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: 811-5972
Name of Registrant: VANGUARD INTERNATIONAL EQUITY INDEX FUNDS
Address of Registrant: P.O. BOX 2600, VALLEY FORGE, PA 19482
Name and address of agent for service: R. GREGORY BARTON
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, 2002 - October 31, 2003
ITEM 1: Reports to Shareholders
VANGUARD(R) INTERNATIONAL STOCK INDEX FUNDS
OCTOBER 31, 2003
ANNUAL REPORT
VANGUARD(R) EUROPEAN STOCK INDEX FUND
VANGUARD(R) PACIFIC STOCK INDEX FUND
VANGUARD(R) EMERGING MARKETS STOCK INDEX FUND
VANGUARD(R) TOTAL INTERNATIONAL STOCK INDEX FUND
VANGUARD(R) DEVELOPED MARKETS INDEX FUND
VANGUARD(R) INSTITUTIONAL DEVELOPED MARKETS INDEX FUND
THE VANGUARD GROUP(R) LOGO
HOW TO READ YOUR FUND REPORT
This report contains information that can help you evaluate your investment. It
includes details about your fund's return and presents data and analysis that
provide insight into the fund's performance and investment approach.
By reading the letter from Vanguard's chairman, you'll get an understanding of
how the fund invests and how the market environment affected its performance.
The statistical information that follows can help you understand how the fund's
performance and characteristics stack up against those of similar funds and
market benchmarks.
It's important to keep in mind that any opinions expressed here are just that:
informed opinions. They should not be considered promises or advice. These
opinions, like the statistics, cover the period through the date on the cover of
this report. The risks of investing in the fund are spelled out in the
prospectus.
Frequent updates on the fund's performance and information about some of its
holdings are available on Vanguard.com(R).
- --------------------------------------------------------------------------------
CONTENTS
1 letter from the chairman
8 fund profiles
16 glossary of investment terms
17 performance summaries
26 your fund's after-tax returns
28 about your fund's expenses
29 financial statements
81 advantages of vanguard.com
- --------------------------------------------------------------------------------
SUMMARY
* Returns for the Vanguard International Stock Index Funds' Investor Shares
ranged from 24.3% to 49.9% during fiscal year 2003, as international stock
markets rebounded dramatically, producing very strong returns for
U.S.-based investors.
* All of the funds outperformed their average mutual fund peers, and all
hewed to the results of their benchmark indexes.
* Despite several trying years for international investors, international
stock funds still play a valuable role in diversifying a portfolio of
stocks, bonds, and short-term reserves held for the long term.
- --------------------------------------------------------------------------------
WANT LESS CLUTTER IN YOUR MAILBOX? JUST REGISTER WITH VANGUARD.COM AND OPT TO
GET FUND REPORTS ONLINE.
[INDEX TO MSCI]
Emerging Markets Stock Index Fund
European Stock Index Fund
Pacific Stock Index Fund
LETTER FROM THE CHAIRMAN
FELLOW SHAREHOLDER,
Virtually all stock markets around the world gained ground during the fiscal
year ended October 31, 2003. For U.S.-based investors, a decline in the dollar
against most major currencies translated into even higher returns from overseas
markets.
[PICTURES OF JOHN J. BRENNAN]
The Vanguard International Stock Index Funds posted returns ranging from 24.3%
for the Investor Shares of the European Stock Index Fund to 50.1% for the
Institutional Shares of the Emerging Markets Stock Index Fund. The funds'
returns closely tracked those of their unmanaged target indexes and, in all
cases, exceeded those of their average mutual fund peers.
The table on page 2 presents the total return (capital change plus reinvested
dividends) for each fund's share classes. Returns are also shown for the funds'
average mutual fund peers and target indexes. Information on the changes in the
funds' net asset values and on each fund's per-share distributions can be found
on page 7. If you own one or more of the funds in a taxable account, you may
wish to review our report on the funds' after-tax returns on page 26.
WORLD MARKETS STAGED A STRONG RALLY
At the onset of the 2003 fiscal year, investors' fears about the looming war
with Iraq, the SARS (severe acute respiratory syndrome) outbreak, increasing
terrorist activity, and the sluggish world economy weighed heavily on global
stock markets. These concerns dissipated somewhat with the start of combat
operations in Iraq, as a sense of relief seemed to spark a powerful upswing
throughout most global markets.
In the aggregate, returns from international markets outpaced the performance of
the U.S. market during the 12 months. As measured by the Morgan Stanley Capital
International (MSCI) All Country
1
World Index Free ex USA, stocks outside the United States rose 30.4% in U.S.
dollars for the period. This exceeded the 24.4% return of the Wilshire 5000
Total Market Index, a proxy for the broad U.S. stock market, by 6 percentage
points. The MSCI Europe, Australasia, Far East (EAFE) Index, a measure of stock
performance in 21 developed nations, returned 27.0% in U.S. dollars. The
increase was less than half that percentage (+12.7%) in local currencies, but
the dollar's weakness relative to most major currencies enhanced returns for
U.S.-based investors.
- -------------------------------------------------------------
2003 TOTAL RETURNS FISCAL YEAR ENDED
OCTOBER 31
- -------------------------------------------------------------
VANGUARD EUROPEAN STOCK INDEX FUND
Investor Shares 24.3%
Admiral Shares 24.4
Institutional Shares 24.5
MSCI Europe Index 24.2
Average European Region Fund* 23.6
- -------------------------------------------------------------
VANGUARD PACIFIC STOCK INDEX FUND
Investor Shares 33.8%
Admiral Shares 33.8
Institutional Shares 33.9
MSCI Pacific Index 33.8
Average Japan/Pacific Region Fund* 33.1
- -------------------------------------------------------------
VANGUARD EMERGING MARKETS STOCK INDEX FUND
Investor Shares 49.9%
Institutional Shares 50.1
Select Emerging Markets Free Index** 50.6
Average Emerging Markets Fund* 47.0
- -------------------------------------------------------------
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND 28.9%
Total International Composite Index+ 29.1
Average International Fund* 24.5
- -------------------------------------------------------------
VANGUARD DEVELOPED MARKETS INDEX FUND 27.1%
MSCI EAFE Index 27.0
Average International Fund* 24.5
- -------------------------------------------------------------
VANGUARD INSTITUTIONAL DEVELOPED MARKETS INDEX FUND 27.1%
MSCI EAFE Index 27.0
Average International Fund* 24.5
- -------------------------------------------------------------
*Derived from data provided by Lipper Inc.
**Consists of stocks that can be bought free of restrictions in 18 emerging
markets of Europe, Asia, Africa, and Latin America. Through April 30, 2003, this
index included a cash component (5%) based on the Lipper Money Market average.
The index is administered exclusively for Vanguard by MSCI.
+Consists of the MSCI Europe Index (62%), the MSCI Pacific Index (28%), and the
Select Emerging Markets Free Index (10%).
POSITIVE NEWS ON MANY FRONTS PROPELLED INTERNATIONAL MARKETS
Around the world, the fiscal year brought signs of economic growth. In the
Pacific region, the good news came from the area's largest economy, Japan. The
nation's gross domestic product in the third quarter of calendar 2003 added to
the impressive gains the economy experienced earlier in the year. Tokyo's Nikkei
225 Index, which fell to a 20-year low early in calendar 2003, gained nearly 22%
during the fiscal period. Japan's unemployment rate seems to be establishing a
moderating trend, after hitting its lowest point in two years in August, and
many businesses saw a return to profitability during the 12 months.
2
- --------------------------------------------------------------------------------
ADMIRAL(TM) SHARES
A lower-cost class of shares available to many longtime shareholders and to
those with significant investments in the fund.
INSTITUTIONAL SHARES
This class of shares also carries low expenses and is available for a minimum
investment of $10 million.
- --------------------------------------------------------------------------------
On balance, Eurozone economies showed fewer signs of recovery than did Japan.
The growth rate of Europe's developed economies was very slow, and a few
countries, most notably Germany, were in a mild recession during the fiscal
year. Decreasing unemployment rates and the success of stimulative fiscal
policies--including a tax cut in Germany--have raised hopes that growth may
improve.
The world's emerging markets continued their exceptional showing. Much of the
growth was centered in Asian emerging markets, which benefited from China's
growth and from signs of recovery in Western economies. As a major exporter, as
well as a big importer of raw materials from around the world, China plays an
ever-growing role in the Pacific region's economies.
THE FUNDS' RESULTS WERE EXCELLENT IN FISCAL 2003
The fiscal year saw a dramatic reversal of the results seen in the previous few
years for our international stock index funds. After two or, in some cases,
three years of declines, the funds' gains were most welcome. We thank you for
staying the course during these troubling times and for trusting in the
long-term viability of the international markets.
- --------------------------------------------------------------------------------
MARKET BAROMETER AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 2003
--------------------------------
ONE THREE FIVE
YEAR YEARS YEARS
- --------------------------------------------------------------------------------
MSCI All Country World Index Free
ex USA (International) 30.4% -4.4% 1.4%
Russell 1000 Index (Large-caps) 22.3 -8.2 1.1
Russell 2000 Index (Small-caps) 43.4 3.4 8.3
Wilshire 5000 Index (Entire market) 24.4 -7.1 1.7
- --------------------------------------------------------------------------------
Lehman Aggregate Bond Index 4.9% 8.4% 6.5%
(Broad taxable market)
Lehman Municipal Bond Index 5.1 7.1 5.6
Citigroup 3-Month Treasury Bill Index 1.2 2.6 3.6
================================================================================
Consumer Price Index 2.0% 2.1% 2.4%
- --------------------------------------------------------------------------------
The funds' tight tracking of their benchmark indexes is a testament to the
long-term proficiency in index tracking of Vanguard's Quantitative Equity Group,
the funds' advisor. Only two funds lagged their indexes in fiscal 2003, with the
largest shortfall just 0.7 percentage point for the Investor Shares of the
Emerging Markets Stock Index Fund. This is notable because index funds, like
actively
3
managed funds, have expenses and incur transaction costs that make it far less
likely for them to match--much less exceed--the results of their unmanaged
indexes, which do not incur costs.
The 24.3% fiscal-year return of the EUROPEAN STOCK INDEX FUND'S Investor Shares
was the lowest of the six funds, but it was a marked improvement over the fund's
showings in the past few years. The fund's return was 0.7 percentage point
higher than that of its average peer, as the fund benefited from the MSCI Europe
Index's large weightings in the United Kingdom (nearly 38% of assets as of the
fiscal year-end) and France (roughly 14%).
- --------------------------------------------------------------------------------
TOTAL RETURNS 12 MONTHS ENDED
OCTOBER 31, 2003
---------------------------------------------
VANGUARD MUTUAL FUND
INDEX FUND FUND AVERAGE DIFFERENCE
- --------------------------------------------------------------------------------
European Stock
Investor Shares 24.3% 23.6% +0.7%
Pacific Stock
Investor Shares 33.8 33.1 +0.7
Emerging Markets Stock
Investor Shares 49.9 47.0 +2.9
Total International Stock 28.9 24.5 +4.4
Developed Markets 27.1 24.5 +2.6
Institutional
Developed Markets 27.1 24.5 +2.6
- --------------------------------------------------------------------------------
The Investor Shares of the PACIFIC STOCK INDEX FUND returned 33.8%, which
exceeded the return of the average peer by 0.7 percentage point. Stocks from
Japan, which accounted for nearly three-fourths of the MSCI Pacific Index as of
October 31, 2003, surged during the period and provided a majority of the
index's--and the fund's--gains.
The Investor Shares of the EMERGING MARKETS STOCK INDEX FUND returned 49.9%,
surpassing the average peer's return by 2.9 percentage points. As we reported to
you in our semiannual report in April, we eliminated the 5% cash component of
the Select Emerging Markets Free Index and added holdings in three
countries--Chile, India, and Peru. The benchmark is now 100% invested in stocks
from 18 emerging markets in Europe, Asia, Africa, and Latin America.
The DEVELOPED MARKETS INDEX FUND and its companion, the INSTITUTIONAL DEVELOPED
MARKETS INDEX FUND, each returned 27.1% for the fiscal year. As you know, these
are "funds of funds" that invest in our European and Pacific Stock Index Funds
in proportions (69% and 31%, respectively, as of October 31, 2003) designed to
match the composition of the EAFE Index. The funds' returns surpassed that of
their average mutual fund peer by 2.6 percentage points.
4
The TOTAL INTERNATIONAL STOCK INDEX FUND, a fund of funds that held shares of
our European, Pacific, and Emerging Markets Stock Index Funds in roughly a
62%/28%/10% mix as of October 31, 2003, gained 28.9% for the year, which
outpaced the 24.5% return of the average international fund and was in line with
the result for the Total International Composite Index.
THE FUNDS' LONG-TERM PERFORMANCE PRESENTS A MIXED PICTURE
The prolonged bear market in international stocks eroded the long-term returns
of many international funds, including the returns of some of our funds. In some
cases, even after an excellent 2003 fiscal-year performance, our funds generated
average annual declines either for the past decade or since their inceptions.
The table below shows that of the two funds with a full decade of performance
(the European and Pacific Stock Index Funds), the European Stock Index Fund
registered an average annual gain over that period, while two of the four
remaining funds--the Emerging Markets and Total International Stock Index
Funds--recorded average annual gains since their inceptions. It's important to
remember that market cycles can be long, so investors should focus on lengthy
periods--a decade or more--when evaluating a fund's performance, particularly
with respect to often-more-volatile international funds.
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS TEN YEARS ENDED OCTOBER 31, 2003*
----------------------------------------------------------------------
AVERAGE FINAL VALUE OF A $10,000
ANNUAL RETURN INITIAL INVESTMENT
------------------------------------ --------------------------------
AVERAGE AVERAGE
VANGUARD COMPETING TARGET VANGUARD COMPETING
INDEX FUND FUND FUND INDEX FUND FUND
- ------------------------------------------------------------------------------------------------------------------
European Stock
Investor Shares 8.2% 6.7% 8.0% $21,925 $19,212
Pacific Stock
Investor Shares -2.6 -1.5 -2.5 7,716 8,618
Emerging Markets Stock
Investor Shares 2.9 2.2 2.3 13,142 12,323
Total International Stock 1.2 1.9 1.0 10,929 11,525
Developed Markets -7.5 -8.3 -7.5 7,622 7,391
Institutional
Developed Markets -7.8 -8.7 -7.6 7,588,958** 7,327,509**
- ------------------------------------------------------------------------------------------------------------------
* Since inception for the Emerging Markets Stock Index Fund (May 4, 1994), the
Total International Stock Index Fund (April 29, 1996), the Developed Markets
Index Fund (May 8, 2000), and the Institutional Developed Markets Index Fund
(June 1, 2000).
**Final value of a $10 million investment.
5
Although the performances of our shorter-lived funds were disappointing on an
absolute basis, these funds posted competitive results relative to their average
peer funds, most of which are actively managed. The European Stock, Emerging
Markets Stock, Developed Markets, and Institutional Developed Markets Index
Funds outpaced their average competitors, while the Pacific and Total
International Stock Index Funds lagged theirs.
A SOLID CASE FOR KEEPING INTERNATIONAL FUNDS IN YOUR PORTFOLIO
As the recent years of tumult in the stock market have shown, the greatest
certainty in investing is uncertainty. Because no one has yet been able to
consistently predict future movements in the markets with accuracy, Vanguard
continues to stress the importance of forging a sound, balanced investment plan
and sticking to it through good times and bad.
If you are a long-term investor, a reasonable commitment of assets--consistent
with your risk tolerance, objectives, and time frame--to one or more low-cost
international stock funds may benefit your portfolio. Our International Stock
Index Funds have established themselves as competitive choices for
value-conscious investors. These funds can add an international flavor and help
to diversify and mitigate the risks of a portfolio of U.S. stock funds.
In light of the shocking allegations about market-timing and late trading at
some investment management firms, I feel compelled to close this letter with an
assurance that Vanguard has policies and procedures in place to identify and
deter such behavior. In addition, I have great confidence in the ethics,
integrity, and character of the Vanguard crew--values that receive strong
institutional support from our client-owned corporate structure, which channels
all our efforts into the creation of wealth for our shareholders.
Thank you for your continuing confidence in Vanguard.
Sincerely,
/S/JOHN J. BRENNAN
John J. Brennan
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
NOVEMBER 14, 2003
6
- --------------------------------------------------------------------------------
YOUR FUND'S PERFORMANCE AT A GLANCE OCTOBER 31, 2002-OCTOBER 31, 2003
DISTRIBUTIONS PER SHARE
--------------------------
STARTING ENDING INCOME CAPITAL
INDEX FUND SHARE PRICE SHARE PRICE DIVIDENDS GAINS
- --------------------------------------------------------------------------------
EUROPEAN STOCK
Investor Shares $16.44 $19.93 $0.400 $0.000
Admiral Shares 38.61 46.82 0.975 0.000
Institutional Shares 16.46 19.96 0.425 0.000
- --------------------------------------------------------------------------------
PACIFIC STOCK
Investor Shares $ 5.90 $ 7.80 $0.067 $0.000
Admiral Shares 38.63 51.05 0.473 0.000
Institutional Shares 5.91 7.81 0.075 0.000
- --------------------------------------------------------------------------------
EMERGING MARKETS STOCK
Investor Shares $ 7.48 $11.04 $0.122 $0.000
Institutional Shares 7.49 11.05 0.135 0.000
- --------------------------------------------------------------------------------
Total International Stock $ 7.79 $ 9.84 $0.157 $0.000
- --------------------------------------------------------------------------------
Developed Markets $ 5.80 $ 7.22 $0.116 $0.000
- --------------------------------------------------------------------------------
Institutional Developed Markets $ 5.76 $ 7.16 $0.126 $0.000
- --------------------------------------------------------------------------------
7
FUND PROFILES AS OF 10/31/2003
These Profiles provide snapshots of each fund's characteristics, compared where
indicated with both an appropriate market index and a broad market index. Key
terms are defined on page 16.
EUROPEAN STOCK INDEX FUND
- --------------------------------------------------------------------
PORTFOLIO CHARACTERISTIC
COMPARATIVE BROAD
FUND INDEX* INDEX**
- --------------------------------------------------------------------
Number of Stocks 558 544 1,746
Turnover Rate 6% -- --
Expense Ratio -- --
Investor Shares 0.32%
Admiral Shares 0.23%
Institutional Shares 0.17%
Cash Investments 0% -- --
- --------------------------------------------------------------------
- --------------------------------------------
TEN LARGEST HOLDINGS (% OF TOTAL NET ASSETS)
HSBC Holdings PLC 3.5%
(banking)
BP PLC 2.9
(oil)
GlaxoSmithKline PLC 2.8
(pharmaceuticals)
Vodafone Group PLC 2.7
(cellular telecommunications)
Total SA 2.2
(integrated oil)
Royal Dutch Petroleum Co. 2.0
(energy)
Novartis AG (Registered) 2.0
(pharmaceuticals)
Nestle SA (Registered) 1.9
(food, beverage, and tobacco)
Nokia Oyj 1.8
(telecommunications)
AstraZeneca Group PLC 1.7
(pharmaceuticals)
- --------------------------------------------
Top Ten 23.5%
- --------------------------------------------
The "Ten Largest Holdings" excludes any temporary cash investments and equity
index products.
- ---------------------------------------------------------------------
VOLATILITY MEASURES
COMPARATIVE BROAD
FUND INDEX* FUND INDEX**
- ---------------------------------------------------------------------
R-Squared 1.00 1.00 0.93 1.00
Beta 1.00 1.00 1.11 1.00
- ---------------------------------------------------------------------
- -------------------------------------------------------
COUNTRY DIVERSIFICATION (% OF PORTFOLIO)
COMPARATIVE
FUND INDEX*
- -------------------------------------------------------
United Kingdom 39% 39%
France 14 14
Switzerland 10 10
Germany 9 9
Netherlands 7 7
Italy 5 5
Spain 5 5
Sweden 3 3
Finland 3 3
Belgium 1 1
Denmark 1 1
Ireland 1 1
Norway 1 1
Greece 1 1
- -------------------------------------------------------
Total 100% 100%
- -------------------------------------------------------
*MSCI Europe Index.
**MSCI All Country World Index Free ex USA.
8
- --------------------------------------------------------------------------
SECTOR DIVERSIFICATION (% OF PORTFOLIO)
COMPARATIVE BROAD
FUND INDEX* INDEX**
- --------------------------------------------------------------------------
Consumer Discretionary 10% 10% 12%
Consumer Staples 10 10 8
Energy 11 11 9
Financials 27 27 26
Health Care 11 11 8
Industrials 7 7 9
Information Technology 5 5 8
Materials 6 6 8
Telecommunication Services 9 9 8
Utilities 4 4 4
- --------------------------------------------------------------------------
*MSCI Europe Index.
**MSCI All Country World Index Free ex USA.
VISIT OUR WEBSITE AT VANGUARD.COM
FOR REGULARLY UPDATED FUND INFORMATION.
9
FUND PROFILES (CONTINUED)
PACIFIC STOCK INDEX FUND
- --------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS
COMPARATIVE BROAD
FUND INDEX* INDEX**
- --------------------------------------------------------------------------
Number of Stocks 470 465 1,746
Turnover Rate 3% -- --
Expense Ratio -- --
Investor Shares 0.39%
Admiral Shares 0.30%
Institutional Shares 0.22%
Cash Investments 0% -- --
- --------------------------------------------------------------------------
- -----------------------------------------------
TEN LARGEST HOLDINGS (% OF TOTAL NET ASSETS)
Toyota Motor Corp. 3.7%
(automotive and transport equipment)
Canon, Inc. 2.0
(computer hardware)
NTT DoCoMo, Inc. 1.8
(telecommunications)
National Australia Bank Ltd. 1.6
(banking)
BHP Billiton Ltd. 1.5
(metals and mining)
Honda Motor Co., Ltd. 1.5
(automotive and transport equipment)
Sony Corp. 1.5
(consumer electronics)
Nomura Holdings Inc. 1.5
(financial services)
Takeda Chemical Industries Ltd. 1.5
(pharmaceuticals)
Mitsubishi Tokyo Financial Group Inc. 1.4
(banking)
- -----------------------------------------------
Top Ten 18.0%
- -----------------------------------------------
The "Ten Largest Holdings" excludes any temporary cash investments and equity
index products.
- ---------------------------------------------------------------------
VOLATILITY MEASURES
COMPARATIVE BROAD
FUND INDEX* FUND INDEX**
- ---------------------------------------------------------------------
R-Squared 0.98 1.00 0.58 1.00
Beta 1.01 1.00 0.72 1.00
- ---------------------------------------------------------------------
- -----------------------------------------------
COUNTRY DIVERSIFICATION (% OF PORTFOLIO)
COMPARATIVE
FUND INDEX*
- -----------------------------------------------
Japan 73% 73%
Australia 17 17
Hong Kong 6 6
Singapore 3 3
New Zealand 1 1
- -----------------------------------------------
Total 100% 100%
- -----------------------------------------------
- ---------------------------------------------------------------------
SECTOR DIVERSIFICATION (% OF PORTFOLIO)
COMPARATIVE BROAD
FUND INDEX* INDEX**
- ---------------------------------------------------------------------
Consumer Discretionary 19% 19% 12%
Consumer Staples 6 6 8
Energy 1 1 9
Financials 24 24 26
Health Care 4 4 8
Industrials 14 14 9
Information Technology 13 13 8
Materials 10 10 8
Telecommunication Services 4 4 8
Utilities 5 5 4
- ---------------------------------------------------------------------
*MSCI Pacific Index.
**MSCI All Country World Index Free ex USA.
10
EMERGING MARKETS STOCK INDEX FUND
- ---------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS
COMPARATIVE BROAD
FUND INDEX* INDEX**
- ---------------------------------------------------------------------
Number of Stocks 546 535 1,746
Turnover Rate 16% -- --
Expense Ratio -- --
Investor Shares 0.53%
Institutional Shares 0.38%
Cash Investments 0% -- --
- ---------------------------------------------------------------------
- -------------------------------------------------------
TEN LARGEST HOLDINGS (% OF TOTAL NET ASSETS)
Samsung Electronics Co., Ltd. 6.9%
(electronics)
Anglo American PLC 4.3
(metals and mining)
Taiwan Semiconductor Manufacturing Co., Ltd. 2.4
(electronics)
Petroleo Brasileiro SA 2.3
(energy)
China Mobile (Hong Kong) Ltd. 2.1
(telecommunications)
Teva Pharmaceutical Industries Ltd. 2.0
(pharmaceuticals)
Telefonos de Mexico SA 1.8
(telecommunications)
Kookmin Bank 1.5
(banking)
Sasol Ltd. 1.1
(chemicals)
United Microelectronics Corp. 1.1
(electronics)
- -------------------------------------------------------
Top Ten 25.5%
- -------------------------------------------------------
The "Ten Largest Holdings" excludes any temporary cash investments and equity
index products.
- ---------------------------------------------------------------------
VOLATILITY MEASURES
COMPARATIVE BROAD
FUND INDEX* FUND INDEX**
- ---------------------------------------------------------------------
R-Squared 1.00 1.00 0.79 1.00
Beta 1.00 1.00 1.21 1.00
- ---------------------------------------------------------------------
- -------------------------------------------------------
COUNTRY DIVERSIFICATION (% OF PORTFOLIO)
COMPARATIVE
FUND INDEX*
- -------------------------------------------------------
South Korea 19% 20%
South Africa 16 16
Taiwan 16 16
Brazil 9 9
China 8 8
Mexico 8 7
India 6 6
Israel 4 4
Thailand 3 3
Chile 2 2
Turkey 2 2
Indonesia 2 2
Poland 1 1
Hungary 1 1
Peru 1 0
Philippines 1 1
Czech Republic 1 1
Argentina 0 1
- -------------------------------------------------------
Total 100% 100%
- -------------------------------------------------------
*Select Emerging Markets Free Index.
**MSCI All Country World Index Free ex USA.
Emerging Markets Stock Index Fund continues on next page.
VISIT OUR WEBSITE AT VANGUARD.COM
FOR REGULARLY UPDATED FUND INFORMATION.
11
FUND PROFILES (CONTINUED)
- ---------------------------------------------------------------------
SECTOR DIVERSIFICATION (% OF PORTFOLIO)
COMPARATIVE BROAD
FUND INDEX* INDEX**
- ---------------------------------------------------------------------
Consumer Discretionary 7% 7% 12%
Consumer Staples 6 6 8
Energy 8 7 9
Financials 17 17 26
Health Care 3 3 8
Industrials 6 5 9
Information Technology 20 22 8
Materials 18 18 8
Telecommunication Services 12 13 8
Utilities 3 2 4
- ---------------------------------------------------------------------
*Select Emerging Markets Free Index.
**MSCI All Country World Index Free ex USA.
12
TOTAL INTERNATIONAL STOCK INDEX FUND
- -------------------------------------------------------
PORTFOLIO CHARACTERISTICS
FUND
- -------------------------------------------------------
Expense Ratio 0%
Average Weighted Expense Ratio* 0.36%
- -------------------------------------------------------
- ---------------------------------------------------
TEN LARGEST HOLDINGS++ (% OF TOTAL NET ASSETS)
HSBC Holdings PLC 2.1%
(banking)
BP PLC 1.7
(oil)
GlaxoSmithKline PLC 1.6
(pharmaceuticals)
Vodafone Group PLC 1.6
(cellular telecommunications)
Total SA 1.3
(integrated oil)
Toyota Motor Corp. 1.0
(automotive and transport equipment)
Samsung Electronics Co., Ltd. 0.7
(electronics)
Anglo American PLC 0.4
(metals and mining)
Taiwan Semiconductor Manufacturing Co., Ltd. 0.2
(electronics)
China Mobile (Hong Kong) Ltd. 0.2
(telecommunications)
- ---------------------------------------------------
Top Ten 10.8%
- ---------------------------------------------------
The "Ten Largest Holdings" excludes any temporary cash investments and equity
index products.
- -------------------------------------------------------------------
VOLATILITY MEASURES
COMPARATIVE BROAD
FUND INDEX** FUND INDEX+
- -------------------------------------------------------------------
R-Squared 1.00 1.00 1.00 1.00
Beta 1.01 1.00 1.02 1.00
- -------------------------------------------------------------------
- ----------------------------------------------------------
ALLOCATION TO UNDERLYING VANGUARD FUNDS
European Stock Index Fund Investor Shares 62.1%
Pacific Stock Index Fund Investor Shares 27.6
Emerging Markets Stock Index Fund Investor Shares 10.3
- ----------------------------------------------------------
Total 100.0%
- ----------------------------------------------------------
- --------------------------------------------------------------------
SECTOR DIVERSIFICATION (% OF PORTFOLIO)
COMPARATIVE BROAD
FUND++ INDEX** INDEX+
- --------------------------------------------------------------------
Consumer Discretionary 12% 12% 12%
Consumer Staples 8 9 8
Energy 8 8 9
Financials 26 25 26
Health Care 8 8 8
Industrials 9 9 9
Information Technology 9 9 8
Materials 8 8 8
Telecommunication Services 8 8 8
Utilities 4 4 4
- --------------------------------------------------------------------
*For underlying funds.
**Total International Composite Index.
+MSCI All Country World Index Free ex USA.
++Reflects holdings of underlying funds.
VISIT OUR WEBSITE AT VANGUARD.COM
FOR REGULARLY UPDATED FUND INFORMATION.
13
FUND PROFILES (CONTINUED)
DEVELOPED MARKETS INDEX FUND
- -------------------------------------------------------
PORTFOLIO CHARACTERISTICS
FUND
- -------------------------------------------------------
Expense Ratio 0%
Average Weighted Expense Ratio* 0.34%
- -------------------------------------------------------
- ------------------------------------------------
TEN LARGEST HOLDINGS** (% OF TOTAL NET ASSETS)
HSBC Holdings PLC 2.4%
(banking)
BP PLC 1.9
(oil)
GlaxoSmithKline PLC 1.8
(pharmaceuticals)
Vodafone Group PLC 1.8
(cellular telecommunications)
Total SA 1.5
(integrated oil)
Royal Dutch Petroleum Co. 1.3
(energy)
Novartis AG (Registered) 1.3
(pharmaceuticals)
Nestle SA (Registered) 1.2
(food, beverage, and tobacco)
Toyota Motor Corp. 1.1
(automotive and transport equipment)
Canon, Inc. 0.6
(computer hardware)
- ------------------------------------------------
Top Ten 14.9%
- ------------------------------------------------
The "Ten Largest Holdings" excludes any temporary cash investments and equity
index products.
- -----------------------------------------------------
ALLOCATION TO UNDERLYING VANGUARD FUNDS
European Stock Index Fund Investor Shares 69.2%
Pacific Stock Index Fund Investor Shares 30.8
- -----------------------------------------------------
Total 100.0%
- -----------------------------------------------------
- ---------------------------------------------------------------------------
SECTOR DIVERSIFICATION (% OF PORTFOLIO)
COMPARATIVE BROAD
FUND** INDEX+ INDEX++
- ---------------------------------------------------------------------------
Consumer Discretionary 13% 13% 12%
Consumer Staples 9 9 8
Energy 8 8 9
Financials 27 27 26
Health Care 9 9 8
Industrials 9 9 9
Information Technology 7 7 8
Materials 7 7 8
Telecommunication Services 7 7 8
Utilities 4 4 4
- ---------------------------------------------------------------------------
*For underlying funds.
**Reflects holdings of underlying funds.
+MSCI EAFE Index.
++MSCI All Country World Index Free ex USA.
14
INSTITUTIONAL DEVELOPED MARKETS INDEX FUND
- -----------------------------------------------------------
PORTFOLIO CHARACTERISTICS
FUND
- -----------------------------------------------------------
Expense Ratio 0%
Average Weighted Expense Ratio* 0.19%
- -----------------------------------------------------------
- -------------------------------------------------
TEN LARGEST HOLDINGS** (% OF TOTAL NET ASSETS)
HSBC Holdings PLC 2.4%
(banking)
BP PLC 1.9
(oil)
GlaxoSmithKline PLC 1.8
(pharmaceuticals)
Vodafone Group PLC 1.8
(cellular telecommunications)
Total SA 1.5
(integrated oil)
Royal Dutch Petroleum Co. 1.3
(energy)
Novartis AG (Registered) 1.3
(pharmaceuticals)
Nestle SA (Registered) 1.2
(food, beverage, and tobacco)
Toyota Motor Corp. 1.1
(automotive and transport equipment)
Canon, Inc. 0.6
(computer hardware)
- -------------------------------------------------
Top Ten 14.9%
- -------------------------------------------------
The "Ten Largest Holdings" excludes any temporary cash investments and equity
index products.
- -----------------------------------------------------------
ALLOCATION TO UNDERLYING VANGUARD FUNDS
European Stock Index Fund Institutional Shares 69.2%
Pacific Stock Index Fund Institutional Shares 30.8
- -----------------------------------------------------------
Total 100.0%
- -----------------------------------------------------------
- ----------------------------------------------------------------------
SECTOR DIVERSIFICATION (% OF PORTFOLIO)
COMPARATIVE BROAD
FUND** INDEX+ INDEX++
- ----------------------------------------------------------------------
Consumer Discretionary 13% 13% 12%
Consumer Staples 9 9 8
Energy 8 8 9
Financials 27 27 26
Health Care 9 9 8
Industrials 9 9 9
Information Technology 7 7 8
Materials 7 7 8
Telecommunication Services 7 7 8
Utilities 4 4 4
- ----------------------------------------------------------------------
*For underlying funds.
**Reflects holdings of underlying funds.
+MSCI EAFE Index.
++MSCI All Country World Index Free ex USA.
VISIT OUR WEBSITE AT VANGUARD.COM
FOR REGULARLY UPDATED FUND INFORMATION.
15
GLOSSARY OF INVESTMENT TERMS
AVERAGE WEIGHTED EXPENSE RATIO. Funds that invest in other Vanguard funds incur
no direct expenses, but do bear proportionate shares of the operating,
administrative, and advisory expenses of the underlying funds. The average
weighted expense ratio is the average of these expense ratios, weighted in
proportion to the amount of the fund invested in each underlying fund.
- --------------------------------------------------------------------------------
BETA. A measure of the magnitude of a fund's past share-price fluctuations in
relation to the ups and downs of a given market index. The index is assigned a
beta of 1.00. Compared with a given index, a fund with a beta of 1.20 typically
would have seen its share price rise or fall by 12% when the index rose or fell
by 10%. A fund's beta should be reviewed in conjunction with its R-squared (see
definition below). The lower the R-squared, the less correlation there is
between the fund and the index, and the less reliable beta is as an indicator of
volatility.
- --------------------------------------------------------------------------------
CASH INVESTMENTS. The percentage of a fund's net assets invested in "cash
equivalents"--highly liquid, short-term, interest-bearing securities. This
figure does not include cash invested in futures contracts or swap agreements.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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).
- --------------------------------------------------------------------------------
16
PERFORMANCE SUMMARIES AS OF 10/31/2003
All of the returns in this report represent past performance, which cannot be
used to predict future returns that may be achieved by the funds. Note, too,
that both share price and return can fluctuate widely. An investor's shares,
when redeemed, could be worth more or less than their original cost. The returns
shown do not reflect taxes that a shareholder would pay on fund distributions or
on the redemption of fund shares.
EUROPEAN STOCK INDEX FUND
- --------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE OCTOBER 31, 1993-OCTOBER 31, 2003
MSCI
EUROPEAN STOCK ALL COUNTRY AVERAGE
INDEX FUND WORLD INDEX MSCI EUROPEAN
INVESTOR SHARES* FREE EX USA EUROPE INDEX REGION FUND**
199310 10000 10000 10000 10000
199401 11028 10778 11065 11035
199404 10816 10553 10813 10929
199407 10798 10804 10793 10764
199410 11100 11184 11175 10913
199501 10665 10138 10731 10347
199504 11778 11068 11865 11317
199507 12863 11483 12874 12248
199510 12654 10973 12690 11931
199601 13194 11835 13271 12403
199604 13690 12422 13774 13347
199607 13868 11888 13857 13268
199610 14880 12132 14907 13963
199701 15936 12226 16009 15250
199704 16609 12529 16661 15633
199707 19138 14321 19096 17210
199710 18821 12723 18780 16809
199801 20597 13089 20588 18179
199804 24240 14548 24240 21766
199807 25608 14366 25496 22583
199810 23187 13345 23111 19406
199901 25285 14531 25241 21713
199904 25698 15636 25610 21723
199907 25204 15952 25022 21416
199910 26182 16716 26004 21486
200001 27575 18009 27345 25747
200004 28457 18120 28165 27217
200007 28447 17682 28079 27050
200010 26568 16370 26249 24178
200101 27269 16412 26984 25042
200104 24648 15000 24398 22459
200107 22643 13714 22387 20588
200110 20470 12290 20252 17918
200201 20627 12460 20475 18629
200204 21582 13317 21417 19629
200207 18545 11626 18317 16991
200210 17644 10952 17441 15539
200301 16996 10718 16800 15413
200304 18371 11289 18169 16502
200307 20187 12670 19930 18101
200310 21925 14282 21655 19212
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 2003
---------------------------------- FINAL VALUE
ONE FIVE TEN OF A $10,000
YEAR YEARS YEARS INVESTMENT
- --------------------------------------------------------------------------------
European Stock Index Fund
Investor Shares* 24.27% -1.11% 8.17% $21,925
MSCI All Country World Index
Free ex USA 30.40 1.37 3.63 14,282
MSCI Europe Index 24.16 -1.29 8.03 21,655
Average European Region Fund** 23.64 -0.20 6.75 19,212
- --------------------------------------------------------------------------------
FINAL VALUE
ONE SINCE OF A $250,000
YEAR INCEPTION+ INVESTMENT
- --------------------------------------------------------------------------------
European Stock Index Fund
Admiral Shares 24.42% -0.80% $245,599
MSCI All Country World Index
Free ex USA 30.40 2.36 263,244
MSCI Europe Index 24.16 -0.93 244,886
- --------------------------------------------------------------------------------
FINAL VALUE
ONE SINCE OF A $10,000,000
YEAR INCEPTIONY INVESTMENT
- --------------------------------------------------------------------------------
European Stock Index Fund
Institutional Shares 24.49% -6.79% $7,839,509
MSCI All Country World Index
Free ex USA 30.40 -5.75 8,148,079
MSCI Europe Index 24.16 -6.90 7,807,773
- --------------------------------------------------------------------------------
*Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
**Derived from data provided by Lipper Inc.
+Inception dates are August 13, 2001, for the Admiral Shares and May 15, 2000,
for the Institutional Shares.
NOTES: The fund assesses a 2% fee on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months. See Financial Highlights
tables on pages 60 through 62 for dividend and capital gains information.
17
PERFORMANCE SUMMARIES (CONTINUED)
- --------------------------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) OCTOBER 31, 1993-OCTOBER 31, 2003
EUROPEAN STOCK
INDEX FUND MSCI
INVESTOR SHARES* EUROPE INDEX
1994 11.0 11.7
1995 14.0 13.6
1996 17.6 17.5
1997 26.5 26.0
1998 23.2 23.1
1999 12.9 12.5
2000 1.5 0.9
2001 -23.0 -22.8
2002 -13.8 -13.9
2003 24.3 24.2
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED SEPTEMBER 30, 2003
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 ONE FIVE -----------------------
DATE YEAR YEARS CAPITAL INCOME TOTAL
- -----------------------------------------------------------------------------
EUROPEAN STOCK INDEX FUND
Investor Shares* 6/18/1990 27.72% -0.89% 5.72% 2.15% 7.87%
Admiral Shares 8/13/2001 27.86 -3.79** -- -- --
Institutional Shares 5/15/2000 27.97 -8.72** -- -- --
- -----------------------------------------------------------------------------
*Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
**Returns are since inception.
18
PACIFIC STOCK INDEX FUND
- --------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE OCTOBER 31, 1993-OCTOBER 31, 2003
MSCI
PACIFIC STOCK ALL COUNTRY AVERAGE
INDEX FUND WORLD INDEX MSCI JAPAN/PACIFIC
INVESTOR SHARES* FREE EX USA PACIFIC INDEX REGION FUND**
199310 10000 10000 10000 10000
199401 10200 10778 10239 11217
199404 10345 10553 10351 10203
199407 10706 10804 10714 10471
199410 10869 11184 10904 10941
199501 9723 10138 9705 8958
199504 10622 11068 10631 9507
199507 10466 11483 10487 10214
199510 9669 10973 9699 9856
199601 10677 11835 10708 10348
199604 11435 12422 11451 10908
199607 10464 11888 10453 10494
199610 10057 12132 10027 10191
199701 8986 12226 8976 9628
199704 9023 12529 8989 9568
199707 10274 14321 10234 11193
199710 8072 12723 8038 8653
199801 7677 13089 7651 7931
199804 7356 14548 7332 7803
199807 6714 14366 6701 7335
199810 6940 13345 6922 7076
199901 7513 14531 7495 7788
199904 8846 15636 8823 9464
199907 9732 15952 9713 11611
199910 10503 16716 10437 12735
200001 11149 18009 11106 14942
200004 10890 18120 10808 13848
200007 9979 17682 9921 12344
200010 9403 16370 9341 10998
200101 8678 16412 8635 10406
200104 8629 15000 8390 9537
200107 7472 13714 7442 8565
200110 6606 12290 6571 7447
200201 6043 12460 6102 7386
200204 6874 13317 6899 7996
200207 6375 11626 6418 7457
200210 5769 10952 5813 6475
200301 5648 10718 5698 6562
200304 5540 11289 5578 6107
200307 6450 12670 6434 7301
200310 7716 14282 7779 8618
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 2003
---------------------------------- FINAL VALUE
ONE FIVE TEN OF A $10,000
YEAR YEARS YEARS INVESTMENT
- --------------------------------------------------------------------------------
Pacific Stock Index Fund
Investor Shares* 33.75% 2.14% -2.56% $ 7,716
MSCI All Country World Index
Free ex USA 30.40 1.37 3.63 14,282
MSCI Pacific Index 33.82 2.36 -2.48 7,779
Average Japan/Pacific Region Fund** 33.10 4.02 -1.48 8,618
- --------------------------------------------------------------------------------
FINAL VALUE
ONE SINCE OF A $250,000
YEAR INCEPTION+ INVESTMENT
- --------------------------------------------------------------------------------
Pacific Stock Index Fund
Admiral Shares 33.82% 1.75% $259,816
MSCI All Country World Index
Free ex USA 30.40 2.10 261,802
MSCI Pacific Index 33.82 2.24 262,586
- --------------------------------------------------------------------------------
FINAL VALUE
ONE SINCE OF A $10,000,000
YEAR INCEPTION+ INVESTMENT
- --------------------------------------------------------------------------------
Pacific Stock Index Fund
Institutional Shares 33.88% -8.78% $ 7,275,841
MSCI All Country World Index
Free ex USA 30.40 -6.96 7,789,878
MSCI Pacific Index 33.82 -8.49 7,355,027
- --------------------------------------------------------------------------------
*Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
**Derived from data provided by Lipper Inc.
+Inception dates are August 13, 2001, for the Admiral Shares and May 15, 2000,
for the Institutional Shares.
NOTES: The fund assesses a 2% fee on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months. See Financial Highlights
tables on pages 63 through 65 for dividend and capital gains information. * *
19
PERFORMANCE SUMMARIES (CONTINUED)
- --------------------------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) OCTOBER 31, 1993-OCTOBER 31, 2003
- --------------------------------------------------------------------------------
PACIFIC STOCK
INDEX FUND MSCI
INVESTOR SHARES* PACIFIC INDEX
1994 8.7 9.0
1995 -11.0 -11.0
1996 4.0 3.4
1997 -19.7 -19.8
1998 -14.0 -13.9
1999 51.3 50.8
2000 -10.5 -10.5
2001 -29.7 -29.7
2002 -12.7 -11.5
2003 33.8 33.8
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED SEPTEMBER 30, 2003
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 ONE FIVE -------------------------
DATE YEAR YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------
PACIFIC STOCK INDEX FUND
Investor Shares* 6/18/1990 22.90% 4.43% -3.71% 0.87% -2.84%
Admiral Shares 8/13/2001 23.17 -0.57** -- -- --
Institutional Shares 5/15/2000 23.23 -10.36** -- -- --
- --------------------------------------------------------------------------------
*Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
**Returns are since inception.
20
EMERGING MARKETS STOCK INDEX FUND
- --------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE MAY 4, 1994-OCTOBER 31, 2003
MSCI ALL SELECT
EMERGING MARKETS COUNTRY WOLRD EMERGING AVERAGE
STOCK INDEX FUND INDEX FREE MARKETS EMERGING
INVESTOR SHARES** EX USA FREE INDEX+ MARKETS FUND++
5/4/1994 9950 10000 10000 10000
199407 11353 11320 10943 11174
199410 12607 11718 12032 12325
199501 9760 10622 9262 9783
199504 10202 11596 9689 10085
199507 11238 12031 10703 10471
199510 10514 11497 9972 9985
199601 12111 12400 11434 11293
199604 12439 13014 11741 11741
199607 11763 12456 11016 10636
199610 12224 12711 11456 10894
199701 13379 12809 12575 12468
199704 13130 13126 12350 12827
199707 14478 15004 13591 13871
199710 10591 13330 9970 11240
199801 9737 13714 9199 10493
199804 11168 15243 10533 12034
199807 9015 15052 8510 9508
199810 8411 13982 7887 7662
199901 8415 15224 7896 8128
199904 11088 16382 10314 10064
199907 11077 16713 10336 10465
199910 11329 17513 10557 10402
200001 13320 18868 12462 14055
200004 12646 18985 11851 13067
200007 12063 18525 11209 11803
200010 10617 17151 9885 10113
200101 11338 17195 10551 10999
200104 10134 15715 9455 9692
200107 9387 14368 8755 8740
200110 8364 12876 7811 7819
200201 10135 13054 9472 9919
200204 10912 13953 10208 10793
200207 9123 12180 8552 8783
200210 8805 11474 8263 8385
200301 9132 11229 8563 8999
200304 9359 11828 8797 9257
200307 11284 13274 10622 10482
200310 13141 14963 12448 12323
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 2003
---------------------------------- FINAL VALUE
ONE FIVE SINCE OF A $10,000
YEAR YEARS INCEPTION INVESTMENT
- --------------------------------------------------------------------------------
Emerging Markets Stock Index Fund
Investor Shares** 48.40% 9.22% 2.92% $13,142
MSCI All Country World Index
Free ex USA 30.40 1.37 4.34 14,963
Select Emerging Markets Free
Index+ 50.65 9.56 2.33 12,448
Average Emerging Markets Fund++ 46.96 9.97 2.22 12,323
- --------------------------------------------------------------------------------
FINAL VALUE
ONE SINCE OF A $10,000,000
YEAR INCEPTION* INVESTMENT
- --------------------------------------------------------------------------------
Emerging Markets Stock Index Fund
Institutional Shares** 48.58% 1.45% $10,495,289
MSCI All Country World Index
Free ex USA 30.40 1.18 10,402,898
Select Emerging Markets
Free IndexY 50.65 1.94 10,667,456
- --------------------------------------------------------------------------------
*Inception dates are May 4, 1994, for the Investor Shares and June 22, 2000, for
the Institutional Shares.
**Performance figures are adjusted for the 0.5% transaction fee on purchases and
redemptions. For the Emerging Markets Stock Index Fund Investor Shares, the
figures do not reflect the $10 annual account maintenance fee applied on
balances under $10,000; for the Emerging Markets Stock Index Fund Institutional
Shares, this fee does not apply.
+Consists of stocks that can be bought free of restrictions in 18 emerging
markets of Europe, Asia, Africa, and Latin America. Through April 30, 2003, this
index included a cash component (5%) based on the Lipper Money Market average.
The index is administered exclusively for Vanguard by MSCI.
++Derived from data provided by Lipper Inc.
NOTES: The fund assesses a 2% fee on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months. See Financial Highlights
tables on pages 66 and 67 for dividend and capital gains information.
21
PERFORMANCE SUMMARIES (CONTINUED)
- --------------------------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) MAY 4, 1994-OCTOBER 31, 2003
- --------------------------------------------------------------------------------
SELECT
EMERGING MARKETS EMERGING
STOCK INDEX FUND MARKETS
INVESTOR SHARES** FREE INDEX+
1994 26.7 20.3
1995 -16.6 -17.1
1996 16.3 14.9
1997 -13.4 -13.0
1998 -20.6 -20.9
1999 34.7 33.9
2000 -6.3 -6.4
2001 -21.2 -21.0
2002 5.3 5.8
2003 49.9 50.6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED SEPTEMBER 30, 2003
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.
SINCE INCEPTION
INCEPTION ONE FIVE ---------------------------
DATE YEAR YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------
EMERGING MARKETS STOCK
Index Fund
Investor Shares** 5/4/1994 46.39% 10.67% 0.17% 1.93% 2.10%
Fee-Adjusted Returns+ 44.95 10.46 0.17 1.83 2.00
Institutional Shares 6/22/2000 46.57 -0.88++ -- -- --
Fee-Adjusted ReturnsY 45.12 -1.17++ -- -- --
- --------------------------------------------------------------------------------
*Consists of stocks that can be bought free of restrictions in 18 emerging
markets of Europe, Asia, Africa, and Latin America. Through April 30, 2003, this
index included a cash component (5%) based on the Lipper Money Market average.
The index is administered exclusively for Vanguard by MSCI.
**Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
+Performance figures are adjusted for the 0.5% transaction fee on purchases and
redemptions. (The fund assesses a 2% fee on redemptions of shares purchased on
or after June 27, 2003, and held for less than two months.)
++Returns are since inception.
22
TOTAL INTERNATIONAL STOCK INDEX FUND
- --------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE APRIL 29, 1996-OCTOBER 31, 2003
MSCI ALL
TOTAL COUNTRY WORLD TOTAL AVERAGE
INTERNATIONAL INDEX FREE INTERNATIONAL INTERNATIONAL
STOCK INDEX FUND* EX USA COMPOSITE INDEX** FUND+
4/29/1996 10000 10000 10000 10000
199604 9990 9990 9990 9990
199607 9610 9561 9548 9653
199610 9795 9758 9747 9896
199701 9817 9833 9800 10341
199704 10006 10076 9977 10533
199707 11414 11517 11335 12005
199710 10006 10233 9938 10924
199801 10281 10527 10230 10993
199804 11403 11701 11348 12733
199807 11322 11554 11236 12818
199810 10604 10733 10526 11345
199901 11462 11687 11392 12200
199904 12370 12575 12267 13107
199907 12545 12830 12416 13556
199910 13164 13444 13008 14033
200001 14053 14484 13884 15728
200004 14145 14573 13946 16047
200007 13714 14221 13505 15624
200010 12759 13166 12570 14408
200101 12784 13200 12612 14125
200104 11833 12064 11606 13130
200107 10711 11030 10568 11943
200110 9610 9884 9487 10606
200201 9629 10021 9543 10542
200204 10315 10710 10199 11435
200207 9009 9350 8900 9951
200210 8476 8808 8373 9257
200301 8252 8620 8156 8808
200304 8663 9079 8561 9390
200307 9740 10190 9598 10385
200310 10929 11486 10812 11525
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 2003
---------------------------------- FINAL VALUE
ONE FIVE SINCE OF A $10,000
YEAR YEARS INCEPTION INVESTMENT
- --------------------------------------------------------------------------------
Total International Stock
Index Fund* 28.94% 0.60% 1.19% $10,929
MSCI All Country World Index
Free ex USA 30.40 1.37 1.86 11,486
Total International
Composite Index** 29.13 0.54 1.05 10,812
Average International Fund+ 24.51 0.32 1.91 11,525
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) APRIL 29, 1996-OCTOBER 31, 2003
- --------------------------------------------------------------------------------
TOTAL TOTAL
INTERNATIONAL INTERNATIONAL
STOCK INDEX FUND* COMPOSITE INDEX**
1996 -2.0 -2.5
1997 2.1 2.0
1998 6.0 5.9
1999 24.1 23.6
2000 -3.1 -3.4
2001 -24.7 -24.5
2002 -11.8 -11.7
2003 28.9 29.1
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED SEPTEMBER 30, 2003
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.
SINCE INCEPTION
INCEPTION ONE FIVE ---------------------------
DATE YEAR YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------
Total International Stock
Index Fund* 4/29/1996 27.98% 1.40% -1.28% 1.63% 0.35%
- --------------------------------------------------------------------------------
*Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
**Consists of the MSCI Europe Index (62%), the MSCI Pacific Index (28%), and the
Select Emerging Markets Free Index (10%).
+Derived from data provided by Lipper Inc.
NOTES: The fund assesses a 2% fee on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months. See Financial Highlights table
on page 68 for dividend and capital gains information.
23
PERFORMANCE SUMMARIES (CONTINUED)
DEVELOPED MARKETS INDEX FUND
- --------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE MAY 8, 2000-OCTOBER 31, 2003
MSCI ALL
DEVELOPED COUNTRY WORLD AVERAGE
MARKETS INDEX FREE MSCI EAFE INTERNATIONAL
INDEX FUND* EX USA FUND** FUND**
5/8/2000 10000 10000 10000 10000
200007 9890 9879 9827 9992
200010 9270 9146 9206 9239
200101 9211 9169 9171 9202
200104 8561 8380 8469 8372
200107 7727 7662 7693 7638
200110 6944 6866 6911 6801
200201 6816 6961 6826 6867
200204 7292 7440 7293 7291
200207 6403 6495 6392 6364
200210 5999 6119 5998 5936
200301 5806 5988 5807 5738
200304 6113 6307 6107 5987
200307 6820 7078 6794 6641
200310 7622 7979 7620 7391
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 2003
---------------------------------- FINAL VALUE
ONE SINCE OF A $10,000
YEAR INCEPTION INVESTMENT
- --------------------------------------------------------------------------------
Developed Markets Index Fund* 27.06% -7.50% $ 7,622
MSCI All Country World Index
Free ex USA 30.40 -6.28 7,979
MSCI EAFE Index 27.03 -7.51 7,620
Average International Fund** 24.51 -8.32 7,391
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) MAY 8, 2000-OCTOBER 31, 2003
- --------------------------------------------------------------------------------
DEVELOPED
MARKETS MSCI EAFE
INDEX FUND* FUND**
2000 -7.3 -7.9
2001 -25.1 -24.9
2002 -13.6 -13.2
2003 27.1 27.0
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED SEPTEMBER 30, 2003
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.
SINCE INCEPTION
INCEPTION ONE ---------------------------
DATE YEAR CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------
Developed Markets Index Fund* 5/8/2000 26.19% -10.74% 1.44% -9.30%
- --------------------------------------------------------------------------------
*Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000.
**Derived from data provided by Lipper Inc.
NOTES: The fund assesses a 2% fee on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months. See Financial Highlights table
on page 69 for dividend and capital gains information.
24
INSTITUTIONAL DEVELOPED MARKETS INDEX FUND
- --------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE JUNE 1, 2000-OCTOBER 31, 2003
MSCI ALL
INSTITUTIONAL COUNTRY WORLD AVERAGE
DEVELOPED MARKETS INDEX FREE MSCI EAFE INTERNATIONAL
INDEX FUND EX USA INDEX FUND*
6/1/2000 10000000 10000000 10000000 10000000
200007 9830000 9880892 9834342 9905415
200010 9200000 9147919 9213783 9160108
200101 9161513 9171425 9178736 9123080
200104 8500583 8382146 8475333 8299904
200107 7676962 7663680 7699156 7572251
200110 6894013 6867679 6916714 6742755
200201 6767573 6962771 6830963 6808555
200204 7244308 7441908 7299024 7228386
200207 6363384 6496638 6396639 6309199
200210 5969559 6120160 6002893 5885077
200301 5776512 5989330 5811160 5688547
200304 6083886 6308619 6111795 5935951
200307 6794025 7080012 6799473 6584280
200310 7588958 7980986 7625769 7327509
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 2003
---------------------------------- FINAL VALUE
ONE SINCE OF A $10,000
YEAR INCEPTION INVESTMENT
- --------------------------------------------------------------------------------
Institutional Developed
Markets Index Fund 27.13% -7.76% $7,588,958
MSCI All Country World Index
Free ex USA 30.40 -6.39 7,980,986
MSCI EAFE Index 27.03 -7.63 7,625,769
Average International Fund* 24.51 -8.70 7,327,509
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) JUNE 1, 2000-OCTOBER 31, 2003
- --------------------------------------------------------------------------------
INSTITUTIONAL
DEVELOPED MARKETS MSCI EAFE
INDEX FUND INDEX
2000 -8.0 -7.9
2001 -25.1 -24.9
2002 -13.6 -13.2
2003 27.1 27.0
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED SEPTEMBER 30, 2003
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.
SINCE INCEPTION
INCEPTION ONE ---------------------------
DATE YEAR CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------
Institutional Developed Markets
Index Fund 6/1/2000 26.48% -11.17% 1.56% -9.61%
- --------------------------------------------------------------------------------
*Derived from data provided by Lipper Inc.
NOTES: The fund assesses a 2% fee on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months. See Financial Highlights table
on page 70 for dividend and capital gains information.
25
YOUR FUND'S AFTER-TAX RETURNS
This table presents returns for your fund both before and after taxes. The
after-tax returns are shown in two ways: (1) assuming that an investor owned the
fund during the entire period and paid taxes on the fund's distributions, and
(2) assuming that an investor paid taxes on the fund's distributions and sold
all shares at the end of each period.
Calculations are based on the highest individual federal income tax and capital
gains tax rates in effect at the times of the distributions and the hypothetical
sales. State and local taxes were not considered. After-tax returns reflect the
reduced tax rates on ordinary income and short-term capital gains that became
effective as of January 1, 2003, and on long-term capital gains realized on or
after May 6, 2003. However, they do not reflect the reduced rates on "qualified
dividend income." (In the example, returns after the sale of fund shares may be
higher than those assuming no sale. This occurs when the sale would have
produced a capital loss. The calculation assumes that the investor received a
tax deduction for the loss.)
The table shows returns for Investor Shares only; returns for other share
classes will differ. Please note that your actual after-tax returns will depend
on your tax situation and may differ from those shown. Also note that if you own
the fund in a tax-deferred account, such as an individual retirement account or
a 401(k) plan, this information does not apply to you. Such accounts are not
subject to current taxes.
Finally, keep in mind that a fund's performance--whether before or after
taxes--does not indicate how it will perform in the future.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED OCTOBER 31, 2003
ONE YEAR FIVE YEARS TEN YEARS
-----------------------------------------------
EUROPEAN STOCK INDEX FUND
INVESTOR SHARES*
Returns Before Taxes 24.27% -1.11% 8.17%
Returns After Taxes on
Distributions 23.23 -1.83 7.39
Returns After Taxes on
Distributions and Sale of
Fund Shares 15.66 -1.30 6.77
- --------------------------------------------------------------------------------
PACIFIC STOCK INDEX FUND
INVESTOR SHARES*
Returns Before Taxes 33.75% 2.14% -2.56%
Returns After Taxes on
Distributions 33.21 1.83 -2.86
Returns After Taxes on
Distributions and Sale of
Fund Shares 21.84 1.66 -2.27
- --------------------------------------------------------------------------------
*Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000. The funds assess a 2% fee on redemptions of
shares purchased on or after June 27, 2003, and held for less than two months.
26
- --------------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION**
-----------------------------------------
EMERGING MARKETS STOCK INDEX FUND
INVESTOR SHARES*+
Returns Before Taxes 48.40% 9.22% 2.92%
Returns After Taxes on Distributions 47.69 8.32 2.24
Returns After Taxes on Distributions
and Sale of Fund Shares 31.39 7.42 2.09
- --------------------------------------------------------------------------------
TOTAL INTERNATIONAL STOCK INDEX FUND+
Returns Before Taxes 28.94% 0.60% 1.19%
Returns After Taxes on Distributions 27.93 -0.12 0.52
Returns After Taxes on Distributions
and Sale of Fund Shares 18.59 0.08 0.61
- --------------------------------------------------------------------------------
DEVELOPED MARKETS INDEX FUND+
Returns Before Taxes 27.06% -- -7.50%
Returns After Taxes on Distributions 26.06 -- -8.06
Returns After Taxes on Distributions
and Sale of Fund Shares 17.37 -- -6.62
- --------------------------------------------------------------------------------
INSTITUTIONAL DEVELOPED MARKETS INDEX FUND
Returns Before Taxes 27.13% -- -7.76%
Returns After Taxes on Distributions 26.04 -- -8.37
Returns After Taxes on Distributions
and Sale of Fund Shares 17.39 -- -6.86
- --------------------------------------------------------------------------------
*Performance figures are adjusted for the 0.5% transaction fee on purchases and
redemptions.
**Inception dates are May 4, 1994, for the Emerging Markets Stock Index Fund;
April 29, 1996, for the Total International Stock Index Fund; May 8, 2000, for
the Developed Markets Index Fund; and June 1, 2000, for the Institutional
Developed Markets Index Fund.
+Total return figures do not reflect the $10 annual account maintenance fee
applied on balances under $10,000. The funds assess a 2% fee on redemptions of
shares purchased on or after June 27, 2003, and held for less than two months.
27
ABOUT YOUR FUND'S EXPENSES
All mutual funds have operating expenses. These expenses 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 net assets. This figure is known
as the expense ratio. a hypothetical example
We believe it is important for you to understand the impact of costs on your
investment. The following example illustrates the costs that you would incur
over a 12-month period if you invested $10,000 in the funds, using the funds'
actual returns and operating expenses for the fiscal year ended October 31,
2003. The cost in dollars is calculated by applying the expense ratio to the
average balance in the hypothetical account. For comparative purposes, we also
list the average expense ratio for the funds' peer groups, which are derived
from data provided by Lipper Inc.
- --------------------------------------------------------------------------------
COST OF $10,000 FUND PEER GROUP*
INVESTMENT IN FUND EXPENSE RATIO EXPENSE RATIO
- --------------------------------------------------------------------------------
European Stock Index Fund $36 0.32% 1.87%
Pacific Stock Index Fund 46 0.39 2.27
Emerging Markets Stock Index Fund 66** 0.53 2.14
Total International Stock Index Fund 41 0.36+ 1.70
Developed Markets Index Fund 39 0.34+ 1.70
Institutional Developed Markets Index Fund 22 0.19+ 1.70
- --------------------------------------------------------------------------------
*Peer groups are: for the European Stock Index Fund, the Average European Region
Fund; for the Pacific Stock Index Fund, the Average Japan/Pacific Region Fund;
for the Emerging Markets Stock Index Fund, the Average Emerging Markets Fund;
and for the Total International Stock, Developed Markets, and Institutional
Developed Markets Index Funds, the Average International Fund.
**Does not reflect the 0.5% fee assessed on purchases. If this fee were
included, the cost shown would have been higher.
+Average weighted expense ratio, which reflects the expenses of the underlying
funds. The Total International Stock, Developed Markets, and Institutional
Developed Markets Index Funds have a 0% direct expense ratio.
Calculations assume that no shares were sold. Your actual costs may have been
higher or lower, depending on the amount of your investment and your holding
period. Peer-group ratios capture data through year-end 2002.
You can find more information about the funds' expenses, including annual
expense ratios for the past five years, in the Financial Statements section of
this report. For additional information on operating expenses and other
shareholder costs, please refer to the funds' prospectus. The prospectus
presents hypothetical shareholder costs over various time periods based upon a
$10,000 investment and a return of 5% a year. This standardized example, which
appears in all mutual fund prospectuses, may be useful to you in comparing the
costs of investing in different funds.
28
FINANCIAL STATEMENTS AS OF 10/31/2003
STATEMENT OF NET ASSETS
This Statement provides a detailed list of each fund's holdings, including each
security's market value on the last day of the reporting period. European,
Pacific, and Emerging Markets Stock Index Fund securities are grouped and
subtotaled by asset type (common stocks, bonds, etc.) and by country; the Total
International Stock, Developed Markets, and Institutional Developed Markets
Index Funds list investments in shares of each Vanguard International Stock
Index fund. Other assets are added to, and liabilities are subtracted from, the
value of Total Investments to calculate the fund's Net Assets. Finally, Net
Assets are divided by the outstanding shares of the fund to arrive at its share
price, or Net Asset Value (NAV) Per Share.
At the end of the Statement of Net Assets of each fund, you will find a table
displaying the composition of the fund's net assets. Because all income and any
realized gains must be distributed to shareholders each year, the bulk of net
assets consists of Paid-in Capital (money invested by shareholders). The amounts
shown for Undistributed Net Investment Income and Accumulated Net Realized Gains
usually approximate the sums the fund had available to distribute to
shareholders as income dividends or capital gains as of the statement date, but
may differ because certain investments or transactions may be treated
differently for financial statement and tax purposes. Any Accumulated Net
Realized Losses, and any cumulative excess of distributions over net income or
net realized gains, will appear as negative balances. Unrealized Appreciation
(Depreciation) is the difference between the market value of the fund's
investments and their cost, and reflects the gains (losses) that would be
realized if the fund were to sell all of its investments at their statement-date
values.
- --------------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS (99.7%)(1)
- --------------------------------------------------------------------------------
AUSTRIA (0.3%)
Erste Bank der Oesterreichischen
Sparkassen AG 37,787 $ 4,178
* Telekom Austria AG 277,394 2,947
OMV AG 18,928 2,420
* Bank Austria Creditanstalt 50,650 2,207
* Immofinanz Immobilien
Anlagen AG 261,007 1,887
Voestalpine AG 30,780 1,102
Wienerberger AG 45,371 965
Oesterreichische
Elektrizitaetswirtschafts AG Class A 6,549 617
Flughafen Wien AG 14,521 592
Mayr-Melnhof Karton AG 5,735 573
Boehler-Uddeholm AG 7,527 433
* VA Technologies AG 13,171 354
* RHI AG 23,655 337
----------------
$ 18,612
----------------
BELGIUM (1.5%)
Fortis Group 1,441,178 25,701
Dexia 891,757 14,047
Electrabel SA 41,932 11,597
Solvay SA 88,649 6,601
KBC Bankverzekeringsholding 125,843 5,338
Interbrew 209,876 4,914
Delhaize Group 102,220 4,854
Groupe Bruxelles Lambert SA 95,861 4,630
Agfa Gevaert NV 155,485 3,859
UCB SA 121,455 3,831
Colruyt NV 23,529 2,134
* Mobistar SA 30,241 1,519
Umicore 20,130 1,225
Bekaert NV 20,649 1,026
Barco NV 11,975 884
Omega Pharma SA 28,537 879
Cofinimmo 6,544 816
D'Ieteren SA 3,930 731
Compagnie Maritime Belge SA 4,158 211
----------------
$ 94,797
----------------
DENMARK (1.1%)
Danske Bank A/S 693,073 13,982
Novo Nordisk A/S B Shares 355,072 12,771
AP Moller-Maersk A/S 1,530 12,011
TDC A/S 180,045 5,786
29
- --------------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Vestas Wind Systems A/S 144,832 $ 3,046
ISS A/S 61,343 2,926
Danisco A/S 74,598 2,870
Novozymes A/S 76,534 2,466
Group 4 Falck A/S 105,767 2,374
* GN Store Nord A/S 310,740 2,017
H. Lundbeck A/S 97,357 1,789
* Topdanmark A/S 34,303 1,706
Coloplast A/S B Shares 18,812 1,583
* William Demant A/S 41,890 1,425
Carlsberg A/S B Shares 32,363 1,344
East Asiatic Co. A/S 28,369 1,065
DSV, De Sammensluttede Vognmaend A/S 28,600 1,006
Kobenhavns Lufthavne A/S 8,948 929
Bang & Olufsen A/S B Shares 16,147 626
* NEG Micon A/S 29,325 422
* FLS Industries A/S B Shares 39,335 421
NKT Holding A/S 24,110 411
----------------
$ 72,976
----------------
FINLAND (2.6%)
Nokia Oyj 6,664,067 113,187
UPM-Kymmene Oyj 689,970 12,914
Stora Enso Oyj R Shares 901,846 12,267
Fortum Oyj 472,676 4,358
Sampo Oyj A Shares 386,851 3,256
TietoEnator Oyj B Shares 114,269 3,029
Kone Corp. B Shares 49,205 2,571
* Elisa Oyj Class A 190,800 2,274
Metso Oyj 140,337 1,573
Outokumpu Oyj A Shares 122,443 1,482
Kesko Oyj 81,901 1,274
Amer Group Ltd. 32,606 1,241
Uponor Oyj 42,206 1,124
Orion-Yhtyma Oyj B Shares 50,399 970
Nokian Renkaat Oyj 12,841 959
Wartsila Oyj B Shares 52,340 897
* Rautaruuki Oyj 120,015 834
KCI Konecranes Oyj 19,839 593
Pohjola Group PLC D Shares 25,811 582
----------------
$ 165,385
----------------
FRANCE (13.6%)
Total SA 907,054 140,984
BNP Paribas SA 1,120,140 58,859
Aventis SA 943,976 49,987
Carrefour SA 795,334 41,755
AXA 1,960,373 37,148
L'Oreal SA 469,680 34,727
Societe Generale Class A 447,927 33,275
* France Telecom SA 1,345,628 32,570
Sanofi-Synthelabo SA 509,386 31,534
Groupe Danone 172,021 25,957
* Alcatel SA 1,695,368 22,370
STMicroelectronics NV 812,366 21,627
LVMH Louis Vuitton Moet Hennessy 306,247 21,166
* Vivendi Universal SA 991,021 20,818
L'Air Liquide SA (Registered) 138,745 20,565
Cie. de St. Gobain SA 425,871 17,967
Suez SA 1,116,078 17,905
Lafarge SA 228,110 16,335
Schneider Electric SA 270,243 15,818
Renault SA 237,820 15,731
PSA Peugeot Citroen 252,739 10,842
Credit Agricole SA 503,504 10,694
Accor SA 263,258 10,354
Pinault-Printemps-Redoute SA 93,744 9,552
Lagardere S.C.A 174,363 8,771
European Aeronautic Defence and Space Co. 397,361 8,084
Bouygues SA 287,269 7,815
Veolia Environnement 338,998 7,567
* Cap Gemini SA 148,556 7,487
Compagnie Generale des Etablissements
Michelin SA B Shares 189,548 7,437
Pernod Ricard SA 73,120 7,055
Arcelor 479,160 6,835
Vinci SA 92,646 6,715
Essilor International SA 136,102 6,547
Pechiney SA 103,785 5,737
* Vivendi Universal SA ADR 272,160 5,724
Thomson SA 252,180 5,312
Societe Television Francaise 1 163,722 4,911
Etablissements Economiques du
Casino Guichard-Perrachon SA 52,325 4,790
Unibail Company 56,896 4,488
Publicis Groupe SA 134,867 4,218
* Wanadoo 524,227 3,900
Valeo SA 102,597 3,842
Sodexho Alliance SA 133,849 3,501
Thales SA 108,646 3,132
Autoroutes du Sud de la France 96,397 2,970
* Business Objects SA 88,393 2,898
Gecina SA 20,903 2,620
Sagem SA 25,296 2,582
Technip SA 25,803 2,550
Dassault Systemes SA 56,316 2,390
Hermes International 12,904 2,222
CNP Assurances 47,939 2,186
Imerys 10,907 2,092
* Atos Origin SA 31,190 2,081
30
- --------------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Societe BIC SA 45,534 $ 1,886
Air France 106,647 1,706
Klepierre 30,687 1,636
Zodiac SA 55,040 1,627
* Alstom 400,738 1,276
* Credit Agricole SA Rights Exp. 11/8/2003 281,000 65
----------------
$ 875,195
----------------
GERMANY (9.4%)
Siemens AG 1,112,841 75,035
Deutsche Bank AG 727,651 47,997
* Deutsche Telekom AG 2,917,590 45,959
SAP AG 284,344 41,370
E.On AG 817,558 41,325
Allianz AG 380,408 40,783
BASF AG 754,848 34,628
DaimlerChrysler AG (Registered) 867,908 32,378
Bayer AG 912,516 21,927
Muenchener Rueckversicherungs-
Gesellschaft AG (Registered) 161,657 19,280
Volkswagen AG 311,437 15,710
RWE AG 508,061 14,116
DaimlerChrysler AG 327,337 12,092
Commerzbank AG 603,268 11,922
Schering AG 231,909 10,830
Deutsche Post AG 541,346 10,415
* Bayerische Hypo-und
Vereinsbank AG 472,247 10,404
* Infineon Technologies AG 599,717 8,840
Metro AG 202,162 8,268
Deutsche Boerse AG 147,623 8,207
ThyssenKrupp AG 430,188 7,177
Altana AG 97,519 6,146
Henkel KGaA 82,244 6,049
Adidas-Salomon AG 63,344 5,869
Continental AG 167,739 5,694
Porsche AG 10,965 5,386
Linde AG 116,136 5,326
Volkswagen AG Pfd. 146,481 4,988
Deutsche Lufthansa AG 266,999 4,187
Man AG 148,223 4,108
Beiersdorf AG 35,071 3,956
Puma AG 22,173 3,234
TUI AG 172,648 3,017
Fresenius Medical Care AG 48,397 2,760
* HeidelbergerCement AG 61,128 2,612
Merck KGaA 68,741 2,408
* Qiagen NV 184,783 2,165
* Hypo Real Estate Holding AG 116,529 2,032
Celesio AG 42,106 1,762
* MLP AG 83,942 1,610
ProSieben Sat.1 Media AG 101,983 1,571
Wella AG 19,113 1,522
Fresenius Medical Care AG 36,655 1,504
Karstadt Quelle AG 58,228 1,447
* EPCOS AG 68,352 1,410
Douglas Holding AG 46,899 1,360
RWE AG Pfd. 55,179 1,359
* Meunchener Reuckversicherungs-
Gesellchaft AG 160,588 1,327
Suedzucker AG 71,356 1,201
----------------
$ 604,673
----------------
GREECE (0.6%)
National Bank of Greece SA 263,176 5,507
Alpha Credit Bank SA 200,680 4,535
Hellenic Telecommunication
Organization SA 351,500 3,939
EFG Eurobank Ergasias 214,729 3,675
Greek Organization of
Football Prognostics 222,000 2,736
Public Power Corp. 96,000 2,070
Coca-Cola Hellenic
Bottling Co. SA 105,100 2,036
Commercial Bank of Greece SA 80,160 1,698
Vodafone-Panafon SA 219,210 1,529
Titan Cement Co. SA 39,300 1,510
Bank of Piraeus 160,010 1,496
Hellenic Petroleum SA 144,500 1,173
Intracom SA 109,080 751
Viohalco, Hellenic Copper &
Aluminum Industry SA 141,140 679
Hellenic Duty Free Shops SA 33,600 564
Technical Olympic SA 106,599 525
Folli-Follie SA 20,897 490
Hellenic Technodomiki Tev SA 89,500 472
Papastratos Cigarettes Co. SA 22,300 467
Aluminum of Greece SA 10,900 215
----------------
$ 36,067
----------------
IRELAND (1.0%)
* Allied Irish Banks PLC 1,178,926 17,241
Bank of Ireland 1,379,837 17,003
* CRH PLC 732,669 13,177
Irish Life & Permanent PLC 375,331 5,258
Kerry Group PLC A Shares 180,336 3,145
* Elan Corp. PLC 441,871 2,183
* Ryanair Holdings PLC 220,629 1,872
* Independent News & Media PLC 760,277 1,662
* Grafton Group PLC 262,762 1,634
DCC PLC 114,637 1,539
Fyffes PLC 438,966 796
Greencore Group PLC 219,489 791
31
- --------------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
* Ryanair Holdings PLC ADR 8,400 $ 433
* Waterford Wedgewood PLC 860,442 290
* Elan Corp. PLC ADR 45,229 232
----------------
$ 67,256
----------------
ITALY (5.3%)
ENI SpA 3,613,807 57,388
* Telecom Italia SpA 12,854,178 33,548
Assicurazioni Generali SpA 1,328,986 30,591
Unicredito Italiano SpA 5,239,232 25,825
Telecom Italia Mobile SpA 5,269,300 24,319
ENEL SpA 2,946,560 18,429
Banca Intesa SpA 4,927,406 16,612
San Paolo-IMI SpA 1,406,635 15,829
* Telecom Italia SpA RNC 8,074,614 14,005
Mediaset SpA 819,577 8,280
Banco Popolare di Verona e
Novara Scrl 516,844 7,991
* Banche Popolari Unite Scrl 441,464 6,724
Mediobanca Banca di Credito
Finanziaria SpA 650,642 6,543
Riunione Adriatica di Sicurta SpA 417,030 6,516
Alleanza Assicurazioni SpA 646,197 6,468
Finmeccanica SpA 8,237,130 5,870
* Fiat SpA 616,342 4,829
* Banca Nazionale del Lavoro (BNL) 2,105,729 4,798
* Capitalia SpA 1,700,310 4,744
Snam Rete Gas SpA 1,222,673 4,605
Banca Monte dei Paschi di Siena SpA 1,530,529 4,564
* SEAT Pagine Gialle SpA 4,494,736 4,363
Banca Intesa SpA Non Convertible Risp 1,305,191 3,277
Luxottica Group SpA 189,374 3,021
Banca Popolare di Milano SpA 535,938 2,735
Banca Fideuram SpA 405,937 2,548
Mediolanum SpA 358,527 2,505
* Autogrill SpA 160,948 2,038
Pirelli & C. Accomandita per Azioni 2,514,040 1,949
Parmalat Finanziaria SpA 569,830 1,775
* Tiscali SpA 256,911 1,708
Bulgari SpA 182,125 1,647
* FinecoGroup SpA 2,203,892 1,555
Mondadori (Arnoldo)Editore SpA 177,104 1,359
Italcementi SpA 112,396 1,352
Gruppo Editoriale L'Espresso SpA 240,954 1,291
Benetton Group SpA 77,164 918
Snia SpA 417,602 874
* Telecom Italia SpA 1,704,730 739
----------------
$ 344,132
----------------
NETHERLANDS (7.2%)
Royal Dutch Petroleum Co. 2,916,427 129,413
Koninklijke (Royal)
Philips Electronics NV 1,828,021 49,282
ING Groep NV 2,352,110 48,837
Unilever NV 794,077 46,129
* ABN-AMRO Holding NV 2,102,046 44,109
Aegon NV 1,710,526 22,431
* Koninklijke KPN NV 2,426,808 18,451
Akzo Nobel NV 377,398 11,934
* ASML Holding NV 597,323 10,368
TPG NV 468,047 10,093
Reed Elsevier NV 873,034 9,723
Heineken NV 272,302 9,718
Verenigde Nederlandse
Uitgeversbedrijven NV 309,475 9,426
* Koninklijke Ahold NV 905,055 7,660
Wolters Kluwer NV 375,475 5,277
DSM NV 111,977 5,134
* Koninklijke Numico NV 209,188 4,720
Rodamco Europe NV 62,914 3,211
Euronext NV 128,120 3,135
Aegon NV ARS 169,466 2,223
Corio NV 61,747 2,059
Vedior NV 125,836 1,814
* IHC Caland NV 41,544 1,772
Wereldhave NV 27,020 1,699
Koninklijke Vendex KBB NV 125,035 1,539
Oce NV 110,152 1,462
* ASML Holding (New York) 38,580 677
Hagemeyer NV 146,724 425
----------------
$ 462,721
----------------
NORWAY (0.7%)
Norsk Hydro ASA 203,521 11,454
Orkla ASA 282,669 5,926
Statoil ASA 610,450 5,740
Telenor ASA 1,007,390 5,484
Gjensidige NOR ASA 78,350 3,213
DNB Holding ASA 537,236 3,138
Norske Skogindustrier ASA 148,964 2,834
Tomra Systems ASA 248,910 1,432
* Tandberg ASA 178,012 1,254
Schibsted ASA 68,888 1,213
* Storebrand ASA 211,570 1,179
Frontline Ltd. 55,077 1,075
* Aker Kvaerner ASA 36,248 592
Smedvig ASA A Shares 54,083 375
----------------
$ 44,909
----------------
32
- --------------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
PORTUGAL (0.5%)
Portugal Telecom SGPS SA 1,302,148 $ 10,945
Electricidade de Portugal SA 2,510,121 5,690
Banco Comercial Portugues SA 2,727,636 5,264
Brisa-Auto Estradas
de Portugal SA 383,071 2,396
Banco Espirito Santo SA 147,082 2,110
Banco BPI SA 523,785 1,614
* PT Multimedia-Servicos de Telecomunicacoes e
Multimedia, SGPS, SA 66,880 1,146
Cimpor-Cimento de Portugal SA 228,955 1,011
* Sonae SGPS SA 1,416,749 972
* Jeronimo Martins & Filho, SGPS, SA 43,914 414
----------------
$ 31,562
----------------
SPAIN (5.0%)
* Telefonica SA 5,968,936 74,248
Banco Santander Central Hispano SA 5,963,685 57,197
Banco Bilbao Vizcaya Argentaria SA 4,219,455 48,415
Repsol-YPF SA 1,272,538 22,191
Endesa SA 1,249,999 19,836
Iberdrola SA 1,066,306 17,789
Banco Popular Espanol SA 220,668 11,475
Altadis SA 404,252 9,803
Telefonica SA ADR 190,681 7,131
Industria de Diseno Textil SA 302,545 6,250
Gas Natural SDG SA 279,044 5,362
Union Fenosa SA 275,185 4,447
Abertis Infraestructuras SA 306,090 4,128
Grupo Dragados SA 169,545 3,463
Acerinox SA 67,975 2,959
Grupo Ferrovial, SA 88,065 2,514
Fomento de Construc y Contra SA 73,274 2,390
ACS, Actividades de
Construccion y Servicios, SA 53,724 2,262
Acciona SA 40,005 2,100
Amadeus Global Travel Distribution SA 327,317 2,055
Indra Sistemas, SA 172,782 1,944
Sacyr Vallehermoso SA 137,909 1,837
Iberia (Linea Aer Espana) 635,230 1,551
* Zeltia SA 208,680 1,482
Corporacion Mapfre SA 114,929 1,432
* NH Hoteles SA 116,878 1,344
Telefonica Publicidad e Informacion, SA 230,561 1,161
Promotora de Informaciones SA 104,524 1,159
Sociedad General de
Aguas de Barcelona SA 80,436 1,059
* Antena 3 Television 22,262 727
----------------
$ 319,711
----------------
SWEDEN (3.2%)
* Telefonaktiebolaget LM
Ericsson AB Class B 20,411,542 35,062
Nordea AB 3,317,876 20,586
Hennes & Mauritz
AB B Shares 659,344 13,988
Svenska Handelsbanken
AB A Shares 767,136 13,522
Svenska Cellulosa
AB B Shares 265,980 10,041
TeliaSonera AB 2,280,858 9,970
Sandvik AB 306,511 9,116
Volvo AB B Shares 315,425 8,815
Electrolux AB Series B 414,869 8,510
Skandinaviska Enskilda
Banken AB A Shares 654,442 7,887
* Tele2 AB B Shares 131,398 6,611
Atlas Copco AB A Shares 156,369 5,492
Securitas AB B Shares 412,322 5,074
Skandia Forsakrings AB 1,147,144 4,206
Assa Abloy AB 407,591 4,023
SKF AB B Shares 113,238 4,006
Swedish Match AB 473,754 3,856
Skanska AB B Shares 530,672 3,673
Volvo AB A Shares 134,703 3,618
Atlas Copco AB B Shares 97,361 3,183
Nobel Biocare Holding AG 27,700 2,475
Holmen AB 67,700 2,269
Getinge AB 55,800 2,042
Eniro AB 230,800 1,849
Drott AB B Shares 110,718 1,795
Gambro AB A Shares 239,914 1,784
Trelleborg AB B Shares 106,699 1,559
* Modern Times Group AB 72,733 1,366
Alfa Laval AB 93,490 1,234
Billerud Aktiebolag 85,600 1,229
Svenskt Stal AB A Shares 81,352 1,189
Castellum AB 57,470 1,146
Svenska Handelsbanken
AB B Shares 61,856 1,051
Gambro AB B Shares 137,897 1,034
SKF AB A Shares 28,775 1,018
* SAS AB 103,488 909
OM HEX AB 75,671 776
Hoganas AB B Shares 38,800 761
* WM-Data AB Class B 354,140 690
33
- --------------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Axfood AB 34,500 $ 690
Svenskt Stal AB 37,519 534
SAPA AB 14,100 307
----------------
$ 208,946
----------------
SWITZERLAND (10.3%)
Novartis AG (Registered) 3,308,848 126,124
Nestle SA (Registered) 560,706 123,448
UBS AG 1,604,682 98,538
Roche Holdings AG 976,551 80,809
Credit Suisse Group (Registered) 1,653,174 58,248
Swiss Re (Registered) 447,539 28,169
* Zurich Financial Services AG 199,968 25,607
Cie. Financiere Richemont AG 727,666 16,375
Swisscom AG 36,839 10,718
Adecco SA (Registered) 180,717 10,657
Holcim Ltd. (Registered) 209,476 8,816
* ABB Ltd. 1,413,597 8,310
Syngenta AG 148,710 7,968
Serono SA Class B 9,768 6,744
* CIBA Specialty Chemicals
AG (Registered) 94,760 6,270
Synthes-Stratec Inc. 6,104 5,604
Roche Holdings AG (Bearer) 44,432 5,540
Swatch Group AG (Bearer) 46,225 4,924
Givaudan SA 9,924 4,474
SGS Societe Generale de Surveillance Holding
SA (Registered) 6,024 3,401
Lonza AG (Registered) 59,737 2,930
* Clariant AG 191,610 2,698
* Logitech International SA 59,696 2,392
UBS AG 35,370 2,170
Geberit AG 4,900 2,018
Unaxis Holding AG 13,806 1,804
* Schindler Holding AG (Ptg. Ctf.) 7,555 1,697
Swatch Group AG (Registered) 78,220 1,669
* Kudelski SA 45,887 1,337
Kuoni Reisen Holding AG (Registered) 4,280 1,335
Valora Holding AG 5,666 1,311
Sulzer AG (Registered) 4,929 1,172
----------------
$ 663,277
----------------
UNITED KINGDOM (37.4%)
HSBC Holdings PLC 15,062,892 226,216
BP PLC 27,254,557 189,162
GlaxoSmithKline PLC 8,315,840 178,089
Vodafone Group PLC 82,942,016 174,177
AstraZeneca Group PLC 2,376,948 111,649
Royal Bank of Scotland Group PLC 3,882,395 104,029
Shell Transport & Trading Co. PLC 13,428,040 83,855
Barclays PLC 9,077,538 76,559
HBOS PLC 5,259,498 61,182
Lloyds TSB Group PLC 7,753,753 53,848
Diageo PLC 4,306,843 50,648
Tesco PLC 10,060,163 40,332
BT Group PLC 12,047,677 37,924
Rio Tinto PLC 1,480,440 35,900
Unilever PLC 3,845,162 32,789
National Grid Transco PLC 4,278,553 27,318
British American Tobacco PLC 2,228,124 26,940
BHP Billiton PLC 3,425,717 26,901
Aviva PLC 3,134,076 25,714
Vodafone Group PLC ADR 1,177,400 24,902
BP PLC ADR 575,360 24,384
BG Group PLC 4,907,407 22,381
Prudential PLC 2,817,975 21,865
* British Sky Broadcasting Group PLC 1,751,226 19,019
Centrica PLC 5,917,772 18,528
Cadbury Schweppes PLC 2,861,720 18,344
Compass Group PLC 3,055,777 17,618
Reckitt Benckiser PLC 832,328 17,514
GUS PLC 1,401,952 17,129
Imperial Tobacco Group PLC 1,011,816 16,775
Legal & General Group PLC 9,040,867 15,956
Marks & Spencer Group PLC 3,157,964 15,421
Kingfisher PLC 3,167,173 15,183
Reed Elsvier PLC 1,763,565 13,707
Boots Group PLC 1,128,398 13,643
BAE Systems PLC 4,255,056 13,214
Scottish & Southern Energy PLC 1,192,920 12,419
Amersham PLC 974,900 12,135
WPP Group PLC 1,244,234 11,856
BAA PLC 1,483,578 11,732
ScottishPower PLC 1,961,671 11,651
Pearson PLC 1,113,209 11,523
Smith & Nephew PLC 1,294,697 10,288
Land Securities Group PLC 650,155 9,941
Wolseley PLC 806,267 9,882
Rentokil Initial PLC 2,566,750 9,724
J. Sainsbury PLC 2,011,296 9,668
Man Group PLC 383,748 9,436
BOC Group PLC 691,831 9,433
SABMiller PLC 1,110,871 9,383
InterContinental Hotels Group PLC 1,023,270 9,286
Smiths Group PLC 774,632 9,221
3i Group PLC 852,413 8,968
Reuters Group PLC 1,997,578 8,703
Carnival PLC 232,160 8,017
Next PLC 398,855 7,987
34
- --------------------------------------------------------------------------------
MARKET
VALUE*
EUROPEAN STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Granada PLC 3,842,373 $ 7,645
Cable and Wireless PLC 3,300,320 7,631
Amvescap PLC 934,984 7,402
Hilton Group PLC 2,200,826 7,245
Safeway PLC 1,467,418 7,221
Hanson Building Materials PLC 1,024,126 7,091
Scottish & Newcastle PLC 1,119,098 6,566
Rolls-Royce Group PLC 2,037,340 6,560
Dixons Group PLC 2,700,754 6,222
United Utilities PLC 763,364 6,105
British Land Co., PLC 682,111 5,987
Royal & Sun Alliance Insurance Group PLC 4,016,257 5,981
Severn Trent PLC 476,409 5,724
Imperial Chemical Industries PLC 1,666,756 5,480
LogicaCMG PLC 1,041,809 5,427
The Sage Group PLC 1,684,722 5,332
Exel PLC 413,668 5,324
Friends Provident PLC 2,274,816 5,298
Whitbread PLC 412,400 5,256
Tomkins PLC 1,077,617 5,139
Johnson Matthey PLC 302,901 5,048
Bunzl PLC 635,847 4,963
Emap PLC 358,220 4,866
The Peninsular & Oriental Steam Navigation 1,030,796 4,837
Hays PLC 2,306,458 4,775
GKN PLC 1,014,369 4,751
Rexam PLC 639,624 4,667
Signet Group PLC 2,389,073 4,196
Daily Mail and General Trust 427,839 4,178
Kelda Group PLC 544,482 4,105
* Mitchells & Butlers PLC 1,024,774 4,043
Misys PLC 775,061 3,946
Rank Group PLC 825,047 3,920
Capita Group PLC 929,570 3,900
Provident Financial PLC 354,307 3,887
RMC Group PLC 371,816 3,880
Hammerson PLC 383,103 3,871
BPB PLC 680,046 3,840
Slough Estates PLC 579,011 3,768
WPP Group PLC ADR 78,406 3,762
Liberty International PLC 346,407 3,742
ScottishPower PLC ADR 154,280 3,724
United Business Media PLC 471,748 3,714
Electrocomponents PLC 610,358 3,604
* International Power PLC 1,552,667 3,511
Enterprise Inns PLC 236,362 3,391
William Hill PLC 588,801 3,387
Associated British Ports Holdings PLC 458,690 3,308
EMI Group PLC 1,094,229 3,250
Carlton Communications PLC 886,372 3,249
Cobham PLC 155,571 3,110
Alliance Unichem PLC 340,852 3,109
Taylor Woodrow PLC 812,544 3,089
* Yell Group PLC 632,987 3,083
Brambles Industries PLC 998,760 3,025
Tate & Lyle PLC 571,431 2,989
* Celltech Group PLC 383,518 2,987
* Kesa Electricals PLC 719,997 2,981
Persimmon PLC 376,749 2,970
* George Wimpey PLC 526,459 2,921
FirstGroup PLC 570,810 2,918
IMI PLC 493,808 2,899
BBA Group PLC 632,611 2,788
* ARM Holdings PLC 1,428,265 2,757
Barratt Developments PLC 328,934 2,735
* British Airways PLC 755,171 2,666
Aegis Group PLC 1,556,279 2,634
Canary Wharf Group PLC 645,714 2,567
Invensys PLC 4,933,887 2,512
Cattles PLC 457,766 2,478
Close Brothers Group PLC 198,357 2,434
MFI Furniture Group PLC 859,362 2,366
Schroders PLC 172,736 2,197
* United Utilities PLC 441,311 2,086
Pilkington PLC 1,404,506 2,074
The Berkeley Group PLC 157,594 2,046
Kidde PLC 1,175,206 2,009
Stagecoach Group PLC 1,469,922 1,939
Balfour Beatty PLC 590,097 1,918
Serco Group PLC 601,345 1,815
The Davis Service Group PLC 281,787 1,812
Amec PLC 412,714 1,782
FKI PLC 819,845 1,607
Novar PLC 611,128 1,374
SSL International PLC 265,515 1,329
De La Rue Group PLC 247,334 1,177
Securicor PLC 743,130 1,100
Great Portland Estates PLC 248,547 993
Aggreko PLC 358,336 961
----------------
$ 2,405,024
----------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $5,872,991) $ 6,415,243
- --------------------------------------------------------------------------------
35
- --------------------------------------------------------------------------------
FACE MARKET
AMOUNT VALUE*
EUROPEAN STOCK INDEX FUND (000) (000)
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (5.0%)(1)
- --------------------------------------------------------------------------------
Federal National Mortgage Assn.
(2) 1.05%, 1/20/2004 $ 3,000 $ 2,993
Repurchase Agreements
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
1.06%, 11/3/2003--Note F 304,454 304,454
1.07%, 11/3/2003 15,758 15,758
- --------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $323,205) 323,205
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (104.7%)
(Cost $6,196,196) 6,738,448
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-4.7%)
- --------------------------------------------------------------------------------
Other Assets--Note B 28,973
Security Lending Collateral Payable
to Brokers--Note F (304,454)
Other Liabilities (28,357)
----------------
(303,838)
----------------
- --------------------------------------------------------------------------------
NET ASSETS (100%) $ 6,434,610
================================================================================
*See Note A in Notes to Financial Statements.
*Non-income-producing security.
(1) The fund invests a portion of its cash reserves in equity markets through
the use of index futures contracts. After giving effect to futures
investments, the fund's effective common stock and temporary cash
investment positions represent 100.0% and 4.7%, respectively, of net
assets. See Note D in Notes to Financial Statements.
(2) Security segregated as initial margin for open futures contracts.
ADR--American Depositary Receipt.
(Ptg. Ctf.)--Participating Certificate.
- --------------------------------------------------------------------------------
AMOUNT
(000)
- --------------------------------------------------------------------------------
AT OCTOBER 31, 2003, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Paid-in Capital $ 6,130,970
Undistributed Net Investment Income 136,684
Accumulated Net Realized Losses (376,058)
Unrealized Appreciation (Depreciation)
Investment Securities 542,252
Futures Contracts (57)
Foreign Currencies and Forward Currency Contracts 819
- --------------------------------------------------------------------------------
NET ASSETS $ 6,434,610
================================================================================
Investor Shares--Net Assets
Applicable to 267,827,524 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 5,339,100
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--INVESTOR SHARES $ 19.93
================================================================================
Admiral Shares--Net Assets
Applicable to 9,539,057 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 446,645
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE-- ADMIRAL SHARES $ 46.82
================================================================================
Institutional Shares--Net Assets
Applicable to 32,507,258 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 648,865
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE-- INSTITUTIONAL SHARES $ 19.96
================================================================================
See Note D in Notes to Financial Statements for the tax-basis components of net
assets.
36
- --------------------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS (99.1%)(1)
- --------------------------------------------------------------------------------
AUSTRALIA (16.7%)
National Australia Bank Ltd. 2,096,516 $ 45,506
BHP Billiton Ltd. 5,194,284 43,196
Commonwealth Bank of Australia 1,738,354 33,920
Westpac Banking Corp., Ltd. 2,456,094 28,145
Australia & New Zealand Bank Group Ltd. 2,099,897 26,522
News Corp. Ltd. Pfd. 2,768,929 20,374
News Corp. Ltd. 2,029,978 18,077
Woolworths Ltd. 1,419,199 11,198
Rio Tinto Ltd. 433,443 10,964
Wesfarmers Ltd. 523,992 10,782
Telstra Corp. Ltd. 3,033,071 10,201
Foster's Group Ltd. 2,892,647 9,380
AMP Ltd. 1,971,501 9,205
Coles Myer Ltd. 1,516,445 8,361
Insurance Australia Group Ltd. 2,333,152 7,367
Westfield Trust (Units) 3,029,295 7,158
Amcor Ltd. 1,176,215 7,094
Macquarie Bank Ltd. 283,581 7,010
Suncorp-Metway Ltd. 738,582 6,797
Alumina Ltd. 1,559,141 6,594
QBE Insurance Group Ltd. 871,010 6,366
Woodside Petroleum Ltd. 647,774 6,081
Macquarie Infrastructure Group 2,641,979 5,943
Westfields Holdings Ltd. 588,194 5,931
Rinker Group Ltd. 1,315,320 5,926
* WMC Resources Ltd. 1,571,559 5,709
Stockland 1,633,635 5,622
General Property Trust 2,723,605 5,392
Australian Gas Light Co., Ltd. 617,756 4,690
Brambles Industries Ltd. 1,337,233 4,431
Lend Lease Corp. 549,302 4,369
BHP Steel Ltd. 1,103,599 4,244
Tabcorp Holdings Ltd. 501,957 4,128
Newcrest Mining Ltd. 452,504 3,879
Orica Ltd. 384,557 3,605
Santos Ltd. 804,150 3,486
James Hardie Industries NV 635,463 3,233
Boral Ltd. 793,437 3,096
John Fairfax Holdings Ltd. 1,141,278 2,932
Mirvac Group 961,033 2,905
Mayne Group Ltd. 1,089,070 2,813
Origin Energy Ltd. 901,860 2,752
CSL Ltd. 223,209 2,692
Coca-Cola Amatil Ltd. 625,865 2,616
Investa Property Group 1,855,295 2,541
Patrick Corp. Ltd. 228,799 2,370
Centro Properties Group 834,565 2,244
Paperlinx Ltd. 565,681 2,035
Macquarie Goodman Industrial Trust 1,844,630 2,016
CSR Ltd. 1,296,930 1,951
Southcorp Ltd. 868,795 1,911
* Transurban Group 642,993 1,898
Harvey Norman Holdings Ltd. 737,240 1,758
Toll Holdings Ltd. 291,945 1,732
Cochlear Ltd. 73,034 1,632
Publishing & Broadcasting Ltd. 182,462 1,560
Australian Stock Exchange Ltd. 137,316 1,559
Lion Nathan Ltd. 395,954 1,551
CFS Gandel Retail Trust 1,684,405 1,542
Sonic Healthcare Ltd. 316,077 1,539
Leighton Holdings Ltd. 186,437 1,504
Computershare Ltd. 584,841 1,486
Tab Ltd. 585,792 1,476
Commonwealth Property Office Fund 1,751,420 1,442
Deutsche Office Trust 1,525,523 1,202
OneSteel Ltd. 741,599 1,168
* Australia and New Zealand
Banking Group Ltd. Rights (11/24/03) 377,248 1,154
Ansell Ltd. 227,251 1,116
Iluka Resources Ltd. 326,967 1,083
Futuris Corp., Ltd. 738,386 791
Aristocrat Leisure Ltd. 416,504 700
----------------
$ 473,653
---------------
HONG KONG (5.7%)
Hutchison Whampoa Ltd. 2,960,600 22,970
Cheung Kong Holdings Ltd. 2,093,100 17,452
Sun Hung Kai Properties Ltd. 1,831,800 15,509
Hang Seng Bank Ltd. 1,060,246 13,243
CLP Holdings Ltd. 2,512,899 11,358
Swire Pacific Ltd. A Shares 1,291,400 7,882
Hong Kong Electric Holdings Ltd. 1,934,400 7,548
Hong Kong & China Gas Co., Ltd. 5,104,651 7,066
Boc Hong Kong Holdings Ltd. 3,655,000 6,330
Bank of East Asia Ltd. 1,903,933 5,688
Wharf Holdings Ltd. 1,688,714 4,251
Li & Fung Ltd. 2,185,500 3,673
Henderson Land Development Co. Ltd. 839,000 3,522
* PCCW Ltd. 4,475,569 3,199
Hong Kong Exchanges & Clearing Ltd. 1,437,000 3,127
Johnson Electric Holdings Ltd. 2,036,100 2,648
Cathay Pacific Airways Ltd. 1,377,000 2,633
Esprit Holdings Ltd. 813,000 2,554
MTR Corp. 1,805,000 2,452
Hang Lung Properties Ltd. 1,620,500 2,118
37
- --------------------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Yue Yuen Industrial (Holdings) Ltd. 657,500 $ 1,863
Television Broadcasts Ltd. 388,000 1,839
Techtronic Industries Co., Ltd. 628,000 1,731
Hopewell Holdings Ltd. 822,000 1,365
Cheung Kong Infrastructure
Holdings Ltd. 621,000 1,347
* Shangri-La Asia Ltd. 1,338,744 1,284
New World Development Co., Ltd. 1,959,697 1,255
Hysan Development Co., Ltd. 855,211 1,239
Sino Land Co. 2,191,600 1,143
Giordano International Ltd. 1,951,108 879
ASM Pacific Technology Ltd. 230,000 860
SCMP Group Ltd. 1,262,546 618
SmarTone Telecommunications Ltd. 378,000 613
Texwinca Holdings Limited 700,000 500
* Hopewell Highway Infrastructure
Warrants Exp. 8/5/2006 71,100 15
----------------
$ 161,774
----------------
JAPAN (73.2%)
Toyota Motor Corp. 3,710,900 105,654
Canon, Inc. 1,147,000 55,506
NTT DoCoMo, Inc. 23,789 51,501
Honda Motor Co., Ltd. 1,068,300 42,174
Sony Corp. 1,205,338 41,992
Nomura Holdings Inc. 2,428,000 41,698
Takeda Chemical
Industries Ltd. 1,161,400 41,096
Mitsubishi Tokyo
Financial Group Inc. 5,542 39,828
Nissan Motor Co., Ltd. 3,393,400 38,029
Matsushita Electric
Industrial Co., Ltd. 2,858,945 37,682
Tokyo Electric Power Co. 1,577,400 33,647
Nippon Telegraph and
Telephone Corp. 7,176 32,050
Sumitomo Mitsui
Financial Group, Inc. 5,155 25,931
Millea Holdings, Inc. 2,038 24,285
Hitachi Ltd. 3,923,000 23,052
East Japan Railway Co. 4,669 21,150
* UFJ Holdings Inc. 4,827 20,637
Rohm Co., Ltd. 146,700 19,776
* Mizuho Financial Group, Inc. 7,942 19,433
Sharp Corp. 1,219,000 19,194
Fuji Photo Film Co., Ltd. 637,000 18,774
Shin-Etsu Chemical Co., Ltd. 493,000 18,341
Murata Manufacturing Co., Ltd. 318,800 18,124
Ito-Yokado Co., Ltd. 489,000 17,970
Seven Eleven Japan Co. Ltd. 561,000 17,758
Chubu Electric Power Co. 859,700 17,243
NEC Corp. 1,930,000 17,047
Ricoh Co. 868,000 16,462
JFE Holdings, Inc. 631,200 16,134
Kansai Electric Power Co., Inc. 921,700 15,930
Nippon Steel Corp. 7,455,000 15,326
Kao Corp. 743,000 15,274
Toshiba Corp. 3,754,000 15,059
Tokyo Electron Ltd. 205,230 14,711
Mitsubishi Corp. 1,391,000 14,437
Softbank Corp. 276,800 14,226
Mitsui Sumitomo Insurance Co. 1,725,530 14,220
* Fujitsu Ltd. 2,191,000 13,732
Hoya Corp. 151,700 13,730
Kyocera Corp. 223,600 13,465
Dai-Nippon Printing Co., Ltd. 835,000 12,897
Mitsubishi Estate Co., Ltd. 1,336,000 12,809
Denso Corp. 663,700 12,588
Daiwa Securities Group Inc. 1,643,000 12,016
Tokyo Gas Co., Ltd. 3,474,000 11,913
Mitsui & Co., Ltd. 1,620,000 11,789
Bridgestone Corp. 886,500 11,612
Nitto Denko Corp. 214,600 11,263
Mitsubishi Heavy Industries Ltd. 3,930,000 10,796
Central Japan Railway Co. 1,223 10,702
Secom Co., Ltd. 271,500 10,619
Yamanouchi Pharmaceuticals Co., Ltd. 420,700 10,562
Aeon Co., Ltd. 319,000 10,533
Nintendo Co. 136,000 10,503
Mitsubishi Electric Corp. 2,349,000 10,491
TDK Corp. 154,900 10,145
Fanuc Co., Ltd. 163,400 9,825
Keyence Corp. 43,480 9,563
Nikko Securities Co., Ltd. 1,760,000 9,494
Tohoku Electric Power Co. 583,800 9,463
Sanyo Electric Co., Ltd. 2,056,000 9,426
Orix Corp. 109,800 9,239
* Resona Holdings Inc. 6,237,000 9,134
Kyushu Electric Power Co., Inc. 551,800 9,115
Mitsui Fudosan Co., Ltd. 959,000 8,924
SMC Corp. 73,900 8,893
Nippon Oil Corp. 1,762,600 8,706
Sompo Japan Insurance Inc. 1,014,000 8,394
Asahi Glass Co., Ltd. 1,049,000 8,282
Asahi Kasei Corp. 1,678,000 7,998
Sankyo Co., Ltd. 494,600 7,918
Ajinomoto Co., Inc. 762,000 7,694
Osaka Gas Co., Ltd. 2,768,000 7,654
NTT Data Corp. 1,714 7,593
Kirin Brewery Co., Ltd. 945,000 7,556
38
- --------------------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Fujisawa Pharmaceutical Co., Ltd. 361,400 $ 7,462
Yamato Transport Co., Ltd. 545,000 7,243
Sumitomo Trust & Banking Co., Ltd. 1,296,000 7,238
Konica Minolta Holdings, Inc. 547,500 7,196
Eisai Co., Ltd. 304,300 7,141
Komatsu Ltd. 1,304,000 7,058
Sumitomo Electric Industries Ltd. 820,000 7,049
Toppan Printing Co., Ltd. 765,000 7,014
Shionogi & Co., Ltd. 409,000 6,864
Toray Industries, Inc. 1,628,000 6,768
Sekisui House Ltd. 679,000 6,664
Tokyu Corp. 1,329,000 6,588
Advantest Corp. 88,400 6,586
Sumitomo Corp. 944,000 6,552
Daiwa House Industry Co., Ltd. 605,000 6,527
Japan Tobacco, Inc. 957 6,390
Omron Corp. 290,000 6,357
Olympus Corp. 289,000 6,335
Itochu Corp. 1,839,000 6,206
Tostem Inax Holding Corp. 341,408 6,084
* Kinki Nippon Railway Co. 1,980,150 5,962
Sumitomo Chemical Co. 1,589,000 5,926
Mitsubishi Chemical Corp. 2,244,000 5,879
OJI Paper Co., Ltd. 1,092,000 5,811
Marui Co., Ltd. 454,000 5,765
Shizuoka Bank Ltd. 813,000 5,739
Nippon Unipac Holding 1,217 5,734
Bank of Yokohama Ltd. 1,325,000 5,725
West Japan Railway Co. 1,503 5,592
Daikin Industries Ltd. 254,000 5,418
Promise Co., Ltd. 119,800 5,383
* Nikon Corp. 354,000 5,374
Takefuji Corp. 90,390 5,353
Nippon Yusen Kabushiki Kaisha Co. 1,254,000 5,338
Chugai Pharmaceutical Co., Ltd. 374,400 5,333
Pioneer Corp. 209,300 5,217
JSR Corp. 246,000 5,214
Daiichi Pharmaceutical Co., Ltd. 335,300 5,124
Hirose Electric Co., Ltd. 40,700 5,002
Nippon Express Co., Ltd. 1,091,000 4,922
Kubota Corp. 1,353,000 4,874
Shiseido Co., Ltd. 464,000 4,871
Daido Life Insurance Co. 1,637 4,869
Sumitomo Metal Mining Co. 704,000 4,828
Nidec Corp. 47,400 4,592
Acom Co., Ltd. 99,330 4,445
Asahi Breweries Ltd. 528,000 4,409
Stanley Electric Co. 206,600 4,398
Mitsui Chemicals, Inc. 751,000 4,386
Fast Retailing Co., Ltd. 72,000 4,375
Terumo Corp. 230,100 4,374
Mitsui Osk Lines Ltd. 1,070,000 4,351
Yamaha Corp. 212,200 4,275
Sumitomo Realty & Development Co. 445,000 4,129
Matsushita Electric Works, Ltd. 549,000 4,125
Taisho Pharmaceutical Co. 233,000 4,021
Sumitomo Metal Industries Ltd. 4,253,000 3,946
Credit Saison Co., Ltd. 187,400 3,921
Kajima Corp. 1,046,000 3,920
Toyoda Automatic Loom Works Ltd. 210,600 3,889
* Mitsui Trust Holding Inc. 720,400 3,833
Kuraray Co., Ltd. 498,000 3,751
Oriental Land Co., Ltd. 68,000 3,736
Daito Trust Construction Co., Ltd. 120,700 3,733
Keio Electric Railway Co., Ltd. 703,000 3,715
Chiba Bank Ltd. 863,000 3,713
Taisei Corp. 1,060,000 3,683
Aiful Corp. 57,950 3,664
Ohbayashi Corp. 793,000 3,614
Alps Electric Co., Ltd. 210,000 3,521
* Trend Micro Inc. 127,000 3,500
Konami Corp. 114,700 3,495
Toto Ltd. 408,000 3,396
Yokogawa Electric Corp. 290,000 3,390
CSK Corp. 89,400 3,383
Tobu Railway Co., Ltd. 965,000 3,379
ToneGeneral Sekiyu K.K 401,000 3,276
Yamada Denki Co., Ltd. 102,200 3,254
Teijin Ltd. 1,086,000 3,220
Mabuchi Motor Co. 42,000 3,202
* Oki Electric Industry Co. Ltd. 711,000 3,150
Marubeni Corp. 1,725,000 3,107
JAFCO CO., Ltd. 36,200 3,095
Lawson Inc. 80,800 3,087
Bank of Fukuoka, Ltd. 729,000 3,044
Keihin Electric Express
Railway Co., Ltd. 519,000 3,036
Mitsui Mining & Smelting Co., Ltd. 745,000 2,982
Joyo Bank Ltd. 925,000 2,962
NTN Corp. 568,000 2,961
Citizen Watch Co., Ltd. 360,000 2,950
Furukawa Electric Co. 767,000 2,902
Seiko Epson Corp. 79,400 2,860
Shimizu Corp. 700,000 2,706
Fujikura Ltd. 449,000 2,700
Sekisui Chemical Co. 546,000 2,687
Kaneka Corp. 340,000 2,650
39
- --------------------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
THK Co., Inc. 129,600 $ 2,629
Takashimaya Co. 360,000 2,626
Uni-Charm Corp. 56,200 2,623
Kyowa Hakko Kogyo Co. 444,000 2,617
Nissin Food Products Co., Ltd. 113,500 2,607
Taiheiyo Cement Corp. 1,046,000 2,588
Kawasaki Kisen Kaisha Ltd. 645,000 2,587
* Showa Denko K.K 1,330,000 2,577
Ushio Inc. 150,000 2,558
Oracle Corp. Japan 43,100 2,529
Nippon Mining Holdings Inc. 690,000 2,523
Japan Airlines System Co. 870,000 2,501
NGK Insulators Ltd. 362,000 2,473
Minebea Co., Ltd. 434,000 2,471
Mitsubishi Rayon Co., Ltd. 663,000 2,461
Isetan Co. 228,200 2,362
NSK Ltd. 569,000 2,345
77 Bank Ltd. 437,000 2,290
Casio Computer Co. 257,000 2,289
JGC Corp. 266,000 2,287
Yakult Honsha Co., Ltd. 145,000 2,255
Hitachi Chemical Co., Ltd. 139,200 2,249
Toyo Seikan Kaisha Ltd. 192,000 2,244
Sankyo Co., Ltd. 66,700 2,227
Toho Co., Ltd. 178,700 2,201
Nippon Meat Packers, Inc. 216,000 2,155
Ube Industries Ltd. 998,000 2,142
Kawasaki Heavy Industries Ltd. 1,681,000 2,125
Uny Co., Ltd. 204,000 2,123
Benesse Corp. 85,800 2,107
Gunma Bank Ltd. 477,000 2,048
Taiyo Yuden Co., Ltd. 141,000 2,039
Dowa Mining Co. Ltd. 374,000 2,021
Toyoda Gosei Co., Ltd. 66,700 1,972
* Mitsubishi Materials Corp. 1,223,000 1,969
Onward Kashiyama Co., Ltd. 175,000 1,964
Shimano, Inc. 102,600 1,960
Ishikawajima-Harima
Heavy Industries Co. 1,425,000 1,944
Shimamura Co., Ltd. 27,400 1,904
FamilyMart Co., Ltd. 86,100 1,872
USS Co., Ltd. 26,010 1,848
Nisshin Seifun Group Inc. 223,000 1,828
* Mitsukoshi, Ltd. 491,000 1,827
Kamigumi Co., Ltd. 280,000 1,824
NGK Spark Plug Co. 216,000 1,812
Nomura Research Institute, Ltd. 17,900 1,799
Skylark Co., Ltd. 109,100 1,797
Nissan Chemical Industries, Ltd. 203,000 1,769
Amada Co., Ltd. 409,000 1,767
Hino Motors, Ltd. 309,000 1,765
Obic Co., Ltd. 8,000 1,761
Yamaha Motor Co., Ltd. 155,000 1,758
Daimaru, Inc. 297,000 1,751
Fuji Electric Holdings Co., Ltd. 708,000 1,745
Takara Holdings Inc. 222,000 1,745
* All Nippon Airways Co., Ltd. 670,000 1,725
Tosoh Corp. 615,000 1,717
Dai-Nippon Ink & Chemicals, Inc. 861,000 1,715
Office Building Fund of Japan Inc. 277 1,706
* Sega Corp. 153,100 1,695
Denki Kagaku Kogyo K.K 557,000 1,692
Dentsu Inc. 373 1,679
* Hokugin Financial Group, Inc. 1,061,000 1,670
The Suruga Bank, Ltd. 266,000 1,667
TIS Inc. 47,200 1,662
Net One Systems Co., Ltd. 221 1,656
Kurita Water Industries Ltd. 136,400 1,655
Susuken Co., Ltd. 52,600 1,627
Central Glass Co., Ltd. 250,000 1,590
Meitec Corp. 44,100 1,577
* Sumitomo Heavy Industries Ltd. 702,000 1,552
Makita Corp. 155,000 1,537
Nichii Gakkan Co. 28,140 1,531
Fuji Television Network, Inc. 285 1,517
Toyobo Ltd. 749,000 1,513
Meiji Seika Kaisha Ltd. 391,000 1,508
Ito En, Ltd. 36,800 1,490
Daicel Chemical Industries Ltd. 346,000 1,467
Aeon Credit Service Co. Ltd. 31,530 1,460
World Co., Ltd. 53,100 1,439
Showa Shell Sekiyu K.K 178,000 1,430
Mitsui Engineering &
Shipbuilding Co., Ltd. 899,000 1,382
Itochu Techno-Science Corp. 41,000 1,376
Nippon Sheet Glass Co., Ltd. 444,000 1,365
Nishimatsu Construction Co. 323,000 1,349
Ebara Corp. 336,000 1,348
Aoyama Trading Co., Ltd. 72,000 1,336
Namco Ltd. 48,000 1,323
Mitsubishi Gas Chemical Co. 463,000 1,310
Koyo Seiko Co., Ltd. 128,000 1,304
Sumitomo Bakelite Co. Ltd. 212,000 1,302
Kikkoman Corp. 197,000 1,283
Shimachu Co. 65,200 1,275
Nippon Shokubai Co., Ltd. 182,000 1,275
Japan Real Estate Investment Corp. 216 1,263
Bandai Co., Ltd. 47,300 1,256
Gunze Ltd. 274,000 1,244
* Dai-Nippon Screen
Manufacturing Co., Ltd. 173,000 1,235
40
- --------------------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Teikoku Oil Co., Ltd. 266,000 $ 1,224
Hankyu Department Stores, Inc. 165,000 1,208
* Bandai Co., Ltd. 45,100 1,198
Yamazaki Baking Co., Ltd. 161,000 1,192
Q.P. Corp. 146,600 1,187
Mitsubishi Logistics Corp. 135,000 1,175
Toyo Suisan Kaisha, Ltd. 110,000 1,162
Seino Transportation Co., Ltd. 160,000 1,128
Nichirei Corp. 334,000 1,109
Matsumotokiyoshi Co., Ltd. 21,600 1,087
Hitachi Software
Engineering Co., Ltd. 34,400 1,070
Meiji Dairies Corp. 283,000 1,061
Nippon Sanso Corp. 255,000 1,055
Tokyo Style Co. 105,000 1,044
Coca-Cola West Japan Co. Ltd. 55,600 1,029
Wacoal Corp. 122,000 1,009
Asatsu-DK Inc. 42,000 1,003
Okumura Corp. 242,000 988
Kokuyo Co., Ltd. 93,500 972
* Ashikaga Financial Group, Inc. 958,000 959
Sapparo Holdings Ltd. 342,000 933
* Comsys Holdings Corp. 147,000 919
Nippon Kayaku Co., Ltd. 181,000 917
House Foods Industry Corp. 84,100 910
Katokichi Co., Ltd. 56,300 899
Hitachi Cable Ltd. 225,000 894
Bellsystem24, Inc. 3,930 894
Mitsumi Electric Co., Ltd. 84,500 885
Sumitomo Osaka Cement Co., Ltd. 476,000 879
Nisshinbo Industries, Inc. 176,000 879
Komori Corp. 71,000 877
Aderans Co. Ltd. 47,600 866
Kinden Corp. 182,000 793
* Anritsu Corp. 121,000 790
Capcom Co., Ltd. 59,800 771
* Ishihara Sangyo Kaisha Ltd. 375,000 771
Autobacs Seven Co., Ltd. 35,300 771
Sanden Corp. 139,000 746
Tokyo Broadcasting System, Inc. 45,700 732
Toda Corp. 261,000 729
Ariake Japan Co., Ltd. 22,940 695
* Kanebo Ltd. 530,000 559
* Snow Brand Milk Products Co. 171,000 526
Kaken Pharmaceutical Co. 103,000 519
Amano Corp. 75,000 515
Takuma Co., Ltd. 86,000 443
Saizeriya Co., Ltd. 37,750 382
----------------
$ 2,072,172
----------------
NEW ZEALAND (0.7%)
Telecom Corp. of New Zealand Ltd. 2,642,264 7,858
Fletcher Building Ltd. 591,079 1,594
Sky City Entertainment Group Ltd. 283,222 1,558
Auckland International Airport Ltd. 342,192 1,390
Carter Holt Harvey Ltd. 1,230,218 1,383
Contact Energy Ltd. 395,789 1,228
Fisher & Paykel Healthcare Corp. Ltd. 97,642 726
Fisher & Paykel
Appliances Holdings Ltd. 75,237 681
Independent Newspapers Ltd. 226,097 660
The Warehouse Group Ltd. 181,541 636
* Tower Ltd. 501,995 395
* Sky Network Television, Ltd. 123,773 393
* Fletcher Challenge
Forests Ltd. Pfd. 468,619 377
NGC Holdings, Ltd. 295,686 320
* Fletcher Challenge Forests Ltd. 232,470 187
----------------
$ 19,386
----------------
SINGAPORE (2.8%)
United Overseas Bank Ltd. 1,638,567 12,800
DBS Group Holdings Ltd. 1,534,161 12,602
Oversea-Chinese
Banking Corp., Ltd. 1,344,510 9,345
Singapore
Telecommunications Ltd. 8,650,612 8,547
Singapore Press Holdings Ltd. 507,455 5,742
Singapore Airlines Ltd. 770,962 5,358
Venture Corp. Ltd. 289,000 3,137
Keppel Corp., Ltd. 742,750 2,538
City Developments Ltd. 613,412 2,132
Singapore Technologies
Engineering Ltd. 1,785,407 1,979
Fraser & Neave Ltd. 242,900 1,716
* Neptune Orient Lines Ltd. 1,151,000 1,468
* Chartered Semiconductor
Manufacturing Ltd. 1,448,000 1,422
Capitaland Ltd. 1,433,300 1,342
ComfortDelgro Corp Ltd. 2,414,000 1,075
SembCorp Industries Ltd. 1,230,419 933
Singapore Exchange Ltd. 941,000 897
Creative Technology Ltd. 70,900 737
Singapore Post Ltd. 1,860,000 716
United Overseas Land Ltd. 459,500 507
Cycle & Carriage Ltd. 146,128 504
Keppel Land Ltd. 460,000 449
* ST Assembly Test Services Ltd. 341,000 447
Parkway Holdings Ltd. 735,640 420
41
- --------------------------------------------------------------------------------
MARKET
VALUE*
PACIFIC STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Haw Par Brothers
International Ltd. 166,193 $ 418
Allgreen Properties Ltd. 647,000 409
* Datacraft Asia Ltd. 322,000 403
SembCorp Logistics Ltd. 412,000 398
SembCorp Marine Ltd. 674,000 387
Overseas Union Enterprise Ltd. 92,000 370
Singapore Land Ltd. 161,000 357
SMRT Corp. Ltd. 705,000 249
Wing Tai Holdings Ltd. 436,000 192
----------------
$ 79,996
----------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $2,970,457) $ 2,806,981
- --------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (8.2%)(1)
- --------------------------------------------------------------------------------
Federal National Mortgage Assn.
(2) 1.05%, 1/20/2004 $ 1,500 1,497
Repurchase Agreements
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
1.07%, 11/3/2003 36,813 36,813
1.06%, 11/3/2003--Note F 194,058 194,058
- --------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $232,367) $ 232,368
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (107.3%)
(Cost $3,202,824) $ 3,039,349
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-7.3%)
- --------------------------------------------------------------------------------
Other Assets--Note B 16,856
Security Lending Collateral Payable
to Brokers--Note F (194,058)
Other Liabilities (30,741)
----------------
$ (207,943)
----------------
- --------------------------------------------------------------------------------
NET ASSETS (100%) $ 2,831,406
- --------------------------------------------------------------------------------
*See Note A in Notes to Financial Statements.
*Non-income-producing security.
(1) The fund invests a portion of its cash reserves in equity markets through
the use of index futures contracts. After giving effect to futures
investments, the fund's effective common stock and temporary cash
investment positions represent 100.2% and 7.1%, respectively, of net
assets. See Note D in Notes to Financial Statements.
(2) Security segregated as initial margin for open futures contracts.
- --------------------------------------------------------------------------------
AMOUNT
(000)
- --------------------------------------------------------------------------------
AT OCTOBER 31, 2003, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
Paid-in Capital $ 3,147,469
Undistributed Net Investment Income 25,809
Accumulated Net Realized Losses (180,487)
Unrealized Appreciation (Depreciation)
Investment Securities (163,475)
Futures Contracts 154
Foreign Currencies and Forward Currency Contracts 1,936
- --------------------------------------------------------------------------------
NET ASSETS $ 2,831,406
- --------------------------------------------------------------------------------
Investor Shares--Net Assets
Applicable to 290,375,406 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 2,264,675
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--INVESTOR SHARES $ 7.80
================================================================================
Admiral Shares--Net Assets
Applicable to 3,871,634 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 197,654
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE-- ADMIRAL SHARES $ 51.05
================================================================================
Institutional Shares--Net Assets
Applicable to 47,248,541 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 369,077
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE-- INSTITUTIONAL SHARES $ 7.81
================================================================================
See Note D in Notes to Financial Statements for the tax-basis components of net
assets.
42
- --------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS (98.0%)(1)
- --------------------------------------------------------------------------------
ARGENTINA (0.5%)
* Petrobas Energia
Participaciones SA 2,113,660 $ 1,961
* Telecom Argentina
STET-France Telecom SA 1,050,885 1,625
Tenaris SA 555,355 1,523
Siderar SA Class A 229,907 815
* BBVA Banco Frances SA 247,270 557
Tenaris SA ADR 19,234 523
* Transportadora de Gas Sur SA 776,755 507
* Molinos Rio de la Plata SA 269,496 464
* Irsa Inversiones y
Representaciones SA 349,972 365
* Petrobras Energia
Participaciones SA ADR 31,000 285
Solvay Indupa S.A.I.C 267,938 219
* Cresud SA 143,263 183
----------------
$ 9,027
----------------
BRAZIL (9.2%)
Petroleo Brasileiro SA Pfd. 1,018,189 22,362
Petroleo Brasileiro SA 738,462 17,300
Companhia Vale do Rio
Doce Pfd. Class A 358,715 14,356
Companhia de Bebidas das
Americas Pfd. 58,117,380 12,420
Cia Vale do Rio Doce (CVRD) 253,900 11,507
Banco Itau Holding
Financeira SA Pfd. 123,189,694 10,092
Tele Norte Leste
Participacoes SA Pfd. 630,255,575 8,962
Banco Bradesco SA Pfd. 1,849,181,415 7,807
Empresa Brasileira
de Aeronautica SA Pfd. 789,491 5,119
Unibanco-Uniao de Bancos
Brasileiros SA 106,789,068 4,747
Brasil Telecom
Participacoes SA Pfd. 579,676,850 4,234
Companhia Siderurgica
Nacional SA 92,577,681 3,808
Centrais Electricas
Brasileiras SA 293,825,668 3,672
Companhia Energetica
de Minas Gerais Pfd. 237,175,223 3,512
Aracruz Celulose SA Pfd.
B Shares 1,111,523 3,100
Gerdau SA Pfd. 174,816 2,544
* Telesp Celular
Participacoes SA Pfd. 1,075,449,892 2,418
Centrais Electricas Brasileiras
SA Pfd. B Shares 174,807,776 2,294
Usiminas-Usinas Siderugicas de
Minas Gerais SA Pfd. Class A 268,181 2,145
Tele Centro Oeste Celular
Participacoes SA Pfd. 622,792,937 1,791
Souza Cruz SA 196,593 1,778
* Embratel Participacoes
SA Pfd. 535,105,718 1,750
Companhia Brasileira de Distribuicao Grupo
Pao de Acucar Pfd. 77,472,719 1,564
Tele Norte Leste
Participacoes SA 129,589,785 1,461
Votorantim Celulose e
Papel SA Pfd. 26,702,876 1,452
* Companhia Paranaense
de Energia-COPEL 262,465,532 974
Companhia de Saneamento Basico do
Estado de Sao Paulo 21,666,800 968
Sadia SA Pfd. 865,938 912
Brasil Telecom Participacoes SA 155,900,538 910
Telemig Celular Participacoes SA Pfd. 558,948,347 898
Companhia Siderurgica de Tubarao 35,375,900 845
Tele Nordeste Celular
Participacoes SA Pfd. 537,924,342 692
Tele Celular Sul
Participacoes SA Pfd. 565,249,700 666
Companhia de Tecidos
Norte de Minas Pfd. 7,376,668 501
Duratex SA Pfd. 14,022,556 352
----------------
$ 159,913
----------------
CHILE (2.4%)
Empresas Copec SA 1,177,300 8,274
Compania de Telecomunicaciones
de Chile SA 1,355,400 5,218
Empresas CMPC SA 258,852 4,333
* Enersis SA 28,543,741 3,853
* Empresa Nacional de Electricidad SA 8,477,800 3,277
Banco Santander Chile SA 123,087,100 2,851
S.A.C.I. Falabella, SA 1,031,200 1,845
Empresa Nacional
de Telecomunicaciones SA 248,300 1,606
Sociedad Quimica y
Minera de Chile SA 317,200 1,317
Colburn SA 9,890,400 1,303
Vina Concha y Toro SA 1,318,244 1,274
Distribucion y Servicio D&S SA 884,400 1,130
43
- --------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Banco de Chile 18,882,600 $ 860
Cristalerias de Chile 73,600 788
Embotelladora Andina SA Pfd.
Class B 430,410 743
Compania Cervecerias
Unidas SA 165,830 707
Embotelladora Andina SA 390,900 674
Compania Acero del
Pacifico SA (CAP) 217,500 476
Parque Arauco SA 836,300 399
Masisa SA 1,194,100 376
Empresas Iansa SA 3,881,340 149
Enersis SA ADR 17,500 121
----------------
$ 41,574
----------------
CHINA (8.3%)
China Mobile (Hong Kong) Ltd. 12,731,000 36,149
PetroChina Co. Ltd. 36,399,400 13,241
China Petroleum &
Chemical Corp. 26,045,700 8,636
CNOOC Ltd. 4,260,800 8,038
China Telecom Corp. Ltd. 20,779,000 6,890
CITIC Pacific Ltd. 2,828,000 6,591
Huaneng Power
International, Inc. H Share 3,880,000 6,046
Denway Motors Ltd. 5,300,000 4,368
Legend Group Ltd. 8,684,000 4,193
Cosco Pacific Ltd. 2,773,000 3,767
China Merchants Holdings
International Co. Ltd. 2,672,000 3,613
China Resources Enterprise Ltd. 2,434,659 2,869
Aluminum Corp. of China Ltd. 5,004,000 2,577
Brilliance China
Automotive Holdings Ltd. 5,716,000 2,392
Zhejiang
Expressway Co., Ltd. 3,672,000 2,305
China Shipping
Development Co. 3,370,000 2,213
Shanghai Industrial Holding Ltd. 980,000 1,956
Yanzhou Coal Mining Co. Ltd.
H Share 2,636,000 1,935
Sinotrans Ltd. 3,734,000 1,851
Sinopec Shanghai
Petrochemical Co. Ltd. 5,998,000 1,699
Beijing Datang Power
Generation Co. Ltd. 2,580,000 1,653
Jiangsu Expressway Co. Ltd.
H Share 2,800,000 1,406
Guangdong Electric Power
Development Co., Ltd. 1,744,100 1,224
Huadian Power
International Corp. Ltd. 3,758,000 1,222
* China Southern Airlines
Company Ltd. 2,984,000 1,182
TCL International Holdings Ltd. 3,072,000 1,157
Zhejiang Southeast
Electric Power Co., Ltd. 1,573,200 1,117
Tsingtao Brewery Co., Ltd. 790,000 1,027
The Guangshen
Railway Co., Ltd. 3,672,000 1,017
China Everbright Ltd. 1,832,000 1,009
Beijing Capital International
Airport Co., Ltd. 2,646,000 980
China Travel International 4,880,000 974
China Overseas Land &
Investment Ltd. 6,398,000 972
COFCO International Ltd. 1,420,000 878
Beijing Enterprises Holdings Ltd. 658,000 775
Sinopec Yizheng
Chemical Fibre Co., Ltd. 3,678,000 772
TravelSky Technology Ltd. 798,000 750
* China Eastern
Airlines Corp. Ltd. 3,878,000 669
Jiangxi Copper Co. Ltd. 1,757,000 628
China Pharmaceutical
Group Ltd. 1,676,000 572
Qingling Motors Co. Ltd.
H Share 2,700,000 497
Shenzhen Investment Ltd. 2,703,000 386
Digital China Holdings Ltd. 958,100 330
China Resources Land 1,952,000 266
* Eastern Communications
Co. Ltd. 340,000 164
----------------
$ 142,956
----------------
CZECH REPUBLIC (0.6%)
Komercni Banka a.s 39,108 3,492
Ceske Energeticke Zavody a.s 536,415 2,748
Cesky Telecom a.s 209,783 2,112
Philip Morris CR a.s 2,602 1,352
* Unipetrol a.s 198,102 452
----------------
$ 10,156
----------------
HUNGARY (1.2%)
* OTP Bank Rt 614,290 7,526
MOL Magyar Olaj-es Gazipari Rt 153,654 4,775
Magyar Tavkozlesi Rt 1,215,475 4,375
Richter Gedeon Rt 36,039 3,706
* Raba Rt 22,975 93
----------------
$ 20,475
----------------
INDIA (5.8%)
Reliance Industries Ltd. 1,444,690 15,502
Infosys Technologies Ltd. 102,595 10,734
Hindustan Lever Ltd. 1,991,280 7,672
ICICI Bank Ltd. 1,110,740 6,081
44
- --------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Housing Development
Finance Corp. Ltd. 467,980 $ 5,369
Ranbaxy Laboratories Ltd. 182,180 3,952
Satyam Computer Services Ltd. 579,280 3,913
ITC Ltd. 180,110 3,452
Dr. Reddy's Laboratories Ltd. 118,150 3,116
State Bank of India 242,582 2,592
HDFC Bank Ltd. 366,570 2,559
Hindalco Industries Ltd. 95,100 2,305
Wipro Ltd. 77,480 2,297
Larsen & Toubro Ltd. 246,200 2,210
Tata Motors Ltd. 250,530 2,070
Tata Iron and Steel Company Ltd. 227,960 1,803
Grasim Industries Ltd. 89,170 1,689
Hero Honda Motors Ltd. 204,850 1,598
Gail India Ltd. 434,300 1,560
Hindustan Petroleum
Corporation Ltd. 211,100 1,533
Bajaj Auto Ltd. 75,420 1,523
Bharat Heavy Electricals Ltd. 129,060 1,371
* Maruti Udyog Ltd. 183,500 1,309
Zee Telefilms Ltd. 418,850 1,264
Bharat Petroleum Corp. Ltd. 156,580 1,186
Mahanagar Telephone Nigam Ltd. 490,950 1,174
Cipla Ltd. 37,250 1,067
Gujarat Ambuja Cements Ltd. 146,970 819
Mahindra & Mahindra Ltd. 104,970 792
Nestle India Ltd. 59,580 744
Sun Pharmaceutical
Industries Ltd. 58,930 697
Bank of Baroda 156,950 662
Tata Power Company Ltd. 124,340 647
Associated Cement
Companies Ltd. 100,900 477
GlaxoSmithKline
Pharmaceuticals (India) Ltd. 44,300 467
Asian Paints (India) Ltd. 72,775 439
Videsh Sanchar Nigam Ltd. 154,300 414
Indian Hotels Company Ltd. 45,270 352
Tata Tea Ltd. 55,000 320
ABB (India) Ltd. 27,270 316
Castrol (India) Ltd. 72,980 305
Colgate-Palmolive (India) Ltd. 88,800 269
Digital Globalsoft Ltd. 20,880 254
Punjab Tractors Ltd. 46,420 200
Britannia Industries Limited 14,900 187
GlaxoSmithKline Consumer
Healthcare Ltd. 26,735 172
GTL Ltd. 121,047 148
----------------
$ 99,582
----------------
INDONESIA (1.6%)
PT Telekomunikasi
Indonesia Tbk 13,088,584 9,243
PT Hanjaya Mandala
Sampoerna Tbk 7,493,000 3,836
* PT Astra International Tbk 5,766,400 2,952
* PT Central Bank Asia Tbk 5,489,180 2,277
PT Gudang Garam Tbk 1,255,500 1,943
PT Indonesian
Satellite Corp. Tbk 1,216,000 1,710
* PT Bank Mandiri 10,555,800 1,180
PT Indofood Sukses
Makmur Tbk 11,300,252 931
PT Ramayana Lestari
Sentosa Tbk 1,260,760 697
PT Bank Indonesia Tbk 16,592,740 547
PT Kalbe Farma Tbk 5,412,348 510
PT Bimantara Citra Tbk 1,036,752 378
PT Semen Gresik Tbk 369,232 365
PT Tempo Scan Pacific Tbk 436,456 303
PT Aneka Tambang Tbk 1,800,315 244
PT Astra Agro Lestari Tbk 1,194,680 243
PT Matahari Putra Prima Tbk 2,933,816 173
* PT Bhakti Investama Tbk 3,199,500 121
----------------
$ 27,653
----------------
ISRAEL (3.9%)
Teva Pharmaceutical
Industries Ltd. 592,990 34,249
* Check Point Software
Technologies Ltd. 478,090 8,123
* Bank Hapoalim Ltd. 1,933,563 4,075
* Bank Leumi Le-Israel 1,477,209 2,315
Bezeq Israeli Telecommunication
Corp., Ltd. 1,863,390 1,960
* Orbotech Ltd. 81,075 1,926
Israel Chemicals Ltd. 1,236,667 1,621
Makhteshim-Agan
Industries Ltd. 438,646 1,346
* M-Systems Flash Disk
Pioneers Ltd. 61,625 1,220
IDB Development Corp. Ltd. 58,852 1,185
Elbit Systems Ltd. 52,604 948
Discount Investment Corp. Ltd. 36,333 809
* United Mizrahi Bank Ltd. 260,596 792
* NICE Systems Ltd. 34,300 757
Migdal Insurance Holdings Ltd. 533,428 700
* ECI Telecom Ltd. 141,465 700
* Israel Discount Bank Ltd. 879,436 691
* Koor Industries Ltd. 25,156 663
* Audiocodes Ltd. 75,000 643
* Clal Industries Ltd. 157,466 603
45
- --------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
CLAL Insurance Enterprise
Holdings Ltd. 32,897 $ 556
Super Sol Ltd. 244,687 542
Elite Industries Ltd. -ILS 5 Par 10,966 402
The Israel Corp. Ltd.-ILS 1 Par 3,351 361
* Matav-Cable Systems Media Ltd. 29,475 212
Blue Square-Israel Ltd. 24,020 207
----------------
$ 67,606
----------------
MEXICO (7.6%)
Telefonos de Mexico SA
Series L 13,592,259 21,906
America Movil SA de CV
Series L 14,210,498 16,891
Cemex SA CPO 2,845,132 13,656
Grupo Televisa SA CPO 5,577,122 10,713
Wal-Mart de Mexico SA 3,530,942 9,846
Telefonos de Mexico SA
Series A 5,555,377 8,964
* Grupo Financiero BBVA
Bancomer, SA de CV Class B 8,806,156 7,474
America Movil SA de CV
Series A 5,555,377 6,603
Fomento Economico
Mexicano UBD 1,653,954 5,875
Wal-Mart de Mexico SA de CV 1,356,390 3,531
Grupo Modelo SA 1,345,381 3,381
Kimberly Clark de Mexico
SA de CV Series A 1,301,132 3,152
Grupo Carso SA de CV Series A1 662,396 2,245
Alfa SA de CV Series A 610,631 1,736
TV Azteca SA CPO 3,101,600 1,570
Grupo Financerio Banorte
SA de CV 446,700 1,454
* Grupo Mexico SA de CV 809,019 1,419
* Coca-Cola Femsa SA de CV 703,822 1,412
Tenaris SA 450,275 1,251
Grupo Elektra SA 241,888 1,203
* Corporacion Interamericana
de Entretenimiento SA de CV 628,093 1,093
Grupo Aeroportuario
del Sureste SA de CV 564,100 987
Grupo Bimbo SA 603,809 919
* Consorcio ARA SA de CV 334,100 910
Industrias Penoles SA Series CP 249,739 705
Controladora Comercial
Mexicana SA de CV (Units) 826,271 688
Grupo Continental SA 384,722 530
Vitro SA 388,060 289
----------------
$ 130,403
----------------
PERU (0.6%)
Compania de Minas
Buenaventura S.A.u 218,264 5,166
Credicorp Ltd. 133,334 1,413
Southern Peru Copper Corp. 35,550 995
Minsur SA 509,515 700
Edegel SA 1,677,026 580
Union de Cervecerias Backus
y Johnston SAA 1,365,932 362
Luz del Sur SAA 276,723 319
Compania de Minas
Buenaventura SAA ADR 6,200 295
----------------
$ 9,830
----------------
PHILIPPINES (0.6%)
* Philippine Long Distance
Telephone Co. 110,196 1,524
Bank of Philippine Islands 1,696,300 1,395
Ayala Land, Inc. 10,851,071 1,275
Globe Telecom, Inc. 79,400 1,134
SM Prime Holdings, Inc. 7,983,120 1,039
San Miguel Corp. Class B 777,313 878
Ayala Corp. 8,853,300 816
* Metropolitan Bank & Trust Co. 1,261,985 627
* ABS-CBN Broadcasting Corp. 722,200 372
* Equitable PCI Bank, Inc. 545,400 365
* Manila Electric Co. 808,693 300
Jollibee Foods Corp. 705,800 223
* Filinvest Land, Inc. 8,028,518 165
Petron Corp. 4,364,146 163
* Megaworld Corp. 7,030,000 147
----------------
$ 10,423
----------------
POLAND (1.4%)
Telekomunikacja Polska SA 1,447,008 5,068
Bank Polska Kasa Opieki
Grupa Pekao SA 170,297 4,864
Polski Koncern Naftowy SA 760,534 4,855
Bank Przemyslowo Handlowy
PBK SA 22,383 1,940
* KGHM Polska Miedz SA 286,119 1,841
* Prokom Software SA 21,178 984
Bank Zachodni WBK SA 47,000 946
* Agora SA 62,016 764
* Bank Rozwoju Eksportu SA 28,779 670
Frantschach Swiecei SA 31,834 620
Grupa Kety SA 20,700 612
Orbis SA 63,650 436
* Computerland SA 13,954 269
* Budimex SA 26,700 237
* Softbank SA 28,490 212
Przedsiebiorstwo
Farmaceutyczne JELFA SA 10,791 141
----------------
$ 24,459
----------------
SOUTH AFRICA (15.6%)
Anglo American PLC 3,615,869 73,602
Sasol Ltd. 1,469,673 19,184
46
- --------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Old Mutual PLC 8,924,052 $ 15,272
Impala Platinum Holdings Ltd. 163,629 15,034
Gold Fields Ltd. 972,204 13,890
Standard Bank Group Ltd. 2,583,674 12,519
Anglogold Ltd. 288,564 11,158
* MTN Group Ltd. 2,778,978 9,955
Firstrand Ltd. 7,761,224 9,174
Harmony Gold Mining Co., Ltd. 567,100 8,718
Sanlam Ltd. 6,862,090 8,459
Anglo American Platinum Corp. 194,674 8,329
Sappi Ltd. 556,275 7,038
Bidvest Group Ltd. 772,908 4,708
Tiger Brands Ltd. 433,390 4,607
Barloworld Ltd. 526,615 4,567
Imperial Holdings Ltd. 421,494 3,698
* Telkom South Africa Ltd. 435,700 3,381
Nedcor Ltd. 353,847 3,233
Naspers Ltd. 653,860 3,082
Nampak Ltd. 1,496,433 2,817
Liberty Group Ltd. 354,906 2,733
Anglovaal Industries Ltd. 881,900 2,213
Woolworths Holdings Ltd. 2,305,146 2,140
* Network Healthcare
Holdings Ltd. 2,953,100 1,884
* Dimension Data Holdings PLC 3,261,805 1,807
Iscor Ltd. 512,765 1,710
JD Group Ltd. 324,172 1,538
Truworths International Ltd. 1,243,297 1,524
African Bank Investments Ltd. 1,237,707 1,481
Foschini Ltd. 562,010 1,439
Investec Ltd. 85,654 1,338
* Metro Cash & Carry Ltd. 4,187,315 1,306
New Africa Capital Ltd. 1,330,825 1,293
Alexander Forbes Ltd. 761,500 1,194
Pick'n Pay Stores Ltd. 552,082 1,193
Shoprite Holdings Ltd. 1,003,057 1,093
Tongaat-Hulett Group Ltd. 133,645 640
----------------
$ 268,951
----------------
SOUTH KOREA (19.7%)
Samsung Electronics Co., Ltd. 298,330 118,475
Kookmin Bank 720,509 26,300
Posco 120,800 14,086
SK Telecom Co., Ltd. 74,940 13,234
Hyundai Motor Co. Ltd. 363,510 12,117
KT Corp. 300,320 11,952
Korea Electric Power Corp. 608,290 11,744
Samsung Electronics Co., Ltd. Pfd. 53,020 10,528
Samsung SDI Co. Ltd. 88,320 9,104
Shinhan Financial Group Ltd. 450,890 6,477
Posco ADR 207,000 5,999
LG Electronics Inc. 115,631 5,989
Hyundai Mobis 142,600 5,506
Samsung Fire & Marine
Insurance Co. 88,460 5,053
Shinsegae Co. Ltd. 24,814 4,980
Samsung Electro-Mechanics Co. 142,400 4,825
LG Chem Ltd. 106,932 4,292
KT & G Corp. 214,510 4,133
* Daewoo Shipbuilding &
Marine Engineering Co., Ltd. 228,950 3,076
* Hyundai Heavy
Industries Co., Inc. 107,530 3,053
Kangwon Land Inc. 238,230 3,009
* Samsung
Electronics Co., Ltd. GDR 14,000 2,780
Kia Motors 395,140 2,771
Samsung Securities Co. Ltd. 127,470 2,725
Samsung Corp. 355,480 2,625
S-Oil Corp. 107,430 2,501
Hana Bank 141,358 2,460
CJ Corp. 40,170 2,006
LG Investment &
Securities Co. Ltd. 219,150 1,935
Samsung Heavy
Industries Co. Ltd. 414,810 1,921
Daelim Industrial Co. 66,210 1,690
Hankook Tire Co. Ltd. 228,760 1,579
Hite Brewery Co., Ltd. 20,290 1,543
Amorepacific Corporation 10,970 1,506
* NCsoft Corp. 27,895 1,485
LG Petrochemical Co., Ltd. 63,290 1,444
Daishin Securities Co. 98,750 1,423
LG Engineering &
Construction Co., Ltd. 83,440 1,336
Honam Petrochemical Corp. 33,280 1,333
* Hyundai Securities Co. 237,310 1,331
* Korea Exchange Bank 320,730 1,321
Hanjin Shipping Co., Ltd. 92,020 1,298
Cheil Industrial, Inc. 105,370 1,238
Korean Air Co. Ltd. 90,298 1,205
* Daum Communications Corp. 24,858 1,162
Nong Shim Co. Ltd. 7,634 1,116
Kumkang Korea Chemical Co., Ltd. 12,330 1,041
S1 Corp. 48,770 1,022
Cheil Communications Inc. 8,160 1,000
LG Card Co., Ltd. 89,320 909
Hyundai Department Store Co., Ltd. 34,308 868
* Daewoo Securities Co., Ltd. 227,030 859
Yuhan Corp. 14,454 794
Dae Duck Electronics Co. 83,173 766
LG Cable Ltd. 50,070 668
47
- --------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Humax Co., Ltd. 59,696 $ 641
* Shinhan Good Morning
Securities Co., Ltd. 153,438 635
LG Household & Health Care Ltd. 24,932 566
Hyosung Corp. 56,623 521
Samsung Fine Chemicals Co., Ltd. 41,030 520
Poongsan Corp. 50,700 433
* Donqwon Financial Holding Co. Ltd. 84,503 366
----------------
$ 339,275
----------------
TAIWAN (14.6%)
Taiwan Semiconductor
Manufacturing Co., Ltd. 20,977,944 41,369
United Microelectronics Corp. 20,867,794 19,102
Hon Hai Precision
Industry Co., Ltd. 2,605,660 11,657
Nan Ya Plastic Corp. 6,804,199 9,072
MediaTek Incorporation 746,050 7,686
Formosa Plastic Corp. 4,968,816 7,605
China Steel Corp. 8,544,070 6,891
Chinatrust Financial Holding 6,571,332 6,828
Cathay Financial Holding Co. 4,046,980 6,671
Formosa Chemicals &
Fibre Corp. 4,095,624 6,510
Mega Financial
Holding Co. Ltd. 10,400,224 6,428
Fubon Financial
Holding Co., Ltd. 5,352,100 5,640
AU Optronics Corp. 4,128,500 5,565
China Development
Financial Holding Corp. 11,349,684 4,894
Asustek Computer Inc. 1,972,175 4,702
Quanta Computer Inc. 1,613,580 4,393
Chunghwa Telecom Co., Ltd. 2,742,000 4,318
Acer Inc. 2,873,304 4,229
Advanced Semiconductor
Engineering Inc. 3,667,530 3,400
* First Financial Holding Co., Ltd. 5,008,000 3,361
Compal Electronics Inc. 2,150,710 3,260
* Hau Nan Financial
Holdings Co., Ltd. 3,670,532 2,809
Taiwan Cellular Corp. 3,026,360 2,717
Taishin Financial Holdings 3,723,000 2,641
* Winbond Electronics Corp. 5,146,000 2,575
BENQ Corp. 1,890,968 2,421
Lite-On Technology Corp. 2,201,909 2,385
SinoPac Holdings 4,322,491 2,341
* Chang Hwa Commercial Bank 4,625,880 2,315
* CMC Magnetics Corp. 2,824,700 2,128
* Chunghwa Picture Tubes, Ltd. 4,533,000 2,055
Pou Chen Corp. 1,725,542 1,981
Uni-President Enterprises Co. 4,404,590 1,815
Delta Electronics Inc. 1,355,177 1,731
Via Technologies Inc. 1,156,047 1,718
China Motor Co., Ltd. 879,826 1,670
Inventec Co., Ltd. 2,388,830 1,575
* Ritek Corp. 2,237,500 1,574
Yulon Motor Co., Ltd. 1,190,040 1,573
Far Eastern Textile Ltd. 2,818,627 1,560
* Yageo Corp. 3,208,520 1,530
* Siliconware Precision
Industries Co. 1,530,300 1,464
Yang Ming Marine Transport 1,441,000 1,442
Realtek Semiconductor Corp. 717,680 1,426
* Tatung Co., Ltd. 5,369,000 1,375
International Bank of Taipei 2,455,651 1,308
* Walsin Lihwa Corp. 4,519,000 1,257
President Chain Store Corp. 785,562 1,214
Largan Precision Co., Ltd. 112,400 1,201
Micro-Star International Co., Ltd. 676,541 1,175
Synnex Technology
International Corp. 772,880 1,137
Gigabyte Technology Co., Ltd. 586,400 1,131
Cheng Shin Rubber
Industry Co., Ltd. 739,771 1,034
Taiwan Cement Corp. 1,990,701 1,002
Evergreen Marine Corp. 1,088,344 955
Taiwan Glass Industrial Corp. 1,304,990 949
* Macronix International Co., Ltd. 3,470,700 935
Premier Image
Technology Corp. 544,500 897
Asia Cement Corp. 1,593,000 825
Teco Electric &
Machinery Co., Ltd 2,315,000 807
Zyxel Communications Corp. 366,000 803
Oriental Union Chemical Corp. 605,920 785
Wan Hai Lines Ltd. 777,684 760
Kinpo Electronics, Inc. 1,264,616 703
Phoenixtec Power Co., Ltd. 564,430 673
* Compeq Manufacturing Co., Ltd. 1,146,750 648
D-Link Corp. 611,800 646
Ambit Microsystems Corp. 234,873 643
Taiwan Styrene Monomer Corp. 742,800 643
Nien Hsing Textile Co. Ltd. 606,000 622
Formosa Taffeta Co., Ltd. 1,492,529 615
Systex Corp. 1,127,620 597
EVA Airways Corp. 1,308,099 554
* Prodisc Technology Inc. 577,730 536
Advantech Co., Ltd. 352,199 529
* Sampo Corp. 1,175,000 526
Accton Technology Corp. 842,116 523
48
- --------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
Elitegroup Computer
Systerm Co., Ltd. 531,900 $ 523
Cathay Construction Corp. 1,305,779 507
* Arima Computer Corp. 1,379,100 485
Nien Made Enterprise Co., Ltd. 270,000 425
China Airlines 924,269 414
Giant Manufacturing Co., Ltd. 314,270 407
Taiwan Secom Corp., Ltd. 430,248 404
Shihlin Electric &
Engineering Corp. 578,000 335
Eternal Chemical Co., Ltd. 636,100 333
Continental Engineering Corp. 786,256 316
* Wus Printed Circuit Co., Ltd. 574,000 291
BES Engineering Corp. 1,997,468 289
* Picvue Electronics, Ltd. 920,150 253
* Chang Hwa Commercial Bank
Rights Exp. 11/17/2003 1,041,214 92
----------------
$ 252,109
----------------
THAILAND (2.8%)
PTT Public Co., Ltd. (Foreign) 2,159,400 5,142
Siam Cement PLC (Foreign) 779,740 4,417
* Bangkok Bank PLC (Foreign) 1,846,934 4,329
Advanced Information
Services Co. Ltd. (Foreign) 2,288,940 3,557
* Kasikornbank Public Co. Ltd.
(Foreign) 2,932,900 3,271
PTT Exploration &
Production PLC (Foreign) 674,836 3,180
Siam Cement PLC (Local) 406,590 2,059
Land and Houses
Public Co. Ltd. 5,158,600 1,746
* Bangkok Bank PLC (Local) 766,200 1,652
Krung Thai Bank Co. Ltd. 7,084,500 1,580
Shin Corp. Public Co. Ltd. 2,597,500 1,511
* Siam Commercial Bank
PLC (Foreign) 1,381,691 1,429
BEC World Public Co. Ltd.
(Foreign) 234,923 1,425
* Sahaviriya Steel Industries
(Foreign) 1,102,100 1,070
National Finance &
Securities PLC (Foreign) 2,194,730 902
* TISCO Finance Public Co.
Ltd. (Foreign) 1,029,200 858
Siam City Cement PLC
(Foreign) 158,506 834
* Kasikornbank Public Co., Ltd. 695,500 737
* Siam Commercial Bank Cvt. Pfd. 688,944 721
Hana Microelectronics
Public Co. Ltd. (Foreign) 283,000 709
Charoen Pokphand Foods
Public Co., Ltd. (Foreign) 5,913,612 706
Ratchaburi Electricity
Generating Holding
Public Co. Ltd. (Foreign) 755,800 663
Banpu PLC (Foreign) 286,700 640
Delta Electronics (Thailand)
Public Co. Ltd. (Foreign) 882,450 625
Land and Houses
Public Co. Ltd. 1,886,700 572
Thai Union Frozen Products
Public Co., Ltd. (Foreign) 628,700 500
Bangkok Expressway
PLC (Foreign) 865,000 478
Electricity Generating
Public Co. Ltd. 280,500 436
National Petrochemical
PLC (Foreign) 196,416 426
Electricity Generating
PLC (Foreign) 259,048 412
Kiatnakin Finance
Public Co. Ltd. (Foreign) 397,700 404
* TelecomAsia PLC (Foreign) 2,631,488 366
GMM Grammy Public Co.
Ltd. (Foreign) 584,600 311
* Industrial Finance Corp. of
Thailand PLC (Foreign) 1,821,208 265
Siam Makro Public Co. (Foreign) 223,900 212
* United Broadcasting Corp.
PLC (Foreign) 394,096 184
Thai Union Frozen Products
Public Co. 160,700 116
Land and Houses Public Co.
Ltd. NVDR 199,000 60
Delta Electronics (Thailand)
Public Co. Ltd. (Local) 69,600 49
PTT Public Co., Ltd. 20,500 49
* TelecomAsia Corp. Public Co.
Ltd. (Foreign) Warrants Exp. 4/3/2010 1,020,789 --
----------------
$ 48,603
----------------
TURKEY (1.7%)
Akbank TAS 922,091,859 4,321
* Turkiye Is Bankasi
A.S. C Shares 623,480,540 3,153
Haci Omer Sabanci
Holding A.S 508,282,615 2,159
Tupras-Turkiye Petrol
Rafinerileri A.S 223,691,216 1,825
Anadolu Efes Biracilik ve
Malt Sanayii A.S 144,020,236 1,767
49
- --------------------------------------------------------------------------------
MARKET
EMERGING MARKETS VALUE*
STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
* Turkiye Garanti
Bankasi A.S. 735,896,171 $ 1,724
KOC Holding A.S 124,002,600 1,706
* Turkcell Iletisim
Hizmetleri A.S 180,943,700 1,379
* Yapi ve Kredi Bankasi A.S 865,701,698 1,214
* Eregli Demir ve Celik
Fabrikalari A.S 56,277,071 1,186
Arcelik A.S 204,363,780 985
Migros Turk A.S 70,083,854 964
* Ford Otomotiv Sanayi A.S 157,971,340 884
* Vestel Elektronik Sanayi ve
Ticaret A.S 208,323,007 650
* Hurriyet Azteccilik ve
Matbaacillik A.S 221,192,141 585
* Dogan Yayin Holding A.S 193,629,654 539
* Tofas Turk Otomobil
Fabrikasi A.S 294,626,556 469
* Turk Sise ve Cam
Fabrikalari A.S 261,400,789 404
Trakya Cam Sanayii A.S 132,287,873 386
Aksigorta A.S 84,569,207 334
* Tansas Perakende
Magazacilik Ticaret A.S 290,381,796 280
* Aygaz A.S 117,109,659 268
Aksa Akrilik Kimya
Sanayii A.S 26,929,372 225
Alarko Holdings A.S 11,207,152 206
Akcansa Cimento A.S 56,903,490 200
Cimsa Cemento Sanayi ve
Ticaret A.S 60,092,560 183
Ak Enerji Elektrik Uretimi
Otoproduktor Gruba A.S 38,960,785 162
Nortel Networks 6,657,324 149
* Is Gayrimenkul Yatirim
Ortakligi A.S 195,843,575 145
Adana Cimento
Sanayii T.A.S 29,564,486 91
----------------
$ 28,543
----------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $1,534,920) $ 1,691,538
- --------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (1.7%)(1)
- --------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSN.
(2) 1.08%, 2/18/2004 4,000 3,988
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
1.07%, 11/3/2003 25,272 25,272
- --------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $29,259) $ 29,260
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.7%)
(Cost $1,564,179) $ 1,720,798
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (0.3%)
- --------------------------------------------------------------------------------
Other Assets--Note B $ 12,554
Liabilities (7,724)
----------------
$ 4,830
----------------
- --------------------------------------------------------------------------------
NET ASSETS (100%) $ 1,725,628
================================================================================
*See Note A in Notes to Financial Statements.
(1) The fund invests a portion of its cash reserves in equity markets through
the use of equity swap contracts. Investments in swap contracts increased
the fund's equity investments in South Korea and Taiwan to 20.3% and 15.6%,
respectively. After giving effect to swap investments, the fund's effective
common stock and temporary cash investment positions represent 99.6% and
0.1%, respectively, of net assets. See Note D in Notes to Financial
Statements.
(2) Security segregated as initial margin for open swap contracts.
*Non-income-producing security.
ADR-American Depositary Receipt.
GDR-Global Depository Receipt.
ILS-Israeli Shekel.
50
- --------------------------------------------------------------------------------
AMOUNT
(000)
- --------------------------------------------------------------------------------
AT OCTOBER 31, 2003, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
Paid-in Capital $ 1,716,169
Undistributed Net Investment Income 24,346
Accumulated Net Realized Losses (177,644)
Unrealized Appreciation
Investment Securities 156,619
Foreign Currencies 7
Swap Contracts 6,131
- --------------------------------------------------------------------------------
NET ASSETS $ 1,725,628
================================================================================
Investor Shares--Net Assets
Applicable to 143,953,212 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 1,588,988
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE-- INVESTOR SHARES $ 11.04
================================================================================
Institutional Shares--Net Assets
Applicable to 12,361,744 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 136,640
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE-- INSTITUTIONAL SHARES $ 11.05
================================================================================
See Note D in Notes to Financial Statements for the tax-basis components of net
assets.
51
- --------------------------------------------------------------------------------
MARKET
VALUE*
TOTAL INTERNATIONAL STOCK INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES (100.0%)
- --------------------------------------------------------------------------------
Vanguard European Stock Index Fund
Investor Shares 141,427,487 $ 2,818,650
Vanguard Pacific Stock Index Fund
Investor Shares 160,617,870 1,252,819
Vanguard Emerging Markets Stock Index Fund
Investor Shares 42,205,344 465,947
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.0%) (Cost $4,741,685) 4,537,416
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
Other Assets $ 9,368
Liabilities (8,307)
----------------
$ 1,061
----------------
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 461,062,541 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 4,538,477
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $ 9.84
- --------------------------------------------------------------------------------
*See Note A in Notes to Financial Statements.
- --------------------------------------------------------------------------------
AT OCTOBER 31, 2003, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------
Paid-in Capital $4,793,476 $ 10.39
Undistributed Net Investment Income 524 --
Accumulated Net Realized Losses (51,254) 0.11
Unrealized Depreciation (204,269) (0.44)
- --------------------------------------------------------------------------------
NET ASSETS $4,538,477 $ 9.84
================================================================================
See Note D in Notes to Financial Statements for the tax-basis components of net
assets.
52
- --------------------------------------------------------------------------------
MARKET
VALUE*
DEVELOPED MARKETS INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES (99.9%)
- --------------------------------------------------------------------------------
Vanguard European Stock Index Fund
Investor Shares 20,725,347 $ 413,056
Vanguard Pacific Stock Index Fund
Investor Shares 23,530,870 183,541
- --------------------------------------------------------------------------------
TOTAL INVESTMENT COMPANIES (Cost $573,557) $ 596,597
- --------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT (1.8%)
- --------------------------------------------------------------------------------
Repurchase Agreement
Collateralized by U.S. Government Obligations
in a Pooled Cash Account 1.07%, 11/3/2003
(Cost $10,701) $10,701 10,701
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (101.7%) (Cost $584,258) $ 607,298
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-1.7%)
- --------------------------------------------------------------------------------
Other Assets 3,983
Liabilities (14,353)
----------------
$ (10,370)
----------------
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 82,652,544 outstanding $.001 par value
shares of beneficial interest
(unlimited authorization) $ 596,928
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $ 7.22
================================================================================
*See Note A in Notes to Financial Statements.
- --------------------------------------------------------------------------------
AT OCTOBER 31, 2003, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------
Paid-in Capital $573,805 $6.94
Undistributed Net Investment Income 83 --
Accumulated Net Realized Gains -- --
Unrealized Appreciation 23,040 .28
- --------------------------------------------------------------------------------
NET ASSETS $596,928 $ 7.22
================================================================================
See Note D in Notes to Financial Statements for the tax-basis components of net
assets.
53
- --------------------------------------------------------------------------------
MARKET
VALUE*
INSTITUTIONAL DEVELOPED MARKETS INDEX FUND SHARES (000)
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES (100.1%)
- --------------------------------------------------------------------------------
Vanguard European Stock Index Fund
Institutional Shares 19,674,050 $ 392,694
Vanguard Pacific Stock Index Fund
Institutional Shares 22,333,098 174,421
- --------------------------------------------------------------------------------
TOTAL INVESTMENT COMPANIES (Cost $549,397) 567,115
- --------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT
- --------------------------------------------------------------------------------
Repurchase Agreement
Collateralized by U.S. Government Obligations
in a Pooled Cash Account 1.07%, 11/3/2003
(Cost $41) $41 $ 41
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.1%) (Cost $549,438) 567,156
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.1%)
- --------------------------------------------------------------------------------
Other Assets 28
Liabilities (418)
----------------
$ (390)
----------------
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 79,113,558 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $ 566,766
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $ 7.16
- --------------------------------------------------------------------------------
*See Note A in Notes to Financial Statements.
- --------------------------------------------------------------------------------
AT OCTOBER 31, 2003, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------
Paid-in Capital $559,073 $ 7.07
Undistributed Net Investment Income 60 --
Accumulated Net Realized Losses (10,085) (.13)
Unrealized Appreciation 17,718 .22
- --------------------------------------------------------------------------------
NET ASSETS $566,766 $ 7.16
================================================================================
See Note D in Notes to Financial Statements for the tax-basis components of net
assets.
54
STATEMENT OF OPERATIONS
This Statement shows the types of income earned by each fund during the
reporting period, and details the operating expenses charged to each class of
its shares. These expenses directly reduce the amount of investment income
available to pay to shareholders as income dividends. The Total International
Stock, Developed Markets, and Institutional Developed Markets Index Funds'
Income Distributions Received from the other funds' net income have been reduced
by their share of the other funds' expenses. This Statement also shows any Net
Gain (Loss) realized on the sale of investments, and the increase or decrease in
the Unrealized Appreciation (Depreciation) of investments during the period.
- --------------------------------------------------------------------------------
EMERGING
EUROPEAN STOCK PACIFIC STOCK MARKETS STOCK
INDEX FUND INDEX FUND INDEX FUND
------------------------------------------------
YEAR ENDED OCTOBER 31, 2003
------------------------------------------------
(000) (000) (000)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends* $ 155,409 $ 35,899 $ 29,935
Inerest 118 309 869
Security Lending 6,185 1,045 --
Swap Income -- -- 1,774
- --------------------------------------------------------------------------------
Total Income 161,712 37,253 32,578
- --------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 108 108 108
Management and Administrative--
Investor Shares 11,075 5,058 3,102
Management and Administrative--
Admiral Shares 606 305 --
Management and Administrative--
Institutional Shares 527 331 129
Marketing and Distribution--
Investor Shares 605 232 131
Marketing and Distribution--
Admiral Shares 35 12 --
Marketing and Distribution--
Institutional Shares 82 34 16
Custodian Fees 2,662 920 2,519
Auditing Fees 24 24 24
Shareholders' Reports and Proxies--
Investor Shares 79 191 33
Shareholders' Reports and Proxies--
Admiral Shares 2 2 --
Shareholders' Reports and Proxies--
Institutional Shares 1 -- --
Trustees' Fees and Expenses 7 3 1
- --------------------------------------------------------------------------------
Total Expenses 15,813 7,220 6,063
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 145,899 30,033 26,515
- --------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold (49,781) (11,951) (3,725)
Futures Contracts 1,394 5,371 --
Foreign Currencies and Forward
Currency Contracts 5,366 702 (302)
Swap Contracts -- -- (7,217)
- --------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) (43,021) (5,878) (11,244)
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities 1,114,374 616,743 485,242
Futures Contracts 11 1,066 --
Foreign Currencies and Forward
Currency Contracts 187 2,262 148
Swap Contracts -- -- 12,605
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) 1,114,572 620,071 497,995
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,217,450 $644,226 $513,266
================================================================================
*Dividends are net of foreign withholding taxes of $11,569,000, $2,516,000, and
$3,183,000, respectively.
55
STATEMENT OF OPERATIONS (CONTINUED)
- --------------------------------------------------------------------------------
TOTAL INSTITUTIONAL
INTERNATIONAL DEVELOPED DEVELOPED
STOCK MARKETS MARKETS
INDEX FUND INDEX FUND INDEX FUND
------------------------------------------------
YEAR ENDED OCTOBER 31, 2003
------------------------------------------------
(000) (000) (000)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Income Distributions Received $ 59,766 $ 6,561 $ 8,152
Interest 31 6 11
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME--Note C 59,797 6,567 8,163
- --------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Capital Gain Distributions Received -- -- --
Investment Securities Sold -- -- (10,096)
- --------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) -- -- (10,096)
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENT
SECURITIES 894,167 112,094 120,043
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $953,964 $ 118,661 $118,110
================================================================================
56
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how each fund's total net assets changed during the two
most recent reporting periods. The Operations section summarizes information
detailed in the Statement of Operations. The amounts shown as Distributions to
shareholders from the fund's net income and capital gains may not match the
amounts shown in the Operations section, because distributions are determined on
a tax basis and may be made in a period different from the one in which the
income was earned or the gains were realized on the financial statements. The
Capital Share Transactions section shows the net amount shareholders invested in
or redeemed from the fund. Distributions and Capital Share Transactions are
shown separately for each class of shares.
- --------------------------------------------------------------------------------
EUROPEAN STOCK PACIFIC STOCK
INDEX FUND INDEX FUND
-----------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------
2003 2002 2003 2002
(000) (000) (000) (000)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 145,899 $ 110,556 $ 30,033 $ 17,523
Realized Net Gain (Loss) (43,021) (248,573) (5,878)( 68,609)
Change in Unrealized
Appreciation
(Depreciation) 1,114,572 (586,241) 620,071 (180,859)
- --------------------------------------------------------------------------------
Net Increase (Decrease) in
Net Assets Resulting from
Operations 1,217,450 (724,258) 644,226 (231,945)
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income
Investor Shares (95,319) (93,901) (15,919) (6,460)
Admiral Shares (8,302) (7,397) (1,318) (464)
Institutional Shares (10,645) (6,895) (2,312) (556)
Realized Capital Gain
Investor Shares -- -- -- --
Admiral Shares -- -- -- --
Institutional Shares -- -- -- --
- --------------------------------------------------------------------------------
Total Distributions (114,266) (108,193) (19,549) (7,480)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS--NOTE G
Investor Shares 553,578 414,037 363,714 201,347
Admiral Shares 34,274 141,385 50,971 37,503
Institutional Shares 227,705 119,523 172,230 61,788
- --------------------------------------------------------------------------------
Net Increase (Decrease) from
Capital Share Transactions 815,557 674,945 586,915 300,638
- --------------------------------------------------------------------------------
Total Increase (Decrease) 1,918,741 (157,506) 1,211,592 61,213
- --------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 4,515,869 4,673,375 1,619,814 1,558,601
- --------------------------------------------------------------------------------
End of Period $6,434,610 $4,515,869 $2,831,406 $1,619,814
================================================================================
57
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
EMERGING MARKETS
STOCK INDEX FUND
-----------------------------
YEAR ENDED OCTOBER 31,
- --------------------------------------------------------------------------------
2003 2002
(000) (000)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 26,515 $ 16,364
Realized Net Gain (Loss) (11,244) (66,301)
Change in Unrealized Appreciation (Depreciation) 497,995 76,421
- --------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 513,266 26,484
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income
Investor Shares (14,099) (18,741)
Institutional Shares (1,409) (2,055)
Realized Capital Gain
Investor Shares -- --
Institutional Shares -- --
- --------------------------------------------------------------------------------
Total Distributions (15,508) (20,796)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS--NOTE G
Investor Shares 290,807 66,374
Institutional Shares 19,521 10,755
- --------------------------------------------------------------------------------
Net Increase (Decrease) from Capital Share
Transactions 310,328 77,129
- --------------------------------------------------------------------------------
Total Increase (Decrease) 808,086 82,817
- --------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 917,542 834,725
- --------------------------------------------------------------------------------
End of Period $1,725,628 $ 917,542
================================================================================
- --------------------------------------------------------------------------------
TOTAL INTERNATIONAL
STOCK INDEX FUND
----------------------------------------
YEAR ENDED OCTOBER 31,
- --------------------------------------------------------------------------------
2003 2002
(000) (000)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 59,797 $ 50,696
Realized Net Gain (Loss) -- (43,870)
Change in Unrealized Appreciation (Depreciation) 894,167 (396,552)
- --------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 953,964 (389,726)
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income (59,624) (50,646)
Realized Capital Gain -- --
- --------------------------------------------------------------------------------
Total Distributions (59,624) (50,646)
- --------------------------------------------------------------------------------
Net Increase (Decrease) from Capital Share 760,538 592,307
Transactions--Note G
- --------------------------------------------------------------------------------
Total Increase (Decrease) 1,654,878 151,935
- --------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 2,883,599 2,731,664
- --------------------------------------------------------------------------------
End of Period $4,538,477 $2,883,599
================================================================================
58
- --------------------------------------------------------------------------------
INSTITUTIONAL
DEVELOPED MARKETS DEVELOPED MARKETS
INDEX FUND INDEX FUND
----------------------------------------
YEAR ENDED OCTOBER 31,
- --------------------------------------------------------------------------------
2003 2002 2003 2002
(000) (000) (000) (000)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 6,567 $ 3,033 $ 8,163 $ 4,413
Realized Net Gain (Loss) -- -- (10,096) --
Change in Unrealized Appreciation
(Depreciation) 112,094 (46,600) 120,043 (42,863)
- --------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 118,661 (43,567) 118,110 (38,450)
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income (6,494) (3,023) (8,134) (4,448)
Realized Capital Gain -- -- -- --
- --------------------------------------------------------------------------------
Total Distributions (6,494) (3,023) (8,134) (4,448)
- --------------------------------------------------------------------------------
Net Increase (Decrease) from
Capital Share Transactions--Note G 176,562 209,397 195,677 97,692
- --------------------------------------------------------------------------------
Total Increase (Decrease) 288,7281 162,807 305,653 54,794
- --------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 308,200 145,393 261,113 206,319
- --------------------------------------------------------------------------------
End of Period $596,928 $308,200 $566,766 $261,113
================================================================================
59
FINANCIAL HIGHLIGHTS
This table summarizes each fund's investment results and distributions to
shareholders on a per-share basis for each class of shares. The table also
presents the fund's Total Return and shows net investment income and expenses as
percentages of average net assets. The Total International Stock, Developed
Markets, and Institutional Developed Markets Index Funds' expense ratios are
zero because they pay no direct expenses; these funds' share of the expenses of
the other funds in which they invest reduces the income received from them.
These data will help you assess: the variability of the fund's net income and
total returns from year to year; the relative contributions of net income and
capital gains to the fund's total return; how much it costs to operate the fund;
and the extent to which the fund tends to distribute capital gains. The table
also shows the Portfolio Turnover Rate, a measure of trading activity. A
turnover rate of 100% means that the average security is held in the fund for
one year.
EUROPEAN STOCK INDEX FUND INVESTOR SHARES
- ---------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, JAN. 1 TO DECEMBER 31,
------------------- OCT. 31, ---------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001* 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $16.44 $19.50 $25.99 $28.82 $25.28 $20.13
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .44 .39 .37 .335 .50 .41
Net Realized and Unrealized Gain (Loss)
on Investments 3.45 (3.01) (6.85) (2.692) 3.69 5.40
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.89 (2.62) (6.48) (2.357) 4.19 5.81
- ---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.40) (.44) (.01) (.423) (.50) (.52)
Distributions from Realized Capital Gains -- -- -- (.050) (.15) (.14)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (.40) (.44) (.01) (.473) (.65) (.66)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $19.93 $16.44 $19.50 $25.99 $28.82 $25.28
=====================================================================================================================
TOTAL RETURN** 24.27% -13.81% -24.94% -8.18% 16.62% 28.86%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $5,339 $3,870 $4,165 $5,611 $6,106 $4,479
Ratio of Total Expenses to
Average Net Assets 0.32% 0.33% 0.30%+ 0.29% 0.29% 0.29%
Ratio of Net Investment Income to
Average Net Assets 2.76% 2.24% 2.08%+ 1.64% 1.99% 1.97%
Portfolio Turnover Rate 6% 15% 3% 8% 7% 7%
=====================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
**Total returns do not reflect the 0.5% transaction fee on purchases through
3/31/2000; the 2% fee assessed on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months; or the $10 annual account
maintenance fee applied on balances under $10,000.
+Annualized.
60
EUROPEAN STOCK INDEX FUND ADMIRAL SHARES
- --------------------------------------------------------------------------------
YEAR ENDED
OCTOBER 31, AUG. 13* TO
------------------- OCT. 31,
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001**
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $38.61 $45.77 $50.00
- --------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income 1.070 .96 .12
Net Realized and Unrealized Gain (Loss)
on Investments 8.115 (7.08) (4.35)
- --------------------------------------------------------------------------------
Total from Investment Operations 9.185 (6.12) (4.23)
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.975) (1.04) --
Distributions from Realized Capital Gains -- -- --
- --------------------------------------------------------------------------------
Total Distributions (.975) (1.04) --
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $46.82 $38.61 $45.77
================================================================================
TOTAL RETURN+ 24.42% -13.74% -8.46%
================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $447 $335 $261
Ratio of Total Expenses to
Average Net Assets 0.23% 0.23% 0.25%++
Ratio of Net Investment Income to
Average Net Assets 2.84% 2.41% 0.70%++
Portfolio Turnover Rate 6% 15% 3%
================================================================================
*Inception.
**The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
+Total returns do not reflect the 2% fee assessed on redemptions of shares
purchased on or after June 27, 2003, and held for less than two months.
++Annualized.
61
FINANCIAL HIGHLIGHTS (CONTINUED)
EUROPEAN STOCK INDEX FUND INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 15**
OCTOBER 31, JAN. 1 TO DECEMBER 31,
------------------- OCT. 31, -------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001* 2000
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $16.46 $19.52 $25.99 $27.22
- ------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .471 .414 .390 .172
Net Realized and Unrealized Gain (Loss)
on Investments 3.454 (3.015) (6.848) (.965)
- ------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.925 (2.601) (6.458) (.793)
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.425) (.459) (.012) (.437)
Distributions from Realized Capital Gains -- -- -- --
- ------------------------------------------------------------------------------------------------------
Total Distributions (.425) (.459) (.012) (.437)
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $19.96 $16.46 $19.52 $25.99
======================================================================================================
TOTAL RETURN+ 24.49% -13.71% -24.85% -2.89%
======================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $649 $311 $248 $284
Ratio of Total Expenses to Average Net Assets 0.17% 0.18% 0.20%++ 0.20%++
Ratio of Net Investment Income to
Average Net Assets 2.96% 2.46% 2.13%++ 1.19%++
Portfolio Turnover Rate 6% 15% 3% 8%
======================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
**Inception.
+Total returns do not reflect the 2% fee assessed on redemptions of shares
purchased on or after June 27, 2003, and held for less than two months.
++Annualized.
62
PACIFIC STOCK INDEX FUND INVESTOR SHARES
- ---------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, JAN. 1 TO DECEMBER 31,
------------------- OCT. 31, ---------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001* 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $5.90 $6.79 $8.95 $12.22 $ 7.84 $7.72
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .082 .065 .07 .077 .08 .085
Net Realized and Unrealized Gain (Loss)
on Investments 1.885 (.923) (2.23) (3.222) 4.39 .100
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.967 (.858) (2.16) (3.145) 4.47 .185
- ---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.067) (.032) -- (.125) (.09) (.065)
Distributions from Realized Capital Gains -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (.067) (.032) -- (.125) (.09) (.065)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 7.80 $ 5.90 $6.79 $ 8.95 $12.22 $7.84
=====================================================================================================================
TOTAL RETURN** 33.75% -12.67% -24.13% -25.74% 57.05% 2.41%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $2,265 $1,386 $1,389 $1,823 $2,526 $1,033
Ratio of Total Expenses to
Average Net Assets 0.39% 0.40% 0.37%+ 0.38% 0.37% 0.40%
Ratio of Net Investment Income to
Average Net Assets 1.49% 1.04% 1.06%+ 0.68% 0.95% 1.17%
Portfolio Turnover Rate 3% 20% 2% 6% 6% 4%
=====================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
**Total returns do not reflect the 0.5% transaction fee on purchases through
3/31/2000; the 2% fee assessed on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months; or the $10 annual account
maintenance fee applied on balances under $10,000.
+Annualized.
63
FINANCIAL HIGHLIGHTS (CONTINUED)
PACIFIC STOCK INDEX FUND ADMIRAL SHARES
- --------------------------------------------------------------------------------
YEAR ENDED
OCTOBER 31, AUG. 13* TO
------------------- OCT. 31,
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001**
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $38.63 $44.40 $50.00
- --------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .575 .461 .20
Net Realized and Unrealized Gain (Loss)
on Investments 12.318 (6.016) (5.80)
- --------------------------------------------------------------------------------
Total from Investment Operations 12.893 (5.555) (5.60)
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.473) (.215) --
Distributions from Realized Capital Gains -- -- --
- --------------------------------------------------------------------------------
Total Distributions (.473) (.215) --
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $51.05 $38.63 $44.40
================================================================================
TOTAL RETURN+ 33.82% -12.55% -11.20%
================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $198 $102 $80
Ratio of Total Expenses to
Average Net Assets 0.30% 0.30% 0.32%++
Ratio of Net Investment Income to
Average Net Assets 1.59% 1.16% 2.05%++
Portfolio Turnover Rate 3% 20% 2%
================================================================================
*Inception.
**The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
+Total returns do not reflect the 2% fee assessed on redemptions of shares
purchased on or after June 27, 2003, and held for less than two months.
++Annualized.
64
PACIFIC STOCK INDEX FUND INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 15**
OCTOBER 31, JAN. 1 TO DECEMBER 31,
------------------- OCT. 31, -------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001* 2000
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $5.91 $6.79 $8.95 $11.10
- ------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .090 .081 .08 .052
Net Realized and Unrealized Gain (Loss)
on Investments 1.885 (.923) (2.24) (2.071)
- ------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.975 (.842) (2.16) (2.019)
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.075) (.038) -- (.131)
Distributions from Realized Capital Gains -- -- -- --
- ------------------------------------------------------------------------------------------------------
Total Distributions (.075) (.038) -- (.131)
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $7.81 $5.91 $6.79 $ 8.95
======================================================================================================
TOTAL RETURN+ 33.88% -12.44% -24.13% -18.19%
======================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $369 $131 $90 $102
Ratio of Total Expenses to
Average Net Assets 0.22% 0.25% 0.29%++ 0.29%++
Ratio of Net Investment Income to
Average Net Assets 1.70% 1.20% 1.18%++ 0.79%++
Portfolio Turnover Rate 3% 20% 2% 6%
======================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
**Inception.
+Total returns do not reflect the 2% fee assessed on redemptions of shares
purchased on or after June 27, 2003, and held for less than two months.
++Annualized.
65
FINANCIAL HIGHLIGHTS (CONTINUED)
EMERGING MARKETS STOCK INDEX FUND INVESTOR SHARES
- ---------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, JAN. 1 TO DECEMBER 31,
------------------- OCT. 31, ---------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001* 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.48 $7.28 $8.84 $12.50 $ 7.91 $9.98
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .170 .15 .19 .141 .24 .27
Net Realized and Unrealized Gain (Loss)
on Investments 3.512 .25 (1.74) (3.583) 4.62 (2.08)
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.682 .40 (1.55) (3.442) 4.86 (1.81)
- ---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.122) (.20) (.01) (.218) (.27) (.26)
Distributions from Realized Capital Gains -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (.122) (.20) (.01) (.218) (.27) (.26)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.04 $7.48 $7.28 $ 8.84 $12.50 $7.91
=====================================================================================================================
TOTAL RETURN** 49.88% 5.27% -17.55% -27.56% 61.57% -18.12%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,589 $841 $770 $913 $1,138 $577
Ratio of Total Expenses to
Average Net Assets 0.53% 0.57% 0.60%+ 0.59% 0.58% 0.61%
Ratio of Net Investment Income to
Average Net Assets 2.26% 1.67% 2.69%+ 1.51% 2.55% 2.99%
Portfolio Turnover Rate 16% 65% 23% 40% 22% 22%
=====================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
**Total returns do not reflect the 0.5% transaction fee on purchases (1.0% prior
to 4/1/2000); the 2% fee assessed on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months; the 0.5% fee on all other
redemptions (1.0% prior to 4/1/2000); or the $10 annual account maintenance fee
applied on balances under $10,000.
+Annualized.
66
EMERGING MARKETS STOCK INDEX FUND INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 22**
OCTOBER 31, JAN. 1 TO DECEMBER 31,
------------------- OCT. 31, -------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001* 2000
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.49 $7.29 $8.84 $11.16
- ------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .183 .165 .200 .021
Net Realized and Unrealized Gain (Loss)
on Investments 3.512 .246 (1.739) (2.126)
- ------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.695 .411 (1.539) (2.105)
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.135) (.211) (.011) (.215)
Distributions from Realized Capital Gains -- -- -- --
- ------------------------------------------------------------------------------------------------------
Total Distributions (.135) (.211) (.011) (.215)
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.05 $7.49 $7.29 $ 8.84
======================================================================================================
TOTAL RETURN+ 50.06% 5.40% -17.42% -18.86%
======================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $137 $76 $65 $19
Ratio of Total Expenses to
Average Net Assets 0.38% 0.41% 0.45%++ 0.45%++
Ratio of Net Investment Income to
Average Net Assets 2.41% 1.85% 2.75%++ 1.34%++
Portfolio Turnover Rate 16% 65% 23% 40%
======================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
**Inception.
+Total returns do not reflect the 0.5% transaction fee on purchases; the 2% fee
assessed on redemptions of shares purchased on or after June 27, 2003, and held
for less than two months; or the 0.5% fee on all other redemptions.
++Annualized.
67
FINANCIAL HIGHLIGHTS (CONTINUED)
TOTAL INTERNATIONAL STOCK INDEX FUND
- ---------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, JAN. 1 TO DECEMBER 31,
------------------- OCT. 31, ---------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001* 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $7.79 $8.99 $11.83 $14.31 $11.19 $ 9.87
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .157 .165 -- .20 .21 .21
Capital Gain Distributions Received -- -- -- .01 .04 .02
Net Realized and Unrealized Gain (Loss)
on Investments 2.050 (1.200) (2.84) (2.44) 3.09 1.31
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 2.207 (1.035) (2.84) (2.23) 3.34 1.54
- ---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.157) (.165) -- (.20) (.21) (.21)
Distributions from Realized Capital Gains -- -- -- (.05) (.01) (.01)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (.157) (.165) -- (.25) (.22) (.22)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.84 $7.79 $ 8.99 $11.83 $14.31 $11.19
=====================================================================================================================
TOTAL RETURN** 28.94% -11.80% -24.01% -15.61% 29.92% 15.60%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $4,538 $2,884 $2,732 $2,920 $2,570 $1,375
Ratio of Total Expenses to
Average Net Assets--Note C 0%+ 0% 0% 0% 0% 0%
Ratio of Net Investment Income to
Average Net Assets 1.75% 1.70% 0.05%++ 1.68% 2.04% 2.18%
Portfolio Turnover Rate 2% 5% 2% 3% 1% 2%
=====================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
**Total returns do not reflect the 0.5% transaction fee on purchases through
3/31/2000; the 2% fee assessed on redemptions of shares purchased on or after
June 27, 2003, and held for less than two months; or the $10 annual account
maintenance fee applied on balances under $10,000.
+The average weighted expense ratio of the underlying funds was 0.36%.
++Annualized.
68
DEVELOPED MARKETS INDEX FUND
- ------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 8**
OCTOBER 31, JAN. 1 TO DECEMBER 31,
------------------- OCT. 31, -------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001* 2000
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $5.80 $6.83 $9.07 $10.00
- ------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .116 .12 -- .15
Capital Gain Distributions Received -- -- -- --
Net Realized and Unrealized Gain (Loss)
on Investments 1.420 (1.03) (2.24) (.93)
- ------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.536 (.91) (2.24) (.78)
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.116) (.12) -- (.15)
Distributions from Realized Capital Gains -- -- -- --
- ------------------------------------------------------------------------------------------------------
Total Distributions (.116) (.12) -- (.15)
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $7.22 $5.80 $6.83 $ 9.07
======================================================================================================
TOTAL RETURN+ 27.06% -13.61% -24.70% -7.78%
======================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $597 $308 $145 $99
Ratio of Total Expenses to
Average Net Assets--Note C 0%++ 0% 0% 0%
Ratio of Net Investment Income to
Average Net Assets 1.48% 1.30% 0.04%+ 1.66%+
Portfolio Turnover Rate 7% 5% 9% 8%
======================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
**Inception.
+Total returns do not reflect the 2% fee assessed on redemptions of shares
purchased on or after June 27, 2003, and held for less than two months, or the
$10 annual account maintenance fee applied on balances under $10,000.
++The average weighted expense ratio of the underlying funds was 0.34%.
+Annualized.
69
FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL DEVELOPED MARKETS INDEX FUND
- ------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 1**
OCTOBER 31, JAN. 1 TO DECEMBER 31,
------------------- OCT. 31, -------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001* 2000
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $5.76 $6.78 $9.01 $10.00
- ------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .126 .132 -- .15
Capital Gain Distributions Received -- -- -- --
Net Realized and Unrealized Gain (Loss)
on Investments 1.400 (1.020) (2.23) (.99)
- ------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.526 (.888) (2.23) (.84)
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.126) (.132) -- (.15)
Distributions from Realized Capital Gains -- -- -- --
- ------------------------------------------------------------------------------------------------------
Total Distributions (.126) (.132) -- (.15)
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $7.16 $5.76 $6.78 $ 9.01
======================================================================================================
TOTAL RETURN+ 27.13% -13.41% -24.75% -8.38%
======================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $567 $261 $206 $171
Ratio of Total Expenses to
Average Net Assets--Note C 0%++ 0% 0% 0%
Ratio of Net Investment Income to
Average Net Assets 1.80% 1.75% 0.05%+ 1.74%+
Portfolio Turnover Rate 11% 9% 3% 3%
======================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective
October 31, 2001.
**Inception.
+Total returns do not reflect the 2% fee assessed on redemptions of shares
purchased on or after June 27, 2003, and held for less than two months.
++The average weighted expense ratio of the underlying funds was 0.19%.
+Annualized.
SEE ACCOMPANYING NOTES, WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
70
NOTES TO FINANCIAL STATEMENTS
Vanguard International Stock Index Funds comprise the European, Pacific,
Emerging Markets, and Total International Stock Index Funds, the Developed
Markets Index Fund, and the Institutional Developed Markets Index Fund, each of
which is registered under the Investment Company Act of 1940 as an open-end
investment company, or mutual fund. The European, Pacific, and Emerging Markets
Stock Index Funds each seek to match the performance of a distinct international
market index by investing in common stocks. The Total International Stock Index
Fund seeks to match the performance of its target index by investing in the
European, Pacific, and Emerging Markets Stock Index Funds. The Developed Markets
and Institutional Developed Markets Index Funds seek to match the performance of
their target index by investing in the European and Pacific Stock Index Funds.
The funds' direct and indirect investments in foreign securities involve
investment risks not normally associated with investing in securities of U.S.
corporations.
The European and Pacific Stock Index Funds each offer three classes of
shares, Investor Shares, Admiral Shares, and Institutional Shares. The Emerging
Markets Stock Index 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. Admiral Shares are designed for
investors who meet certain administrative, servicing, tenure, and account-size
criteria. Institutional Shares are designed for investors who meet certain
administrative and servicing criteria and invest a minimum of $10 million. A.
The following significant accounting policies conform to generally accepted
accounting principles for U.S. mutual funds. The funds consistently follow such
policies in preparing their financial statements.
1. SECURITY VALUATION: European, Pacific, and Emerging Markets Stock Index
Funds: Securities are valued as of the close of trading on the New York Stock
Exchange (generally 4:00 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 materially affected by events
occurring before the funds' pricing time but after the close of the securities'
primary markets, are valued by methods deemed by the board of trustees to
represent fair value. Total International Stock, Developed Markets, and
Institutional Developed Markets Index Funds: Investments are valued at the net
asset value of each Vanguard fund determined as of the close of the New York
Stock Exchange on the valuation date. All funds: 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 at the
exchange rates on the valuation date as employed by Morgan Stanley Capital
International in the calculation of its indexes.
Realized gains (losses) and unrealized appreciation (depreciation) on
investment securities include the effects of changes in exchange rates since the
securities were purchased, combined with the effects of changes in security
prices. Fluctuations in the value of other assets and liabilities resulting from
changes in exchange rates are recorded as unrealized foreign currency gains
(losses) until the asset or liability is settled in cash, when they are recorded
as realized foreign currency gains (losses).
71
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. FUTURES AND FORWARD CURRENCY CONTRACTS: The European Stock Index Fund
uses MSCI Pan-Euro Index futures contracts, and the Pacific Stock Index Fund
uses Topix Index futures contracts, to a limited extent, with the objectives of
maintaining full exposure to the stock market, enhancing returns, maintaining
liquidity, and minimizing transaction costs. The funds may purchase futures
contracts to immediately invest incoming cash in the market, or sell futures in
response to cash outflows, thereby simulating a fully invested position in the
underlying index while maintaining a cash balance for liquidity. The funds may
seek to enhance returns by using futures contracts instead of the underlying
securities when futures are believed to be priced more attractively than the
underlying securities. The primary risks associated with the use of futures
contracts are imperfect correlation between changes in market values of stocks
held by the funds and the prices of futures contracts, and the possibility of an
illiquid market.
The European and Pacific Stock Index Funds also enter into forward currency
contracts to provide the appropriate currency exposure related to any open
futures contracts. The primary risk associated with the funds' use of these
contracts is that a counterparty will fail to fulfill its obligation to pay
gains due to the funds under the contracts.
Futures and forward currency contracts are valued at their quoted daily
settlement prices. The aggregate principal amounts of the contracts are not
recorded in the financial statements. Fluctuations in the value of the contracts
are recorded in the Statement of Net Assets as an asset (liability) and in the
Statement of Operations as unrealized appreciation (depreciation) until the
contracts are closed, when they are recorded as realized gains (losses) on
futures or forward currency contracts.
4. SWAP CONTRACTS: The Emerging Markets Stock Index Fund has entered into
equity swap contracts to earn the total return on selected stocks in the fund's
target index, when investing through a swap provides a return advantage over
buying the individual stocks. Under the terms of the swaps, the fund receives
the total return (either receiving the increase or paying the decrease) of the
referenced stock, applied to a notional amount that is the value of a designated
number of shares of the stock at the beginning of the swap. The fund agrees to
pay the counterparty a floating rate that is reset periodically based on
short-term interest rates, less a specified interest rate spread, applied to the
notional amount. At the same time, the fund invests an amount equal to the
notional amount of the swaps in high-quality temporary cash investments. The
primary risks associated with the swaps are that a counterparty will default on
its obligation to pay net amounts due to the fund, or that the fund will incur
fees in the event it terminates the swap prior to the scheduled termination
date.
The notional amounts of swap contracts are not recorded in the financial
statements. Swaps are valued daily and the change in value is recorded as
unrealized appreciation (depreciation) until termination of the swap, at which
time realized gain (loss) is recorded. Swap income is accrued daily in the
amount of net interest earned or payable and any payments in lieu of dividends
by the referenced stocks.
5. REPURCHASE AGREEMENTS: Each fund, along with other members of The
Vanguard Group, transfers uninvested cash balances to a pooled cash account,
which is invested in repurchase agreements secured by U.S. government
securities. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal; however, in the event of default or bankruptcy by the other party
to the agreement, retention of the collateral may be subject to legal
proceedings.
6. FEDERAL INCOME TAXES: Each fund intends to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for federal income taxes is required in the financial
statements.
7. DISTRIBUTIONS: Distributions to shareholders are recorded on the
ex-dividend date.
72
8. OTHER: Dividend income is recorded on the ex-dividend date. Security
transactions are accounted for on the date securities are bought or sold. Costs
used to determine realized gains (losses) on the sale of investment securities
are those of the specific securities sold. Fees assessed on capital share
transactions are credited to paid-in capital.
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), shareholder reporting, and proxies. 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 to the European, Pacific, and Emerging Markets
Stock Index Funds at cost investment advisory, corporate management,
administrative, marketing, and distribution services. The costs of such services
are allocated to the funds under methods approved by the board of trustees. Each
fund has committed to provide up to 0.40% of its net assets in capital
contributions to Vanguard. At October 31, 2003, the funds had contributed
capital to Vanguard (included in Other Assets) of:
- --------------------------------------------------------------------------------
CAPITAL CONTRIBUTION PERCENTAGE PERCENTAGE OF
TO VANGUARD OF FUND VANGUARD'S
INDEX FUND (000) NET ASSETS CAPITALIZATION
- --------------------------------------------------------------------------------
European $997 0.02% 1.00%
Pacific 433 0.02 0.43
Emerging Markets 254 0.02 0.25
- --------------------------------------------------------------------------------
The funds' trustees and officers are also directors and officers of Vanguard.
C. Under a special service agreement, The Vanguard Group furnishes corporate
management, administrative, marketing, and distribution services to the Total
International Stock, Developed Markets, and Institutional Developed Markets
Index Funds. The special service agreement provides that Vanguard will reimburse
the funds' expenses to the extent of savings in administrative and marketing
costs realized by Vanguard in the operation of the funds. Accordingly, all
expenses incurred by the funds during the year ended October 31, 2003, were
reimbursed by Vanguard.
D. Distributions are determined on a tax basis and may differ from net
investment income and realized capital gains for financial reporting purposes.
Differences may be permanent or temporary. Permanent differences are
reclassified among capital accounts in the financial statements to reflect their
tax character. Temporary differences arise when certain items of income,
expense, gain, or loss are recognized in different periods for financial
statement and tax purposes; these differences will reverse at some time in the
future. Differences in classification may also result from the treatment of
short-term gains as ordinary income for tax purposes.
During the year ended October 31, 2003, the European, Pacific, and Emerging
Markets Stock Index Funds realized net foreign currency gains (losses) of
$2,022,000, $288,000, and $(302,000), respectively, which permanently increased
(decreased) distributable net income for tax purposes; accordingly such gains
(losses) have been reclassified from accumulated net realized losses to
undistributed net investment income. The Pacific Stock Index Fund also realized
gains on sales of "passive foreign investment companies" of $459,000, 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. The Emerging Markets Stock Index Fund
realized gains (losses) include gains on termination of certain swaps of
$966,000 and taxes paid on realized capital gains on Indian securities of
$(140,000) which are treated as increases (decreases) to taxable income;
accordingly
73
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
these amounts have been reclassified from accumulated net realized gains to
undistributed net investment income.
At October 31, 2003, the funds had the following tax-basis amounts available for
distribution, and capital losses available to offset future net capital gains:
- --------------------------------------------------------------------------------
AMOUNT AVAILABLE
FOR DISTRIBUTION CAPITAL LOSS
---------------------------------------------------------
ORDINARY LONG-TERM EXPIRATION: FISCAL
INCOME CAPITAL GAIN AMOUNT YEARS ENDING
INDEX FUND (000) (000) (000) OCTOBER 31
- --------------------------------------------------------------------------------
European $144,656 -- $374,339 2008-2011
Pacific 34,931 -- 178,735 2006-2011
Emerging Markets 26,089 -- 177,644 2006-2011
Total International 397 -- 51,127 2009-2010
Developed Markets 83 -- -- --
Institutional
Developed Markets 71 -- 10,096 2011
- --------------------------------------------------------------------------------
At October 31, 2003, net unrealized appreciation (depreciation) of investment
securities for tax purposes was:
- --------------------------------------------------------------------------------
(000)
------------------------------------------------
NET UNREALIZED
APPRECIATED DEPRECIATED APPRECIATION
INDEX FUND SECURITIES SECURITIES (DEPRECIATION)
- --------------------------------------------------------------------------------
European $1,169,545 $(629,263) $ 540,282
Pacific 295,491 (465,290) (169,799)
Emerging Markets 336,615 (180,079) 156,536
Total International 64,247 (268,516) (204,269)
Developed Markets 23,040 -- 23,040
Institutional Developed Markets 17,718 -- 17,718
- --------------------------------------------------------------------------------
At October 31, 2003, the aggregate settlement value of open futures contracts
and the related unrealized appreciation (depreciation) were:
- --------------------------------------------------------------------------------
(000)
------------------------------------------------
AGGREGATE UNREALIZED
NUMBER OF SETTLEMENT APPRECIATION
INDEX FUND/FUTURES CONTRACTS LONG CONTRACTS VALUE (DEPRECIATION)
- --------------------------------------------------------------------------------
European/
MSCI Pan-Euro Index, exp. 12/2003 1,027 $18,250 $ (57)
Pacific/
Topix Index, exp. 12/2003 309 29,397 154
- --------------------------------------------------------------------------------
74
At October 31, 2003, the European and Pacific Stock Index Funds had open forward
currency contracts to receive and deliver currencies as follows:
- --------------------------------------------------------------------------------
(000)
------------------------------------------------
CONTRACT AMOUNT UNREALIZED
---------------------- APPRECIATION
INDEX FUND/CONTRACT SETTLEMENT DATE RECEIVE DELIVER (DEPRECIATION)
- --------------------------------------------------------------------------------
European 12/24/2003 EUR 15,824 USD 18,370 $ 632
Pacific 12/17/2003 JPY 3,359,275 USD 30,598 1,821
- --------------------------------------------------------------------------------
EUR--Euro.
JPY--Japanese Yen.
USD--U.S. Dollars.
Unrealized appreciation on open forward currency contracts is treated as
realized gain for tax purposes.
The European, Pacific, and Emerging Markets Stock Index Funds had net unrealized
foreign currency gains of $187,000, $115,000, and $7,000, respectively,
resulting from the translation of other assets and liabilities at October 31,
2003.
At October 31, 2003, the Emerging Markets Stock Index Fund had the following
open swap contracts with Morgan Stanley & Co. International Limited as
counterparty:
- --------------------------------------------------------------------------------------------------
UNREALIZED
NOTIONAL FLOATING MARKET APPRECIATION
TERMINATION AMOUNT INTEREST VALUE (DEPRECIATION)
FUND/COUNTRY/REFERENCED STOCK DATE (000) RATE* (000) (000)
- --------------------------------------------------------------------------------------------------
Emerging Markets
South Korea
KT Corp. 7/8/2004 $1,621 2.88% $1,671 $ 50
LG Electronics Inc. 11/21/2003 3,326 2.63% 5,180 1,854
SK Telecom Co., Ltd. 7/8/2004 3,504 2.88% 4,238 734
Taiwan
Ambit Microsystems Corp. 7/7/2004 409 1.88% 470 61
Asustek Computer Inc. 2/18/2004 1,799 1.88% 1,628 (171)
AU Optronics Corp. 2/17/2004 1,010 2.88% 1,130 120
BENQ Corp. 7/7/2004 446 2.88% 645 199
Cathay Financial Holding Co. 7/7/2004 2,687 2.63% 3,956 1,269
China Development
Financial Holding Corp. 7/7/2004 656 1.38% 793 137
CMC Magnetics Corp. 7/7/2004 433 2.88% 655 222
Compal Electronics Inc. 2/12/2004 1,925 2.88% 1,987 62
Gigabyte Technology Co., Ltd. 7/7/2004 259 2.88% 365 106
Lite-On Technology Corp. 7/7/2004 322 2.88% 432 110
Macronix International Co.,
Ltd. 7/7/2004 226 2.88% 355 129
Quanta Computer Inc. 7/7/2004 859 2.88% 1,419 560
Realtek Semiconductor Corp. 7/7/2004 356 1.38% 440 84
Ritek Corp. 7/7/2004 320 1.88% 534 214
Siliconware Precision
Industries Co. 7/7/2004 325 2.88% 624 299
Via Technologies Inc. 7/7/2004 413 1.88% 505 92
--------
$ 6,131
--------
- --------------------------------------------------------------------------------------------------
*Based on one-month London InterBank Offered Rate (LIBOR). Each contract
provides for the payment of interest based on LIBOR less a fixed interest rate
spread. At October 31, 2003, the spread was greater than LIBOR, resulting in net
interest earned by the fund at the rate shown above.
75
E. During the year ended October 31, 2003, purchases and sales of investment
securities other than temporary cash investments were:
- ----------------------------------------------------------------------------
(000)
--------------------------------------
INDEX FUND PURCHASES SALES
- ----------------------------------------------------------------------------
European $1,149,541 $294,190
Pacific 657,619 55,612
Emerging Markets 553,641 173,432
Total International 824,412 64,497
Developed Markets 206,933 30,375
Institutional Developed Markets 243,840 47,891
- ----------------------------------------------------------------------------
F. The market value of securities on loan to broker/dealers at October 31, 2003,
and collateral received with respect to such loans were:
- ----------------------------------------------------------------------------
(000)
--------------------------------------
MARKET VALUE CASH
OF LOANED COLLATERAL
INDEX FUND SECURITIES RECEIVED
- ----------------------------------------------------------------------------
European $ 287,634 $ 304,454
Pacific 180,948 194,058
- ----------------------------------------------------------------------------
The funds invest cash collateral received in repurchase agreements, and record a
liability for the return of the collateral, during the period the securities are
on loan.
G. Capital share transactions for each class of shares were:
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 2003 OCTOBER 31, 2002
--------------------------- ---------------------
AMOUNT SHARES AMOUNT SHARES
INDEX FUND (000) (000) (000) (000)
- --------------------------------------------------------------------------------
EUROPEAN
INVESTOR SHARES
Issued $ 919,668 53,722 $ 994,408 52,718
Issued in Lieu of Cash
Distributions 90,697 5,679 88,639 4,506
Redeemed* (456,787) (27,003) (669,010) (35,340)
--------------------------------------------------
Net Increase (Decrease)--
Investor Shares 553,578 32,398 414,037 21,884
--------------------------------------------------
Admiral Shares
Issued 98,535 2,450 194,610 4,268
Issued in Lieu of Cash
Distributions 6,400 171 5,932 128
Redeemed* (70,661) (1,768) (59,157) (1,409)
--------------------------------------------------
Net Increase (Decrease)--
Admiral Shares 34,274 853 141,385 2,987
--------------------------------------------------
Institutional Shares
Issued 351,531 20,586 171,326 8,794
Issued in Lieu of Cash
Distributions 10,145 635 6,351 323
Redeemed* (133,971) (7,589) (58,154) (2,949)
--------------------------------------------------
Net Increase (Decrease)--
Institutional Shares 227,705 13,632 119,523 6,168
- --------------------------------------------------------------------------------
76
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 2003 OCTOBER 31, 2002
--------------------------- ---------------------
AMOUNT SHARES AMOUNT SHARES
INDEX FUND (000) (000) (000) (000)
- --------------------------------------------------------------------------------
PACIFIC
Investor Shares
Issued $ 529,652 81,854 $ 434,864 65,614
Issued in Lieu of Cash
Distributions 15,104 2,640 5,988 942
Redeemed** (181,042) (28,933) (239,505) (36,348)
--------------------------------------------------
Net Increase (Decrease)--
Investor Shares 363,714 55,561 201,347 30,208
--------------------------------------------------
Admiral Shares
Issued 73,096 1,757 56,944 1,315
Issued in Lieu of Cash
Distributions 1,055 28 387 9
Redeemed** (23,180) (567) (19,828) (464)
--------------------------------------------------
Net Increase (Decrease)--
Admiral Shares 50,971 1,218 37,503 860
--------------------------------------------------
Institutional Shares
Issued 244,471 37,056 93,950 13,831
Issued in Lieu of Cash
Distributions 2,099 367 556 87
Redeemed** (74,340) (12,425) (32,718) (4,903)
--------------------------------------------------
Net Increase (Decrease)--
Institutional Shares 172,230 24,998 61,788 9,015
- --------------------------------------------------------------------------------
EMERGING MARKETS
Investor Shares
Issued $ 399,952 44,002 $ 257,448 29,712
Issued in Lieu of Cash
Distributions 12,798 1,624 17,319 2,122
Redeemed+ (121,943) (14,176) (208,393) (24,995)
--------------------------------------------------
Net Increase (Decrease)--
Investor Shares 290,807 31,450 66,374 6,839
--------------------------------------------------
Institutional Shares
Issued 31,104 3,725 30,938 3,697
Issued in Lieu of Cash
Distributions 1,016 129 1,509 185
RedeemedY (12,599) (1,658) (21,692) (2,649)
--------------------------------------------------
Net Increase (Decrease)--
Institutional Shares 19,521 2,196 10,755 1,233
- --------------------------------------------------------------------------------
TOTAL INTERNATIONAL
Issued $ 1,204,305 144,867 $1,039,674 118,131
Issued in Lieu of Cash
Distributions 54,512 7,211 46,919 5,083
Redeemed++ (498,279) (61,379) (494,286) (56,538)
--------------------------------------------------
Net Increase (Decrease) 760,538 90,699 592,307 66,676
- --------------------------------------------------------------------------------
DEVELOPED MARKETS
Issued $ 272,248 45,434 $ 274,440 41,801
Issued in Lieu of Cash
Distributions 5,661 1,009 2,495 361
Redeemed++ (101,348) (16,899) (67,538) (10,343)
--------------------------------------------------
Net Increase (Decrease) 176,561 29,544 209,397 31,819
- --------------------------------------------------------------------------------
77
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 2003 OCTOBER 31, 2002
--------------------------- ---------------------
AMOUNT SHARES AMOUNT SHARES
INDEX FUND (000) (000) (000) (000)
- --------------------------------------------------------------------------------
Institutional Developed Markets
Issued $254,567 43,178 $126,752 19,187
Issued in Lieu of Cash
Distributions 3,270 589 2,261 330
Redeemed++ (62,160) (9,994) (31,321) (4,593)
--------------------------------------------------
Net Increase (Decrease) 195,677 33,773 97,692 14,924
- --------------------------------------------------------------------------------
*European Stock Index Fund amounts are net of redemption fees of $24,000 for
2003 (fund totals). The fund did not assess redemption fees in 2002.
**Pacific Stock Index Fund amounts are net of redemption fees of $27,000 for
2003 (fund totals). The fund did not assess redemption fees in 2002.
+ Emerging Markets Stock Index Fund amounts are net of redemption fees of
$499,000 and $949,000, respectively (fund totals).
++Total International Stock, Developed Markets and Institutional Developed
Markets Index Fund amounts are net of redemption fees of $24,000, $3,000, and
$0.00,respectively, for 2003. The fund did not assess redemption fees in 2002.
78
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Trustees of Vanguard International Stock Index Funds:
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Vanguard European Stock Index Fund, Vanguard Pacific Stock Index Fund, Vanguard
Emerging Markets Stock Index Fund, Vanguard Total International Stock Index
Fund, Vanguard Developed Markets Index Fund and Vanguard Institutional Developed
Markets Index Fund (separate portfolios of Vanguard International Stock Index
Funds, hereafter referred to as the "Funds") at October 31, 2003, the results of
each of their operations for the year then ended, the changes in each of their
net assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at October 31, 2003 by correspondence with the custodians and
brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
PHILADELPHIA, PENNSYLVANIA
DECEMBER 8, 2003
- --------------------------------------------------------------------------------
SPECIAL 2003 TAX INFORMATION
(UNAUDITED) FOR VANGUARD INTERNATIONAL STOCK INDEX FUNDS
This information for the fiscal year ended October 31, 2003, is included
pursuant to provisions of the Internal Revenue Code.
The funds intend to distribute the maximum amount of qualified dividend income
allowable. The amount of qualified dividend income distributed by the funds will
be provided to individual shareholders on their 2003 Form 1099-DIV.
(continued on next page)
- --------------------------------------------------------------------------------
79
- --------------------------------------------------------------------------------
SPECIAL 2003 TAX INFORMATION (CONTINUED)
(UNAUDITED) FOR VANGUARD INTERNATIONAL STOCK INDEX FUNDS
The European Stock Index, Pacific Stock Index, and Emerging Markets Stock Index
Funds have elected to pass through to shareholders taxes paid in foreign
countries. The foreign income and foreign tax paid per share outstanding on
October 31, 2003, are as follows:
- --------------------------------------------------------------------------------
GROSS
FOREIGN FOREIGN
COUNTRY DIVIDENDS TAX
- --------------------------------------------------------------------------------
EUROPEAN STOCK INDEX FUND
Austria $0.0008 $0.0001
Belgium 0.0099 0.0001
Denmark 0.0035 0.0000
Finland 0.0113 0.0000
France 0.0526 0.0031
Germany 0.0340 0.0005
Greece 0.0032 0.0000
Ireland 0.0058 0.0000
Italy 0.0299 0.0001
Netherlands 0.0454 0.0052
Norway 0.0040 0.0001
Portugal 0.0029 0.0006
Spain 0.0276 0.0012
Sweden 0.0126 0.0001
Switzerland 0.0308 0.0003
United Kingdom 0.2628 0.0258
- --------------------------------------------------------------------------------
PACIFIC STOCK INDEX FUND
Australia $0.0412 $0.0022
Hong Kong 0.0135 0.0000
Japan 0.0464 0.0026
New Zealand 0.0019 0.0002
Singapore 0.0087 0.0016
- --------------------------------------------------------------------------------
EMERGING MARKETS STOCK INDEX FUND
Argentina $0.0005 $0.0000
Brazil 0.0354 0.0041
Chile 0.0026 0.0006
China 0.0252 0.0000
Czech Republic 0.0036 0.0005
Hungary 0.0012 0.0002
India 0.0114 0.0009
Indonesia 0.0050 0.0008
Israel 0.0041 0.0009
Mexico 0.0175 0.0000
Peru 0.0006 0.0000
Philippines 0.0013 0.0003
Poland 0.0019 0.0003
South Africa 0.0498 0.0004
South Korea 0.0232 0.0038
Taiwan 0.0206 0.0072
Thailand 0.0061 0.0005
Turkey 0.0022 0.0000
- --------------------------------------------------------------------------------
The pass-through of foreign taxes paid will affect only shareholders on the
dividend record date in December 2003. Shareholders will receive more detailed
information along with their Form 1099-DIV in January 2004.
80
INVESTING IS FAST, EASY, AND SECURE ON VANGUARD.COM
If you're like many Vanguard investors, you believe in planning and taking
control of your own investments. VANGUARD.COM was built for you--and it keeps
getting better.
RESEARCH AND PLAN YOUR INVESTMENTS WITH CONFIDENCE
Use our PLANNING & ADVICE and RESEARCH FUNDS & STOCKS sections to:
* Determine what asset allocation might best suit your needs--by taking our
Investor Questionnaire.
* Find out how much to save for retirement and your children's college
education-- by using our planning tools.
* Learn how to achieve your goals--by reading our PlainTalk(R) investment
guides.
* Find your next fund--by using the Compare Funds, Compare Costs, and Narrow
Your Fund Choices tools.
* Look up fund price, performance history, and distribution information--in a
snap.
INVEST AND MANAGE ACCOUNTS WITH EASE
LOG ON TO VANGUARD.COM TO:
* See what you own (at Vanguard and elsewhere) and how your investments are
doing.
* Elect to receive online statements, fund reports (like this one),
prospectuses, and tax forms.
* Analyze your portfolio's holdings and performance.
* Open new accounts, buy and sell shares, and exchange money between
funds--securely and easily.
* Sign up to receive electronic newsletters from Vanguard informing you of
news on our funds, products, and services, as well as on investing and the
financial markets.
Find out what VANGUARD.COM can do for you. Log on today!
81
CAPITALIZE ON YOUR IRA
Are you taking full advantage of your individual retirement account? You really
should be. The contribution limits on IRAs were recently raised, making these
tax-deferred accounts more powerful options for retirement savers.
Here's how you can exploit your IRA--and improve your chances of having the
retirement of your dreams.
CONTRIBUTE THE MAXIMUM AMOUNT EACH YEAR
It may be an obvious point, but if you invest as much in your IRA as the law
allows--currently $3,000 per tax year if you are under age 50 and $3,500 if you
are age 50 or over--you will increase the odds of meeting your retirement goals.
"Max out" every year you can.
MAKE IT AUTOMATIC
Put your IRA on autopilot by taking advantage of Vanguard's Automatic Investment
Plan. Your IRA contributions will be deducted from your bank account on a
schedule of your choosing, making retirement investing a healthy habit.
CONSIDER COST
The owners of low-cost investments keep a larger portion of their gross returns
than the owners of high-cost investments. Over the long term, avoiding costlier
mutual funds and brokerage commissions could significantly boost your retirement
savings. Our low costs are one reason a Vanguard IRA(R) is such a smart choice.
REQUEST A DIRECT ROLLOVER WHEN YOU CHANGE JOBS
Don't spend your retirement assets before you've retired. When you change jobs,
roll your 401(k) or other employer-sponsored retirement plan assets directly
into your IRA.
If you have questions about your IRA, want to transfer an IRA from another
institution to Vanguard, or need help with any other IRA transaction, call our
Retirement Resource Center at 1-800-205-6189 or visit Vanguard.com. You can open
or fund your IRA on our website and have a confirmation in your hand within
minutes.
THE VANGUARD(R) FAMILY OF FUNDS
STOCK FUNDS
500 Index Fund
Calvert Social Index Fund
Capital Opportunity Fund
Capital Value Fund
Convertible Securities Fund
Developed Markets Index Fund
Dividend Growth Fund
Emerging Markets Stock Index Fund
Energy Fund
Equity Income Fund
European Stock Index Fund
Explorer(TM) Fund
Extended Market Index Fund
Global Equity Fund
Growth and Income Fund
Growth Equity Fund
Growth Index Fund
Health Care Fund
Institutional Developed Markets Index Fund
Institutional Index Fund
Institutional Total Stock Market Index Fund
International Explorer(TM) Fund
International Growth Fund
International Value Fund
Mid-Cap Growth Fund
Mid-Cap Index Fund
Morgan(TM) Growth Fund
Pacific Stock Index Fund
Precious Metals Fund
PRIMECAP Fund
REIT Index Fund
Selected Value Fund
Small-Cap Growth Index Fund
Small-Cap Index Fund
Small-Cap Value Index Fund
Strategic Equity Fund
Tax-Managed Capital Appreciation Fund
Tax-Managed Growth and Income Fund
Tax-Managed International Fund
Tax-Managed Small-Cap Fund
Total International Stock Index Fund
Total Stock Market Index Fund
U.S. Growth Fund
U.S. Value Fund
Value Index Fund
Windsor(TM) Fund
Windsor(TM) II Fund
BALANCED FUNDS
Asset Allocation Fund
Balanced Index Fund
LifeStrategy(R) Conservative Growth Fund
LifeStrategy(R) Growth Fund
LifeStrategy(R) Income Fund
LifeStrategy(R) Moderate Growth Fund
STAR(R) Fund
Target Retirement Funds:
Retirement Income
Retirement 2005
Retirement 2015
Retirement 2025
Retirement 2035
Retirement 2045
Tax-Managed Balanced Fund
Wellesley(R) Income Fund
Wellington(TM) Fund
BOND FUNDS
GNMA Fund
High-Yield Corporate Fund
High-Yield Tax-Exempt Fund
Inflation-Protected Securities Fund
Institutional Total Bond Market Index Fund
Insured Long-Term Tax-Exempt Fund
Intermediate-Term Bond Index Fund
Intermediate-Term Corporate Fund
Intermediate-Term Tax-Exempt Fund
Intermediate-Term Treasury Fund
Limited-Term Tax-Exempt Fund
Long-Term Bond Index Fund
Long-Term Corporate Fund
Long-Term Tax-Exempt Fund
Long-Term Treasury Fund
Short-Term Bond Index Fund
Short-Term Corporate Fund
Short-Term Federal Fund
Short-Term Tax-Exempt Fund
Short-Term Treasury Fund
State Tax-Exempt Bond Funds
(California, Florida, Massachusetts,
New Jersey, New York, Ohio,
Pennsylvania)
Total Bond Market Index Fund
MONEY MARKET FUNDS
Admiral(TM) Treasury Money Market Fund
Federal Money Market Fund
Prime Money Market Fund
State Tax-Exempt Money Market
Funds (California, New Jersey,
New York, Ohio, Pennsylvania)
Tax-Exempt Money Market Fund
Treasury Money Market Fund
VARIABLE ANNUITY
Balanced Portfolio
Capital Growth Portfolio
Diversified Value Portfolio
Equity Income Portfolio
Equity Index Portfolio
Growth Portfolio
High Yield Bond Portfolio
International Portfolio
Mid-Cap Index Portfolio
Money Market Portfolio
REIT Index Portfolio
Short-Term Corporate Portfolio
Small Company Growth Portfolio
Total Bond Market Index Portfolio
Total Stock Market Index Portfolio
For information about Vanguard funds and annuities, including charges and
expenses, obtain a prospectus from The Vanguard Group, P.O. Box 2600, Valley
Forge, PA 19482-2600. Read it carefully before you invest or send money.
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 trustees also serve on the board of directors of The
Vanguard Group, Inc., which is owned by the Vanguard funds and provides services
to them on an at-cost basis.
A majority of Vanguard's board members are independent, meaning that they have
no affiliation with Vanguard or the funds they oversee, apart from the sizable
personal investments they have made as private individuals.
Our independent board members bring distinguished backgrounds in business,
academia, and public service to their task of working with Vanguard officers to
establish the policies and oversee the activities of
- ------------------------------------------------------------------------------------------------------------
POSITION(S) HELD WITH
NAME FUND (NUMBER OF
(YEAR OF BIRTH) VANGUARD FUNDS
TRUSTEE/OFFICER OVERSEEN BY
SINCE TRUSTEE/OFFICER) PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------
JOHN J. BRENNAN* Chairman of the Chairman of the Board, Chief Executive Officer, and Director/Trustee
(1954) Board, Chief of The Vanguard Group, Inc., and of each of the investment companies
May 1987 Executive Officer, served by The Vanguard Group.
and Trustee
(112)
- ------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
CHARLES D. ELLIS Trustee The Partners of '63 (pro bono ventures in education); Senior Advisor
(1937) (112) to Greenwich Associates (international business strategy consulting);
January 2001 Successor Trustee of Yale University; Overseer of the Stern School of
Business at New York University; Trustee of the Whitehead Institute
for Biomedical Research.
- ------------------------------------------------------------------------------------------------------------
RAJIV L. GUPTA Trustee Chairman and Chief Executive Officer (since October 1999), Vice
(1945) (112) Chairman (JanuarySeptember 1999), and Vice President (prior to
December 2001 September 1999) of Rohm and Haas Co. (chemicals); Director of
Technitrol, Inc. (electronic components), and Agere Systems
(communications components); Board Member of the American Chemistry
Council; and Trustee of Drexel University.
- ------------------------------------------------------------------------------------------------------------
JOANN HEFFERNAN Trustee Vice President, Chief Information Officer, and Member of the
HEISEN (112) Executive Committee of Johnson & Johnson (pharmaceuticals/consumer
(1950) products); Director of the Medical Center at Princeton and Women's
July 1998 Research and Education Institute.
- ------------------------------------------------------------------------------------------------------------
BURTON G. MALKIEL Trustee Chemical Bank Chairman's Professor of Economics,Princeton University;
(1932) (110) Director of Vanguard Investment Series plc (Irish invest-ment fund)
May 1977 (since November 2001), Vanguard Group (Ireland)Limited (Irish
investment management firm)(since November 2001),Prudential Insurance
Co. of America, BKF Capital (investment management), The Jeffrey Co.
(holding company), and NeuVis, Inc.(software company).
- ------------------------------------------------------------------------------------------------------------
the funds. Among board members' responsibilities are selecting investment
advisors for the funds; monitoring fund operations, performance, and costs;
reviewing contracts; nominating and selecting new trustees/directors; and
electing Vanguard officers.
Each trustee serves a fund until its termination; or until the trustee's
retirement, resignation, or death; or otherwise as specified in the fund's
organizational documents. Any trustee may be removed at a shareholders' meeting
by a vote representing two-thirds of the net asset value of all shares of the
fund together with shares of other Vanguard funds organized within the same
trust. The table on these two pages shows information for each trustee and
executive officer of the fund. The mailing address of the trustees and officers
is P.O. Box 876, Valley Forge, PA 19482.
POSITION(S) HELD WITH
NAME FUND (NUMBER OF
(YEAR OF BIRTH) VANGUARD FUNDS
TRUSTEE/OFFICER OVERSEEN BY
SINCE TRUSTEE/OFFICER) PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------
Alfred M. Rankin, Jr. Trustee Chairman, President, Chief Executive Officer, and Director of NACCO
(1941) (112) Industries, Inc. (forklift trucks/housewares/lignite); Director of
January 1993 Goodrich Corporation (industrial products/aircraft systems and
services); Director of Standard Products Company (supplier for
the automotive industry) until 1998.
- ------------------------------------------------------------------------------------------------------------
J. Lawrence Wilson Trustee Retired Chairman and Chief Executive Officer of Rohm and Haas Co.
(1936) (112) (chemicals); Director of Cummins Inc. (diesel engines), The Mead
April 1985 Corp. (paper products), and AmerisourceBergen Corp. (pharmaceuti-cal
distribution); Trustee of Vanderbilt University.
- ------------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS*
R. Gregory Barton Secretary Managing Director and General Counsel of The Vanguard Group, Inc.;
(1951) (112) Secretary of The Vanguard Group and of each of the investment
June 2001 companies served by The Vanguard Group.
- ------------------------------------------------------------------------------------------------------------
Thomas J. Higgins Treasurer Principal of The Vanguard Group, Inc.; Treasurer of each of the
(1957) (112) investment companies served by The Vanguard Group.
July 1998
- ------------------------------------------------------------------------------------------------------------
*Officers of the funds are "interested persons" as defined in the Investment
Company Act of 1940.
More information about the trustees is in the Statement of Additional
Information, available from The Vanguard Group.
- ------------------------------------------------------------------------------------------------------------
VANGUARD SENIOR MANAGEMENT TEAM
MORTIMER J. BUCKLEY, Information Technology. MICHAEL S. MILLER, Planning and Development.
JAMES H. GATELY, Investment Programs and Services. RALPH K. PACKARD, Finance.
KATHLEEN C. GUBANICH, Human Resources. GEORGE U. SAUTER, Chief Investment Officer.
F. WILLIAM MCNABB, III, Client Relationship Group.
- ------------------------------------------------------------------------------------------------------------
JOHN C. BOGLE, Founder; Chairman and Chief Executive Officer, 1974-1996.
- ------------------------------------------------------------------------------------------------------------
[SHIP]
[THE VANGUARD GROUP(R) LOGO]
Post Office Box 2600
Valley Forge, PA 19482-2600
Vanguard, The Vanguard Group, Vanguard.com, Vanguard IRA, Admiral, Explorer,
Morgan, LifeStrategy, PlainTalk, STAR, Wellesley, Wellington, Windsor, and the
ship logo are trademarks of The Vanguard Group, Inc.
Standard & Poor's 500 and 500 are trademarks of The McGraw-Hill Companies, Inc.,
and have been licensed for use by The Vanguard Group, Inc. Vanguard mutual funds
are not sponsored, endorsed, sold, or promoted by Standard & Poor's, and
Standard & Poor's makes no representation regarding the advisability of
investing in the funds.
Calvert Social Index is a trademark of Calvert Group, Ltd., and has been
licensed for use by The Vanguard Group, Inc. Vanguard Calvert Social Index Fund
is not sponsored, endorsed, sold, or promoted by Calvert Group, Ltd., and
Calvert Group, Ltd., makes no representation regarding the advisability of
investing in the fund.
All other marks are the exclusive property of their respective owners.
All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc.,
unless otherwise noted.
The funds or securities referred to herein that are offered by The Vanguard
Group and track an MSCI index are not sponsored, endorsed, or promoted by MSCI,
and MSCI bears no liability with respect to any such funds or securities. For
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.
ABOUT OUR COVER
The photographs that appear on the cover of this report are copyrighted by
Michael Kahn.
FOR MORE INFORMATION
This report is intended for the funds' shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus.
To receive a free copy of the prospectus or the Statement of Additional
Information, or to request additional information about the funds or other
Vanguard funds, please contact us at one of the adjacent telephone numbers or by
e-mail through Vanguard.com. Prospectuses may also be viewed online.
WORLD WIDE WEB
www.vanguard.com
FUND INFORMATION
1-800-662-7447
DIRECT INVESTOR ACCOUNT SERVICES
1-800-662-2739
INSTITUTIONAL INVESTOR SERVICES
1-800-523-1036
TEXT TELEPHONE
1-800-952-3335
(C) 2003 THE VANGUARD GROUP, INC.
ALL RIGHTS RESERVED.
VANGUARD MARKETING
CORPORATION, DISTRIBUTOR.
Q720 122003
ITEM 2: Code of Ethics. The Board of Trustees has adopted a code of ethics that
applies to the principal executive officer, principal financial officer,
principal accounting officer or controller of the Registrant and The Vanguard
Group, Inc., and to persons performing similar functions.
ITEM 3: Audit Committee Financial Expert. All of the members of the Audit
Committee have been determined by the Registrant's Board of Trustees to be Audit
Committee Financial Experts. The members of the Audit Committee are: Charles D.
Ellis, Rajiv L. Gupta, JoAnn Heffernan Heisen, Burton G. Malkiel, Alfred M.
Rankin, Jr., and J. Lawrence Wilson. All Audit Committee members are independent
under applicable rules.
ITEM 4: Not applicable.
ITEM 5: Not applicable.
ITEM 6: Reserved.
ITEM 7: Not applicable.
ITEM 8: Reserved.
ITEM 9: 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 10: EXHIBITS. The following exhibits are attached hereto:
(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 INTERNATIONAL EQUITY INDEX FUNDS
BY:_____________(signature)________________
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER
Date: December 12, 2003
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 INTERNATIONAL EQUITY INDEX FUNDS
BY:_____________(signature)________________
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER
Date: December 12, 2003
VANGUARD INTERNATIONAL EQUITY INDEX FUNDS
BY:_____________(signature)________________
(HEIDI STAM)
THOMAS J. HIGGINS*
TREASURER
Date: December 12, 2003
*By Power of Attorney. See File Number 2-57689, filed on December 26, 2002.
Incorporated by Reference.