NV | 861,603 | 28,271 | |
| Akzo Nobel NV | 467,753 | 27,660 | |
| Heineken NV | 496,034 | 23,129 | |
| TNT NV | 751,311 | 22,960 | |
| * | Aegon NV | 3,151,191 | 22,039 |
| Reed Elsevier NV | 1,457,332 | 17,356 | |
| Koninklijke DSM NV | 312,751 | 13,970 | |
| Wolters Kluwer NV | 565,758 | 11,560 | |
| * | Randstad Holding NV | 205,757 | 10,426 |
| Heineken Holding NV | 221,832 | 9,080 | |
| Fugro NV | 136,016 | 8,854 | |
| ^ | Corio NV | 118,499 | 6,856 |
| SBM Offshore NV | 331,825 | 6,530 | |
| Koninklijke Boskalis | |||
| Westminster NV | 131,020 | 5,910 | |
| Koninklijke Vopak NV | 63,886 | 5,240 | |
| ASML Holding NV | 8,280 | 270 | |
| * | Aegon NV | 695 | 5 |
| 534,870 | |||
| New Zealand (0.1%) | |||
| Fletcher Building Ltd. | 1,220,274 | 7,406 | |
| Telecom Corp. of | |||
| New Zealand Ltd. | 3,842,819 | 6,010 | |
| Contact Energy Ltd. | 609,682 | 2,760 | |
| Sky City Entertainment | |||
| Group Ltd. | 1,169,977 | 2,674 | |
25
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Auckland International | |||
| Airport Ltd. | 1,822,878 | 2,650 | |
| 21,500 | |||
| Norway (0.6%) | |||
| Statoil ASA | 2,269,998 | 54,888 | |
| * | Telenor ASA | 1,675,031 | 23,812 |
| DnB NOR ASA | 1,802,285 | 21,330 | |
| Seadrill Ltd. | 564,896 | 14,229 | |
| Yara International ASA | 383,603 | 13,311 | |
| ^ | Orkla ASA | 1,562,696 | 13,167 |
| *,^ | Norsk Hydro ASA | 1,378,093 | 10,788 |
| *,^ | Renewable Energy Corp. | ||
| ASA | 665,665 | 2,262 | |
| * | Renewable Energy Corp. | ||
| ASA Rights Exp. | |||
| 5/14/2010 | 332,832 | 461 | |
| 154,248 | |||
| Peru (0.1%) | |||
| Credicorp Ltd. | 118,098 | 10,275 | |
| Cia de Minas | |||
| Buenaventura SA | 250,262 | 8,308 | |
| Southern Copper Corp. | |||
| (U.S. Shares) | 245,985 | 7,522 | |
| Southern Copper Corp. | 183,214 | 5,616 | |
| Cia de Minas | |||
| Buenaventura SA ADR | 135,096 | 4,443 | |
| Credicorp Ltd. | 19,482 | 1,692 | |
| 37,856 | |||
| Philippines (0.1%) | |||
| Philippine Long Distance | |||
| Telephone Co. | 93,490 | 5,239 | |
| Manila Electric Co. | 896,050 | 3,528 | |
| SM Investments Corp. | 363,320 | 3,225 | |
| Ayala Land Inc. | 10,572,500 | 3,219 | |
| Ayala Corp. | 365,820 | 2,771 | |
| Bank of the | |||
| Philippine Islands | 2,629,900 | 2,665 | |
| Energy | |||
| Development Corp. | 16,340,000 | 1,959 | |
| SM Prime Holdings Inc. | 7,872,000 | 1,798 | |
| Globe Telecom Inc. | 66,490 | 1,430 | |
| Banco de Oro Unibank Inc. | 1,424,500 | 1,335 | |
| Metropolitan Bank & Trust | 1,056,600 | 1,244 | |
| Jollibee Foods Corp. | 900,300 | 1,179 | |
| 29,592 | |||
| Poland (0.3%) | |||
| Powszechna Kasa | |||
| Oszczednosci Bank | |||
| Polski SA | 1,255,182 | 18,075 | |
| * | Bank Pekao SA | 236,673 | 13,486 |
| KGHM Polska Miedz SA | 284,149 | 10,597 | |
| * | Polski Koncern Naftowy | ||
| Orlen | 648,636 | 8,544 | |
| Telekomunikacja Polska | |||
| SA | 1,342,892 | 7,304 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| * | Polska Grupa | ||
| Energetyczna SA | 518,626 | 3,884 | |
| * | Bank Zachodni WBK SA | 43,973 | 3,230 |
| Polskie Gornictwo | |||
| Naftowe i Gazownictwo | |||
| SA | 2,386,814 | 2,814 | |
| * | Getin Holding SA | 698,707 | 2,569 |
| Asseco Poland SA | 121,757 | 2,333 | |
| * | BRE Bank SA | 20,468 | 1,943 |
| * | Globe Trade Centre SA | 241,684 | 1,904 |
| TVN SA | 282,611 | 1,814 | |
| * | Bank Handlowy w | ||
| Warszawie SA | 65,071 | 1,782 | |
| * | ING Bank Slaski SA | 6,510 | 1,713 |
| * | Bank Millennium SA | 1,007,832 | 1,651 |
| * | PBG SA | 19,821 | 1,585 |
| * | Grupa Lotos SA | 128,628 | 1,430 |
| Cyfrowy Polsat SA | 162,982 | 815 | |
| 87,473 | |||
| Portugal (0.2%) | |||
| EDP–Energias de | |||
| Portugal SA | 3,503,146 | 12,537 | |
| * | Portugal Telecom | ||
| SGPS SA | 1,178,309 | 11,992 | |
| Banco Espirito Santo | |||
| SA | 1,051,210 | 5,032 | |
| Galp Energia SGPS SA | |||
| Class B | 306,824 | 4,919 | |
| Jeronimo Martins | |||
| SGPS SA | 448,560 | 4,642 | |
| Banco Comercial | |||
| Portugues SA | 4,700,689 | 4,415 | |
| ^ | Cimpor Cimentos de | ||
| Portugal SGPS SA | 514,067 | 3,728 | |
| * | EDP Renovaveis SA | 433,716 | 3,083 |
| Brisa Auto-Estradas de | |||
| Portugal SA | 368,284 | 2,611 | |
| 52,959 | |||
| Russia (1.6%) | |||
| Gazprom OAO ADR | 4,785,721 | 109,862 | |
| Lukoil OAO ADR | 945,121 | 53,162 | |
| Sberbank of Russian | |||
| Federation | 17,454,774 | 46,119 | |
| MMC Norilsk Nickel | |||
| ADR | 1,732,393 | 32,698 | |
| Mobile Telesystems | |||
| OJSC ADR | 401,477 | 22,182 | |
| Rosneft Oil Co. GDR | 2,563,876 | 20,519 | |
| Tatneft ADR | 474,803 | 14,316 | |
| NovaTek OAO GDR | 184,660 | 13,835 | |
| Surgutneftegaz ADR | 1,441,127 | 13,639 | |
| * | RusHydro | 218,365,474 | 12,679 |
| VTB Bank OJSC GDR | 1,532,659 | 8,173 | |
| Polyus Gold Co. ADR | 308,423 | 7,568 | |
| Mechel ADR | 292,275 | 7,512 | |
26
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Surgutneftegaz | |||
| Prior Pfd. | 13,941,899 | 7,494 | |
| * | Federal Grid Co. | ||
| Unified Energy | |||
| System JSC | 582,970,150 | 7,281 | |
| * | Uralkali | 1,496,731 | 6,431 |
| Novolipetsk Steel | |||
| OJSC GDR | 156,071 | 5,621 | |
| Severstal OAO GDR | 416,527 | 5,604 | |
| * | Sistema JSFC GDR | 196,576 | 5,228 |
| * | Pharmstandard GDR | 154,882 | 4,332 |
| Sberbank of Russian | |||
| Federation Prior Pfd. | 1,982,136 | 3,987 | |
| * | Inter Rao Ues OAO | 2,077,382,464 | 3,635 |
| Gazprom Neft JSC | 672,462 | 3,629 | |
| Wimm-Bill-Dann Foods | |||
| OJSC ADR | 144,620 | 3,146 | |
| * | TMK OAO GDR | 112,591 | 2,321 |
| * | Polymetal | 208,047 | 2,162 |
| Comstar United | |||
| Telesystems | |||
| OJSC GDR | 329,934 | 2,157 | |
| VTB Bank OJSC | 122,279,512 | 330 | |
| 425,622 | |||
| Singapore (1.2%) | |||
| DBS Group | |||
| Holdings Ltd. | 3,455,999 | 38,054 | |
| United Overseas | |||
| Bank Ltd. | 2,462,000 | 36,019 | |
| Singapore | |||
| Telecommunications | |||
| Ltd. | 16,059,000 | 35,423 | |
| Oversea-Chinese | |||
| Banking Corp. Ltd. | 5,249,000 | 33,336 | |
| Keppel Corp. Ltd. | 2,582,000 | 18,320 | |
| CapitaLand Ltd. | 5,130,500 | 13,859 | |
| Wilmar | |||
| International Ltd. | 2,588,000 | 12,994 | |
| Singapore Airlines Ltd. | 1,070,000 | 11,747 | |
| Singapore | |||
| Exchange Ltd. | 1,713,000 | 10,156 | |
| Singapore Press | |||
| Holdings Ltd. | 3,204,000 | 9,570 | |
| Noble Group Ltd. | 3,854,500 | 8,360 | |
| City Developments Ltd. | 1,007,000 | 7,736 | |
| Fraser and Neave Ltd. | 1,941,000 | 6,897 | |
| *,^ | Genting Singapore PLC | 9,303,720 | 6,442 |
| CapitaMall Trust | 4,478,300 | 6,317 | |
| Singapore Technologies | |||
| Engineering Ltd. | 2,736,000 | 6,284 | |
| SembCorp | |||
| Industries Ltd. | 1,964,000 | 5,974 | |
| Jardine Cycle & | |||
| Carriage Ltd. | 262,000 | 5,761 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| * | Golden | ||
| Agri-Resources Ltd. | 13,344,791 | 5,637 | |
| SembCorp Marine Ltd. | 1,660,000 | 5,080 | |
| CapitaMalls Asia Ltd. | 2,999,000 | 4,731 | |
| ^ | Olam International Ltd. | 2,426,000 | 4,578 |
| ComfortDelgro | |||
| Corp. Ltd. | 3,774,000 | 4,287 | |
| Ascendas Real Estate | |||
| Investment Trust | 2,956,666 | 4,128 | |
| Yangzijiang Shipbuilding | |||
| Holdings Ltd. | 3,737,000 | 3,630 | |
| Neptune Orient | |||
| Lines Ltd./Singapore | 1,815,750 | 2,848 | |
| UOL Group Ltd. | 1,012,000 | 2,809 | |
| Cosco Corp. | |||
| Singapore Ltd. | 2,026,000 | 2,533 | |
| StarHub Ltd. | 1,214,000 | 2,061 | |
| * | Golden | ||
| Agri-Resources Ltd. | |||
| Warrants Exp. | |||
| 07/23/2012 | 724,972 | 63 | |
| 315,634 | |||
| South Africa (1.7%) | |||
| Sasol Ltd. | 1,161,603 | 47,001 | |
| MTN Group Ltd. | 2,980,235 | 43,842 | |
| Standard Bank Group Ltd. | 2,362,345 | 36,396 | |
| Naspers Ltd. | 777,416 | 31,330 | |
| Impala Platinum | |||
| Holdings Ltd. | 1,085,368 | 30,602 | |
| AngloGold Ashanti Ltd. | 621,364 | 26,000 | |
| Gold Fields Ltd. | 1,354,610 | 18,095 | |
| FirstRand Ltd. | 5,701,783 | 15,660 | |
| * | Anglo Platinum Ltd. | 133,412 | 14,478 |
| Sanlam Ltd. | 4,133,139 | 13,503 | |
| ABSA Group Ltd. | 655,764 | 12,351 | |
| Remgro Ltd. | 875,979 | 11,641 | |
| Bidvest Group Ltd. | 592,136 | 11,015 | |
| Shoprite Holdings Ltd. | 823,254 | 8,743 | |
| Tiger Brands Ltd. | 325,662 | 8,292 | |
| Kumba Iron Ore Ltd. | 162,455 | 7,668 | |
| African Bank | |||
| Investments Ltd. | 1,553,592 | 7,439 | |
| Harmony Gold | |||
| Mining Co. Ltd. | 723,136 | 7,049 | |
| Steinhoff International | |||
| Holdings Ltd. | 2,543,817 | 6,931 | |
| RMB Holdings Ltd. | 1,454,991 | 6,581 | |
| Nedbank Group Ltd. | 350,069 | 6,304 | |
| Truworths | |||
| International Ltd. | 868,558 | 6,218 | |
| Growthpoint | |||
| Properties Ltd. | 2,985,201 | 6,156 | |
| Massmart Holdings Ltd. | 405,953 | 6,015 | |
| * | Aspen Pharmacare | ||
| Holdings Ltd. | 516,918 | 5,817 | |
27
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| African Rainbow | |||
| Minerals Ltd. | 212,971 | 5,699 | |
| Vodacom Group Pty Ltd. | 743,901 | 5,692 | |
| Redefine Properties Ltd. | 4,815,153 | 5,134 | |
| Woolworths Holdings Ltd. | 1,478,459 | 4,661 | |
| Imperial Holdings Ltd. | 343,486 | 4,551 | |
| Pretoria Portland | |||
| Cement Co. Ltd. | 1,007,602 | 4,499 | |
| * | Sappi Ltd. | 1,021,240 | 4,296 |
| Exxaro Resources Ltd. | 251,020 | 4,158 | |
| ArcelorMittal | |||
| South Africa Ltd. | 354,661 | 4,051 | |
| Aveng Ltd. | 794,241 | 3,979 | |
| Foschini Ltd. | 413,210 | 3,799 | |
| Investec Ltd. | 439,183 | 3,681 | |
| Murray & | |||
| Roberts Holdings Ltd. | 641,641 | 3,560 | |
| Netcare Ltd. | 1,866,207 | 3,420 | |
| Reunert Ltd. | 358,999 | 2,798 | |
| Telkom SA Ltd. | 537,458 | 2,675 | |
| Discovery Holdings Ltd. | 533,025 | 2,579 | |
| Pick n Pay Stores Ltd. | 451,207 | 2,533 | |
| Liberty Holdings Ltd. | 236,771 | 2,424 | |
| Northam Platinum Ltd. | 286,773 | 2,022 | |
| 471,338 | |||
| South Korea (3.3%) | |||
| Samsung | |||
| Electronics Co. Ltd. | 194,009 | 147,513 | |
| POSCO | 89,757 | 40,250 | |
| Hyundai Motor Co. | 310,660 | 37,887 | |
| Shinhan Financial | |||
| Group Co. Ltd. | 679,200 | 28,892 | |
| KB Financial Group Inc. | 571,154 | 27,829 | |
| * | Hynix Semiconductor Inc. | 951,580 | 24,085 |
| LG Chem Ltd. | 93,580 | 23,664 | |
| 2 | Samsung | ||
| Electronics Co. Ltd. GDR | 61,134 | 23,349 | |
| Hyundai Mobis | 127,643 | 21,186 | |
| LG Electronics Inc. | 190,156 | 20,734 | |
| LG Display Co. Ltd. | 469,360 | 19,961 | |
| Samsung | |||
| Electronics Co. Ltd. | |||
| Prior Pfd. | 41,446 | 19,588 | |
| POSCO ADR | 168,771 | 18,929 | |
| Hyundai Heavy | |||
| Industries Co. Ltd. | 76,463 | 17,306 | |
| Samsung Electro- | |||
| Mechanics Co. Ltd. | 120,950 | 15,272 | |
| Samsung Fire & | |||
| Marine Insurance Co. Ltd. | 76,156 | 14,079 | |
| * | NHN Corp. | 82,679 | 13,784 |
| SK Energy Co. Ltd. | 120,779 | 13,160 | |
| Shinsegae Co. Ltd. | 28,546 | 13,088 | |
| LG Corp. | 190,949 | 13,020 | |
| Samsung C&T Corp. | 253,286 | 11,977 | |
| Hana Financial Group Inc. | 383,870 | 11,940 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| KT&G Corp. | 223,157 | 11,248 | |
| Korea Electric | |||
| Power Corp. | 365,420 | 11,086 | |
| Kia Motors Corp. | 427,230 | 10,424 | |
| Samsung SDI Co. Ltd. | 68,751 | 9,159 | |
| Hyundai Steel Co. | 111,953 | 9,130 | |
| KT Corp. | 190,819 | 8,469 | |
| Woori Finance | |||
| Holdings Co. Ltd. | 512,197 | 8,126 | |
| SK Telecom Co. Ltd. | 51,623 | 8,056 | |
| Samsung Heavy | |||
| Industries Co. Ltd. | 328,120 | 7,530 | |
| Cheil Industries Inc. | 96,423 | 6,912 | |
| Korea Exchange Bank | 514,690 | 6,282 | |
| Samsung Techwin Co. Ltd. | 78,440 | 6,235 | |
| Samsung | |||
| Engineering Co. Ltd. | 60,229 | 5,804 | |
| Shinhan Financial | |||
| Group Co. Ltd. ADR | 67,503 | 5,747 | |
| Samsung | |||
| Securities Co. Ltd. | 100,189 | 5,532 | |
| GS Engineering & | |||
| Construction Corp. | 70,973 | 5,365 | |
| OCI Co. Ltd. | 27,997 | 5,309 | |
| Lotte Shopping Co. Ltd. | 18,633 | 5,285 | |
| Hyundai Engineering & | |||
| Construction Co. Ltd. | 99,660 | 4,813 | |
| Amorepacific Corp. | 6,368 | 4,810 | |
| LG Household & | |||
| Health Care Ltd. | 17,180 | 4,694 | |
| Industrial Bank of Korea | 334,250 | 4,648 | |
| Korea Electric | |||
| Power Corp. ADR | 308,702 | 4,643 | |
| SK Telecom Co. Ltd. ADR | 250,083 | 4,629 | |
| Daewoo | |||
| Securities Co. Ltd. | 244,860 | 4,599 | |
| Doosan Heavy | |||
| Industries and | |||
| Construction Co. Ltd. | 62,470 | 4,582 | |
| * | Korean Air Lines Co. Ltd. | 72,733 | 4,567 |
| S-Oil Corp. | 89,277 | 4,551 | |
| KB Financial Group Inc. | |||
| ADR | 92,366 | 4,507 | |
| NCSoft Corp. | 28,050 | 4,170 | |
| LG Telecom Ltd. | 508,730 | 3,837 | |
| Hankook Tire Co. Ltd. | 169,800 | 3,795 | |
| SK Holdings Co. Ltd. | 47,508 | 3,736 | |
| Honam | |||
| Petrochemical Corp. | 28,812 | 3,735 | |
| Samsung Card Co. | 75,211 | 3,734 | |
| Hanwha Corp. | 99,470 | 3,678 | |
| Daewoo | |||
| Shipbuilding & Marine | |||
| Engineering Co. Ltd. | 193,150 | 3,670 | |
| GS Holdings | 104,240 | 3,626 | |
| Busan Bank | 318,440 | 3,389 |
28
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Hyundai Motor Co. | |||
| 2nd Pfd. | 76,650 | 3,370 | |
| Woongjin Coway Co. Ltd. | 99,080 | 3,262 | |
| Hyosung Corp. | 45,187 | 3,207 | |
| Daelim Industrial Co. Ltd. | 56,101 | 3,186 | |
| Daegu Bank Ltd. | 239,640 | 3,167 | |
| Daewoo | |||
| International Corp. | 98,627 | 3,125 | |
| CJ CheilJedang Corp. | 15,686 | 3,119 | |
| Hyundai Mipo Dockyard | 21,997 | 3,097 | |
| * | Doosan Infracore Co. Ltd. | 154,160 | 3,063 |
| Kangwon Land Inc. | 194,880 | 3,023 | |
| Korea Zinc Co. Ltd. | 17,076 | 2,972 | |
| KT Corp. ADR | 131,252 | 2,966 | |
| LS Corp. | 36,299 | 2,961 | |
| Hyundai Securities Co. | 252,320 | 2,949 | |
| * | Korea Life | ||
| Insurance Co. Ltd. | 345,000 | 2,861 | |
| Hyundai Development Co. | 113,240 | 2,794 | |
| KCC Corp. | 9,642 | 2,711 | |
| Yuhan Corp. | 18,505 | 2,673 | |
| Hyundai Department | |||
| Store Co. Ltd. | 29,197 | 2,610 | |
| Glovis Co. Ltd. | 23,124 | 2,560 | |
| Woori Investment & | |||
| Securities Co. Ltd. | 170,330 | 2,489 | |
| Dongbu Insurance Co. Ltd. | 78,620 | 2,480 | |
| Hanwha Chem Corp. | 159,540 | 2,400 | |
| STX Pan Ocean Co. Ltd. | 202,010 | 2,379 | |
| Mirae Asset | |||
| Securities Co. Ltd. | 45,081 | 2,238 | |
| Doosan Corp. | 20,268 | 2,214 | |
| LS Industrial | |||
| Systems Co. Ltd. | 33,456 | 2,203 | |
| Korea Investment | |||
| Holdings Co. Ltd. | 74,760 | 2,183 | |
| * | Celltrion Inc. | 109,449 | 2,114 |
| Daewoo Engineering & | |||
| Construction Co. Ltd. | 227,160 | 2,113 | |
| * | Samsung Life | ||
| Insurance Co. Ltd. | 19,500 | 1,935 | |
| Korea Gas Corp. | 47,003 | 1,894 | |
| Hyundai Motor Co. | |||
| Prior Pfd. | 43,390 | 1,827 | |
| Dongkuk | |||
| Steel Mill Co. Ltd. | 76,970 | 1,609 | |
| Hanjin Heavy Industries & | |||
| Construction Co. Ltd. | 64,339 | 1,592 | |
| Lotte | |||
| Confectionery Co. Ltd. | 1,403 | 1,550 | |
| * | SK Broadband Co. Ltd. | 303,147 | 1,503 |
| LG Electronics Inc. | |||
| Prior Pfd. | 35,820 | 1,478 | |
| S1 Corp. | 32,780 | 1,400 | |
| SK Networks Co. Ltd. | 139,850 | 1,392 | |
| Hite Brewery Co. Ltd. | 10,592 | 1,246 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Tong Yang Securities Inc. | 133,350 | 1,142 | |
| STX Offshore & | |||
| Shipbuilding Co. Ltd. | 89,200 | 1,078 | |
| Taewoong Co. Ltd. | 14,305 | 951 | |
| 904,691 | |||
| Spain (2.8%) | |||
| Banco Santander SA | 16,632,284 | 211,485 | |
| Telefonica SA | 8,558,858 | 193,732 | |
| Banco Bilbao Vizcaya | |||
| Argentaria SA | 7,200,254 | 94,699 | |
| Iberdrola SA | 7,440,098 | 59,045 | |
| Repsol YPF SA | 1,477,818 | 34,699 | |
| Inditex SA | 440,330 | 27,253 | |
| ^ | ACS Actividades de | ||
| Construccion y Servicios | |||
| SA | 284,658 | 12,908 | |
| Banco Popular Espanol SA | 1,746,938 | 12,369 | |
| Red Electrica Corp. SA | 217,722 | 10,316 | |
| Abertis Infraestructuras | |||
| SA | 570,065 | 9,928 | |
| ^ | Banco de Sabadell SA | 1,839,692 | 9,334 |
| Criteria Caixacorp SA | 1,699,302 | 8,475 | |
| Gas Natural SDG SA | 463,520 | 7,914 | |
| Ferrovial SA | 892,153 | 7,858 | |
| Enagas | 360,306 | 7,226 | |
| Iberdrola Renovables SA | 1,702,329 | 6,600 | |
| Acerinox SA | 279,783 | 5,570 | |
| Acciona SA | 50,943 | 5,049 | |
| Mapfre SA | 1,476,671 | 4,833 | |
| Gamesa Corp. | |||
| Tecnologica SA | 366,062 | 4,498 | |
| Bankinter SA | 574,287 | 4,240 | |
| Zardoya Otis SA | 266,334 | 4,158 | |
| Indra Sistemas SA | 197,478 | 3,959 | |
| ^ | Grifols SA | 255,373 | 3,233 |
| * | Iberia Lineas Aereas de | ||
| Espana SA | 957,624 | 3,201 | |
| Gestevision Telecinco SA | 203,404 | 2,892 | |
| ^ | Fomento de | ||
| Construcciones y | |||
| Contratas SA | 82,588 | 2,703 | |
| ^ | Banco de Valencia SA | 423,520 | 2,469 |
| *,^ | Sacyr Vallehermoso SA | 189,995 | 1,450 |
| * | Banco de Valencia SA | ||
| Rights Exp. 05/10/2010 | 423,520 | 50 | |
| 762,146 | |||
| Sweden (2.2%) | |||
| ^ | Telefonaktiebolaget LM | ||
| Ericsson Class B | 6,085,747 | 70,233 | |
| ^ | Hennes & Mauritz AB | ||
| Class B | 1,034,349 | 66,000 | |
| Nordea Bank AB | 6,528,414 | 63,693 | |
| TeliaSonera AB | 4,533,510 | 31,074 | |
| ^ | Sandvik AB | 2,034,978 | 29,167 |
| ^ | Svenska Handelsbanken | ||
| AB Class A | 989,900 | 27,758 | |
29
Total International Stock Index Fund
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| * | Volvo AB Class B | 2,202,647 | 27,327 |
| ^ | Atlas Copco AB Class A | 1,356,041 | 21,811 |
| *,^ | Skandinaviska Enskilda | ||
| Banken AB Class A | 3,079,145 | 20,990 | |
| ^ | Investor AB Class B | 918,058 | 17,368 |
| ^ | SKF AB | 786,159 | 15,682 |
| ^ | Svenska Cellulosa AB | ||
| Class B | 1,147,922 | 14,957 | |
| ^ | Assa Abloy AB Class B | 627,428 | 14,467 |
| ^ | Skanska AB Class B | 808,853 | 13,402 |
| * | Swedbank AB Class A | 1,234,128 | 13,288 |
| Millicom International | |||
| Cellular SA | 152,897 | 13,284 | |
| Electrolux AB Class B | 482,950 | 12,421 | |
| ^ | Swedish Match AB | 509,416 | 11,548 |
| ^ | Atlas Copco AB Class B | 789,858 | 11,443 |
| Scania AB Class B | 648,853 | 11,323 | |
| * | Volvo AB Class A | 885,324 | 10,751 |
| Tele2 AB | 625,748 | 10,575 | |
| ^ | Alfa Laval AB | 684,231 | 10,195 |
| ^ | Getinge AB | 404,296 | 9,037 |
| Kinnevik Investment AB | |||
| Class B | 435,944 | 8,001 | |
| ^ | Securitas AB Class B | 638,973 | 6,729 |
| ^ | Ratos AB | 204,843 | 6,410 |
| SSAB AB Class A | 362,257 | 6,343 | |
| ^ | Husqvarna AB | 832,328 | 6,176 |
| Lundin Petroleum AB | 461,227 | 2,805 | |
| SSAB AB Class B | 169,899 | 2,640 | |
| Holmen AB | 104,151 | 2,627 | |
| 589,525 | |||
| Switzerland (5.7%) | |||
| Nestle SA | 7,008,587 | 342,937 | |
| Roche Holding AG | 1,420,035 | 224,208 | |
| Novartis AG | 4,264,977 | 217,449 | |
| * | UBS AG | 7,192,699 | 111,431 |
| * | Credit Suisse Group AG | 2,275,346 | 104,433 |
| ABB Ltd. | 4,460,136 | 85,552 | |
| Zurich Financial Services | |||
| AG | 297,363 | 65,924 | |
| Syngenta AG | 191,340 | 48,480 | |
| Cie Financiere Richemont | |||
| SA | 1,054,889 | 38,908 | |
| Holcim Ltd. | 495,887 | 36,953 | |
| Swiss | |||
| Reinsurance Co. Ltd. | 697,217 | 30,237 | |
| Swatch Group AG (Bearer) | 62,095 | 18,192 | |
| Swisscom AG | 47,267 | 16,041 | |
| Adecco SA | 248,667 | 14,626 | |
| SGS SA | 11,089 | 14,404 | |
| Julius Baer Group Ltd. | 415,739 | 14,288 | |
| Geberit AG | 78,111 | 13,862 | |
| Synthes Inc. | 119,520 | 13,562 | |
| Givaudan SA | 15,471 | 13,462 | |
| Sonova Holding AG | 93,027 | 11,532 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Kuehne & | |||
| Nagel International AG | 109,590 | 11,469 | |
| Schindler Holding AG | |||
| (Bearer) | 98,313 | 8,636 | |
| * | Actelion Ltd. | 205,547 | 8,336 |
| Baloise-Holding AG | 100,635 | 7,924 | |
| Lonza Group AG | 91,398 | 7,132 | |
| Swiss Life Holding AG | 58,241 | 7,080 | |
| *,^ | Logitech International SA | 366,584 | 5,985 |
| Lindt & Spruengli AG | 229 | 5,956 | |
| Nobel Biocare Holding AG | 247,990 | 5,435 | |
| GAM Holding Ltd. | 414,943 | 5,154 | |
| Swatch Group AG | |||
| (Registered) | 93,290 | 5,087 | |
| Pargesa Holding SA | 54,303 | 4,415 | |
| Aryzta AG | 112,556 | 4,301 | |
| Lindt & Spruengli AG | 1,732 | 3,837 | |
| Straumann Holding AG | 15,566 | 3,825 | |
| Schindler Holding AG | 42,564 | 3,697 | |
| Aryzta AG | 51,983 | 2,005 | |
| BKW FMB Energie AG | 29,319 | 1,954 | |
| 1,538,709 | |||
| Taiwan (2.7%) | |||
| Taiwan Semiconductor | |||
| Manufacturing Co. Ltd. | 40,228,063 | 78,730 | |
| Hon Hai Precision | |||
| Industry Co. Ltd. | 15,620,885 | 73,333 | |
| MediaTek Inc. | 1,870,430 | 31,670 | |
| Nan Ya Plastics Corp. | 10,348,780 | 21,697 | |
| China Steel Corp. | 19,958,756 | 21,238 | |
| Taiwan Semiconductor | |||
| Manufacturing Co. Ltd. | |||
| ADR | 1,893,348 | 20,051 | |
| * | Cathay Financial | ||
| Holding Co. Ltd. | 11,796,000 | 18,874 | |
| HTC Corp. | 1,353,800 | 18,140 | |
| Formosa Plastics Corp. | 8,037,780 | 17,857 | |
| Chunghwa | |||
| Telecom Co. Ltd. | 8,083,321 | 15,868 | |
| Asustek Computer Inc. | 7,745,601 | 14,935 | |
| Formosa Chemicals & | |||
| Fibre Corp. | 5,746,500 | 14,491 | |
| AU Optronics Corp. | 12,526,640 | 14,433 | |
| Acer Inc. | 5,152,090 | 14,050 | |
| Chimei Innolux Corp. | 9,571,101 | 13,972 | |
| Delta Electronics Inc. | 3,585,240 | 11,884 | |
| * | Fubon Financial | ||
| Holding Co. Ltd. | 8,999,000 | 10,970 | |
| Compal Electronics Inc. | 7,605,521 | 10,570 | |
| * | United | ||
| Microelectronics Corp. | 19,754,175 | 9,939 | |
| Chinatrust Financial | |||
| Holding Co. Ltd. | 17,002,255 | 9,602 | |
| Mega Financial | |||
| Holding Co. Ltd. | 15,575,000 | 9,096 | |
30
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Yuanta Financial | |||
| Holding Co. Ltd. | 14,714,000 | 8,773 | |
| Quanta Computer Inc. | 4,508,950 | 8,476 | |
| Uni-President | |||
| Enterprises Corp. | 6,735,357 | 7,488 | |
| Taiwan Mobile Co. Ltd. | 3,734,000 | 7,146 | |
| Advanced Semiconductor | |||
| Engineering Inc. | 7,290,060 | 7,117 | |
| Wistron Corp. | 3,518,237 | 6,760 | |
| Formosa | |||
| Petrochemical Corp. | 2,502,950 | 6,574 | |
| Far Eastern New | |||
| Century Corp. | 5,657,478 | 6,139 | |
| Siliconware Precision | |||
| Industries Co. | 4,654,000 | 5,703 | |
| * | China Development | ||
| Financial Holding Corp. | 19,502,625 | 5,469 | |
| Lite-On | |||
| Technology Corp. | 4,076,064 | 5,410 | |
| Taiwan Cement Corp. | 5,965,000 | 5,360 | |
| First Financial | |||
| Holding Co. Ltd. | 9,630,859 | 5,302 | |
| Synnex Technology | |||
| International Corp. | 2,129,500 | 5,075 | |
| Foxconn | |||
| Technology Co. Ltd. | 1,182,380 | 4,890 | |
| Taiwan Fertilizer Co. Ltd. | 1,501,000 | 4,776 | |
| Chang Hwa | |||
| Commercial Bank | 9,968,000 | 4,476 | |
| Macronix International | 6,616,927 | 4,400 | |
| Taiwan Cooperative Bank | 7,171,000 | 4,369 | |
| * | Shin Kong Financial | ||
| Holding Co. Ltd. | 10,834,096 | 4,163 | |
| Powertech | |||
| Technology Inc. | 1,149,050 | 4,099 | |
| Hua Nan Financial | |||
| Holdings Co. Ltd. | 6,934,595 | 4,069 | |
| Epistar Corp. | 1,263,408 | 4,043 | |
| * | SinoPac Financial | ||
| Holdings Co. Ltd. | 11,540,000 | 3,925 | |
| Far EasTone | |||
| Telecommunications | |||
| Co. Ltd. | 3,181,000 | 3,872 | |
| Pou Chen Corp. | 4,506,350 | 3,857 | |
| Unimicron | |||
| Technology Corp. | 2,515,750 | 3,780 | |
| * | United | ||
| Microelectronics Corp. | |||
| ADR | 1,043,348 | 3,693 | |
| Cheng Shin Rubber | |||
| Industry Co. Ltd. | 1,697,090 | 3,647 | |
| Largan Precision Co. Ltd. | 203,376 | 3,354 | |
| Novatek | |||
| Microelectronics | |||
| Corp. Ltd. | 961,275 | 3,295 | |
| Asia Cement Corp. | 3,283,413 | 3,087 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| AU Optronics Corp. ADR | 260,366 | 3,018 | |
| Chunghwa | |||
| Telecom Co. Ltd. ADR | 151,964 | 2,966 | |
| President Chain | |||
| Store Corp. | 1,023,536 | 2,927 | |
| Catcher | |||
| Technology Co. Ltd. | 1,101,800 | 2,907 | |
| * | Taishin Financial | ||
| Holding Co. Ltd. | 7,367,184 | 2,843 | |
| * | E.Sun Financial | ||
| Holding Co. Ltd. | 6,368,170 | 2,831 | |
| * | Powerchip | ||
| Semiconductor Corp. | 16,172,000 | 2,764 | |
| Richtek Technology Corp. | 262,005 | 2,747 | |
| Tripod Technology Corp. | 783,759 | 2,693 | |
| KGI Securities Co. Ltd. | 5,812,000 | 2,643 | |
| WPG Holdings Co. Ltd. | 1,255,000 | 2,576 | |
| * | Inotera Memories Inc. | 3,620,002 | 2,555 |
| Simplo | |||
| Technology Co. Ltd. | 390,100 | 2,351 | |
| * | Walsin Lihwa Corp. | 5,324,000 | 2,328 |
| Realtek | |||
| Semiconductor Corp. | 839,673 | 2,274 | |
| Everlight | |||
| Electronics Co. Ltd. | 709,497 | 2,234 | |
| * | Prime View | ||
| International Co. Ltd. | 1,136,000 | 2,195 | |
| * | Clevo Co. | 993,176 | 2,170 |
| * | Ruentex Industries Ltd. | 879,000 | 2,148 |
| Coretronic Corp. | 1,379,000 | 2,091 | |
| Inventec Co. Ltd. | 3,593,100 | 2,072 | |
| * | Polaris | ||
| Securities Co. Ltd. | 4,127,040 | 2,058 | |
| Yulon Motor Co. Ltd. | 1,771,015 | 2,057 | |
| * | Nanya Technology Corp. | 2,331,915 | 2,045 |
| Chicony | |||
| Electronics Co. Ltd. | 764,380 | 2,017 | |
| Transcend | |||
| Information Inc. | 635,363 | 2,008 | |
| * | HannStar Display Corp. | 9,419,000 | 1,939 |
| * | Chunghwa Picture Tubes | 19,319,000 | 1,862 |
| * | Qisda Corp. | 3,119,000 | 1,844 |
| Motech Industries Inc. | 509,731 | 1,817 | |
| U-Ming Marine | |||
| Transport Corp. | 844,000 | 1,743 | |
| Tung Ho Steel | |||
| Enterprise Corp. | 1,601,842 | 1,727 | |
| Giant | |||
| Manufacturing Co. Ltd. | 552,000 | 1,668 | |
| Taiwan Glass | |||
| Industrial Corp. | 1,787,890 | 1,665 | |
| * | Wintek Corp. | 1,995,000 | 1,661 |
| * | Winbond | ||
| Electronics Corp. | 5,734,000 | 1,651 | |
| * | Tatung Co. Ltd. | 7,631,000 | 1,568 |
31
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Nan Ya Printed Circuit | |||
| Board Corp. | 373,320 | 1,558 | |
| * | Eva Airways Corp. | 2,966,900 | 1,539 |
| Feng Hsin Iron & | |||
| Steel Co. | 914,000 | 1,520 | |
| * | Young Fast | ||
| Optoelectronics | |||
| Co. Ltd. | 162,000 | 1,514 | |
| * | China Airlines Ltd. | 3,544,491 | 1,505 |
| Teco Electric and | |||
| Machinery Co. Ltd. | 3,383,000 | 1,501 | |
| Far Eastern Department | |||
| Stores Co. Ltd. | 1,655,210 | 1,477 | |
| Advanced Semiconductor | |||
| Engineering Inc. ADR | 299,740 | 1,457 | |
| * | CMC Magnetics Corp. | 5,163,000 | 1,450 |
| TSRC Corp. | 959,000 | 1,384 | |
| * | Evergreen Marine Corp. | ||
| Taiwan Ltd. | 2,112,000 | 1,350 | |
| Advantech Co. Ltd. | 600,659 | 1,346 | |
| Phison Electronics Corp. | 198,768 | 1,346 | |
| * | Wan Hai Lines Ltd. | 2,147,500 | 1,329 |
| Cheng Uei Precision | |||
| Industry Co. Ltd. | 685,644 | 1,323 | |
| Eternal Chemical Co. Ltd. | 1,225,175 | 1,298 | |
| Formosa Taffeta Co. Ltd. | 1,620,000 | 1,293 | |
| Kinsus Interconnect | |||
| Technology Corp. | 488,000 | 1,266 | |
| Pixart Imaging Inc. | 201,719 | 1,262 | |
| Siliconware Precision | |||
| Industries Co. ADR | 201,575 | 1,240 | |
| Micro-Star | |||
| International Co. Ltd. | 1,945,517 | 1,207 | |
| Formosa Sumco | |||
| Technology Corp. | 399,700 | 1,122 | |
| Farglory Land | |||
| Development Co. Ltd. | 525,000 | 1,114 | |
| * | Taiwan Business Bank | 4,066,000 | 1,089 |
| Mitac International Corp. | 2,318,995 | 1,077 | |
| Yang Ming Marine | |||
| Transport Corp. | 2,575,776 | 1,053 | |
| * | Capital Securities Corp. | 1,977,000 | 932 |
| Chinese Gamer | |||
| International Corp. | 73,000 | 887 | |
| Vanguard International | |||
| Semiconductor Corp. | 1,804,000 | 883 | |
| Formosa International | |||
| Hotels Corp. | 67,100 | 788 | |
| Compal | |||
| Communications Inc. | 627,000 | 664 | |
| * | Evergreen | ||
| International Storage & | |||
| Transport Corp. | 798,000 | 656 | |
| * | Tatung Co. Ltd. GDR | 92,281 | 381 |
| 736,461 | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Thailand (0.3%) | |||
| PTT PCL (Foreign) | 1,691,115 | 13,263 | |
| PTT Exploration & | |||
| Production PCL (Foreign) | 2,304,855 | 10,675 | |
| Siam Commercial Bank | |||
| PCL (Foreign) | 3,114,800 | 7,813 | |
| Bangkok Bank PCL | |||
| (Foreign) | 1,873,500 | 6,864 | |
| Kasikornbank PCL | |||
| (Foreign) | 2,373,100 | 6,858 | |
| Banpu PCL | 310,590 | 6,149 | |
| Siam Cement PCL | |||
| (Foreign) | 608,400 | 5,051 | |
| Advanced Info Service | |||
| PCL (Foreign) | 1,785,900 | 4,170 | |
| CP ALL PCL (Foreign) | 4,313,385 | 3,677 | |
| Bangkok Bank PCL (Local) | 999,200 | 3,554 | |
| Charoen Pokphand Foods | |||
| PCL (Foreign) | 6,093,800 | 2,900 | |
| Kasikornbank PCL | 1,014,800 | 2,806 | |
| IRPC PCL (Foreign) | 19,034,700 | 2,569 | |
| Thai Oil PCL (Foreign) | 1,655,400 | 2,369 | |
| PTT Chemical PCL | |||
| (Foreign) | 726,995 | 2,281 | |
| Bank of Ayudhya | |||
| PCL(Local) | 3,662,779 | 2,210 | |
| Krung Thai Bank PCL | |||
| (Foreign) | 5,553,510 | 2,090 | |
| PTT Aromatics & Refining | |||
| PCL (Foreign) | 2,068,100 | 1,749 | |
| * | TMB Bank PCL | 35,976,400 | 1,481 |
| Total Access | |||
| Communication PCL | |||
| (Foreign) | 1,411,800 | 1,467 | |
| BEC World PCL (Foreign) | 1,753,405 | 1,250 | |
| Glow Energy PCL | |||
| (Foreign) | 1,063,945 | 1,166 | |
| Land and Houses PCL | |||
| (Foreign) | 5,020,200 | 804 | |
| Banpu PCL (Local) | 16,700 | 327 | |
| * | PTT Aromatics & Refining | ||
| PCL | 187,700 | 159 | |
| PTT Exploration and | |||
| Production PCL (Local) | 33,200 | 154 | |
| PTT PCL | 18,000 | 141 | |
| 93,997 | |||
| Turkey (0.4%) | |||
| Turkiye Garanti Bankasi | |||
| AS | 4,254,558 | 20,611 | |
| Turkiye Is Bankasi | 3,178,137 | 11,038 | |
| Akbank TAS | 2,033,927 | 10,213 | |
| Turkcell Iletisim Hizmet | |||
| AS | 1,549,289 | 10,042 | |
| Tupras Turkiye | |||
| Petrol Rafine | 255,199 | 5,674 | |
32
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Anadolu Efes Biracilik | |||
| Ve Malt Sanayii AS | 410,679 | 5,090 | |
| Turkiye Halk Bankasi AS | 635,269 | 5,026 | |
| * | Yapi ve Kredi Bankasi AS | 1,748,851 | 5,002 |
| Haci Omer Sabanci | |||
| Holding AS | 1,074,581 | 4,910 | |
| BIM Birlesik Magazalar | |||
| AS | 75,627 | 4,227 | |
| * | Turkiye Vakiflar | ||
| Bankasi Tao | 1,509,805 | 3,997 | |
| Turk Telekomunikasyon | |||
| AS | 1,058,363 | 3,944 | |
| * | KOC Holding AS | 965,479 | 3,736 |
| * | Eregli Demir ve | ||
| Celik Fabrikalari TAS | 800,649 | 2,509 | |
| Turk Hava Yollari | 716,923 | 2,370 | |
| * | Asya Katilim Bankasi | ||
| AS | 897,101 | 2,368 | |
| Enka Insaat ve Sanayi | |||
| AS | 467,451 | 2,257 | |
| Coca-Cola Icecek AS | 140,110 | 1,374 | |
| Dogan Sirketler Grubu | |||
| Holdings | 1,698,196 | 1,269 | |
| * | Turk Sise ve | ||
| Cam Fabrikalari AS | 806,459 | 1,093 | |
| * | Haci Omer Sabanci | ||
| Holding AS | 157,710 | 731 | |
| 107,481 | |||
| United Kingdom (15.8%) | |||
| HSBC Holdings PLC | 35,184,120 | 358,261 | |
| BP PLC | 37,922,617 | 330,759 | |
| Vodafone Group PLC | 106,317,711 | 235,585 | |
| GlaxoSmithKline PLC | 10,488,294 | 194,674 | |
| Royal Dutch Shell PLC | |||
| Class A | 5,313,332 | 165,494 | |
| Royal Dutch Shell PLC | |||
| Class B | 5,448,827 | 164,275 | |
| Rio Tinto PLC | 2,772,087 | 143,319 | |
| BHP Billiton PLC | 4,460,852 | 136,192 | |
| AstraZeneca PLC | 2,930,450 | 129,487 | |
| British American | |||
| Tobacco PLC | 4,035,165 | 126,885 | |
| Barclays PLC | 23,063,752 | 118,475 | |
| BG Group PLC | 6,812,694 | 115,153 | |
| * | Anglo American PLC | 2,661,162 | 113,035 |
| Standard Chartered | |||
| PLC | 4,089,830 | 109,095 | |
| Tesco PLC | 16,053,513 | 106,479 | |
| Diageo PLC | 5,054,541 | 86,206 | |
| Unilever PLC | 2,594,156 | 77,955 | |
| * | Lloyds Banking Group | ||
| PLC | 77,079,305 | 77,118 | |
| Reckitt Benckiser Group | |||
| PLC | 1,230,575 | 63,926 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Xstrata PLC | 3,855,357 | 63,243 | |
| SABMiller PLC | 1,911,182 | 59,916 | |
| Imperial Tobacco Group | |||
| PLC | 2,056,240 | 58,578 | |
| Royal Dutch Shell PLC | |||
| Class A | |||
| (Amsterdam Shares) | 1,853,242 | 58,151 | |
| National Grid PLC | 4,975,955 | 47,983 | |
| Centrica PLC | 10,380,677 | 46,628 | |
| Prudential PLC | 5,109,900 | 44,862 | |
| BAE Systems PLC | 7,158,347 | 37,519 | |
| Rolls-Royce Group PLC | 3,753,985 | 33,078 | |
| Tullow Oil PLC | 1,791,348 | 31,199 | |
| Scottish & | |||
| Southern Energy PLC | 1,868,818 | 30,992 | |
| Compass Group PLC | 3,757,269 | 30,557 | |
| BT Group PLC | 15,701,452 | 30,214 | |
| Aviva PLC | 5,583,055 | 29,514 | |
| * | Royal Bank of | ||
| Scotland Group PLC | 34,186,431 | 27,975 | |
| WPP PLC | 2,528,200 | 26,805 | |
| Pearson PLC | 1,641,718 | 26,236 | |
| Shire PLC | 1,136,719 | 25,040 | |
| British Sky | |||
| Broadcasting Group PLC | 2,294,752 | 21,480 | |
| Reed Elsevier PLC | 2,446,273 | 19,152 | |
| Experian PLC | 2,068,256 | 19,121 | |
| WM Morrison | |||
| Supermarkets PLC | 4,269,346 | 18,889 | |
| * | Old Mutual PLC | 10,673,159 | 18,837 |
| Smith & Nephew PLC | 1,785,020 | 18,506 | |
| Kingfisher PLC | 4,765,800 | 18,163 | |
| Marks & Spencer Group | |||
| PLC | 3,201,310 | 17,902 | |
| * | Cairn Energy PLC | 2,785,781 | 17,001 |
| International Power PLC | 3,089,892 | 15,640 | |
| Randgold Resources Ltd. | 181,428 | 15,373 | |
| Legal & General Group | |||
| PLC | 11,801,932 | 15,347 | |
| Land Securities Group | |||
| PLC | 1,534,300 | 15,344 | |
| Capita Group PLC | 1,257,529 | 15,338 | |
| Carnival PLC | 338,283 | 14,654 | |
| * | Wolseley PLC | 572,839 | 14,307 |
| Next PLC | 397,337 | 13,886 | |
| Standard Life PLC | 4,503,036 | 13,699 | |
| Smiths Group PLC | 786,934 | 13,531 | |
| Man Group PLC | 3,465,131 | 12,792 | |
| RSA Insurance Group PLC | 6,856,823 | 12,691 | |
| J Sainsbury PLC | 2,440,358 | 12,576 | |
| British Land Co. PLC | 1,738,257 | 12,344 | |
| Antofagasta PLC | 793,509 | 12,031 | |
| * | Autonomy Corp. PLC | 436,093 | 11,963 |
| Johnson Matthey PLC | 432,884 | 11,513 |
33
| Total International Stock Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| United Utilities Group PLC | 1,377,027 | 11,269 | |
| Associated British Foods | |||
| PLC | 719,371 | 11,051 | |
| Vedanta Resources PLC | 275,195 | 10,520 | |
| G4S PLC | 2,557,622 | 10,411 | |
| Inmarsat PLC | 877,722 | 10,213 | |
| Sage Group PLC | 2,653,017 | 9,916 | |
| Eurasian Natural | |||
| Resources Corp. PLC | 520,755 | 9,655 | |
| Serco Group PLC | 995,949 | 9,559 | |
| Cobham PLC | 2,328,885 | 9,440 | |
| Intercontinental Hotels | |||
| Group PLC | 525,062 | 9,257 | |
| Kazakhmys PLC | 434,139 | 9,198 | |
| Burberry Group PLC | 880,758 | 9,021 | |
| * | Lonmin PLC | 310,317 | 8,965 |
| Rexam PLC | 1,781,823 | 8,786 | |
| AMEC PLC | 673,934 | 8,564 | |
| Severn Trent PLC | 478,405 | 8,460 | |
| Invensys PLC | 1,635,968 | 8,425 | |
| Hammerson PLC | 1,432,174 | 8,360 | |
| Whitbread PLC | 353,466 | 8,260 | |
| 3i Group PLC | 1,957,879 | 8,077 | |
| Bunzl PLC | 657,455 | 7,656 | |
| Admiral Group PLC | 376,055 | 7,542 | |
| ^ | Liberty International PLC | 1,009,452 | 7,527 |
| Home Retail Group PLC | 1,775,982 | 7,447 | |
| Petrofac Ltd. | 419,079 | 7,248 | |
| Segro PLC | 1,484,160 | 7,006 | |
| * | Cable & Wireless | ||
| Worldwide PLC | 5,213,562 | 6,892 | |
| ^ | Investec PLC | 861,122 | 6,811 |
| Tomkins PLC | 1,771,406 | 6,701 | |
| Thomas Cook Group PLC | 1,726,425 | 6,549 | |
| ICAP PLC | 1,051,580 | 6,067 | |
| Balfour Beatty PLC | 1,370,787 | 5,802 | |
| Firstgroup PLC | 960,485 | 5,582 | |
| Resolution Ltd. | 4,867,128 | 5,420 | |
| Schroders PLC | 249,372 | 5,272 | |
| TUI Travel PLC | 1,122,440 | 4,788 | |
| Fresnillo PLC | 360,383 | 4,387 | |
| Drax Group PLC | 727,184 | 4,013 | |
| *,^ | British Airways PLC | 1,157,011 | 4,011 |
| London Stock Exchange | |||
| Group PLC | 300,941 | 3,131 | |
| WPP PLC ADR | 298 | 16 | |
| 4,270,218 | |||
| Total Common Stocks | |||
| (Cost $23,851,469) | 26,848,711 | ||
| Market | ||||
| Value• | ||||
| Shares | ($000) | |||
| Temporary Cash Investments (7.8%)1 | ||||
| Money Market Fund (7.7%) | ||||
| 3,4 | Vanguard Market Liquidity | |||
| Fund, 0.210% | 2,100,000,309 | 2,100,000 | ||
| Face | ||||
| Amount | ||||
| ($000) | ||||
| U.S. Government and Agency Obligations (0.1%) | ||||
| 5,6 | Freddie Mac Discount | |||
| Notes, 0.235%, 8/16/10 | 8,000 | 7,995 | ||
| 5,7 | Freddie Mac Discount | |||
| Notes, 0.320%, 9/7/10 | 750 | 749 | ||
| 5,7 | Freddie Mac Discount | |||
| Notes, 0.320%, 9/20/10 | 6,000 | 5,993 | ||
| 14,737 | ||||
| Total Temporary Cash Investments | ||||
| (Cost $2,114,736) | 2,114,737 | |||
| Total Investments (107.1%) | ||||
| (Cost $25,966,205) | 28,963,448 | |||
| Other Assets and Liabilities (-7.1%) | ||||
| Other Assets | 200,464 | |||
| Liabilities4 | (2,131,107) | |||
| (1,930,643) | ||||
| Net Assets (100%) | ||||
| Applicable to 1,879,536,681 outstanding | ||||
| $.001 par value shares of beneficial | ||||
| interest (unlimited authorization) | 27,032,805 | |||
| Net Asset Value Per Share | $14.38 | |||
34
Total International Stock Index Fund
| At April 30, 2010, net assets consisted of: | |
| Amount | |
| ($000) | |
| Paid-in Capital | 26,179,416 |
| Undistributed Net Investment Income | 150,398 |
| Accumulated Net Realized Losses | (2,291,454) |
| Unrealized Appreciation (Depreciation) | |
| Investment Securities | 2,997,243 |
| Futures Contracts | (605) |
| Foreign Currencies and | |
| Forward Currency Contracts | (2,193) |
| Net Assets | 27,032,805 |
• See Note A in Notes to Financial Statements.
* Non-income-producing security.
^ Part of security position is on loan to broker-dealers. The total value of securities on loan is $1,941,118,000.
1 The fund invests a portion of its cash reserves in equity markets through the use of index futures contracts. After giving effect to futures investments, the fund’s effective common stock and temporary cash investment positions represent 99.7% and 7.4%, respectively, of ne t assets.
2 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 April 30, 2010, the value of this security represented 0.1% of net assets.
3 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 Includes $2,051,635,000 of collateral received for securities on loan.
5 The issuer operates under a congressional charter; its securities are not backed by the full faith and credit of the U.S. government.
6 Securities with a value of $2,631,000 have been segregated as collateral for open forward currency contracts.
7 Securities with a value of $6,742,000 have been segregated as initial margin for open futures contracts.
ADR—American Depositary Receipt.
GDR—Global Depositary Receipt.
REIT—Real Estate Investment Trust.
See accompanying Notes, which are an integral part of the Financial Statements.
35
| Total International Stock Index Fund | |
| Statement of Operations | |
| Six Months Ended | |
| April 30, 2010 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 317,904 |
| Interest2 | 134 |
| Security Lending | 2,711 |
| Total Income | 320,749 |
| Expenses | |
| The Vanguard Group—Note B | |
| Investment Advisory Services | 776 |
| Management and Administrative | 26,767 |
| Marketing and Distribution | 2,532 |
| Custodian Fees | 3,647 |
| Shareholders’ Reports | 16 |
| Trustees’ Fees and Expenses | 24 |
| Total Expenses | 33,762 |
| Net Investment Income | 286,987 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold | 109,200 |
| Futures Contracts | 4,512 |
| Foreign Currencies and Forward Currency Contracts | (9,122) |
| Realized Net Gain (Loss) | 104,590 |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities | 877,484 |
| Futures Contracts | 4,584 |
| Foreign Currencies and Forward Currency Contracts | (3,749) |
| Change in Unrealized Appreciation (Depreciation) | 878,319 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 1,269,896 |
1 Dividends are net of foreign withholding taxes of $27,720,000.
2 Interest income from an affiliated company of the fund was $116,000.
See accompanying Notes, which are an integral part of the Financial Statements.
36
| Total International Stock Index Fund | ||
| Statement of Changes in Net Assets | ||
| Six Months Ended | Year Ended | |
| April 30, | October 31, | |
| 2010 | 2009 | |
| ($000) | ($000) | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net Investment Income | 286,987 | 902,287 |
| Realized Net Gain (Loss) | 104,590 | (1,645,022) |
| Change in Unrealized Appreciation (Depreciation) | 878,319 | 6,395,419 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 1,269,896 | 5,652,684 |
| Distributions | ||
| Net Investment Income | (608,036) | (511,942) |
| Realized Capital Gain | — | — |
| Total Distributions | (608,036) | (511,942) |
| Capital Share Transactions | ||
| Issued | 3,307,375 | 5,544,277 |
| Issued in Lieu of Cash Distributions | 557,475 | 468,122 |
| Redeemed1 | (1,823,384) | (3,976,141) |
| Net Increase (Decrease) from Capital Share Transactions | 2,041,466 | 2,036,258 |
| Total Increase (Decrease) | 2,703,326 | 7,177,000 |
| Net Assets | ||
| Beginning of Period | 24,329,479 | 17,152,479 |
| End of Period2 | 27,032,805 | 24,329,479 |
1 Net of redemption fees for fiscal 2010 and 2009 of $413,000 and $1,020,000, respectively.
2 Net Assets—End of Period includes undistributed net investment income of $150,398,000 and $473,474,000.
See accompanying Notes, which are an integral part of the Financial Statements.
37
| Total International Stock Index Fund | ||||||
| Financial Highlights | ||||||
| Six Months | ||||||
| Ended | ||||||
| For a Share Outstanding | April 30, | Year Ended October 31, | ||||
| Throughout Each Period | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Net Asset Value, Beginning of Period | $13.99 | $10.97 | $21.89 | $16.90 | $13.49 | $11.48 |
| Investment Operations | ||||||
| Net Investment Income | .153 | .5441 | .5402 | .412 | .294 | .255 |
| Net Realized and Unrealized Gain (Loss) | ||||||
| on Investments | .581 | 2.801 | (10.938) | 4.980 | 3.410 | 2.010 |
| Total from Investment Operations | .734 | 3.345 | (10.398) | 5.392 | 3.704 | 2.265 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.344) | (.325) | (.522) | (.402) | (.294) | (.255) |
| Distributions from Realized Capital Gains | — | — | — | — | — | — |
| Total Distributions | (.344) | (.325) | (.522) | (.402) | (.294) | (.255) |
| Net Asset Value, End of Period | $14.38 | $13.99 | $10.97 | $21.89 | $16.90 | $13.49 |
| Total Return3 | 5.23% | 31.41% | -48.57% | 32.47% | 27.84% | 19.91% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $27,033 | $24,329 | $17,152 | $29,725 | $18,200 | $11,331 |
| Ratio of Total Expenses to | ||||||
| Average Net Assets | 0.26%4 | 0.27%5 | 0.03%5 | 0%5 | 0%5 | 0%5 |
| Ratio of Net Investment Income to | ||||||
| Average Net Assets | 2.21%4 | 4.73%1 | 3.07% | 1.93% | 1.71% | 1.76% |
| Portfolio Turnover Rate6 | 5%4 | 12% | 15% | 2% | 2% | 3% |
1 Net investment income per share and the ratio of net investment income to average net assets include $0.249 and 2.06%, respectively, of annual dividends received from Vanguard mutual funds in December 2008. From August 2008 through February 2009, the fund invested in a combination of Vanguard mutual funds and common stocks. Effective in March 2009, the fund’s equity investments are solely in common stocks.
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; or the account service fee that may be applicable to certain accounts with balances below $10,000.
4 Annualized.
5 The acquired fund fees and expenses were 0.05%, 0.25%, 0.27%, 0.32%, and 0.31%. Including the acquired fund fees and expenses, total operating expenses were 0.32%, 0.28%, 0.27%, 0.32%, and 0.31%.
6 Excludes the value of securities received and mutual fund shares delivered in connection with a change in the fund’s investment policy to invest directly in individual stocks and reduce the fund’s investments in Vanguard mutual funds.
See accompanying Notes, which are an integral part of the Financial Statements.
38
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 invests in securities of foreign issuers, which may subject it to investment risks not normally associated with investing in securities of United States corporations.
A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.
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 pro xies (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 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.
39
Total International Stock Index Fund
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. Counterparty risk is mitigated by entering into forward currency contracts only with highly rated counterparties, by a master netting arrangement between the fund and the counterparty, and by the posting of collateral by the counterparty. The forward currency contracts contain provisions whereby a counterparty may terminate open contracts if the fund’s net assets decline below a certain level, triggering a payment by the fund if the fund is in a net liability position at the time of the termination. The payment amount would be reduced by any collateral the fund has posted. Any securities po sted as collateral for open contracts are noted in the Statement of Net Assets.
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. Management has analyzed the fund’s tax positions taken for all open federal income tax years (October 31, 2006–2009), and for the period ended April 30, 2010, and has concluded that no provision for federal income tax is required in the fund’s 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.
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 April 30, 2010, the fund had contributed capital of $5,104,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 2.04% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.
40
Total International Stock Index Fund
C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).
The following table summarizes the fund’s investments as of April 30, 2010, based on the inputs used to value them:
| Level 1 | Level 2 | Level 3 | |
| Investments | ($000) | ($000) | ($000) |
| Common Stocks | 1,676,109 | 25,172,400 | 202 |
| Temporary Cash Investments | 2,100,000 | 14,737 | — |
| Futures Contracts—Liabilities1 | (659) | — | — |
| Forward Currency Contracts—Assets | — | 86 | — |
| Forward Currency Contracts—Liabilities | — | (1,854) | — |
| Total | 3,775,450 | 25,185,369 | 202 |
| 1 Represents variation margin on the last day of the reporting period. |
The following table summarizes changes in investments valued based on Level 3 inputs during the six months ended April 30, 2010:
| Investments in | |
| Common Stocks | |
| Amount Valued Based on Level 3 Inputs | ($000) |
| Balance as of October 31, 2009 | 223 |
| Change in Unrealized Appreciation (Depreciation) | (21) |
| Balance as of April 30, 2010 | 202 |
41
Total International Stock Index Fund
D. At April 30, 2010, the fair values of derivatives were reflected in the Statement of Net Assets as follows:
| Foreign | |||
| Equity | Exchange | ||
| Contracts1 | Contracts | Total | |
| Statement of Net Assets Caption | ($000) | ($000) | ($000) |
| Other Assets | — | 86 | 86 |
| Liabilities | (659) | (1,854) | (2,513) |
| 1 Represents variation margin on the last day of the reporting period. |
Realized net gain (loss) and the change in unrealized appreciation (depreciation) on derivatives for the six months ended April 30, 2010 were:
| Foreign | |||
| Equity | Exchange | ||
| Contracts | Contracts | Total | |
| Realized Net Gain (Loss) on Derivatives | ($000) | ($000) | ($000) |
| Futures Contracts | 4,512 | — | 4,512 |
| Forward Currency Contracts | — | (6,677) | (6,677) |
| Realized Net Gain (Loss) on Derivatives | 4,512 | (6,677) | (2,165) |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | |||
| Futures Contracts | 4,584 | — | 4,584 |
| Forward Currency Contracts | — | (2,032) | (2,032) |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | 4,584 | (2,032) | 2,552 |
At April 30, 2010, the aggregate settlement value of open futures contracts and the related unrealized appreciation (depreciation) were:
| ($000) | ||||
| Aggregate | ||||
| Number of | Settlement | Unrealized | ||
| Long (Short) | Value | Appreciation | ||
| Futures Contracts | Expiration | Contracts | Long (Short) | (Depreciation) |
| Dow Jones EURO STOXX 50 Index | June 2010 | 1,275 | 46,587 | (2,012) |
| FTSE 100 Index | June 2010 | 460 | 38,778 | (597) |
| Topix Index | June 2010 | 275 | 28,755 | 2,004 |
Unrealized appreciation (depreciation) on open FTSE 100 Index futures contracts is required to be treated as realized gain (loss) for tax purposes.
42
Total International Stock Index Fund
At April 30, 2010, the fund had open forward currency contracts to receive and deliver currencies as follows. Unrealized appreciation (depreciation) on open forward currency contracts is treated as realized gain (loss) for tax purposes.
| Unrealized | |||||
| Appreciation | |||||
| Contract Amount (000) | (Depreciation) | ||||
| Contract Settlement Date | Receive | Deliver | ($000) | ||
| 6/23/10 | EUR | 36,449 | USD | 48,472 | (1,727) |
| 6/23/10 | GBP | 25,724 | USD | 39,366 | (127) |
| 6/16/10 | USD | 6,000 | JPY | 563,807 | 86 |
EUR—Euro.
GBP—British pound.
JPY—Japanese yen.
USD—U.S. dollar.
The fund had net unrealized foreign currency losses of $425,000 resulting from the translation of other assets and liabilities at April 30, 2010.
E. 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 six months ended April 30, 2010, the fund realized net foreign currency losses of $2,445,000, which decreased distributable net income for tax purposes; accordingly, such losses have been reclassified from accumulated net realized losses to undistributed net investment income. 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 six months ended April 30, 2010, the fund realized gains on the sale of passive foreign investment companies of $418,000, 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 through the most recent mark-to- market date for tax purposes on passive foreign investment company holdings at April 30, 2010, was $48,509,000.
The fund’s tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2009, the fund had available capital loss carryforwards totaling $2,397,680,000 to offset future net capital gains of $43,870,000 through October 31, 2010, $638,457,000 through October 31, 2016, and $1,715,353,000 through October 31, 2017. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2010; should the fund realize net capital losses for the year, the losses will be added to the loss carryforward balance above.
43
Total International Stock Index Fund
At April 30, 2010, the cost of investment securities for tax purposes was $26,014,714,000. Net unrealized appreciation of investment securities for tax purposes was $2,948,734,000, consisting of unrealized gains of $4,170,486,000 on securities that had risen in value since their purchase and $1,221,752,000 in unrealized losses on securities that had fallen in value since their purchase.
F. During the six months ended April 30, 2010, the fund purchased $2,312,283,000 of investment securities and sold $637,425,000 of investment securities, other than temporary cash investments.
| G. Capital shares issued and redeemed were: | ||
| Six Months Ended | Year Ended | |
| April 30, 2010 | October 31, 2009 | |
| Shares | Shares | |
| (000) | (000) | |
| Issued | 228,742 | 493,049 |
| Issued in Lieu of Cash Distributions | 38,553 | 43,832 |
| Redeemed | (126,237) | (361,836) |
| Net Increase (Decrease) in Shares Outstanding | 141,058 | 175,045 |
H. In preparing the financial statements as of April 30, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements.
44
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 fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. 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 accompanying table 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.
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 2% fee on redemptions of shares held for less than two months, nor do they include 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.” 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.
45
| Six Months Ended April 30, 2010 | |||
| Beginning | Ending | Expenses | |
| Account Value | Account Value | Paid During | |
| Total International Stock Index Fund | 10/31/2009 | 4/30/2010 | Period |
| Based on Actual Fund Return | $1,000.00 | $1,052.33 | $1.32 |
| Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,023.51 | 1.30 |
The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratio for that period is 0.26%. 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.
46
Trustees Approve Advisory Arrangement
The board of trustees of Vanguard Total International Stock Index Fund has renewed the fund’s investment advisory arrangement with The Vanguard Group, Inc. Vanguard—through its Quantitative Equity Group—serves as the investment advisor for the fund. The board determined that continuing the fund’s internalized management structure was in the best interests of the fund and its shareholders.
The board based its decision upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. The trustees considered the factors discussed below, among others. However, no single factor determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of services
The board considered the quality of the fund’s investment management since it began investing directly in stocks in 2008, and took into account the organizational depth and stability of the advisor. Vanguard has been managing investments for more than three decades. The Quantitative Equity Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.
The board concluded that Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangement.
Investment performance
The board considered the fund’s performance since 2008, including any periods of outperformance or underperformance of its target index and peer group. The board concluded that the fund has performed in line with expectations, and that the results have been consistent with the fund’s investment strategy. Information about the fund’s most recent performance can be found in the Performance Summary section of this report.
Cost
The board concluded that the fund’s expense ratio was well below the average expense ratio charged by funds in its peer group. The board noted that the fund’s advisory expense ratio was also well below its peer-group average. Information about the fund’s expense ratio appears in the About Your Fund’s Expenses section of this report as well as in the Financial Statements section.
The board does not conduct a profitability analysis of Vanguard because of Vanguard’s unique “at-cost” structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees, and produces “profits” only in the form of reduced expenses for fund shareholders.
The benefit of economies of scale
The board concluded that the fund’s low-cost arrangement with Vanguard ensures that the fund will realize economies of scale as it grows, with the cost to shareholders declining as the fund’s assets increase.
The board will consider whether to renew the advisory arrangement again after a one-year period.
47
Glossary
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%. For this report, beta is based on returns over the past 36 months for both the fund and the index. Note that a fund’s beta should be reviewed in conjunction with its R-squared (see definition). 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.
Dividend Yield. Dividend income earned by stocks, expressed as a percentage of the aggregate market value (or of net asset value, for a fund). The yield is determined by dividing the amount of the annual dividends by the aggregate value (or net asset value) at the end of the period. For a fund, the dividend yield is based solely on stock holdings and does not include any income produced by other investments.
Earnings Growth Rate. The average annual rate of growth in earnings over the past five years for the stocks now in a fund.
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.
Median Market Cap. An indicator of the size of companies in which a fund invests; the midpoint of market capitalization (market price x shares outstanding) of a fund’s stocks, weighted by the proportion of the fund’s assets invested in each stock. Stocks representing half of the fund’s assets have market capitalizations above the median, and the rest are below it.
Price/Book Ratio. The share price of a stock divided by its net worth, or book value, per share. For a fund, the weighted average price/book ratio of the stocks it holds.
Price/Earnings Ratio. The ratio of a stock’s current price to its per-share earnings over the past year. For a fund, the weighted average P/E of the stocks it holds. P/E is an indicator of market expectations about corporate prospects; the higher the P/E, the greater the expectations for a company’s future growth.
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. For this report, R-squared is based on returns over the past 36 months for both the fund and the index.
Return on Equity. The annual average rate of return generated by a company during the past five years for each dollar of shareholder’s equity (net income divided by shareholder’s equity). For a fund, the weighted average return on equity for the companies whose stocks it holds.
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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.
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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. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 162 Vanguard funds.
The following table provides information for each trustee and executive officer of the fund. More information about the trustees is in the Statement of Additional Information, which can be obtained, without charge, by contacting Vanguard at 800-662-7447, or online at www.vanguard.com.
| Interested Trustee1 | Rajiv L. Gupta |
| Born 1945. Trustee Since December 2001.2 | |
| F. William McNabb III | Principal Occupation(s) During the Past Five Years: |
| Born 1957. Trustee Since July 2009. Chairman of the | Chairman and Chief Executive Officer (retired 2009) |
| Board. Principal Occupation(s) During the Past Five | and President (2006–2008) of Rohm and Haas Co. |
| Years: Chairman of the Board of The Vanguard Group, | (chemicals); Director of Tyco International, Ltd. |
| Inc., and of each of the investment companies served | (diversified manufacturing and services) and Hewlett- |
| by The Vanguard Group, since January 2010; Director | Packard Co. (electronic computer manufacturing); |
| of The Vanguard Group since 2008; Chief Executive | Trustee of The Conference Board; Member of the |
| Officer and President of The Vanguard Group and of | Board of Managers of Delphi Automotive LLP |
| each of the investment companies served by The | (automotive components). |
| Vanguard Group since 2008; Director of Vanguard | |
| Marketing Corporation; Managing Director of The | Amy Gutmann |
| Vanguard Group (1995–2008). | Born 1949. Trustee Since June 2006. Principal |
| Occupation(s) During the Past Five Years: President | |
| of the University of Pennsylvania; Christopher H. | |
| Independent Trustees | Browne Distinguished Professor of Political Science |
| in the School of Arts and Sciences with secondary | |
| Emerson U. Fullwood | appointments at the Annenberg School for Commu- |
| Born 1948. Trustee Since January 2008. Principal | nication and the Graduate School of Education of |
| Occupation(s) During the Past Five Years: Executive | the University of Pennsylvania; Director of Carnegie |
| Chief Staff and Marketing Officer for North America | Corporation of New York, Schuylkill River Development |
| and Corporate Vice President (retired 2008) of Xerox | Corporation, and Greater Philadelphia Chamber of |
| Corporation (document management products and | Commerce; Trustee of the National Constitution Center; |
| services); Director of SPX Corporation (multi-industry | Chair of the Presidential Commission for the Study of |
| manufacturing), the United Way of Rochester, | Bioethical Issues. |
| Amerigroup Corporation (managed health care), | |
| the University of Rochester Medical Center, and | |
| Monroe Community College Foundation. |
| JoAnn Heffernan Heisen | Executive Officers | |
| Born 1950. Trustee Since July 1998. Principal | ||
| Occupation(s) During the Past Five Years: Corporate | Thomas J. Higgins | |
| Vice President and Chief Global Diversity Officer since | Born 1957. Chief Financial Officer Since September | |
| 2006 (retired 2008) and Member of the Executive | 2008. Principal Occupation(s) During the Past Five | |
| Committee (retired 2008) of Johnson & Johnson | Years: Principal of The Vanguard Group, Inc.; Chief | |
| (pharmaceuticals/consumer products); Vice President | Financial Officer of each of the investment companies | |
| and Chief Information Officer of Johnson & Johnson | served by The Vanguard Group since 2008; Treasurer | |
| (1997–2005); Director of the University Medical Center | of each of the investment companies served by The | |
| at Princeton and Women’s Research and Education | Vanguard Group (1998–2008). | |
| Institute; Member of the Advisory Board of the | ||
| Maxwell School of Citizenship and Public Affairs | Kathryn J. Hyatt | |
| at Syracuse University. | Born 1955. Treasurer Since November 2008. Principal | |
| Occupation(s) During the Past Five Years: Principal | ||
| F. Joseph Loughrey | of The Vanguard Group, Inc.; Treasurer of each of | |
| Born 1949. Trustee Since October 2009. Principal | the investment companies served by The Vanguard | |
| Occupation(s) During the Past Five Years: President | Group since 2008; Assistant Treasurer of each of the | |
| and Chief Operating Officer since 2005 (retired 2009) | investment companies served by The Vanguard Group | |
| and Vice Chairman of the Board (2008–2009) of | (1988–2008). | |
| Cummins Inc. (industrial machinery); Director of | ||
| SKF AB (industrial machinery), Hillenbrand, Inc. | Heidi Stam | |
| (specialized consumer services), Sauer-Danfoss Inc. | Born 1956. Secretary Since July 2005. Principal | |
| (machinery), the Lumina Foundation for Education, | Occupation(s) During the Past Five Years: Managing | |
| and Oxfam America; Chairman of the Advisory Council | Director of The Vanguard Group, Inc., since 2006; | |
| for the College of Arts and Letters at the University of | General Counsel of The Vanguard Group since 2005; | |
| Notre Dame. | Secretary of The Vanguard Group and of each of the | |
| investment companies served by The Vanguard Group | ||
| André F. Perold | since 2005; Director and Senior Vice President of | |
| Born 1952. Trustee Since December 2004. Principal | Vanguard Marketing Corporation since 2005; | |
| Occupation(s) During the Past Five Years: George | Principal of The Vanguard Group (1997–2006). | |
| Gund Professor of Finance and Banking at the Harvard | ||
| Business School; Chair of the Investment Committee | ||
| of HighVista Strategies LLC (private investment firm). | Vanguard Senior Management Team | |
| Alfred M. Rankin, Jr. | R. Gregory Barton | Michael S. Miller |
| Born 1941. Trustee Since January 1993. Principal | Mortimer J. Buckley | James M. Norris |
| Occupation(s) During the Past Five Years: Chairman, | Kathleen C. Gubanich | Glenn W. Reed |
| President, and Chief Executive Officer of NACCO | Paul A. Heller | George U. Sauter |
| Industries, Inc. (forklift trucks/housewares/lignite); | ||
| Director of Goodrich Corporation (industrial products/ | ||
| aircraft systems and services); Chairman of the Federal | Chairman Emeritus and Senior Advisor | |
| Reserve Bank of Cleveland; Trustee of The Cleveland | ||
| Museum of Art. | John J. Brennan | |
| Chairman, 1996–2009 | ||
| Peter F. Volanakis | Chief Executive Officer and President, 1996–2008 | |
| Born 1955. Trustee Since July 2009. Principal | ||
| Occupation(s) During the Past Five Years: President | ||
| since 2007 and Chief Operating Officer since 2005 | Founder | |
| of Corning Incorporated (communications equipment); | ||
| President of Corning Technologies (2001–2005); | John C. Bogle | |
| Director of Corning Incorporated and Dow Corning; | Chairman and Chief Executive Officer, 1974–1996 | |
| Trustee of the Corning Incorporated Foundation and | ||
| the Corning Museum of Glass; Overseer of the | ||
| Amos Tuck School of Business Administration at | ||
| Dartmouth College. | ||
1 Mr. McNabb is considered an “interested person,” as defined in the Investment Company Act of 1940, because he is an officer of the Vanguard funds.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard State Tax-Exempt Funds.
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| Q1132 062010 | |
 |
| Vanguard Developed Markets |
| Index Fund Semiannual Report |
| April 30, 2010 |
 |
> For the six months ended April 30, 2010, Vanguard Developed Markets Index Fund returned about 3%.
> The fund’s return for the period tracked the market index, the MSCI® EAFE Index. (Fair-value pricing adjustments explained much of the apparent difference.) The fund trailed the average return for international funds.
> The Pacific region produced the best results, while European markets were barely positive. Mounting fiscal problems in several European governments resulted in 7 out of 17 European countries in the fund posting negative returns.
| Contents | |
| Your Fund’s Total Returns. | 1 |
| Chairman’s Letter. | 2 |
| Fund Profile. | 7 |
| Performance Summary. | 9 |
| Financial Statements. | 10 |
| About Your Fund’s Expenses. | 34 |
| Trustees Approve Advisory Arrangement. | 36 |
| Glossary. | 37 |
Developed Markets Index Fund
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 front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.
See the Glossary for definitions of investment terms used in this report.
Cover photograph: Veronica Coia.
| Your Fund’s Total Returns | ||||
| Six Months Ended April 30, 2010 | ||||
| Total | ||||
| Returns | ||||
| Vanguard Developed Markets Index Fund | ||||
| Investor Shares | 2.99% | |||
| Institutional Shares | 3.11 | |||
| MSCI EAFE Index | 2.48 | |||
| International Funds Average | 5.43 | |||
| International Funds Average: Derived from data provided by Lipper Inc. | ||||
| Institutional Shares are available for a minimum investment of $5 million. | ||||
| Your Fund’s Performance at a Glance | ||||
| October 31, 2009 , Through April 30, 2010 | ||||
| Distributions Per Share | ||||
| Starting | Ending | Income | Capital | |
| Share Price | Share Price | Dividends | Gains | |
| Vanguard Developed Markets Index Fund | ||||
| Investor Shares | $9.26 | $9.43 | $0.109 | $0.000 |
| Institutional Shares | 9.26 | 9.36 | 0.109 | 0.000 |
The inception date of the Institutional Shares is January 22, 2010. For the six-month period ended April 30, 2010, the returns and other data shown in the tables above reflect a blend of the historical performance of the fund’s Investor Shares prior to January 22 and of the Institutional Shares from then on.
1
Chairman’s Letter
Dear Shareholder,
For the six months ended April 30, 2010, Vanguard Developed Markets Index Fund returned about 3%. This result was consistent with that of the fund’s benchmark index, the MSCI EAFE Index, although fair-value pricing adjustments appeared to create a slight discrepancy between the fund’s and index’s returns. (Please see the text box on page 5 for more explanation.) The Developed Markets Index Fund lagged the average return for international funds, whose typically meaningful stakes in fast-growing emerging markets produced strong six-month returns.
The Developed Markets Index Fund began the period amid a rally, but slipped in the middle of the first quarter. Stocks in the Pacific region posted relatively strong results for the period, but European markets, the fund’s largest component, struggled. The growing debt crisis in Greece and other countries weakened European markets. As indicated in our October annual report to you, Vanguard Developed Markets Index Fund and Vanguard Institutional Developed Markets Index Fund merged in late January 2010. The resulting single fund, the Developed Markets Index Fund, now comprises both Investor and Institutional Shares.
2
Most stock markets extended their postcrisis rally
Despite a few setbacks, most markets around the world continued to climb during the six months ended April 30. International markets, while considerably lagging the broad U.S. market, generally still ended the half-year in positive territory. In Europe, Greece’s financial woes continued to make headlines, precipitating unusual market volatility that persisted after the close of the fiscal half-year. In Asia, the larger developed markets returned about 8%. Most emerging market stocks, which made a quick and substantial recovery from the global economic slowdown, continued to outperform those in developed markets. China, ho wever, was held back by the prospect of monetary policy tightening.
The broad U.S. stock market ended the period up about 18%. Since scraping bottom in March 2009, U.S. equities have rebounded dramatically, returning more than 80%.
For the half-year, stocks of small-capitalization companies significantly outperformed both the broad market and larger-cap issues, returning about 28%. Large-cap stocks returned about 17%, slightly behind the broad market’s gain. Value stocks generally trumped their growth counterparts for the period, though the differences weren’t all that noteworthy.
| Market Barometer | |||
| Total Returns | |||
| Periods Ended April 30, 2010 | |||
| Six | One | Five Years | |
| Months | Year | (Annualized) | |
| Stocks | |||
| Russell 1000 Index (Large-caps) | 16.77% | 40.21% | 3.07% |
| Russell 2000 Index (Small-caps) | 28.17 | 48.95 | 5.74 |
| Dow Jones U.S. Total Stock Market Index | 17.91 | 41.12 | 3.73 |
| MSCI All Country World Index ex USA (International) | 5.95 | 40.97 | 6.94 |
| Bonds | |||
| Barclays Capital U.S. Aggregate Bond Index | |||
| (Broad taxable market) | 2.54% | 8.30% | 5.38% |
| Barclays Capital Municipal Bond Index | 3.68 | 8.85 | 4.51 |
| Citigroup Three-Month U.S. Treasury Bill Index | 0.04 | 0.12 | 2.72 |
| CPI | |||
| Consumer Price Index | 0.85% | 2.24% | 2.30% |
3
Corporate bonds remained attractive to investors
The broad U.S. taxable bond market returned about 3% for the period as investors continued to favor higher-risk corporate bonds over U.S. government issues. The broad municipal bond market posted strong results, returning almost 4%. The yields of longer-term Treasury bonds rose during the six months, while those of the shortest-term securities remained around 0%.
The Federal Reserve Board has kept its target for short-term interest rates unchanged at 0% to 0.25% since December 2008. The Fed’s April statement noted economic improvements, but said officials still thought that “economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The Fed has, however, begun to wind down credit programs established during the financial crisis.
Sovereign debt crisis dragged down European stocks
Vanguard Developed Markets Index Fund holds roughly two-thirds of its assets in European stocks and the remaining one- third in Pacific stocks. The fund’s return for the six-month period reflected the proportional return of both markets.
Stocks in the Pacific region returned about 8% for the period. Japan, which makes up about 23% of the fund’s assets, contributed
| Expense Ratios | |||
| Your Fund Compared With Its Peer Group | |||
| Investor | Institutional | Peer Group | |
| Shares | Shares | Average | |
| Developed Markets Index Fund | 0.22% | 0.08% | 1.44% |
The fund expense ratios shown are from the prospectus dated February 26, 2010, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. The annualized expense ratios were 0.24% for Investor Shares for the six months ended April 30, 2010, and 0.08% for Institutional Shares from their inception on January 22, 2010, through April 30, 2010. The peer-group expense ratio is derived from data provided by Lipper Inc. and captures information through year-end 2009.
Peer group: International Funds.
4
the most to the fund’s six-month return. Encouraging economic data on export activity helped lift the Japanese stock market to an 18-month high in the spring. Japanese companies in information technology and industrials, benefited from an increase in exports.
Australia and Singapore also played prominent roles in the Pacific markets. In Australia, the financial and materials sectors helped boost returns. Singapore benefited from its strengthening financial and industrial sectors.
European stocks returned 0.1% for the period, reflecting a combination of middling stock market returns and significant weakness in the euro, which reduced returns for U.S.-based investors. The United Kingdom, which accounts for about one-fifth of the fund’s assets, was a tiny bright spot in a continent otherwise submerged in sovereign debt troubles. The U.K.’s materials, consumer discretionary, and consumer staples sectors contributed the most to its return for the period.
Although several other countries in Europe showed gains, their performances were overshadowed by losses in Greece and, to a lesser extent, Portugal, Spain, and Italy. Each of these countries posted double-digit declines for the six months. Greece, which was in the worst shape of all (–41%), was offered emergency loan packages from the International Monetary
| A note on fair-value pricing |
| An index fund’s return sometimes may appear to diverge from the return of its benchmark index a bit more than would be expected. This may be the result of a fair-value pricing adjustment. |
| These adjustments address pricing discrepancies that may arise because of time-zone differences among global stock markets. Foreign stocks may trade on exchanges that close many hours before a fund’s closing share price is calculated in the United States, generally at 4 p.m., Eastern time. In the hours between the foreign close and the U.S. close, the value of these foreign securities may change—because of company- specific announcements or market- wide developments, for example. Such price changes are not immediately reflected in international index values. |
| Fair-value pricing takes such changes into account in calculating the fund’s daily net asset value, thus ensuring that the NAV doesn’t include “stale” prices. The result can be a temporary divergence between the return of the fund and that of its benchmark index—a difference that usually corrects itself when the foreign markets reopen. |
5
Fund and the European Union. Still, fear about the fiscal health of even larger countries led to market unease in Europe and beyond.
Diversification is prudent for all market conditions
During the past six months, the broad U.S. stock market has outperformed international stocks. This contrasts sharply with recent years when U.S. markets were in the grips of a bear market and a severe economic recession.
These events may have left some investors uncertain about where to safely invest their assets. Although it may be frustrating to some investors, the market’s ups and downs are an integral part of investing. To help protect against the market’s unpredictability, Vanguard recommends that investors incorporate broad diversification in their portfolios and always think long term.
We advise that you diversify your portfolio among, and within, different asset classes in a manner consistent with your long-term goals, time horizon, and risk tolerance. Holding a mix of domestic and international stock, bond, and short-term investments can help safeguard your portfolio from the markets’ worst outcomes while giving you the opportunity to participate in the best. Vanguard Developed Markets Index Fund, with its low-cost exposure to international equities, can play an important role as part of such a balanced portfolio.
On another matter, I would like to inform you that on January 1, 2010, we completed a leadership transition that began in March 2008. I succeeded Jack Brennan as chairman of Vanguard and each of the funds. Jack has agreed to serve as chairman emeritus and senior advisor.
Under Jack’s leadership, Vanguard has grown to become a preeminent firm in the mutual fund industry. Jack’s energy, his relentless pursuit of perfection, and his unwavering focus on always doing the right thing for our clients are evident in every facet of Vanguard policy today.
Thank you for entrusting your assets to Vanguard.
Sincerely,
F. William McNabb III
Chairman and Chief Executive Officer
May 17, 2010
6
Developed Markets Index Fund
| Fund Profile | |||
| As of April 30, 2010 | |||
| Share-Class Characteristics | |||
| Investor | Institutional | ||
| Shares | Shares | ||
| Ticker Symbol | VDMIX | VIDMX | |
| Expense Ratio1 | 0.22% | 0.08% | |
| Portfolio Characteristics | |||
| MSCI AC | |||
| MSCI | World | ||
| EAFE | Index | ||
| Fund | Index ex USA | ||
| Number of Stocks | 969 | 953 | 1,816 |
| Median Market Cap $33.2B | $33.2B | $28.4B | |
| Price/Earnings Ratio | 25.3x | 25.5x | 23.2x |
| Price/Book Ratio | 1.6x | 1.6x | 1.7x |
| Return on Equity | 17.4% | 17.4% | 18.3% |
| Earnings Growth Rate | 2.3% | 2.3% | 5.8% |
| Dividend Yield | 3.0% | 3.0% | 2.7% |
| Turnover Rate | |||
| (Annualized) | 5% | — | — |
| Short-Term Reserves | -1.2% | — | — |
| Sector Diversification (% of equity exposure) | |||
| MSCI AC | |||
| MSCI | World | ||
| EAFE | Index | ||
| Fund | Index ex USA | ||
| Consumer | |||
| Discretionary | 10.1% | 10.1% | 8.7% |
| Consumer Staples | 10.0 | 10.0 | 8.5 |
| Energy | 8.1 | 8.1 | 10.9 |
| Financials | 25.2 | 25.3 | 25.7 |
| Health Care | 8.0 | 8.0 | 6.1 |
| Industrials | 12.1 | 12.0 | 10.3 |
| Information | |||
| Technology | 5.5 | 5.4 | 7.1 |
| Materials | 10.2 | 10.3 | 12.1 |
| Telecommunication | |||
| Services | 5.4 | 5.4 | 5.9 |
| Utilities | 5.4 | 5.4 | 4.7 |
| Volatility Measures | ||
| MSCI | MSCI AC | |
| EAFE | World Index | |
| Index | ex USA | |
| R-Squared | 0.98 | 0.96 |
| Beta | 1.03 | 0.95 |
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
Ten Largest Holdings (% of total net assets)
| Royal Dutch Shell PLC | Integrated Oil & | |
| Gas | 1.9% | |
| BHP Billiton Ltd. | Diversified Metals | |
| & Mining | 1.9 | |
| HSBC Holdings PLC | Diversified Banks | 1.7 |
| Nestle SA | Packaged Foods & | |
| Meats | 1.7 | |
| BP PLC | Integrated Oil & | |
| Gas | 1.6 | |
| Vodafone Group PLC | Wireless | |
| Telecommunication | ||
| Services | 1.1 | |
| Total SA | Integrated Oil & | |
| Gas | 1.1 | |
| Toyota Motor Corp. | Automobile | |
| Manufacturers | 1.1 | |
| Roche Holding AG | Pharmaceuticals | 1.1 |
| Novartis AG | Pharmaceuticals | 1.1 |
| Top Ten | 14.3% |
The holdings listed exclude any temporary cash investments and equity index products.
Allocation by Region (% of equity exposure)
1 The expense ratios shown are from the prospectus dated February 26, 2010, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. The annualized expense ratios were 0.24% for Investor Shares for the six months ended April 30, 2010, and 0.08% for Institutional Shares from their inception on January 22, 2010, through April 30, 2010.
7
Developed Markets Index Fund
Market Diversification (% of equity exposure)
| MSCI AC | |||
| MSCI | World | ||
| EAFE | Index | ||
| Fund | Index | ex USA | |
| Europe | |||
| United Kingdom | 21.4% | 21.1% | 14.6% |
| France | 10.2 | 10.3 | 7.1 |
| Germany | 7.8 | 7.8 | 5.4 |
| Switzerland | 7.5 | 7.6 | 5.3 |
| Spain | 3.7 | 3.8 | 2.6 |
| Italy | 3.1 | 3.1 | 2.1 |
| Sweden | 2.9 | 2.9 | 2.0 |
| Netherlands | 2.6 | 2.6 | 1.8 |
| Finland | 1.1 | 1.1 | 0.8 |
| Denmark | 1.0 | 1.0 | 0.7 |
| Other | 3.0 | 3.0 | 2.1 |
| Subtotal | 64.3% | 64.3% | 44.5% |
| Pacific | |||
| Japan | 23.2% | 22.8% | 15.7% |
| Australia | 8.6 | 8.8 | 6.1 |
| Hong Kong | 2.3 | 2.4 | 1.6 |
| Singapore | 1.5 | 1.6 | 1.1 |
| Other | 0.1 | 0.1 | 0.1 |
| Subtotal | 35.7% | 35.7% | 24.6% |
| Emerging Markets | 0.0% | 0.0% | 23.1% |
| North America | 0.0% | 0.0% | 7.8% |
8
Developed Markets Index Fund
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.
Fiscal-Year Total Returns (%): May 8, 2000, Through April 30, 2010
Average Annual Total Returns: Periods Ended March 31, 2010
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.
| Inception | One | Five | Since | |
| Date | Year | Years | Inception | |
| Investor Shares | 5/8/2000 | 54.18% | 3.81% | 1.99% |
| Institutional Shares | 5/8/2000 | 54.22 | 3.81 | 1.99 |
The inception date of the Institutional Shares is January 22, 2010; the returns shown in the table above reflect a blend of the historical performance of the fund’s Investor Shares prior to January 22, 2010, and of the Institutional Shares from then on. The inception date shown in the table is that of the fund’s Investor Shares.
Fund returns do not reflect the 2% fee assessed on redemptions of shares held for less than two months.
See Financial Highlights for dividend and capital gains information.
9
Developed Markets Index Fund
Financial Statements (unaudited)
Statement of Net Assets
As of April 30, 2010
The fund reports a complete list of its holdings in regulatory filings 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) | ||
| Common Stocks (97.5%)1 | |||
| Australia (8.4%) | |||
| BHP Billiton Ltd. | 3,142,363 | 114,873 | |
| Commonwealth Bank | |||
| of Australia | 1,436,538 | 76,861 | |
| Westpac Banking Corp. | 2,755,000 | 68,645 | |
| Australia & New Zealand | |||
| Banking Group Ltd. | 2,345,334 | 51,947 | |
| National Australia | |||
| Bank Ltd. | 1,962,125 | 50,130 | |
| Woolworths Ltd. | 1,160,702 | 28,995 | |
| Rio Tinto Ltd. | 408,088 | 26,664 | |
| Wesfarmers Ltd. | 941,793 | 25,247 | |
| Westfield Group | 1,943,998 | 22,961 | |
| Woodside Petroleum Ltd. | 509,178 | 21,115 | |
| QBE Insurance Group Ltd. | 959,405 | 18,588 | |
| CSL Ltd. | 527,849 | 15,773 | |
| Macquarie Group Ltd. | 311,123 | 14,187 | |
| Newcrest Mining Ltd. | 452,256 | 13,652 | |
| Origin Energy Ltd. | 822,200 | 12,366 | |
| Telstra Corp. Ltd. | 4,083,983 | 11,966 | |
| AMP Ltd. | 1,918,516 | 11,010 | |
| Santos Ltd. | 779,615 | 9,891 | |
| Suncorp-Metway Ltd. | 1,191,964 | 9,851 | |
| Foster’s Group Ltd. | 1,811,370 | 9,077 | |
| Brambles Ltd. | 1,325,539 | 8,813 | |
| Orica Ltd. | 336,119 | 8,151 | |
| Stockland | 2,225,645 | 8,113 | |
| Amcor Ltd. | 1,141,997 | 6,911 | |
| Insurance Australia | |||
| Group Ltd. | 1,943,606 | 6,834 | |
| AGL Energy Ltd. | 419,716 | 5,812 | |
| AXA Asia Pacific | |||
| Holdings Ltd. | 969,604 | 5,500 | |
| Coca-Cola Amatil Ltd. | 526,664 | 5,437 | |
| Transurban Group | 1,091,292 | 5,136 | |
| ASX Ltd. | 161,527 | 4,883 | |
| * | Fortescue Metals | ||
| Group Ltd. | 1,161,921 | 4,835 | |
| Leighton Holdings Ltd. | 140,293 | 4,727 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| GPT Group | 8,689,738 | 4,643 | |
| Computershare Ltd. | 413,987 | 4,496 | |
| Incitec Pivot Ltd. | 1,501,674 | 4,440 | |
| Sonic Healthcare Ltd. | 343,842 | 4,369 | |
| BlueScope Steel Ltd. | 1,698,940 | 4,076 | |
| Toll Holdings Ltd. | 619,605 | 4,047 | |
| * | Asciano Group | 2,590,409 | 4,020 |
| OneSteel Ltd. | 1,238,092 | 3,982 | |
| Lend Lease Group | 504,844 | 3,974 | |
| Mirvac Group | 3,029,651 | 3,888 | |
| Wesfarmers Ltd. Price | |||
| Protected Shares | 142,360 | 3,826 | |
| WorleyParsons Ltd. | 155,403 | 3,790 | |
| Goodman Group | 5,691,032 | 3,700 | |
| Cochlear Ltd. | 52,685 | 3,591 | |
| TABCORP Holdings Ltd. | 567,598 | 3,585 | |
| Crown Ltd. | 459,273 | 3,463 | |
| Dexus Property Group | 4,464,533 | 3,311 | |
| Alumina Ltd. | 2,272,820 | 3,210 | |
| ^ | Fairfax Media Ltd. | 1,995,074 | 3,149 |
| * | OZ Minerals Ltd. | 2,935,407 | 3,090 |
| Boral Ltd. | 558,998 | 3,022 | |
| Bendigo and | |||
| Adelaide Bank Ltd. | 328,018 | 2,966 | |
| CFS Retail Property Trust | 1,627,189 | 2,869 | |
| Sims Metal | |||
| Management Ltd. | 150,811 | 2,835 | |
| * | James Hardie | ||
| Industries SE | 404,257 | 2,834 | |
| * | Qantas Airways Ltd. | 1,038,093 | 2,688 |
| Metcash Ltd. | 714,791 | 2,686 | |
| * | Arrow Energy Ltd. | 547,042 | 2,581 |
| Tatts Group Ltd. | 1,129,895 | 2,578 | |
| * | Paladin Energy Ltd. | 604,742 | 2,202 |
| Intoll Group | 2,123,152 | 2,191 | |
| CSR Ltd. | 1,359,544 | 2,167 | |
| Billabong | |||
| International Ltd. | 189,522 | 1,991 | |
| MAp Group | 692,362 | 1,985 | |
| Goodman Fielder Ltd. | 1,220,213 | 1,638 |
10
Developed Markets Index Fund
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Harvey Norman | |||
| Holdings Ltd. | 504,013 | 1,574 | |
| Aristocrat Leisure Ltd. | 374,812 | 1,471 | |
| Caltex Australia Ltd. | 124,051 | 1,324 | |
| ^ | Nufarm Ltd. | 154,274 | 1,083 |
| SP AusNet | 1,251,418 | 1,021 | |
| Energy Resources | |||
| of Australia Ltd. | 63,184 | 914 | |
| 810,221 | |||
| Austria (0.3%) | |||
| Erste Group Bank AG | 176,569 | 7,839 | |
| OMV AG | 140,531 | 5,022 | |
| Voestalpine AG | 109,488 | 4,073 | |
| *,^ | IMMOFINANZ AG | 927,405 | 3,954 |
| Telekom Austria AG | 291,978 | 3,879 | |
| ^ | Verbund - Oesterreichische | ||
| Elektrizitaetswirtschafts | |||
| AG Class A | 71,409 | 2,656 | |
| Raiffeisen International | |||
| Bank Holding AG | 50,477 | 2,458 | |
| Vienna Insurance Group | 36,289 | 1,774 | |
| 31,655 | |||
| Belgium (0.9%) | |||
| Anheuser-Busch InBev NV | 676,037 | 32,796 | |
| Delhaize Group SA | 94,234 | 7,793 | |
| * | KBC Groep NV | 150,421 | 6,730 |
| * | Ageas | 2,087,624 | 6,412 |
| ^ | Groupe Bruxelles | ||
| Lambert SA | 75,471 | 6,387 | |
| Solvay SA Class A | 55,522 | 5,302 | |
| ^ | Belgacom SA | 142,564 | 5,007 |
| Umicore | 106,946 | 3,910 | |
| ^ | UCB SA | 94,077 | 3,644 |
| Colruyt SA | 14,162 | 3,487 | |
| * | Dexia SA | 498,725 | 2,695 |
| Mobistar SA | 27,655 | 1,700 | |
| ^ | Cie Nationale a Portefeuille | 31,164 | 1,617 |
| 87,480 | |||
| Denmark (1.0%) | |||
| Novo Nordisk A/S Class B | 407,549 | 33,532 | |
| * | Vestas Wind Systems A/S | 190,783 | 11,641 |
| * | Danske Bank A/S | 425,186 | 11,101 |
| AP Moller - Maersk A/S | |||
| Class B | 1,231 | 10,336 | |
| Carlsberg A/S Class B | 99,884 | 8,073 | |
| Novozymes A/S | 42,947 | 5,164 | |
| AP Moller - Maersk A/S | 515 | 4,172 | |
| DSV A/S | 196,489 | 3,512 | |
| Coloplast A/S Class B | 21,136 | 2,342 | |
| * | Topdanmark A/S | 13,445 | 1,660 |
| * | William Demant Holding AS | 22,059 | 1,504 |
| TrygVesta AS | 23,615 | 1,458 | |
| H Lundbeck A/S | 55,296 | 911 | |
| 95,406 | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Finland (1.1%) | |||
| Nokia Oyj | 3,506,424 | 42,868 | |
| Fortum Oyj | 415,787 | 10,744 | |
| Sampo Oyj | 393,437 | 9,671 | |
| UPM-Kymmene Oyj | 486,610 | 6,983 | |
| Kone Oyj Class B | 143,998 | 6,336 | |
| Metso Oyj | 120,296 | 4,640 | |
| Stora Enso Oyj | 542,679 | 4,531 | |
| Wartsila Oyj | 78,668 | 4,006 | |
| Kesko Oyj Class B | 62,652 | 2,429 | |
| Elisa Oyj | 125,925 | 2,410 | |
| Outokumpu Oyj | 110,801 | 2,330 | |
| Nokian Renkaat Oyj | 98,349 | 2,312 | |
| ^ | Neste Oil Oyj | 118,844 | 1,924 |
| Rautaruukki Oyj | 78,117 | 1,638 | |
| Orion Oyj Class B | 83,325 | 1,578 | |
| Sanoma Oyj | 75,539 | 1,462 | |
| Pohjola Bank PLC | 130,118 | 1,421 | |
| 107,283 | |||
| France (10.1%) | |||
| Total SA | 1,977,792 | 107,606 | |
| ^ | Sanofi-Aventis SA | 985,871 | 67,255 |
| ^ | BNP Paribas | 886,991 | 60,924 |
| ^ | GDF Suez | 1,163,949 | 41,394 |
| France Telecom SA | 1,736,221 | 38,009 | |
| AXA SA | 1,590,513 | 31,607 | |
| Societe Generale | 589,184 | 31,462 | |
| ArcelorMittal | 804,313 | 31,300 | |
| ^ | Danone | 514,535 | 30,317 |
| ^ | Vivendi SA | 1,149,669 | 30,159 |
| ^ | Carrefour SA | 594,294 | 29,129 |
| Air Liquide SA | 235,092 | 27,426 | |
| LVMH Moet Hennessy | |||
| Louis Vuitton SA | 229,621 | 26,425 | |
| ^ | Schneider Electric SA | 220,505 | 25,034 |
| ^ | L’Oreal SA | 223,983 | 23,277 |
| Vinci SA | 413,517 | 23,043 | |
| Cie de St-Gobain | 360,462 | 17,794 | |
| Unibail-Rodamco SE | 85,519 | 16,163 | |
| Pernod-Ricard SA | 185,460 | 15,779 | |
| Lafarge SA | 186,846 | 13,547 | |
| ^ | Credit Agricole SA | 867,238 | 12,397 |
| EDF SA | 221,939 | 11,895 | |
| ^ | Veolia Environnement | 369,541 | 11,609 |
| ^ | Cie Generale d’Optique | ||
| Essilor International SA | 188,472 | 11,489 | |
| Alstom SA | 189,613 | 11,126 | |
| Vallourec SA | 53,513 | 10,659 | |
| ^ | Bouygues SA | 209,302 | 10,371 |
| Cie Generale des | |||
| Etablissements | |||
| Michelin Class B | 137,978 | 9,996 | |
| PPR | 71,096 | 9,555 | |
| * | Renault SA | 173,863 | 8,055 |
| Accor SA | 136,768 | 7,815 | |
11
Developed Markets Index Fund
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| ^ | Technip SA | 96,983 | 7,755 |
| European Aeronautic | |||
| Defence and | |||
| Space Co. NV | 380,535 | 7,068 | |
| * | Alcatel-Lucent | 2,167,573 | 6,909 |
| Cap Gemini SA | 136,794 | 6,890 | |
| Hermes International | 49,365 | 6,527 | |
| Christian Dior SA | 59,530 | 6,337 | |
| SES SA | 264,787 | 6,069 | |
| STMicroelectronics NV | 639,036 | 5,917 | |
| Suez Environnement Co. | 252,513 | 5,473 | |
| Sodexo | 88,494 | 5,437 | |
| Publicis Groupe SA | 110,413 | 4,872 | |
| ^ | Casino Guichard Perrachon | ||
| SA | 51,403 | 4,537 | |
| ^ | Lagardere SCA | 110,922 | 4,474 |
| Safran SA | 175,922 | 4,470 | |
| * | Peugeot SA | 142,557 | 4,210 |
| * | Natixis | 816,937 | 4,178 |
| Groupe Eurotunnel SA | 444,121 | 4,055 | |
| * | Cie Generale de | ||
| Geophysique-Veritas | 133,854 | 4,030 | |
| Dassault Systemes SA | 60,513 | 3,932 | |
| ^ | SCOR SE | 154,504 | 3,644 |
| Eutelsat Communications | 92,690 | 3,300 | |
| Legrand SA | 99,231 | 3,231 | |
| Thales SA | 84,387 | 3,143 | |
| ^ | Klepierre | 85,811 | 2,957 |
| * | CNP Assurances | 34,676 | 2,919 |
| Bureau Veritas SA | 45,951 | 2,587 | |
| Neopost SA | 29,193 | 2,322 | |
| Aeroports de Paris | 27,997 | 2,304 | |
| Fonciere Des Regions | 21,872 | 2,263 | |
| * | Atos Origin SA | 42,504 | 2,154 |
| ^ | ICADE | 21,817 | 2,121 |
| ^ | Societe Television | ||
| Francaise 1 | 109,231 | 2,025 | |
| * | Air France-KLM | 126,819 | 1,995 |
| ^ | Eiffage SA | 38,175 | 1,971 |
| Societe BIC SA | 25,210 | 1,960 | |
| Imerys SA | 31,452 | 1,917 | |
| Gecina SA | 17,679 | 1,818 | |
| ^ | Eurazeo | 26,079 | 1,808 |
| * | JC Decaux SA | 62,655 | 1,801 |
| Eramet | 4,887 | 1,764 | |
| Metropole Television SA | 60,201 | 1,556 | |
| ^ | Iliad SA | 15,038 | 1,504 |
| * | Societe Des Autoroutes | ||
| Paris-Rhin-Rhone | 21,168 | 1,486 | |
| PagesJaunes Groupe | 117,861 | 1,412 | |
| BioMerieux | 12,847 | 1,392 | |
| Ipsen SA | 23,231 | 1,110 | |
| 964,221 |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Germany (7.7%) | |||
| Siemens AG | 770,384 | 75,980 | |
| ^ | E.ON AG | 1,779,884 | 65,638 |
| ^ | BASF SE | 859,981 | 49,998 |
| ^ | Bayer AG | 774,279 | 49,459 |
| *,^ | Allianz SE | 424,990 | 48,723 |
| * | Daimler AG | 763,104 | 39,264 |
| SAP AG | 803,711 | 38,778 | |
| Deutsche Bank AG | 552,353 | 38,553 | |
| Deutsche Telekom AG | 2,655,774 | 34,579 | |
| ^ | RWE AG | 391,737 | 32,224 |
| ^ | Muenchener | ||
| Rueckversicherungs AG | 184,928 | 26,063 | |
| ^ | Linde AG | 142,140 | 17,014 |
| ^ | Volkswagen AG Prior Pfd. | 159,229 | 15,384 |
| Bayerische Motoren Werke | |||
| AG | 309,534 | 15,309 | |
| Deutsche Boerse AG | 182,347 | 14,156 | |
| Deutsche Post AG | 791,271 | 12,834 | |
| ^ | Adidas AG | 195,808 | 11,538 |
| ThyssenKrupp AG | 312,487 | 10,161 | |
| ^ | Fresenius Medical Care | ||
| AG & Co. KGaA | 179,733 | 9,731 | |
| MAN SE | 98,730 | 9,318 | |
| ^ | K&S AG | 161,327 | 9,278 |
| Henkel AG & Co. KGaA | |||
| Prior Pfd. | 167,229 | 8,966 | |
| HeidelbergCement AG | 131,401 | 8,136 | |
| * | Infineon Technologies AG | 1,015,834 | 7,192 |
| ^ | Metro AG | 106,198 | 6,384 |
| Henkel AG & Co. KGaA | 121,839 | 5,510 | |
| ^ | Fresenius SE Prior Pfd. | 75,482 | 5,472 |
| * | Commerzbank AG | 663,785 | 5,212 |
| * | QIAGEN NV | 217,426 | 5,018 |
| Merck KGAA | 60,567 | 4,979 | |
| Porsche Automobil | |||
| Holding SE Prior Pfd. | 82,312 | 4,763 | |
| ^ | Beiersdorf AG | 82,932 | 4,700 |
| * | Daimler AG | 81,276 | 4,140 |
| * | Deutsche Lufthansa AG | 213,939 | 3,558 |
| GEA Group AG | 146,089 | 3,242 | |
| Hochtief AG | 39,255 | 3,240 | |
| Salzgitter AG | 36,472 | 2,964 | |
| ^ | RWE AG Prior Pfd. | 36,811 | 2,819 |
| * | Deutsche Postbank AG | 81,313 | 2,795 |
| *,^ | Hannover Rueckversicherung | ||
| AG | 56,737 | 2,663 | |
| ^ | Volkswagen AG | 27,582 | 2,609 |
| ^ | Celesio AG | 79,202 | 2,593 |
| Wacker Chemie AG | 14,745 | 2,154 | |
| ^ | Fresenius SE | 26,337 | 1,874 |
| Fraport AG Frankfurt Airport | |||
| Services Worldwide | 34,206 | 1,774 | |
| * | United Internet AG | 117,518 | 1,767 |
12
| Developed Markets Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Bayerische Motoren | |||
| Werke AG Prior Pfd. | 49,050 | 1,747 | |
| ^ | Puma AG Rudolf | ||
| Dassler Sport | 4,997 | 1,671 | |
| *,^ | TUI AG | 129,494 | 1,433 |
| Suedzucker AG | 61,310 | 1,246 | |
| ^ | Solarworld AG | 78,857 | 1,140 |
| 735,743 | |||
| Greece (0.4%) | |||
| * | National Bank of Greece | ||
| SA | 534,451 | 8,593 | |
| Coca Cola Hellenic | |||
| Bottling Co. SA | 172,157 | 4,668 | |
| OPAP SA | 209,446 | 4,254 | |
| * | Alpha Bank AE | 437,823 | 3,546 |
| Bank of Cyprus | |||
| Public Co. Ltd. | 527,410 | 3,043 | |
| * | EFG Eurobank Ergasias SA | 303,120 | 2,437 |
| * | Piraeus Bank SA | 285,965 | 2,154 |
| Hellenic | |||
| Telecommunications | |||
| Organization SA | 177,351 | 1,956 | |
| * | Public Power Corp. SA | 107,965 | 1,767 |
| Titan Cement Co. SA | 53,696 | 1,429 | |
| Marfin Investment Group | |||
| SA | 598,037 | 1,146 | |
| Hellenic Petroleum SA | 84,051 | 905 | |
| Hellenic | |||
| Telecommunications | |||
| Organization SA ADR | 109,632 | 621 | |
| * | National Bank of Greece | ||
| SA ADR | 170,644 | 556 | |
| 37,075 | |||
| Hong Kong (2.3%) | |||
| Sun Hung Kai | |||
| Properties Ltd. | 1,322,553 | 18,336 | |
| Cheung Kong | |||
| Holdings Ltd. | 1,302,978 | 16,068 | |
| Hong Kong Exchanges | |||
| and Clearing Ltd. | 958,254 | 15,660 | |
| Hutchison Whampoa Ltd. | 1,993,491 | 13,682 | |
| CLP Holdings Ltd. | 1,913,158 | 13,402 | |
| Li & Fung Ltd. | 2,122,769 | 10,234 | |
| Hang Seng Bank Ltd. | 716,097 | 9,760 | |
| Hong Kong & | |||
| China Gas Co. Ltd. | 3,676,051 | 8,920 | |
| Swire Pacific Ltd. | 722,773 | 8,415 | |
| BOC Hong Kong | |||
| Holdings Ltd. | 3,455,808 | 8,271 | |
| Esprit Holdings Ltd. | 1,077,994 | 7,722 | |
| Hongkong Electric | |||
| Holdings Ltd. | 1,295,885 | 7,647 | |
| Wharf Holdings Ltd. | 1,288,111 | 6,967 | |
| Hang Lung | |||
| Properties Ltd. | 1,936,478 | 6,966 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Henderson Land | |||
| Development Co. Ltd. | 1,003,559 | 6,325 | |
| Link REIT | 2,045,524 | 5,018 | |
| Bank of East Asia Ltd. | 1,386,978 | 4,921 | |
| MTR Corp. | 1,347,597 | 4,722 | |
| New World | |||
| Development Ltd. | 2,339,601 | 4,150 | |
| Hang Lung Group Ltd. | 747,819 | 3,653 | |
| Kerry Properties Ltd. | 665,273 | 3,069 | |
| * | Sands China Ltd. | 1,879,600 | 3,051 |
| Sino Land Co. Ltd. | 1,582,286 | 2,840 | |
| Wheelock & Co. Ltd. | 852,353 | 2,653 | |
| Shangri-La Asia Ltd. | 1,224,983 | 2,364 | |
| * | Cathay Pacific | ||
| Airways Ltd. | 1,112,280 | 2,317 | |
| Yue Yuen Industrial | |||
| Holdings Ltd. | 623,183 | 2,171 | |
| *,^ | Foxconn International | ||
| Holdings Ltd. | 1,982,422 | 1,779 | |
| Hysan | |||
| Development Co. Ltd. | 591,624 | 1,736 | |
| ^ | ASM Pacific Technology Ltd. | 181,259 | 1,709 |
| Wing Hang Bank Ltd. | 163,616 | 1,659 | |
| Cheung Kong | |||
| Infrastructure | |||
| Holdings Ltd. | 427,746 | 1,597 | |
| Orient Overseas | |||
| International Ltd. | 207,659 | 1,579 | |
| Hopewell Holdings Ltd. | 534,477 | 1,558 | |
| NWS Holdings Ltd. | 768,985 | 1,344 | |
| * | Mongolia Energy Co. Ltd. | 2,805,781 | 1,289 |
| Television Broadcasts Ltd. | 262,375 | 1,265 | |
| Lifestyle International | |||
| Holdings Ltd. | 560,956 | 1,092 | |
| Chinese Estates | |||
| Holdings Ltd. | 635,143 | 1,081 | |
| PCCW Ltd. | 3,437,347 | 1,039 | |
| Hong Kong Aircraft | |||
| Engineering Co. Ltd. | 61,915 | 785 | |
| 218,816 | |||
| Ireland (0.3%) | |||
| CRH PLC | 653,892 | 18,699 | |
| Kerry Group PLC Class A | 131,519 | 4,227 | |
| * | Elan Corp. PLC | 468,029 | 3,168 |
| * | Ryanair Holdings PLC ADR | 56,610 | 1,594 |
| * | Ryanair Holdings PLC | 70,448 | 351 |
| 28,039 | |||
| Italy (3.0%) | |||
| ENI SPA | 2,437,668 | 54,480 | |
| * | UniCredit SPA | 15,335,544 | 40,190 |
| Enel SPA | 6,167,279 | 32,310 | |
| * | Intesa Sanpaolo SPA | ||
| (Registered) | 7,203,177 | 23,741 | |
| Assicurazioni Generali | |||
| SPA | 1,092,163 | 23,054 | |
13
| Developed Markets Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| * | Telecom Italia SPA | ||
| (Registered) | 9,383,682 | 13,119 | |
| Fiat SPA | 717,243 | 9,414 | |
| Saipem SPA | 248,042 | 9,262 | |
| Tenaris SA | 442,461 | 8,884 | |
| Unione di Banche Italiane | |||
| SCPA | 537,590 | 6,658 | |
| * | Telecom Italia SPA (Bearer) | 5,641,361 | 6,366 |
| Snam Rete Gas SPA | 1,335,450 | 6,342 | |
| Mediaset SPA | 664,742 | 5,264 | |
| Atlantia SPA | 241,599 | 5,142 | |
| Terna Rete Elettrica | |||
| Nazionale SPA | 1,222,566 | 4,956 | |
| Finmeccanica SPA | 379,162 | 4,858 | |
| Parmalat SPA | 1,587,998 | 4,180 | |
| * | Mediobanca SPA | 444,084 | 4,099 |
| Banco Popolare SC | 595,581 | 3,813 | |
| Luxottica Group SPA | 109,004 | 2,987 | |
| Banca Monte dei | |||
| Paschi di Siena SPA | 2,062,281 | 2,856 | |
| Intesa Sanpaolo SPA | |||
| (Bearer) | 872,428 | 2,316 | |
| Banca Popolare di | |||
| Milano Scarl | 367,219 | 2,065 | |
| A2A SPA | 1,027,706 | 1,737 | |
| Prysmian SPA | 92,430 | 1,664 | |
| Banca Carige SPA | 600,903 | 1,527 | |
| * | Pirelli & C SPA | 2,483,259 | 1,429 |
| Exor SPA | 68,219 | 1,249 | |
| * | Autogrill SPA | 96,218 | 1,172 |
| Mediolanum SPA | 204,208 | 1,038 | |
| Fondiaria-Sai SPA | 58,609 | 812 | |
| ^ | Italcementi SPA | 67,001 | 762 |
| *,^ | Unipol Gruppo Finanziario | ||
| SPA | 702,855 | 736 | |
| 288,482 | |||
| Japan (22.2%) | |||
| Toyota Motor Corp. | 2,744,193 | 106,030 | |
| Mitsubishi UFJ | |||
| Financial Group Inc. | 11,785,236 | 61,413 | |
| Honda Motor Co. Ltd. | 1,546,131 | 52,317 | |
| Canon Inc. | 999,035 | 45,699 | |
| Sumitomo Mitsui | |||
| Financial Group Inc. | 1,207,652 | 39,939 | |
| Sony Corp. | 941,235 | 32,227 | |
| Nintendo Co. Ltd. | 92,959 | 31,228 | |
| Takeda Pharmaceutical | |||
| Co. Ltd. | 702,030 | 30,142 | |
| Tokyo Electric | |||
| Power Co. Inc. | 1,140,546 | 28,624 | |
| Mitsubishi Corp. | 1,190,439 | 28,199 | |
| Panasonic Corp. | 1,838,652 | 26,945 | |
| Mizuho Financial | |||
| Group Inc. | 12,815,296 | 24,676 | |
| Mitsui & Co. Ltd. | 1,628,220 | 24,471 | |
| Nomura Holdings Inc. | 3,455,963 | 23,888 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| NTT DoCoMo Inc. | 14,400 | 22,403 | |
| Shin-Etsu Chemical | |||
| Co. Ltd. | 384,219 | 22,149 | |
| Toshiba Corp. | 3,769,786 | 21,731 | |
| East Japan Railway Co. | 318,263 | 21,290 | |
| Fanuc Ltd. | 179,461 | 21,192 | |
| * | Nissan Motor Co. Ltd. | 2,328,188 | 20,258 |
| Tokio Marine Holdings Inc. | 677,912 | 20,182 | |
| Mitsubishi Estate | |||
| Co. Ltd. | 1,107,995 | 19,974 | |
| Nippon Telegraph | |||
| & Telephone Corp. | 486,477 | 19,801 | |
| Seven & I Holdings | |||
| Co. Ltd. | 721,861 | 18,459 | |
| Hitachi Ltd. | 4,178,044 | 18,363 | |
| Komatsu Ltd. | 888,990 | 17,920 | |
| Nippon Steel Corp. | 4,784,073 | 16,973 | |
| JFE Holdings Inc. | 460,674 | 16,429 | |
| Mitsubishi Electric Corp. | 1,812,104 | 16,150 | |
| Kansai Electric Power | |||
| Co. Inc. | 716,135 | 15,934 | |
| Softbank Corp. | 710,287 | 15,885 | |
| Kyocera Corp. | 152,056 | 15,267 | |
| FUJIFILM Holdings Corp. | 432,972 | 14,839 | |
| Astellas Pharma Inc. | 422,730 | 14,802 | |
| Japan Tobacco Inc. | 4,207 | 14,579 | |
| MS&AD Insurance | |||
| Group Holdings | 506,207 | 14,550 | |
| Mitsui Fudosan Co. Ltd. | 783,235 | 14,505 | |
| Chubu Electric Power | |||
| Co. Inc. | 618,967 | 14,381 | |
| Denso Corp. | 454,760 | 13,271 | |
| KDDI Corp. | 2,726 | 13,143 | |
| Dai-ichi Life Insurance | |||
| Co. Ltd. | 7,484 | 12,787 | |
| Sumitomo Corp. | 1,053,049 | 12,681 | |
| Kao Corp. | 505,364 | 12,322 | |
| Fujitsu Ltd. | 1,743,470 | 12,260 | |
| ITOCHU Corp. | 1,410,973 | 12,224 | |
| Sharp Corp. | 935,477 | 12,116 | |
| Murata Manufacturing | |||
| Co. Ltd. | 200,488 | 11,865 | |
| * | JX Holdings Inc. | 2,107,072 | 11,754 |
| Mitsubishi Heavy | |||
| Industries Ltd. | 2,843,383 | 11,453 | |
| Central Japan Railway Co. | 1,406 | 11,449 | |
| Kirin Holdings Co. Ltd. | 782,787 | 11,215 | |
| Asahi Glass Co. Ltd. | 945,376 | 11,171 | |
| Daiichi Sankyo Co. Ltd. | 630,832 | 10,963 | |
| Hoya Corp. | 387,229 | 10,710 | |
| Ricoh Co. Ltd. | 626,506 | 10,643 | |
| Tokyo Electron Ltd. | 160,745 | 10,539 | |
| Nidec Corp. | 102,069 | 10,472 | |
| * | NKSJ Holdings Inc. | 1,319,583 | 9,581 |
| Bridgestone Corp. | 572,027 | 9,533 | |
| Keyence Corp. | 38,721 | 9,252 |
14
| Developed Markets Index Fund | ||
| Market | ||
| Value• | ||
| Shares | ($000) | |
| Tokyo Gas Co. Ltd. | 2,167,767 | 9,212 |
| Marubeni Corp. | 1,549,297 | 9,141 |
| Kubota Corp. | 1,025,548 | 9,008 |
| ORIX Corp. | 98,309 | 8,985 |
| Sumitomo Electric | ||
| Industries Ltd. | 708,109 | 8,714 |
| Sumitomo Metal | ||
| Industries Ltd. | 3,157,577 | 8,571 |
| Secom Co. Ltd. | 196,008 | 8,510 |
| Daikin Industries Ltd. | 220,149 | 8,302 |
| Tohoku Electric | ||
| Power Co. Inc. | 399,195 | 8,141 |
| Terumo Corp. | 158,453 | 8,072 |
| Sumitomo Trust | ||
| & Banking Co. Ltd. | 1,330,939 | 8,049 |
| Eisai Co. Ltd. | 235,405 | 8,046 |
| Daiwa Securities | ||
| Group Inc. | 1,551,452 | 8,025 |
| Mitsui OSK Lines Ltd. | 1,070,692 | 8,005 |
| NEC Corp. | 2,408,777 | 7,931 |
| Sumitomo Realty | ||
| & Development Co. Ltd. | 358,152 | 7,349 |
| Dai Nippon Printing Co. Ltd. | 525,050 | 7,274 |
| SMC Corp. | 50,671 | 7,263 |
| Sumitomo Metal Mining | ||
| Co. Ltd. | 488,878 | 7,233 |
| Kyushu Electric Power | ||
| Co. Inc. | 354,449 | 7,171 |
| Toray Industries Inc. | 1,243,568 | 7,147 |
| TDK Corp. | 109,116 | 6,984 |
| Sumitomo Chemical | ||
| Co. Ltd. | 1,469,823 | 6,945 |
| Suzuki Motor Corp. | 329,983 | 6,936 |
| T&D Holdings Inc. | 264,193 | 6,901 |
| Aeon Co. Ltd. | 598,605 | 6,854 |
| Shiseido Co. Ltd. | 325,832 | 6,831 |
| Nikon Corp. | 299,858 | 6,807 |
| Rohm Co. Ltd. | 91,620 | 6,790 |
| Fast Retailing Co. Ltd. | 44,679 | 6,770 |
| Asahi Kasei Corp. | 1,181,011 | 6,639 |
| Asahi Breweries Ltd. | 361,789 | 6,499 |
| Yamada Denki Co. Ltd. | 81,417 | 6,366 |
| Osaka Gas Co. Ltd. | 1,818,836 | 6,329 |
| Olympus Corp. | 203,177 | 6,148 |
| Nitto Denko Corp. | 154,699 | 6,045 |
| Mitsubishi Chemical | ||
| Holdings Corp. | 1,127,946 | 6,020 |
| Bank of Yokohama Ltd. | 1,151,600 | 5,988 |
| Ajinomoto Co. Inc. | 624,525 | 5,866 |
| West Japan Railway Co. | 1,592 | 5,787 |
| Nippon Yusen KK | 1,405,253 | 5,777 |
| Konica Minolta | ||
| Holdings Inc. | 449,532 | 5,686 |
| Resona Holdings Inc. | 455,071 | 5,558 |
| Aisin Seiki Co. Ltd. | 180,124 | 5,474 |
| Inpex Corp. | 776 | 5,461 |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Yamato Holdings Co. Ltd. | 371,886 | 5,314 | |
| Yahoo! Japan Corp. | 13,665 | 5,232 | |
| Kobe Steel Ltd. | 2,344,070 | 5,232 | |
| Rakuten Inc. | 6,731 | 5,219 | |
| Daiwa House Industry | |||
| Co. Ltd. | 475,470 | 5,116 | |
| Shionogi & Co. Ltd. | 279,699 | 5,049 | |
| Nippon Electric Glass | |||
| Co. Ltd. | 328,091 | 5,003 | |
| Chugoku Electric | |||
| Power Co. Inc. | 260,996 | 4,986 | |
| Hankyu Hanshin | |||
| Holdings Inc. | 1,066,491 | 4,968 | |
| Odakyu Electric | |||
| Railway Co. Ltd. | 589,085 | 4,917 | |
| Toyota Industries Corp. | 166,965 | 4,872 | |
| ^ | Kintetsu Corp. | 1,530,012 | 4,839 |
| Sekisui House Ltd. | 505,363 | 4,817 | |
| Toppan Printing Co. Ltd. | 522,236 | 4,762 | |
| Shizuoka Bank Ltd. | 565,838 | 4,748 | |
| NGK Insulators Ltd. | 236,556 | 4,662 | |
| *,^ | Mitsubishi Motors Corp. | 3,369,479 | 4,614 |
| JS Group Corp. | 233,269 | 4,575 | |
| Chiba Bank Ltd. | 713,380 | 4,518 | |
| Shikoku Electric Power | |||
| Co. Inc. | 167,111 | 4,479 | |
| Tokyu Corp. | 1,061,150 | 4,432 | |
| Omron Corp. | 189,445 | 4,404 | |
| Ibiden Co. Ltd. | 119,870 | 4,317 | |
| Panasonic Electric Works | |||
| Co. Ltd. | 349,878 | 4,307 | |
| NTT Data Corp. | 1,179 | 4,257 | |
| Kuraray Co. Ltd. | 324,535 | 4,249 | |
| Dentsu Inc. | 155,578 | 4,235 | |
| Mazda Motor Corp. | 1,423,940 | 4,205 | |
| Kawasaki Heavy | |||
| Industries Ltd. | 1,325,661 | 4,156 | |
| Nippon Building Fund Inc. | |||
| Class A | 481 | 4,035 | |
| Tobu Railway Co. Ltd. | 762,012 | 4,020 | |
| Daito Trust Construction | |||
| Co. Ltd. | 73,115 | 3,898 | |
| Electric Power | |||
| Development Co. Ltd. | 125,606 | 3,871 | |
| Isetan Mitsukoshi | |||
| Holdings Ltd. | 333,789 | 3,855 | |
| Advantest Corp. | 148,609 | 3,840 | |
| Japan Real Estate | |||
| Investment Corp. | 457 | 3,811 | |
| Unicharm Corp. | 38,872 | 3,778 | |
| Chugai Pharmaceutical | |||
| Co. Ltd. | 208,776 | 3,777 | |
| Nippon Express Co. Ltd. | 801,288 | 3,775 | |
| OJI Paper Co. Ltd. | 799,400 | 3,766 | |
| Hokuriku Electric | |||
| Power Co. | 174,641 | 3,614 |
15
| Developed Markets Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Sumitomo Heavy | |||
| Industries Ltd. | 542,726 | 3,568 | |
| Isuzu Motors Ltd. | 1,112,999 | 3,541 | |
| * | Yamaha Motor Co. Ltd. | 239,679 | 3,536 |
| * | Elpida Memory Inc. | 165,651 | 3,529 |
| Keio Corp. | 541,915 | 3,504 | |
| Keihin Electric Express | |||
| Railway Co. Ltd. | 415,807 | 3,486 | |
| Japan Steel Works Ltd. | 314,200 | 3,441 | |
| JSR Corp. | 166,549 | 3,372 | |
| SBI Holdings Inc. | 15,673 | 3,362 | |
| NSK Ltd. | 438,760 | 3,347 | |
| JGC Corp. | 192,604 | 3,326 | |
| Trend Micro Inc. | 97,844 | 3,319 | |
| Hokkaido Electric | |||
| Power Co. Inc. | 170,230 | 3,303 | |
| Oriental Land Co. Ltd. | 46,498 | 3,293 | |
| Chuo Mitsui Trust | |||
| Holdings Inc. | 857,404 | 3,271 | |
| Ono Pharmaceutical | |||
| Co. Ltd. | 78,923 | 3,269 | |
| Makita Corp. | 104,739 | 3,247 | |
| Benesse Holdings Inc. | 69,728 | 3,206 | |
| * | Mitsubishi Materials Corp. | 1,046,195 | 3,136 |
| Fukuoka Financial | |||
| Group Inc. | 719,182 | 3,120 | |
| Fuji Heavy Industries Ltd. | 546,655 | 3,060 | |
| Kurita Water | |||
| Industries Ltd. | 105,582 | 3,053 | |
| Showa Denko KK | 1,325,024 | 3,012 | |
| Hirose Electric Co. Ltd. | 27,878 | 3,010 | |
| Furukawa Electric Co. Ltd. | 598,843 | 2,968 | |
| Toyota Tsusho Corp. | 198,853 | 2,966 | |
| Sony Financial | |||
| Holdings Inc. | 821 | 2,961 | |
| Shimano Inc. | 62,380 | 2,847 | |
| Teijin Ltd. | 870,519 | 2,778 | |
| Mitsubishi Tanabe | |||
| Pharma Corp. | 209,392 | 2,770 | |
| * | Sanyo Electric Co. Ltd. | 1,739,086 | 2,762 |
| Nitori Co. Ltd. | 34,966 | 2,750 | |
| Sekisui Chemical Co. Ltd. | 401,104 | 2,739 | |
| Obayashi Corp. | 606,738 | 2,711 | |
| * | Kawasaki Kisen Kaisha Ltd. | 631,730 | 2,685 |
| Stanley Electric Co. Ltd. | 131,245 | 2,683 | |
| Lawson Inc. | 60,266 | 2,661 | |
| Bank of Kyoto Ltd. | 301,812 | 2,652 | |
| Takashimaya Co. Ltd. | 276,991 | 2,626 | |
| J Front Retailing Co. Ltd. | 450,287 | 2,622 | |
| Amada Co. Ltd. | 315,602 | 2,591 | |
| Kyowa Hakko Kirin Co. Ltd. | 243,735 | 2,557 | |
| Joyo Bank Ltd. | 613,983 | 2,554 | |
| Suzuken Co. Ltd. | 66,570 | 2,546 | |
| Brother Industries Ltd. | 208,869 | 2,537 | |
| All Nippon Airways | |||
| Co. Ltd. | 783,075 | 2,484 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| IHI Corp. | 1,235,805 | 2,473 | |
| ^ | GS Yuasa Corp. | 347,002 | 2,472 |
| THK Co. Ltd. | 111,884 | 2,457 | |
| Mitsui Chemicals Inc. | 747,188 | 2,454 | |
| Nippon Paper Group Inc. | 86,997 | 2,443 | |
| Toyo Seikan Kaisha Ltd. | 141,662 | 2,437 | |
| Sega Sammy Holdings Inc. | 185,334 | 2,423 | |
| Nomura Research | |||
| Institute Ltd. | 94,020 | 2,399 | |
| * | Sumco Corp. | 107,771 | 2,384 |
| Taiyo Nippon Sanso Corp. | 264,807 | 2,379 | |
| Ube Industries Ltd. | 938,316 | 2,372 | |
| Yakult Honsha Co. Ltd. | 90,637 | 2,369 | |
| Hokuhoku Financial | |||
| Group Inc. | 1,175,317 | 2,337 | |
| Sankyo Co. Ltd. | 50,280 | 2,321 | |
| Hisamitsu Pharmaceutical | |||
| Co. Inc. | 62,755 | 2,313 | |
| MEIJI Holdings Co. Ltd. | 64,022 | 2,311 | |
| Seiko Epson Corp. | 129,806 | 2,300 | |
| ^ | Jupiter | ||
| Telecommunications | |||
| Co. Ltd. | 2,270 | 2,298 | |
| TonenGeneral Sekiyu KK | 265,700 | 2,267 | |
| Hachijuni Bank Ltd. | 400,370 | 2,246 | |
| Santen Pharmaceutical | |||
| Co. Ltd. | 69,462 | 2,218 | |
| Shimizu Corp. | 552,133 | 2,212 | |
| Nissin Foods Holdings | |||
| Co. Ltd. | 65,320 | 2,197 | |
| Mitsubishi Gas Chemical | |||
| Co. Inc. | 360,907 | 2,176 | |
| Taisei Corp. | 954,361 | 2,174 | |
| Credit Saison Co. Ltd. | 148,340 | 2,170 | |
| Hitachi Construction | |||
| Machinery Co. Ltd. | 101,440 | 2,157 | |
| Nisshin Seifun Group Inc. | 174,766 | 2,148 | |
| Nippon Meat Packers Inc. | 169,574 | 2,142 | |
| Hitachi Chemical Co. Ltd. | 97,943 | 2,127 | |
| Mitsubishi UFJ Lease | |||
| & Finance Co. Ltd. | 54,671 | 2,117 | |
| Sojitz Corp. | 1,170,222 | 2,110 | |
| Iyo Bank Ltd. | 225,467 | 2,099 | |
| Toho Gas Co. Ltd. | 414,466 | 2,097 | |
| JTEKT Corp. | 182,406 | 2,096 | |
| Shimamura Co. Ltd. | 20,723 | 2,088 | |
| Chugoku Bank Ltd. | 162,351 | 2,081 | |
| Taisho Pharmaceutical | |||
| Co. Ltd. | 113,239 | 2,060 | |
| NGK Spark Plug Co. Ltd. | 151,719 | 2,059 | |
| Dena Co. Ltd. | 253 | 2,051 | |
| Japan Retail Fund | |||
| Investment Corp. Class A | 1,514 | 2,038 | |
| Toyo Suisan Kaisha Ltd. | 83,502 | 2,013 | |
| Yaskawa Electric Corp. | 227,507 | 2,011 | |
| Kamigumi Co. Ltd. | 243,452 | 2,011 |
16
| Developed Markets Index Fund | ||
| Market | ||
| Value• | ||
| Shares | ($000) | |
| Gunma Bank Ltd. | 372,746 | 2,011 |
| Denki Kagaku Kogyo KK | 450,357 | 2,007 |
| Yamaguchi Financial | ||
| Group Inc. | 199,421 | 1,997 |
| Kajima Corp. | 783,827 | 1,992 |
| Shimadzu Corp. | 237,846 | 1,970 |
| NTN Corp. | 448,099 | 1,968 |
| Minebea Co. Ltd. | 338,984 | 1,967 |
| Nippon Sheet Glass | ||
| Co. Ltd. | 591,304 | 1,942 |
| FamilyMart Co. Ltd. | 55,378 | 1,908 |
| Hiroshima Bank Ltd. | 465,445 | 1,908 |
| Suruga Bank Ltd. | 192,578 | 1,890 |
| Sysmex Corp. | 31,400 | 1,884 |
| Namco Bandai | ||
| Holdings Inc. | 186,236 | 1,858 |
| Mitsui Engineering | ||
| & Shipbuilding Co. Ltd. | 694,648 | 1,851 |
| 77 Bank Ltd. | 324,576 | 1,844 |
| Yokogawa Electric Corp. | 215,783 | 1,844 |
| Nishi-Nippon City Bank Ltd. | 636,619 | 1,832 |
| Tokyu Land Corp. | 428,460 | 1,831 |
| Yamaha Corp. | 148,974 | 1,822 |
| Toho Co. Ltd. | 105,626 | 1,821 |
| Kaneka Corp. | 281,400 | 1,776 |
| Alfresa Holdings Corp. | 35,321 | 1,772 |
| NOK Corp. | 103,958 | 1,767 |
| Kikkoman Corp. | 158,463 | 1,761 |
| Nissan Chemical | ||
| Industries Ltd. | 130,160 | 1,758 |
| Casio Computer Co. Ltd. | 223,578 | 1,758 |
| Oracle Corp. Japan | 35,313 | 1,750 |
| Daihatsu Motor Co. Ltd. | 180,861 | 1,744 |
| Ushio Inc. | 105,325 | 1,740 |
| Rinnai Corp. | 35,464 | 1,739 |
| Citizen Holdings Co. Ltd. | 247,673 | 1,720 |
| Idemitsu Kosan Co. Ltd. | 20,726 | 1,717 |
| Medipal Holdings Corp. | 136,453 | 1,701 |
| Konami Corp. | 87,374 | 1,695 |
| Toyoda Gosei Co. Ltd. | 60,425 | 1,675 |
| Mitsumi Electric Co. Ltd. | 76,934 | 1,674 |
| Hitachi Metals Ltd. | 155,989 | 1,674 |
| Tsumura & Co. | 56,787 | 1,659 |
| Daicel Chemical | ||
| Industries Ltd. | 255,860 | 1,640 |
| Tokyo Tatemono Co. Ltd. | 355,268 | 1,638 |
| Marui Group Co. Ltd. | 206,513 | 1,633 |
| TOTO Ltd. | 240,262 | 1,617 |
| Nomura Real Estate | ||
| Holdings Inc. | 89,085 | 1,578 |
| Aeon Mall Co. Ltd. | 75,280 | 1,578 |
| Tokuyama Corp. | 281,718 | 1,578 |
| Fuji Electric Holdings | ||
| Co. Ltd. | 519,073 | 1,559 |
| Kansai Paint Co. Ltd. | 201,336 | 1,526 |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| UNY Co. Ltd. | 167,000 | 1,515 | |
| Cosmo Oil Co. Ltd. | 561,594 | 1,514 | |
| Koito Manufacturing | |||
| Co. Ltd. | 91,800 | 1,512 | |
| Keisei Electric Railway | |||
| Co. Ltd. | 255,050 | 1,510 | |
| USS Co. Ltd. | 21,629 | 1,481 | |
| Mabuchi Motor Co. Ltd. | 26,667 | 1,470 | |
| Nomura Real Estate | |||
| Office Fund Inc. Class A | 260 | 1,464 | |
| Mitsui Mining & Smelting | |||
| Co. Ltd. | 531,777 | 1,457 | |
| Mizuho Securities Co. Ltd. | 524,851 | 1,454 | |
| NHK Spring Co. Ltd. | 150,731 | 1,448 | |
| Air Water Inc. | 130,142 | 1,440 | |
| Japan Prime Realty | |||
| Investment Corp. | 603 | 1,437 | |
| Sumitomo Rubber | |||
| Industries Ltd. | 160,255 | 1,432 | |
| Yamazaki Baking Co. Ltd. | 111,887 | 1,429 | |
| Asics Corp. | 147,367 | 1,410 | |
| Mitsubishi Logistics Corp. | 107,534 | 1,406 | |
| Hitachi High-Technologies | |||
| Corp. | 64,442 | 1,405 | |
| Nisshin Steel Co. Ltd. | 659,099 | 1,394 | |
| Japan Petroleum | |||
| Exploration Co. | 27,144 | 1,386 | |
| * | Mizuho Trust | ||
| & Banking Co. Ltd. | 1,395,498 | 1,374 | |
| Tosoh Corp. | 480,848 | 1,354 | |
| McDonald’s Holdings Co. | |||
| Japan Ltd. | 63,401 | 1,350 | |
| Dowa Holdings Co. Ltd. | 240,155 | 1,333 | |
| Chiyoda Corp. | 144,000 | 1,322 | |
| Sapporo Hokuyo | |||
| Holdings Inc. | 284,195 | 1,308 | |
| Yamato Kogyo Co. Ltd. | 41,148 | 1,308 | |
| Obic Co. Ltd. | 6,494 | 1,303 | |
| Nisshinbo Holdings Inc. | 120,834 | 1,283 | |
| Tokyo Steel Manufacturing | |||
| Co. Ltd. | 93,799 | 1,257 | |
| Square Enix Holdings | |||
| Co. Ltd. | 59,125 | 1,249 | |
| Dainippon Sumitomo | |||
| Pharma Co. Ltd. | 147,653 | 1,223 | |
| Hino Motors Ltd. | 242,344 | 1,220 | |
| Hakuhodo DY Holdings Inc. | 21,413 | 1,216 | |
| Showa Shell Sekiyu KK | 176,715 | 1,198 | |
| Sapporo Holdings Ltd. | 241,883 | 1,188 | |
| ^ | Shinsei Bank Ltd. | 885,154 | 1,149 |
| Kinden Corp. | 126,808 | 1,125 | |
| Taiheiyo Cement Corp. | 792,424 | 1,121 | |
| Daido Steel Co. Ltd. | 261,294 | 1,111 | |
| Shinko Electric Industries | |||
| Co. Ltd. | 62,187 | 1,104 |
17
| Developed Markets Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Otsuka Corp. | 15,032 | 1,069 | |
| Toyota Boshoku Corp. | 60,115 | 1,066 | |
| NTT Urban | |||
| Development Corp. | 1,094 | 1,061 | |
| Seven Bank Ltd. | 526 | 1,031 | |
| ^ | Senshu Ikeda Holdings Inc. | 596,928 | 1,025 |
| Canon Marketing Japan Inc. | 65,210 | 1,019 | |
| Itochu | |||
| Techno-Solutions Corp. | 26,573 | 1,004 | |
| Aozora Bank Ltd. | 690,486 | 990 | |
| Coca-Cola West Co. Ltd. | 53,029 | 938 | |
| ^ | Jafco Co. Ltd. | 29,939 | 918 |
| ^ | Ito En Ltd. | 58,546 | 908 |
| Nissha Printing Co. Ltd. | 25,672 | 896 | |
| ABC-Mart Inc. | 24,064 | 857 | |
| Matsui Securities Co. Ltd. | 111,002 | 834 | |
| Aeon Credit Service | |||
| Co. Ltd. | 75,487 | 823 | |
| Fuji Media Holdings Inc. | 434 | 697 | |
| Maruichi Steel Tube Ltd. | 34,020 | 654 | |
| ^ | Acom Co. Ltd. | 38,182 | 603 |
| 2,129,847 | |||
| Netherlands (2.6%) | |||
| Unilever NV | 1,525,236 | 46,402 | |
| Koninklijke Philips | |||
| Electronics NV | 910,800 | 30,584 | |
| * | ING Groep NV | 3,410,828 | 30,105 |
| Koninklijke KPN NV | 1,563,435 | 23,456 | |
| Koninklijke Ahold NV | 1,117,781 | 15,327 | |
| ASML Holding NV | 394,727 | 12,952 | |
| Akzo Nobel NV | 216,876 | 12,825 | |
| Heineken NV | 229,743 | 10,712 | |
| TNT NV | 347,228 | 10,611 | |
| * | Aegon NV | 1,461,675 | 10,223 |
| Reed Elsevier NV | 675,772 | 8,048 | |
| Koninklijke DSM NV | 144,283 | 6,445 | |
| Wolters Kluwer NV | 260,469 | 5,322 | |
| * | Randstad Holding NV | 95,233 | 4,825 |
| Heineken Holding NV | 102,728 | 4,205 | |
| Fugro NV | 62,397 | 4,062 | |
| ^ | Corio NV | 54,433 | 3,149 |
| SBM Offshore NV | 155,191 | 3,054 | |
| Koninklijke Boskalis | |||
| Westminster NV | 60,023 | 2,708 | |
| Koninklijke Vopak NV | 30,071 | 2,467 | |
| ASML Holding NV | 8,519 | 278 | |
| * | Aegon NV | 860 | 6 |
| 247,766 | |||
| New Zealand (0.1%) | |||
| Fletcher Building Ltd. | 567,032 | 3,441 | |
| Telecom Corp. of | |||
| New Zealand Ltd. | 1,769,295 | 2,767 | |
| Contact Energy Ltd. | 285,746 | 1,294 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Sky City Entertainment | |||
| Group Ltd. | 541,348 | 1,237 | |
| Auckland International | |||
| Airport Ltd. | 836,540 | 1,216 | |
| 9,955 | |||
| Norway (0.7%) | |||
| Statoil ASA | 1,050,522 | 25,401 | |
| * | Telenor ASA | 776,528 | 11,039 |
| ^ | DnB NOR ASA | 835,952 | 9,894 |
| Seadrill Ltd. | 262,213 | 6,605 | |
| Yara International ASA | 177,113 | 6,146 | |
| ^ | Orkla ASA | 722,647 | 6,089 |
| *,^ | Norsk Hydro ASA | 639,545 | 5,006 |
| *,^ | Renewable Energy Corp. | ||
| ASA | 314,082 | 1,067 | |
| * | Renewable Energy Corp. | ||
| ASA Rights | |||
| Exp. 5/14/2010 | 157,041 | 218 | |
| 71,465 | |||
| Portugal (0.3%) | |||
| EDP - Energias | |||
| de Portugal SA | 1,636,020 | 5,855 | |
| * | Portugal Telecom SGPS | ||
| SA | 545,910 | 5,556 | |
| Banco Espirito Santo SA | 492,166 | 2,356 | |
| Galp Energia SGPS SA | |||
| Class B | 143,190 | 2,296 | |
| Jeronimo Martins | |||
| SGPS SA | 208,182 | 2,154 | |
| Banco Comercial | |||
| Portugues SA | 2,207,863 | 2,074 | |
| ^ | Cimpor Cimentos | ||
| de Portugal SGPS SA | 223,835 | 1,623 | |
| * | EDP Renovaveis SA | 200,767 | 1,427 |
| Brisa Auto-Estradas | |||
| de Portugal SA | 167,562 | 1,188 | |
| 24,529 | |||
| Singapore (1.5%) | |||
| DBS Group Holdings Ltd. | 1,605,014 | 17,673 | |
| United Overseas | |||
| Bank Ltd. | 1,142,172 | 16,710 | |
| Singapore | |||
| Telecommunications | |||
| Ltd. | 7,466,744 | 16,470 | |
| Oversea-Chinese | |||
| Banking Corp. Ltd. | 2,427,085 | 15,414 | |
| Keppel Corp. Ltd. | 1,191,377 | 8,453 | |
| CapitaLand Ltd. | 2,384,314 | 6,441 | |
| Wilmar International Ltd. | 1,194,824 | 5,999 | |
| Singapore Airlines Ltd. | 500,720 | 5,497 | |
| Singapore Exchange Ltd. | 798,263 | 4,733 | |
| Singapore Press | |||
| Holdings Ltd. | 1,499,749 | 4,480 | |
| Noble Group Ltd. | 1,804,459 | 3,914 | |
| City Developments Ltd. | 465,861 | 3,579 | |
18
| Developed Markets Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Fraser and Neave Ltd. | 918,729 | 3,264 | |
| *,^ | Genting Singapore PLC | 4,348,278 | 3,011 |
| CapitaMall Trust | 2,078,404 | 2,932 | |
| Singapore Technologies | |||
| Engineering Ltd. | 1,271,716 | 2,921 | |
| SembCorp Industries Ltd. | 911,023 | 2,771 | |
| * | Golden | ||
| Agri-Resources Ltd. | 6,295,260 | 2,659 | |
| Jardine Cycle | |||
| & Carriage Ltd. | 115,899 | 2,548 | |
| SembCorp Marine Ltd. | 779,386 | 2,385 | |
| ^ | Olam International Ltd. | 1,112,974 | 2,100 |
| CapitaMalls Asia Ltd. | 1,274,000 | 2,010 | |
| ComfortDelgro Corp. Ltd. | 1,766,863 | 2,007 | |
| Ascendas Real Estate | |||
| Investment Trust | 1,405,174 | 1,962 | |
| Yangzijiang Shipbuilding | |||
| Holdings Ltd. | 1,537,000 | 1,493 | |
| Neptune Orient Lines Ltd. | 855,562 | 1,342 | |
| UOL Group Ltd. | 475,201 | 1,319 | |
| Cosco Corp. | |||
| Singapore Ltd. | 939,993 | 1,175 | |
| StarHub Ltd. | 559,055 | 949 | |
| * | Golden | ||
| Agri-Resources Ltd. | |||
| Warrants | |||
| Exp. 07/23/2012 | 296,075 | 26 | |
| 146,237 | |||
| Spain (3.7%) | |||
| Banco Santander SA | 7,704,790 | 97,969 | |
| Telefonica SA | 3,899,762 | 88,272 | |
| Banco Bilbao Vizcaya | |||
| Argentaria SA | 3,333,783 | 43,847 | |
| Iberdrola SA | 3,444,509 | 27,336 | |
| Repsol YPF SA | 686,740 | 16,124 | |
| Inditex SA | 204,027 | 12,628 | |
| ^ | ACS Actividades | ||
| de Construccion | |||
| y Servicios SA | 132,621 | 6,014 | |
| Banco Popular Espanol SA | 811,904 | 5,749 | |
| Red Electrica Corp. SA | 101,680 | 4,818 | |
| Abertis Infraestructuras SA | 264,938 | 4,614 | |
| ^ | Banco de Sabadell SA | 840,847 | 4,266 |
| Criteria Caixacorp SA | 789,460 | 3,937 | |
| Gas Natural SDG SA | 216,389 | 3,694 | |
| Ferrovial SA | 413,164 | 3,639 | |
| Enagas | 166,671 | 3,343 | |
| Iberdrola Renovables SA | 790,395 | 3,064 | |
| Acerinox SA | 127,812 | 2,544 | |
| Acciona SA | 23,603 | 2,340 | |
| Mapfre SA | 683,096 | 2,236 | |
| Gamesa Corp. | |||
| Tecnologica SA | 170,746 | 2,098 | |
| Bankinter SA | 264,770 | 1,955 | |
| Zardoya Otis SA | 124,106 | 1,938 | |
| Indra Sistemas SA | 91,309 | 1,830 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| ^ | Grifols SA | 119,470 | 1,512 |
| * | Iberia Lineas Aereas | ||
| de Espana SA | 448,098 | 1,498 | |
| Telefonica SA ADR | 21,689 | 1,470 | |
| Gestevision Telecinco SA | 91,076 | 1,295 | |
| ^ | Fomento de | ||
| Construcciones | |||
| y Contratas SA | 35,970 | 1,177 | |
| ^ | Banco de Valencia SA | 199,756 | 1,165 |
| *,^ | Sacyr Vallehermoso SA | 83,427 | 637 |
| *,^ | Banco de Valencia SA | ||
| Rights Exp. 05/10/2010 | 199,756 | 23 | |
| 353,032 | |||
| Sweden (2.9%) | |||
| ^ | Telefonaktiebolaget LM | ||
| Ericsson Class B | 2,819,756 | 32,542 | |
| ^ | Hennes & Mauritz AB | ||
| Class B | 479,041 | 30,567 | |
| Nordea Bank AB | 3,024,581 | 29,509 | |
| TeliaSonera AB | 2,099,207 | 14,388 | |
| ^ | Sandvik AB | 944,322 | 13,535 |
| ^ | Svenska Handelsbanken | ||
| AB Class A | 457,675 | 12,834 | |
| * | Volvo AB Class B | 1,018,249 | 12,633 |
| ^ | Atlas Copco AB Class A | 628,698 | 10,112 |
| * | Skandinaviska | ||
| Enskilda Banken AB | |||
| Class A | 1,422,732 | 9,698 | |
| Investor AB Class B | 425,317 | 8,046 | |
| ^ | SKF AB | 364,363 | 7,268 |
| ^ | Svenska Cellulosa AB | ||
| Class B | 532,654 | 6,940 | |
| ^ | Assa Abloy AB Class B | 292,038 | 6,734 |
| ^ | Skanska AB Class B | 373,106 | 6,182 |
| Millicom International | |||
| Cellular SA | 71,070 | 6,175 | |
| * | Swedbank AB Class A | 572,564 | 6,165 |
| Electrolux AB Class B | 225,038 | 5,788 | |
| ^ | Swedish Match AB | 235,301 | 5,334 |
| ^ | Atlas Copco AB Class B | 366,377 | 5,308 |
| ^ | Scania AB Class B | 301,076 | 5,254 |
| * | Volvo AB Class A | 410,772 | 4,988 |
| Tele2 AB | 293,058 | 4,953 | |
| ^ | Alfa Laval AB | 314,517 | 4,686 |
| Getinge AB | 186,340 | 4,165 | |
| Kinnevik Investment AB | |||
| Class B | 204,646 | 3,756 | |
| Securitas AB Class B | 294,596 | 3,102 | |
| SSAB AB Class A | 170,088 | 2,978 | |
| Ratos AB | 94,683 | 2,963 | |
| ^ | Husqvarna AB | 382,273 | 2,837 |
| Lundin Petroleum AB | 209,662 | 1,275 | |
| Holmen AB | 48,710 | 1,228 | |
| SSAB AB Class B | 77,810 | 1,209 | |
| 273,152 | |||
19
| Developed Markets Index Fund | ||||
| Market | ||||
| Value• | ||||
| Shares | ($000) | |||
| Switzerland (7.4%) | ||||
| Nestle SA | 3,246,692 | 158,864 | ||
| Roche Holding AG | 657,822 | 103,863 | ||
| Novartis AG | 1,975,723 | 100,732 | ||
| * | UBS AG | 3,306,618 | 51,227 | |
| * | Credit Suisse Group AG | 1,053,725 | 48,364 | |
| ABB Ltd. | 2,066,229 | 39,633 | ||
| Zurich Financial | ||||
| Services AG | 137,812 | 30,552 | ||
| Syngenta AG | 88,524 | 22,429 | ||
| Cie Financiere | ||||
| Richemont SA | 489,001 | 18,036 | ||
| Holcim Ltd. | 229,896 | 17,132 | ||
| Swiss Reinsurance Co. Ltd. | 323,903 | 14,047 | ||
| Swatch Group AG (Bearer) | 28,895 | 8,465 | ||
| Swisscom AG | 21,773 | 7,389 | ||
| Adecco SA | 115,104 | 6,770 | ||
| SGS SA | 5,119 | 6,649 | ||
| Julius Baer Group Ltd. | 193,150 | 6,638 | ||
| Geberit AG | 36,386 | 6,458 | ||
| Synthes Inc. | 55,504 | 6,298 | ||
| Givaudan SA | 7,161 | 6,231 | ||
| Sonova Holding AG | 43,060 | 5,338 | ||
| Kuehne & Nagel | ||||
| International AG | 50,745 | 5,311 | ||
| Schindler Holding AG | ||||
| (Bearer) | 45,359 | 3,984 | ||
| * | Actelion Ltd. | 95,636 | 3,879 | |
| Baloise-Holding AG | 46,642 | 3,673 | ||
| Lonza Group AG | 42,592 | 3,324 | ||
| Swiss Life Holding AG | 27,078 | 3,292 | ||
| *,^ | Logitech International SA | 169,943 | 2,774 | |
| Lindt & Spruengli AG | 105 | 2,731 | ||
| Nobel Biocare Holding AG | 115,246 | 2,526 | ||
| GAM Holding Ltd. | 193,331 | 2,402 | ||
| Swatch Group AG | ||||
| (Registered) | 40,460 | 2,206 | ||
| Pargesa Holding SA | 25,022 | 2,034 | ||
| Aryzta AG | 47,557 | 1,817 | ||
| Lindt & Spruengli AG | 820 | 1,816 | ||
| Straumann Holding AG | 7,392 | 1,816 | ||
| Schindler Holding AG | 20,307 | 1,764 | ||
| Aryzta AG | 29,041 | 1,120 | ||
| BKW FMB Energie AG | 12,073 | 805 | ||
| * | UBS AG (New York Shares) | 24,848 | 383 | |
| 712,772 | ||||
| United Kingdom (20.6%) | ||||
| HSBC Holdings PLC | 16,298,871 | 165,963 | ||
| BP PLC | 17,567,467 | 153,222 | ||
| Vodafone Group PLC | 46,693,386 | 103,466 | ||
| GlaxoSmithKline PLC | 4,858,628 | 90,181 | ||
| Royal Dutch Shell PLC | ||||
| Class B | 2,524,125 | 76,099 | ||
| Rio Tinto PLC | 1,284,146 | 66,391 | ||
| BHP Billiton PLC | 2,066,450 | 63,090 | ||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| AstraZeneca PLC | 1,357,502 | 59,984 | |
| Royal Dutch Shell PLC | |||
| Class A | |||
| (Amsterdam Shares) | 1,881,456 | 59,036 | |
| British American Tobacco | |||
| PLC | 1,869,252 | 58,778 | |
| Barclays PLC | 10,684,056 | 54,882 | |
| BG Group PLC | 3,155,576 | 53,338 | |
| * | Anglo American PLC | 1,232,646 | 52,358 |
| Standard Chartered PLC | 1,894,118 | 50,525 | |
| Tesco PLC | 7,434,830 | 49,313 | |
| Royal Dutch Shell PLC | |||
| Class A | 1,438,413 | 44,802 | |
| Diageo PLC | 2,343,365 | 39,967 | |
| Unilever PLC | 1,202,239 | 36,128 | |
| * | Lloyds Banking Group | ||
| PLC | 35,717,042 | 35,735 | |
| Reckitt Benckiser | |||
| Group PLC | 570,178 | 29,620 | |
| Xstrata PLC | 1,786,459 | 29,305 | |
| SABMiller PLC | 884,958 | 27,744 | |
| Imperial Tobacco | |||
| Group PLC | 952,191 | 27,126 | |
| National Grid PLC | 2,302,504 | 22,203 | |
| Centrica PLC | 4,801,620 | 21,568 | |
| Prudential PLC | 2,370,867 | 20,815 | |
| BAE Systems PLC | 3,316,462 | 17,382 | |
| Rolls-Royce Group PLC | 1,738,540 | 15,319 | |
| Tullow Oil PLC | 829,607 | 14,449 | |
| Scottish & Southern | |||
| Energy PLC | 862,912 | 14,310 | |
| Compass Group PLC | 1,734,248 | 14,104 | |
| BT Group PLC | 7,249,022 | 13,949 | |
| Aviva PLC | 2,586,100 | 13,671 | |
| * | Royal Bank of Scotland | ||
| Group PLC | 15,825,004 | 12,950 | |
| Pearson PLC | 759,796 | 12,142 | |
| Shire PLC | 526,012 | 11,587 | |
| WPP PLC | 1,076,725 | 11,416 | |
| British Sky Broadcasting | |||
| Group PLC | 1,066,697 | 9,985 | |
| Reed Elsevier PLC | 1,135,977 | 8,893 | |
| Experian PLC | 961,149 | 8,886 | |
| WM Morrison | |||
| Supermarkets PLC | 1,986,366 | 8,788 | |
| * | Old Mutual PLC | 4,943,890 | 8,725 |
| Smith & Nephew PLC | 830,955 | 8,615 | |
| Kingfisher PLC | 2,206,360 | 8,409 | |
| Marks & Spencer | |||
| Group PLC | 1,482,377 | 8,289 | |
| * | Cairn Energy PLC | 1,286,322 | 7,850 |
| International Power PLC | 1,423,172 | 7,204 | |
| Randgold Resources Ltd. | 84,300 | 7,143 | |
| Legal & General Group | |||
| PLC | 5,477,551 | 7,123 |
20
| Developed Markets Index Fund | |||
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| Capita Group PLC | 582,727 | 7,107 | |
| Land Securities Group | |||
| PLC | 706,520 | 7,066 | |
| Carnival PLC | 156,397 | 6,775 | |
| * | Wolseley PLC | 265,690 | 6,636 |
| Next PLC | 184,545 | 6,449 | |
| Standard Life PLC | 2,093,106 | 6,368 | |
| Smiths Group PLC | 364,994 | 6,276 | |
| Man Group PLC | 1,602,591 | 5,916 | |
| RSA Insurance Group | |||
| PLC | 3,195,601 | 5,915 | |
| J Sainsbury PLC | 1,126,958 | 5,808 | |
| British Land Co. PLC | 809,471 | 5,748 | |
| Vodafone Group PLC ADR | 255,762 | 5,678 | |
| Antofagasta PLC | 369,657 | 5,605 | |
| * | Autonomy Corp. PLC | 202,113 | 5,544 |
| Johnson Matthey PLC | 201,518 | 5,359 | |
| United Utilities Group PLC | 639,660 | 5,234 | |
| Associated British Foods | |||
| PLC | 334,958 | 5,146 | |
| Vedanta Resources PLC | 127,858 | 4,887 | |
| G4S PLC | 1,192,913 | 4,856 | |
| Inmarsat PLC | 406,671 | 4,732 | |
| Sage Group PLC | 1,223,946 | 4,575 | |
| Eurasian Natural | |||
| Resources Corp. PLC | 240,108 | 4,452 | |
| Serco Group PLC | 457,576 | 4,392 | |
| Cobham PLC | 1,075,800 | 4,361 | |
| Intercontinental Hotels | |||
| Group PLC | 242,736 | 4,280 | |
| Kazakhmys PLC | 199,293 | 4,222 | |
| Burberry Group PLC | 408,102 | 4,180 | |
| * | Lonmin PLC | 143,942 | 4,159 |
| Rexam PLC | 816,009 | 4,024 | |
| AMEC PLC | 309,828 | 3,937 | |
| Severn Trent PLC | 222,004 | 3,926 | |
| Invensys PLC | 753,003 | 3,878 | |
| Hammerson PLC | 656,181 | 3,830 | |
| Whitbread PLC | 163,577 | 3,823 | |
| 3i Group PLC | 909,504 | 3,752 | |
| Bunzl PLC | 306,701 | 3,572 | |
| Admiral Group PLC | 174,228 | 3,494 | |
| Liberty International PLC | 467,060 | 3,483 | |
| Home Retail Group PLC | 826,231 | 3,464 | |
| Petrofac Ltd. | 193,549 | 3,347 | |
| Segro PLC | 683,286 | 3,225 | |
| Market | |||
| Value• | |||
| Shares | ($000) | ||
| * | Cable & Wireless | ||
| Worldwide PLC | 2,423,227 | 3,203 | |
| Investec PLC | 397,160 | 3,141 | |
| Tomkins PLC | 824,633 | 3,120 | |
| Thomas Cook Group PLC | 802,437 | 3,044 | |
| ICAP PLC | 485,962 | 2,804 | |
| Balfour Beatty PLC | 638,878 | 2,704 | |
| Firstgroup PLC | 450,992 | 2,621 | |
| Resolution Ltd. | 2,264,382 | 2,522 | |
| Schroders PLC | 114,593 | 2,423 | |
| TUI Travel PLC | 525,300 | 2,241 | |
| Fresnillo PLC | 169,324 | 2,061 | |
| Drax Group PLC | 344,501 | 1,901 | |
| *,^ | British Airways PLC | 533,427 | 1,849 |
| London Stock | |||
| Exchange Group PLC | 141,076 | 1,468 | |
| WPP PLC ADR | 19,480 | 1,029 | |
| 1,978,440 | |||
| Total Common Stocks | |||
| (Cost $8,078,038) | 9,351,616 | ||
| Temporary Cash Investments (8.7%)1 | |||
| Money Market Fund (8.7%) | |||
| 2,3 | Vanguard Market | ||
| Liquidity Fund, | |||
| 0.210% | 830,633,000 | 830,633 | |
| Face | ||
| Amount | ||
| ($000) | ||
| U.S. Government and Agency Obligations (0.0%) | ||
| 4,5 Freddie Mac | ||
| Discount Notes, | ||
| 0.230%, 6/28/10 | 2,000 | 1,999 |
| Total Temporary Cash Investments | ||
| (Cost $832,632) | 832,632 | |
| Total Investments (106.2%) | ||
| (Cost $8,910,670) | 10,184,248 | |
| Other Assets and Liabilities (-6.2%) | ||
| Other Assets | 270,567 | |
| Liabilities3 | (863,905) | |
| (593,338) | ||
| Net Assets (100%) | 9,590,910 | |
21
| Developed Markets Index Fund | |
| At April 30, 2010, net assets consisted of: | |
| Amount | |
| ($000) | |
| Paid-in Capital | 10,112,198 |
| Undistributed Net Investment Income | 84,429 |
| Accumulated Net Realized Losses | (1,878,997) |
| Unrealized Appreciation (Depreciation) | |
| Investment Securities | 1,273,578 |
| Futures Contracts | (113) |
| Foreign Currencies and | |
| Forward Currency Contracts | (185) |
| Net Assets | 9,590,910 |
| Investor Shares—Net Assets | |
| Applicable to 343,333,343 outstanding | |
| $.001 par value shares of beneficial | |
| interest (unlimited authorization) | 3,237,931 |
| Net Asset Value Per Share— | |
| Investor Shares | $9.43 |
| Institutional Shares—Net Assets | |
| Applicable to 678,912,049 outstanding | |
| $.001 par value shares of beneficial | |
| interest (unlimited authorization) | 6,352,979 |
| Net Asset Value Per Share— | |
| Institutional Shares | $9.36 |
• See Note A in Notes to Financial Statements.
* Non-income-producing security.
^ Part of security position is on loan to broker-dealers. The total value of securities on loan is $778,767,000.
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 98.7% and 7.5%, respectively, of ne t 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 Includes $828,207,000 of collateral received for securities on loan.
4 The issuer operates under a congressional charter; its securities are not backed by the full faith and credit of the U.S. government.
5 Securities with a value of $1,999,000 have been segregated as initial margin for open futures contracts.
ADR—American Depositary Receipt.
REIT—Real Estate Investment Trust.
See accompanying Notes, which are an integral part of the Financial Statements.
22
| Developed Markets Index Fund | |
| Statement of Operations | |
| Six Months Ended | |
| April 30, 2010 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 105,642 |
| Interest2 | 16 |
| Security Lending | 1,033 |
| Total Income | 106,691 |
| Expenses | |
| The Vanguard Group—Note B | |
| Investment Advisory Services | 196 |
| Management and Administrative—Investor Shares | 3,149 |
| Management and Administrative—Institutional Shares | 738 |
| Marketing and Distribution—Investor Shares | 275 |
| Marketing and Distribution—Institutional Shares | 112 |
| Custodian Fees | 535 |
| Shareholders’ Reports—Investor Shares | 39 |
| Shareholders’ Reports—Institutional Shares | 2 |
| Trustees’ Fees and Expenses | 4 |
| Total Expenses | 5,050 |
| Net Investment Income | 101,641 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold | (6,906) |
| Futures Contracts | 836 |
| Foreign Currencies and Forward Currency Contracts | (894) |
| Realized Net Gain (Loss) | (6,964) |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities | 42,554 |
| Futures Contracts | (113) |
| Foreign Currencies and Forward Currency Contracts | (120) |
| Change in Unrealized Appreciation (Depreciation) | 42,321 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 136,998 |
1 Dividends are net of foreign withholding taxes of $9,218,000.
2 Interest income from an affiliated company of the fund was $14,000.
See accompanying Notes, which are an integral part of the Financial Statements.
23
| Developed Markets Index Fund | ||
| Statement of Changes in Net Assets | ||
| Six Months Ended | Year Ended | |
| April 30, | October 31, | |
| 2010 | 2009 | |
| ($000) | ($000) | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net Investment Income | 101,641 | 139,382 |
| Realized Net Gain (Loss) | (6,964) | (526,521) |
| Change in Unrealized Appreciation (Depreciation) | 42,321 | 947,092 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 136,998 | 559,953 |
| Distributions | ||
| Net Investment Income | — | — |
| Investor Shares | (35,235) | (121,978) |
| Institutional Shares | — | — |
| Realized Capital Gain | — | — |
| Investor Shares | — | — |
| Institutional Shares | — | — |
| Total Distributions | (35,235) | (121,978) |
| Capital Share Transactions | ||
| Investor Shares | 253,334 | 199,012 |
| Institutional Shares | 6,300,064 | — |
| Net Increase (Decrease) from Capital Share Transactions | 6,553,398 | 199,012 |
| Total Increase (Decrease) | 6,655,161 | 636,987 |
| Net Assets | ||
| Beginning of Period | 2,935,749 | 2,298,762 |
| End of Period1 | 9,590,910 | 2,935,749 |
| 1 Net Assets—End of Period includes undistributed net investment income of $84,429,000 and $18,755,000. | ||
See accompanying Notes, which are an integral part of the Financial Statements.
24
| Developed Markets Index Fund | ||||||
| Financial Highlights | ||||||
| Investor Shares | ||||||
| Six Months | ||||||
| Ended | ||||||
| For a Share Outstanding | April 30, | Year Ended October 31, | ||||
| Throughout Each Period | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Net Asset Value, Beginning of Period | $9.26 | $7.79 | $14.91 | $12.15 | $9.75 | $8.43 |
| Investment Operations | ||||||
| Net Investment Income | .1222 | .4521 | .3692 | .305 | .219 | .190 |
| Net Realized and Unrealized Gain (Loss) | ||||||
| on Investments | .157 | 1.416 | (7.097) | 2.759 | 2.400 | 1.320 |
| Total from Investment Operations | .279 | 1.868 | (6.728) | 3.064 | 2.619 | 1.510 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.109) | (.398) | (.387) | (.299) | (.219) | (.190) |
| Distributions from Realized Capital Gains | — | — | (.005) | (.005) | — | — |
| Total Distributions | (.109) | (.398) | (.392) | (.304) | (.219) | (.190) |
| Net Asset Value, End of Period | $9.43 | $9.26 | $7.79 | $14.91 | $12.15 | $9.75 |
| Total Return3 | 2.99% | 25.23% | -46.24% | 25.67% | 27.27% | 18.07% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $3,238 | $2,936 | $2,299 | $3,976 | $2,572 | $1,623 |
| Ratio of Total Expenses to | ||||||
| Average Net Assets | 0.24%5 | 0.10%4 | 0% | 0% | 0% | 0% |
| Ratio of Net Investment Income to | ||||||
| Average Net Assets | 3.10%5 | 5.93%1 | 3.04% | 2.05% | 1.82% | 1.77% |
| Portfolio Turnover Rate | 5%5 | 14%6 | 13% | 7% | 9% | 10% |
1 Net investment income per share and the ratio of net investment income to average net assets include $.400 and 5.19%, respectively, of annual dividends received from Vanguard mutual funds in December 2008. Effective in June 2009, the fund’s equity investments are solely in common stocks.
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, or the account service fee that may be applicable to certain accounts with balances below $10,000.
4 The acquired fund fees and expenses were 0.15% for 2009. Including the acquired fund fees and expenses, the fund’s total operating expenses represented 0.25% of average net assets.
5 Annualized.
6 Excludes the value of securities received and mutual fund shares delivered in connection with a change in the fund’s investment policy to invest directly in individual stocks and reduce the fund’s investment in Vanguard mutual funds.
See accompanying Notes, which are an integral part of the Financial Statements.
25
| Developed Markets Index Fund | |
| Financial Highlights | |
| Institutional Shares | |
| January 22, 20101 to | |
| For a Share Outstanding Throughout the Period | April 30, 2010 |
| Net Asset Value, Beginning of Period | $9.28 |
| Investment Operations | |
| Net Investment Income | .0952 |
| Net Realized and Unrealized Gain (Loss) on Investments | (.015) |
| Total from Investment Operations | .080 |
| Distributions | |
| Dividends from Net Investment Income | — |
| Distributions from Realized Capital Gains | — |
| Total Distributions | — |
| Net Asset Value, End of Period | $9.36 |
| Total Return3 | 0.86% |
| Ratios/Supplemental Data | |
| Net Assets, End of Period (Millions) | $6,353 |
| Ratio of Total Expenses to Average Net Assets | 0.08%4 |
| Ratio of Net Investment Income to Average Net Assets | 3.26%4 |
| Portfolio Turnover Rate | 5%4 |
1 Inception. See Note H in Notes to Financial Statements.
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 Annualized.
See accompanying Notes, which are an integral part of the Financial Statements.
26
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 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 two classes of shares: Investor Shares and Institutional Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. Institutional Shares were first issued on January 22, 2010 (in connection with the acquisition of Vanguard Institutional Developed Markets Index Fund, see Note H), and are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million.
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. 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 pro xies (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).
27
Developed Markets Index Fund
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 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. Counterparty risk is mitigated by entering into forward currency contracts only with highly rated counterparties, by a master netting arrangement between the fund and the counterparty, and by the posting of collateral by the counterparty. The forward currency contracts contain provisions whereby a counterparty may terminate open contracts if the fund’s net assets decline below a certain level, triggering a payment by the fund if the fund is in a net liability position at the time of the termination. The payment amount would be reduced by any collateral the fund has posted. Any securities po sted as collateral for open contracts are noted in the Statement of Net Assets.
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. Management has analyzed the fund’s tax positions taken for all open federal income tax years (October 31, 2006–2009), and for the period ended April 30, 2010, and has concluded that no provision for federal income tax is required in the fund’s 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.
28
Developed Markets Index Fund
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. Through June 18, 2009, fees assessed on redemptions of capital shares were reallocated proportionately to the funds in which the fund invested; effective June 19, 2009, such fees 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 April 30, 2010, the fund had contributed capital of $1,436,000 to Vanguard (included in Other Assets), representing 0.01% of the fund’s net assets and 0.57% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.
C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).
The following table summarizes the fund’s investments as of April 30, 2010, based on the inputs used to value them:
| Level 1 | Level 2 | Level 3 | |
| Investments | ($000) | ($000) | ($000) |
| Common Stocks | 15,756 | 9,335,860 | — |
| Temporary Cash Investments | 830,633 | 1,999 | — |
| Futures Contracts—Assets1 | 537 | — | — |
| Forward Currency Contracts—Assets | — | 189 | — |
| Forward Currency Contracts—Liabilities | — | (149) | — |
| Total | 846,926 | 9,337,899 | — |
1 Represents variation margin on the last day of the reporting period.
29
Developed Markets Index Fund
D. At April 30, 2010, the fair values of derivatives were reflected in the Statement of Net Assets as follows:
| Foreign | |||
| Equity | Exchange | ||
| Contracts | Contracts | Total | |
| Statement of Net Assets Caption | ($000) | ($000) | ($000) |
| Other Assets | 537 | 189 | 726 |
| Liabilities | — | (149) | (149) |
Realized net gain (loss) and the change in unrealized appreciation (depreciation) on derivatives for the six months ended April 30, 2010, were:
| Foreign | |||
| Equity | Exchange | ||
| Contracts | Contracts | Total | |
| Realized Net Gain (Loss) on Derivatives | ($000) | ($000) | ($000) |
| Futures Contracts | 836 | — | 836 |
| Forward Currency Contracts | — | (154) | (154) |
| Realized Net Gain (Loss) on Derivatives | 836 | (154) | 682 |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | |||
| Futures Contracts | (113) | — | (113) |
| Forward Currency Contracts | — | 40 | 40 |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | (113) | 40 | (73) |
At April 30, 2010, the aggregate settlement value of open futures contracts and the related unrealized appreciation (depreciation) were:
| ($000) | ||||
| Aggregate | ||||
| Number of | Settlement | Unrealized | ||
| Long (Short) | Value | Appreciation | ||
| Futures Contracts | Expiration | Contracts | Long (Short) | (Depreciation) |
| FTSE 100 Index | June 2010 | 605 | 51,002 | 131 |
| Nikkei 225 Index | June 2010 | 830 | 48,735 | 306 |
| Dow Jones EURO STOXX 50 Index | June 2010 | 214 | 7,819 | (431) |
| Topix Index | June 2010 | 47 | 4,914 | (45) |
| S&P ASX 200 Index | June 2010 | 26 | 2,916 | (74) |
Unrealized appreciation (depreciation) on open FTSE 100 Index and Nikkei 225 Index futures contracts is required to be treated as realized gain (loss) for tax purposes.
30
Developed Markets Index Fund
At April 30, 2010, the fund had open forward currency contracts to receive and deliver currencies as follows. Unrealized appreciation (depreciation) on open forward currency contracts is treated as realized gain (loss) for tax purposes.
| Unrealized | |||||
| Appreciation | |||||
| Contract Amount (000) | (Depreciation) | ||||
| Contract Settlement Date | Receive | Deliver | ($000) | ||
| 6/23/10 | EUR | 6,144 | USD | 8,171 | (126) |
| 6/23/10 | GBP | 3,651 | USD | 5,587 | 1 |
| 6/23/10 | AUD | 3,195 | USD | 2,955 | 26 |
| 6/16/10 | JPY | 129,090 | USD | 1,374 | (7) |
| 6/16/10 | USD | 11,291 | JPY | 1,060,995 | 146 |
AUD—Australian dollar.
EUR—Euro.
GBP—British pound.
JPY—Japanese yen.
USD—U.S. dollar.
The fund had net unrealized foreign currency losses of $225,000 resulting from the translation of other assets and liabilities at April 30, 2010.
E. 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 six months ended April 30, 2010, the fund realized net foreign currency losses of $740,000, which decreased distributable net income for tax purposes; accordingly, such losses have been reclassified from accumulated net realized losses to undistributed net investment income. 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 six months ended April 30, 2010, the fund realized gains on the sale of passive foreign investment companies of $8,000, 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 through the most recent mark-to-mark et date for tax purposes on passive foreign investment company holdings at April 30, 2010, was $17,299,000, including $12,866,000 acquired from Vanguard Institutional Developed Markets Index Fund.
31
Developed Markets Index Fund
The fund’s tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2009, the fund had available capital loss carryforwards totaling $587,365,000 to offset future net capital gains of $11,015,000 through October 31, 2016, and $576,350,000 through October 31, 2017. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2010; should the fund realize net capital losses for the year, the losses will be added to the loss carryforward balance above.
The fund acquired additional realized losses of $1,285,352,000 to offset future net capital gains in connection with the acquisition of Vanguard Institutional Developed Markets Index Fund in January 2010 (see Note H); these losses have been reclassified from paid-in capital to accumulated net realized losses.
At April 30, 2010, the cost of investment securities for tax purposes was $8,927,969,000. Net unrealized appreciation of investment securities for tax purposes was $1,256,279,000, consisting of unrealized gains of $1,376,212,000 on securities that had risen in value since their purchase and $119,933,000 in unrealized losses on securities that had fallen in value since their purchase.
F. During the six months ended April 30, 2010, the fund purchased $838,792,000 of investment securities and sold $176,639,000 of investment securities, other than temporary cash investments.
| G. Capital share transactions for each class of shares were: | ||||
| Six Months Ended | Year Ended | |||
| April 30, 2010 | October 31, 2009 | |||
| Amount | Shares | Amount | Shares | |
| ($000) | (000) | ($000) | (000) | |
| Investor Shares | ||||
| Issued | 565,052 | 59,151 | 865,447 | 112,058 |
| Issued in Lieu of Cash Distributions | 32,170 | 3,355 | 110,662 | 14,874 |
| Redeemed1 | (343,888) | (36,173) | (777,097)2 | (104,948) |
| Net Increase (Decrease)—Investor Shares | 253,334 | 26,333 | 199,012 | 21,984 |
| Institutional Shares3 | ||||
| Issued | 894,565 | 96,006 | — | — |
| Issued in Connection with Acquisition of | ||||
| Vanguard Institutional Developed Markets Index Fund | 5,729,120 | 617,209 | — | — |
| Issued in Lieu of Cash Distributions | — | — | — | — |
| Redeemed1 | (323,621) | (34,303) | — | — |
| Net Increase (Decrease)—Institutional Shares | 6,300,064 | 678,912 | — | — |
1 Net of redemption fees for fiscal 2010 and 2009 of $82,000 and $45,000, respectively (fund totals).
2 The fund collected redemption fees of $192,000, which were reallocated proportionately to the funds in which the fund invested.
3 Inception date was January 22, 2010.
32
Developed Markets Index Fund
H. On January 22, 2010, the fund acquired all the net assets of Vanguard Institutional Developed Markets Index Fund pursuant to a plan of reorganization approved by the funds’ board of trustees. The acquisition was accomplished by a tax-free exchange of 617,209,000 Institutional Shares of the fund for 617,209,000 shares of the Institutional Developed Markets Index Fund outstanding as of the close of business on January 22, 2010. The Institutional Developed Markets Index Fund’s net assets as of the close of business on January 22, 2010, of $5,729,120,000, including $822,409,000 of unrealized appreciation, were combined with the fund’s net assets. The net assets of the fund immediately before the acquisition were $3,143,852,000. The net assets of the fund immediately following the acquisition were $8,872,972,000.
Assuming that the acquisition had been completed on November 1, 2009, the beginning of the fund’s reporting period, the fund’s pro forma results of operations for the six months ended April 30, 2010, would be:
| ($000) | |
| Net Investment Income | 120,954 |
| Realized Net Gain (Loss) | (13,013) |
| Change in Unrealized Appreciation (Depreciation) | 133,322 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 241,263 |
Because the combined funds have been managed as a single integrated fund since the acquisition was completed, it is not practical to separate the results of operations of Vanguard Institutional Developed Markets Fund that have been included in the fund’s statement of operations since January 22, 2010.
I. In preparing the financial statements as of April 30, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements.
33
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 fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. 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 accompanying table 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.
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 2% fee on redemptions of shares held for less than two months, nor do they include 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.” 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.
34
| Six Months Ended April 30, 2010 | |||
| Beginning | Ending | Expenses | |
| Account Value | Account Value | Paid During | |
| Developed Markets Index Fund | 10/31/2009 | 4/30/2010 | Period |
| Based on Actual Fund Return | |||
| Investor Shares | $1,000.00 | $1,029.93 | $1.21 |
| Institutional Shares | 1,000.00 | 1,008.62 | 0.22 |
| Based on Hypothetical 5% Yearly Return | |||
| Investor Shares | $1,000.00 | $1,023.60 | $1.20 |
| Institutional Shares | 1,000.00 | 1,013.21 | 0.22 |
The calculations are based on expenses incurred in the most recent fiscal period. The fund’s annualized expense ratios were 0.24% for Investor Shares for the six months ended April 30, 2010, and 0.08% for Institutional Shares from their inception on January 22, 2010, through April 30, 2010. 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 fiscal period, then divided by the number of days in the most recent 12-month period. Because Institutional Shares do not have a full six months of operations, “Ending Account Value” and “Expenses Paid During Period” information for Institutional Shares may not be useful for comparing Institutional Shares with other mutual funds.
35
Trustees Approve Advisory Arrangement
The board of trustees of Vanguard Developed Markets Index Fund has renewed the fund’s investment advisory arrangement with The Vanguard Group, Inc. Vanguard—through its Quantitative Equity Group—serves as the investment advisor for the fund. The board determined that continuing the fund’s internalized management structure was in the best interests of the fund and its shareholders.
The board based its decision upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. The trustees considered the factors discussed below, among others. However, no single factor determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of services
The board considered the quality of the fund’s investment management since it began investing directly in stocks in 2009, and took into account the organizational depth and stability of the advisor. Vanguard has been managing investments for more than three decades. The Quantitative Equity Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.
The board concluded that Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangement.
Investment performance
The board considered the fund’s performance since 2009, including any periods of outperformance or underperformance of its target index and peer group. The board concluded that the fund has performed in line with expectations, and that the results have been consistent with the fund’s investment strategy. Information about the fund’s most recent performance can be found in the Performance Summary section of this report.
Cost
The board concluded that the fund’s expense ratio was well below the average expense ratio charged by funds in its peer group. The board noted that the fund’s advisory expense ratio was also well below its peer-group average. Information about the fund’s expense ratio appears in the About Your Fund’s Expenses section of this report as well as in the Financial Statements section.
The board does not conduct a profitability analysis of Vanguard, because of Vanguard’s unique “at-cost” structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees, and produces “profits” only in the form of reduced expenses for fund shareholders.
The benefit of economies of scale
The board concluded that the fund’s low-cost arrangement with Vanguard ensures that the fund will realize economies of scale as it grows, with the cost to shareholders declining as the fund’s assets increase.
The board will consider whether to renew the advisory arrangement again after a one-year period.
36
Glossary
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%. For this report, beta is based on returns over the past 36 months for both the fund and the index. Note that a fund’s beta should be reviewed in conjunction with its R-squared (see definition). 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.
Dividend Yield. Dividend income earned by stocks, expressed as a percentage of the aggregate market value (or of net asset value, for a fund). The yield is determined by dividing the amount of the annual dividends by the aggregate value (or net asset value) at the end of the period. For a fund, the dividend yield is based solely on stock holdings and does not include any income produced by other investments.
Earnings Growth Rate. The average annual rate of growth in earnings over the past five years for the stocks now in a fund.
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.
Median Market Cap. An indicator of the size of companies in which a fund invests; the midpoint of market capitalization (market price x shares outstanding) of a fund’s stocks, weighted by the proportion of the fund’s assets invested in each stock. Stocks representing half of the fund’s assets have market capitalizations above the median, and the rest are below it.
Price/Book Ratio. The share price of a stock divided by its net worth, or book value, per share. For a fund, the weighted average price/book ratio of the stocks it holds.
Price/Earnings Ratio. The ratio of a stock’s current price to its per-share earnings over the past year. For a fund, the weighted average P/E of the stocks it holds. P/E is an indicator of market expectations about corporate prospects; the higher the P/E, the greater the expectations for a company’s future growth.
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. For this report, R-squared is based on returns over the past 36 months for both the fund and the index.
Return on Equity. The annual average rate of return generated by a company during the past five years for each dollar of shareholder’s equity (net income divided by shareholder’s equity). For a fund, the weighted average return on equity for the companies whose stocks it holds.
37
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.
38
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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. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 162 Vanguard funds.
The following table provides information for each trustee and executive officer of the fund. More information about the trustees is in the Statement of Additional Information, which can be obtained, without charge, by contacting Vanguard at 800-662-7447, or online at www.vanguard.com.
| Interested Trustee1 | Rajiv L. Gupta |
| Born 1945. Trustee Since December 2001.2 | |
| F. William McNabb III | Principal Occupation(s) During the Past Five Years: |
| Born 1957. Trustee Since July 2009. Chairman of the | Chairman and Chief Executive Officer (retired 2009) |
| Board. Principal Occupation(s) During the Past Five | and President (2006–2008) of Rohm and Haas Co. |
| Years: Chairman of the Board of The Vanguard Group, | (chemicals); Director of Tyco International, Ltd. |
| Inc., and of each of the investment companies served | (diversified manufacturing and services) and Hewlett- |
| by The Vanguard Group, since January 2010; Director | Packard Co. (electronic computer manufacturing); |
| of The Vanguard Group since 2008; Chief Executive | Trustee of The Conference Board; Member of the |
| Officer and President of The Vanguard Group and of | Board of Managers of Delphi Automotive LLP |
| each of the investment companies served by The | (automotive components). |
| Vanguard Group since 2008; Director of Vanguard | |
| Marketing Corporation; Managing Director of The | Amy Gutmann |
| Vanguard Group (1995–2008). | Born 1949. Trustee Since June 2006. Principal |
| Occupation(s) During the Past Five Years: President | |
| of the University of Pennsylvania; Christopher H. | |
| Independent Trustees | Browne Distinguished Professor of Political Science |
| in the School of Arts and Sciences with secondary | |
| Emerson U. Fullwood | appointments at the Annenberg School for Commu- |
| Born 1948. Trustee Since January 2008. Principal | nication and the Graduate School of Education of |
| Occupation(s) During the Past Five Years: Executive | the University of Pennsylvania; Director of Carnegie |
| Chief Staff and Marketing Officer for North America | Corporation of New York, Schuylkill River Development |
| and Corporate Vice President (retired 2008) of Xerox | Corporation, and Greater Philadelphia Chamber of |
| Corporation (document management products and | Commerce; Trustee of the National Constitution Center; |
| services); Director of SPX Corporation (multi-industry | Chair of the Presidential Commission for the Study of |
| manufacturing), the United Way of Rochester, | Bioethical Issues. |
| Amerigroup Corporation (managed health care), | |
| the University of Rochester Medical Center, and | |
| Monroe Community College Foundation. |
| JoAnn Heffernan Heisen | Executive Officers | |
| Born 1950. Trustee Since July 1998. Principal | ||
| Occupation(s) During the Past Five Years: Corporate | Thomas J. Higgins | |
| Vice President and Chief Global Diversity Officer since | Born 1957. Chief Financial Officer Since September | |
| 2006 (retired 2008) and Member of the Executive | 2008. Principal Occupation(s) During the Past Five | |
| Committee (retired 2008) of Johnson & Johnson | Years: Principal of The Vanguard Group, Inc.; Chief | |
| (pharmaceuticals/consumer products); Vice President | Financial Officer of each of the investment companies | |
| and Chief Information Officer of Johnson & Johnson | served by The Vanguard Group since 2008; Treasurer | |
| (1997–2005); Director of the University Medical Center | of each of the investment companies served by The | |
| at Princeton and Women’s Research and Education | Vanguard Group (1998–2008). | |
| Institute; Member of the Advisory Board of the | ||
| Maxwell School of Citizenship and Public Affairs | Kathryn J. Hyatt | |
| at Syracuse University. | Born 1955. Treasurer Since November 2008. Principal | |
| Occupation(s) During the Past Five Years: Principal | ||
| F. Joseph Loughrey | of The Vanguard Group, Inc.; Treasurer of each of | |
| Born 1949. Trustee Since October 2009. Principal | the investment companies served by The Vanguard | |
| Occupation(s) During the Past Five Years: President | Group since 2008; Assistant Treasurer of each of the | |
| and Chief Operating Officer since 2005 (retired 2009) | investment companies served by The Vanguard Group | |
| and Vice Chairman of the Board (2008–2009) of | (1988–2008). | |
| Cummins Inc. (industrial machinery); Director of | ||
| SKF AB (industrial machinery), Hillenbrand, Inc. | Heidi Stam | |
| (specialized consumer services), Sauer-Danfoss Inc. | Born 1956. Secretary Since July 2005. Principal | |
| (machinery), the Lumina Foundation for Education, | Occupation(s) During the Past Five Years: Managing | |
| and Oxfam America; Chairman of the Advisory Council | Director of The Vanguard Group, Inc., since 2006; | |
| for the College of Arts and Letters at the University of | General Counsel of The Vanguard Group since 2005; | |
| Notre Dame. | Secretary of The Vanguard Group and of each of the | |
| investment companies served by The Vanguard Group | ||
| André F. Perold | since 2005; Director and Senior Vice President of | |
| Born 1952. Trustee Since December 2004. Principal | Vanguard Marketing Corporation since 2005; | |
| Occupation(s) During the Past Five Years: George | Principal of The Vanguard Group (1997–2006). | |
| Gund Professor of Finance and Banking at the Harvard | ||
| Business School; Chair of the Investment Committee | ||
| of HighVista Strategies LLC (private investment firm). | Vanguard Senior Management Team | |
| Alfred M. Rankin, Jr. | R. Gregory Barton | Michael S. Miller |
| Born 1941. Trustee Since January 1993. Principal | Mortimer J. Buckley | James M. Norris |
| Occupation(s) During the Past Five Years: Chairman, | Kathleen C. Gubanich | Glenn W. Reed |
| President, and Chief Executive Officer of NACCO | Paul A. Heller | George U. Sauter |
| Industries, Inc. (forklift trucks/housewares/lignite); | ||
| Director of Goodrich Corporation (industrial products/ | ||
| aircraft systems and services); Chairman of the Federal | Chairman Emeritus and Senior Advisor | |
| Reserve Bank of Cleveland; Trustee of The Cleveland | ||
| Museum of Art. | John J. Brennan | |
| Chairman, 1996–2009 | ||
| Peter F. Volanakis | Chief Executive Officer and President, 1996–2008 | |
| Born 1955. Trustee Since July 2009. Principal | ||
| Occupation(s) During the Past Five Years: President | ||
| since 2007 and Chief Operating Officer since 2005 | Founder | |
| of Corning Incorporated (communications equipment); | ||
| President of Corning Technologies (2001–2005); | John C. Bogle | |
| Director of Corning Incorporated and Dow Corning; | Chairman and Chief Executive Officer, 1974–1996 | |
| Trustee of the Corning Incorporated Foundation and | ||
| the Corning Museum of Glass; Overseer of the | ||
| Amos Tuck School of Business Administration at | ||
| Dartmouth College. | ||
1 Mr. McNabb is considered an “interested person,” as defined in the Investment Company Act of 1940, because he is an officer of the Vanguard funds.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard State Tax-Exempt Funds.
 | |
| P.O. Box 2600 | |
| Valley Forge, PA 19482-2600 | |
| Connect with Vanguard®>www.vanguard.com | |
| Fund Information > 800-662-7447 |
| Direct Investor Account Services > 800-662-2739 |
| Institutional Investor Services > 800-523-1036 |
| Text Telephone for People With Hearing Impairment > 800-749-7273 |
| This material may be used in conjunction with the offering of shares of any Vanguard fund only if preceded or accompanied by the fund’s current prospectus. |
| 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, and searching for “proxy voting guidelines,” or by calling Vanguard at 800-662-2739. The guidelines are 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 20549-1520. |
| 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 relationship MSCI has with The Vanguard Group and any related funds. |
| © 2010 The Vanguard Group, Inc. | |
| All rights reserved. | |
| Vanguard Marketing Corporation, Distributor. | |
| Q2272 062010 |
Item 2: Not Applicable.
Item 3: Not Applicable.
Item 4: Not Applicable.
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: | /s/ F. WILLIAM MCNABB III* |
| F. WILLIAM MCNABB III | |
| CHIEF EXECUTIVE OFFICER | |
| Date: June 21, 2010 | |
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: | /s/ F. WILLIAM MCNABB III* |
| F. WILLIAM MCNABB III | |
| CHIEF EXECUTIVE OFFICER | |
| Date: June 21, 2010 | |
| VANGUARD STAR FUNDS | |
| By: | /s/ THOMAS J. HIGGINS* |
| THOMAS J. HIGGINS | |
| CHIEF FINANCIAL OFFICER | |
| Date: June 21, 2010 |
*By: /s/ Heidi Stam
Heidi Stam, pursuant to a Power of Attorney filed on April 26, 2010, see file Number 33-53683, is Incorporated by Reference.