N-CSR 1 formncsr.txt VANGUARD INTERNATIONAL STOCK INDEX FUND 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, Esquire P.O. Box 876 Valley Forge, PA 19482 Registrant's telephone number, including area code: (610) 669-1000 Date of fiscal year end: October 31 Date of reporting period: November 1, 2002 - April 30, 2003 Item 1: Reports to Shareholders [FRONT COVER] VANGUARD(R) INTERNATIONAL STOCK INDEX FUNDS SEMIANNUAL REPORT APRIL 30, 2003 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 [SHIP LOGO] [THE VANGUARD GROUP[R]] ETERNAL PRINCIPLES Markets change, but the principles of successful investing do not. During the past few years, radical upheaval in the stock market has displayed the power of this simple truth to dramatic effect. In the late 1990s, stocks experienced one of the greatest bull markets in financial history. Then, in March 2000, the longest downturn since the Great Depression began. In both bull and bear markets, however, the principles of successful investing are identical: balance, diversification, and attention to costs. Balance among stock, bond, and money market funds allows you to pursue long-term growth while moderating your risk. Diversification limits your exposure to the disasters that can befall any one security or sector. Attention to costs means you keep a larger share of any rewards produced by your investments. These principles are timeless. In fact, they're the basis of our very first mutual fund--Vanguard(R) Wellington(TM) Fund, a balanced portfolio established in 1929. Over time, balance, diversification, and attention to costs have proven to be the master keys to investment success. ================================================================================ SUMMARY * Returns for the Vanguard International Stock Index Funds ranged from -4.0% to 6.3% during the six-month period; each fund except the Pacific Stock Index Fund posted a positive return. * All of the funds outperformed their average mutual fund peers. * Most long-term investors should hold international funds as a small part of a well-diversified portfolio of stocks, bonds, and cash investments. ================================================================================ ================================================================================ CONTENTS 1 Letter from the Chairman 6 Fund Profiles 14 Glossary of Investment Terms 15 Performance Summaries 19 Results of Proxy Voting 21 Financial Statements 71 Advantages of Vanguard.com ================================================================================ INDEXED TO MSCI EMERGING MARKET STOCK INDEX FUND EUROPEAN STOCK INDEX FUND PACIFIC STOCK INDEX FUND LETTER FROM THE CHAIRMAN [PHOTO] [JOHN J. BRENNAN] FELLOW SHAREHOLDER, Most stock markets around the world lost ground during the six months ended April 30, 2003. However, for U.S.-based investors, the continued decline in the value of the dollar against most major currencies translated into positive overseas returns, with the notable exception of those from Asian markets. The Vanguard International Stock Index Funds posted returns ranging from -4.0% for the Pacific Stock Index Fund to 6.3% for the Emerging Markets Stock Index Fund. The funds' returns closely tracked those of their respective unmanaged target indexes and, in all cases, exceeded those of their average mutual fund peers. The table at left presents the total returns (capital change plus reinvested dividends) for each fund's share classes. Among these are our Admiral(TM) Shares, offered to shareholders whose sizable, long-tenured accounts bring economies of scale to our operations, and our Institutional Shares, offered for a minimum initial investment of $10 million. Returns are also shown for the funds' average mutual fund peers and target indexes. ================================================================================ TOTAL RETURNS SIX MONTHS ENDED APRIL 30, 2003 -------------------------------------------------------------------------------- VANGUARD EUROPEAN STOCK INDEX FUND Investor Shares 4.1% Admiral Shares 4.2 Institutional Shares 4.2 Average European Region Fund* 3.2 MSCI Europe Index 4.2 -------------------------------------------------------------------------------- VANGUARD PACIFIC STOCK INDEX FUND Investor Shares -4.0% Admiral Shares -4.0 Institutional Shares -4.0 Average Japan/Pacific Region Fund* -7.0 MSCI Pacific Index -4.0 -------------------------------------------------------------------------------- VANGUARD EMERGING MARKETS STOCK INDEX FUND Investor Shares 6.3% Institutional Shares 6.3 Average Emerging Markets Fund* 6.1 Select Emerging Markets Free Index** 6.5 -------------------------------------------------------------------------------- VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND 2.2% Average International Fund* 0.9 Total International Composite IndexY 2.2 -------------------------------------------------------------------------------- VANGUARD DEVELOPED MARKETS INDEX FUND 1.9% Average International Fund* 0.9 MSCI EAFE Index 1.8 -------------------------------------------------------------------------------- VANGUARD INSTITUTIONAL DEVELOPED MARKETS INDEX FUND 1.9% Average International Fund* 0.9 MSCI EAFE Index 1.8 ================================================================================ *Derived from data provided by Lipper Inc. **Consists of stocks that can be bought free of restrictions in 15 emerging markets of Europe, Asia, Africa, and Latin America (95%) and a cash component (5%) based on the Lipper Money Market average. The stock component of the index is administered exclusively for Vanguard by MSCI. +Consists of the MSCI Europe Index (65%), the MSCI Pacific Index (26%), and the Select Emerging Markets Free Index (9%). 1 Information on the changes in the funds' net asset values and on per-share distributions can be found on page 5. MOST DEVELOPED MARKETS ROSE IN DOLLARS; EMERGING MARKETS DID WELL During the six months ended April 30, investors in international markets added the U.S. war with Iraq to a list of worries that included the sluggish state of the world economy and the potential for heightened terrorist activity. As tensions grew in Iraq during late 2002 and into the first quarter of 2003, international stock markets drifted lower, but the mid-March invasion of Iraq sparked a rally late in the first quarter. Stocks outside the United States, as measured by the Morgan Stanley Capital International (MSCI) All Country World Index Free ex USA, rose 3.1% in dollars for the six months. This result lagged the 5.0% return of the Wilshire 5000 Total Market Index, a broad measure of the U.S. stock market. Meanwhile, the MSCI Europe, Australasia, Far East (EAFE) Index, a proxy for equity performance in 21 developed nations, returned 1.8% in dollars for the six months, but its return in local currencies was -4.6%. ================================================================================ MARKET BAROMETER TOTAL RETURNS PERIODS ENDED APRIL 30, 2003 -------------------------------------------------------------------------------- SIX ONE FIVE MONTHS YEAR YEARS* -------------------------------------------------------------------------------- STOCKS MSCI All Country World Index Free ex USA (International) 3.1% -15.2% -4.9% Russell 1000 Index (Large-caps) 4.8 -13.5 -2.3 Russell 2000 Index (Small-caps) 7.6 -20.8 -2.5 Wilshire 5000 Index (Entire market) 5.0 -13.6 -2.6 -------------------------------------------------------------------------------- BONDS Lehman Aggregate Bond Index 4.3% 10.5% 7.6% (Broad taxable market) Lehman Municipal Bond Index 3.6 8.5 6.3 Citigroup 3-Month Treasury Bill Index 0.6 1.5 4.0 -------------------------------------------------------------------------------- CPI Consumer Price Index 1.4% 2.2% 2.5% ================================================================================ *Annualized. Emerging markets were the true stars of the period, posting the highest returns in dollars. Israel, the Czech Republic, and Brazil all saw strong gains. However, a number of politically troubled Latin American nations continued to suffer, as general labor strikes disrupted manufacturing activity. OVERSEAS ECONOMIC REPORTS HAD FAR-REACHING IMPLICATIONS Economic reports from overseas were generally poor. In the Eurozone, which comprises the 12 countries that use the euro as a common currency, unemployment figures for March 2003 exceeded those of March 2002 by a substantial margin in 11 of the 12 nations. Accounting scandals that buffeted numerous companies in Europe, most notably Ahold in the Netherlands, only added to investors' worries. The Japanese economy continued to show signs of weakness as key economic indicators--including the unemployment rate, 2 manufacturing activity, and consumer prices--worsened, and Tokyo's Nikkei average fell to near-20-year lows. Elsewhere in the Pacific region, the onset of SARS (Severe Acute Respiratory Syndrome) disrupted business, as local residents grew fearful and companies in the United States and Europe restricted travel to affected areas. OUR FUNDS PERFORMED WELL IN TRYING TIMES Although the performance of international markets generally paled in comparison with U.S. stocks, our funds did a solid job of tracking the performances of their respective benchmarks and surpassing those of their average peers. The total return for the EUROPEAN STOCK INDEX FUND'S Investor Shares was 4.1% for the period, somewhat better than its average peer group's return of 3.2% and just a notch below the MSCI Europe Index's return. Some markets, notably Ireland, rose substantially in their local currencies, while others (such as the Netherlands) fell sharply. However, the overall result across the continent was a negative return. The weak U.S. dollar turned these losses in local currency into a positive return for U.S.-based investors. The PACIFIC STOCK INDEX FUND posted the worst return (-4.0%) of the six international stock index funds, primarily because of the ongoing weakness in Japanese markets, which have been in and out of recession numerous times over the past ten-plus years. However, the fund bested its average peer's return of -7.0% by a comfortable margin, and was directly in line with the -4.0% return of the MSCI Pacific Index. The EMERGING MARKETS STOCK INDEX FUND posted the highest return (6.3%) of the six funds and performed slightly better than the average emerging markets fund (6.1%). Several emerging markets whose local currencies had been losing ground against the rising dollar over the past several years benefited from the dollar's weakness. (A note about this fund: In anticipation of changes to the fund's benchmark that took effect May 1, we added holdings in three countries--Chile, India, and Peru--before the end of this reporting period. We are in the process of eliminating its 5% cash component.) The DEVELOPED MARKETS INDEX FUND and sister fund Institutional Developed Markets Index Fund, "funds of funds" that held a 73%/27% mix of the European and Pacific Funds as of April 30, provided returns of 1.9% for the six months, besting the 0.9% return of their average peer. Poor performance by the stocks in the Pacific segment was to blame for the mediocre results. The TOTAL INTERNATIONAL STOCK INDEX FUND, a "fund of funds" that held shares of our European, Pacific, and Emerging Markets Funds in approximately a 65%/25%/10% mix as of April 30, returned 2.2% for the period, which handily outpaced the 0.9% return for the average international fund. The fund's outperformance was due in part to its emerging markets exposure. 3 THE OPPORTUNITIES IN--AND CHALLENGES OF--INTERNATIONAL INVESTING Although international stocks didn't prove to be much of a refuge from the troubles faced by U.S. stock markets over the past three years, we still believe that there is a place for international stocks in most investors' portfolios. Investors who do not have any exposure to international securities miss out on the potential growth opportunities of almost half the world's stock market capitalization. That said, there are indeed additional risks associated with investments in international stocks. Investors should carefully consider their tolerance for the uncertainties of currency fluctuation, economic volatility, and political instability in a particular country or region. These risks could lead to prolonged downturns that would try the patience of the most seasoned investor. However, if you are investing for the long term, a reasonable commitment--consistent with your risk tolerance, objectives, and time frame--to international stocks can help diversify your portfolio. Our international stock index funds offer you a very low-cost and tax-efficient way to add that international flavor to your stock holdings. We thank you for your continued confidence in Vanguard. Sincerely, JOHN J. BRENNAN CHAIRMAN AND CHIEF EXECUTIVE OFFICER MAY 13, 2003 4 ================================================================================ YOUR FUND'S PERFORMANCE AT A GLANCE OCTOBER 31, 2002-APRIL 30, 2003 DISTRIBUTIONS PER SHARE -------------------------------------------------------------------------------- STARTING ENDING INCOME CAPITAL VANGUARD INDEX FUND SHARE PRICE SHARE PRICE DIVIDENDS GAINS -------------------------------------------------------------------------------- EUROPEAN STOCK Investor Shares $16.44 $16.70 $0.400 $0.000 Admiral Shares 38.61 39.21 0.975 0.000 Institutional Shares 16.46 16.71 0.425 0.000 -------------------------------------------------------------------------------- PACIFIC STOCK Investor Shares $ 5.90 $ 5.60 $0.067 $0.000 Admiral Shares 38.63 36.62 0.473 0.000 Institutional Shares 5.91 5.60 0.075 0.000 -------------------------------------------------------------------------------- EMERGING MARKETS STOCK Investor Shares $7.48 $7.83 $0.122 $0.000 Institutional Shares 7.49 7.83 0.135 0.000 -------------------------------------------------------------------------------- TOTAL INTERNATIONAL STOCK $7.79 $7.80 $0.157 0.000 -------------------------------------------------------------------------------- DEVELOPED MARKETS $5.80 $5.79 $0.116 $0.000 -------------------------------------------------------------------------------- INSTITUTIONAL DEVELOPED MARKETS $5.76 $5.74 $0.12 $0.000 ================================================================================ 5 FUND PROFILES AS OF APRIL 30, 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 14. EUROPEAN STOCK INDEX FUND ================================================================================ PORTFOLIO CHARACTERISTICS -------------------------------------------------------------------------------- COMPARATIVE BROAD FUND INDEX* INDEX** -------------------------------------------------------------------------------- Number of Stocks 545 530 1,747 Turnover Rate 4%Y -- -- Expense Ratio -- -- Investor Shares 0.34%Y Admiral Shares 0.23%Y Institutional Shares 0.18%Y Cash Investments 0.0% -- -- ================================================================================ ================================================================================ TEN LARGEST HOLDINGS (% OF TOTAL NET ASSETS) BP PLC 3.7% (oil) Vodafone Group PLC 3.5 (cellular telecommunications) GlaxoSmithKline PLC 3.1 (pharmaceuticals) HSBC Holdings PLC 3.0 (banking) Novartis AG (Registered) 2.8 (pharmaceuticals) Royal Dutch Petroleum Co. 2.2 (energy) TotalFinaElf SA 2.2 (integrated oil) Nokia Oyj 2.1 (telecommunications) Nestle SA (Registered) 2.1 (food, beverage, and tobacco) Royal Bank of Scotland Group PLC 1.9 (banking) -------------------------------------------------------------------------------- Top Ten 26.6% ================================================================================ 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 0.92 1.00 Beta 1.00 1.00 1.10 1.00 -------------------------------------------------------------------------------- ================================================================================ COUNTRY DIVERSIFICATION (% OF PORTFOLIO) COMPARATIVE FUND INDEX* -------------------------------------------------------------------------------- United Kingdom 37.9% 37.9% France 13.3 13.3 Switzerland 11.1 11.1 Germany 8.7 8.7 Netherlands 7.1 7.1 Italy 5.4 5.4 Spain 5.1 5.1 Sweden 3.0 3.0 Finland 2.9 2.9 Belgium 1.4 1.4 Ireland 1.2 1.2 Denmark 1.1 1.1 Norway 0.6 0.6 Greece 0.5 0.5 Portugal 0.5 0.5 Austria 0.2 0.2 -------------------------------------------------------------------------------- Total 100.0% 100.0% -------------------------------------------------------------------------------- *MSCI Europe Index. **MSCI All Country World Index Free ex USA. +Annualized. 6 ================================================================================ SECTOR DIVERSIFICATION (% OF PORTFOLIO) -------------------------------------------------------------------------------- COMPARATIVE BROAD FUND INDEX* INDEX** -------------------------------------------------------------------------------- Consumer Discretionary 9.4% 9.4% 11.1% Consumer Staples 10.6 10.6 9.1 Energy 11.9 11.8 9.6 Financials 25.9 25.9 24.8 Health Care 12.3 12.2 9.3 Industrials 6.1 6.1 7.9 Information Technology 4.6 4.6 7.2 Materials 5.3 5.3 7.5 Telecommunication Services 9.4 9.4 8.4 Utilities 4.5 4.7 5.1 ================================================================================ VISIT OUR WEBSITE AT WWW.VANGUARD.COM FOR REGULARLY UPDATED FUND INFORMATION. *MSCI Europe Index. **MSCI All Country World Index Free ex USA. 7 FUND PROFILES (CONTINUED) PACIFIC STOCK INDEX FUND ================================================================================ PORTFOLIO CHARACTERISTICS -------------------------------------------------------------------------------- COMPARATIVE BROAD FUND INDEX* INDEX** -------------------------------------------------------------------------------- Number of Stocks 465 465 1,747 Turnover Rate 1%Y -- -- Expense Ratio Investor Shares 0.41%Y Admiral Shares 0.30%Y Institutional Shares 0.25%Y Cash Investments 0.0% -- -- ================================================================================ ================================================================================ TEN LARGEST HOLDINGS (% OF TOTAL NET ASSETS) Toyota Motor Corp. 3.7% (automotive and transport equipment) NTT DoCoMo, Inc. 2.5 (telecommunications) Canon, Inc. 2.3 (computer hardware) National Australia Bank Ltd. 2.2 (banking) Takeda Chemical Industries Ltd. 2.0 (pharmaceuticals) Tokyo Electric Power Co. 1.6 (utilities) News Corp Ltd. 1.5 (media) Commonwealth Bank of Australia 1.5 (banking) Sony Corp. 1.5 (consumer electronics) BHP Billiton Ltd. 1.5 (metals and mining) -------------------------------------------------------------------------------- Top Ten 20.3% ================================================================================ 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 0.54 1.00 Beta 1.02 1.00 0.72 1.00 -------------------------------------------------------------------------------- ================================================================================ COUNTRY DIVERSIFICATION (% OF PORTFOLIO) COMPARATIVE FUND INDEX* -------------------------------------------------------------------------------- Japan 71.2% 71.5% Australia 19.5 19.3 Hong Kong 5.6 5.5 Singapore 2.9 2.9 New Zealand 0.8 0.8 -------------------------------------------------------------------------------- Total 100.0% 100.0% ================================================================================ ================================================================================ SECTOR DIVERSIFICATION (% OF PORTFOLIO) COMPARATIVE BROAD FUND INDEX* INDEX** -------------------------------------------------------------------------------- Consumer Discretionary 18.3% 18.3% 11.1% Consumer Staples 7.0 7.0 9.1 Energy 1.2 1.2 9.6 Financials 21.7 21.7 24.8 Health Care 5.5 5.5 9.3 Industrials 14.0 14.0 7.9 Information Technology 11.5 11.5 7.2 Materials 9.1 9.0 7.5 Telecommunication Services 5.0 5.1 8.4 Utilities 6.7 6.7 5.1 ================================================================================ *MSCI Pacific Index. **MSCI All Country World Index Free ex USA. +Annualized. 8 EMERGING MARKETS STOCK INDEX FUND ================================================================================ PORTFOLIO CHARACTERISTICS COMPARATIVE BROAD FUND INDEX* INDEX** -------------------------------------------------------------------------------- Number of Stocks 551 550 1,747 Turnover Rate 19%Y -- -- Expense Ratio -- -- Investor Shares 0.55%Y Institutional Shares 0.39%Y Cash Investments 3.3% -- -- ================================================================================ ================================================================================ TEN LARGEST HOLDINGS (% OF TOTAL NET ASSETS) Samsung Electronics Co., Ltd. 5.2% (electronics) Anglo American PLC 4.4 (metals and mining) Telefonos de Mexico SA 2.5 (telecommunications) Teva Pharmaceutical Industries Ltd. 2.5 (pharmaceuticals) Petroleo Brasileiro SA 2.3 (energy) Taiwan Semiconductor Manufacturing Co., Ltd. 2.2 (electronics) China Mobile (Hong Kong) Ltd. 2.2 (telecommunications) Kookmin Bank 1.5 (banking) Sasol Ltd. 1.3 (chemicals) Old Mutual PLC 1.2 (insurance) -------------------------------------------------------------------------------- Top Ten 25.3% ================================================================================ 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 0.78 1.00 Beta 0.99 1.00 1.25 1.00 -------------------------------------------------------------------------------- ================================================================================ COUNTRY DIVERSIFICATION (% OF PORTFOLIO) COMPARATIVE FUND INDEX* -------------------------------------------------------------------------------- South Korea 21.4% 20.8% South Africa 15.9 17.3 Taiwan 14.6 15.6 Brazil 10.3 10.6 Mexico 10.2 10.7 China 7.7 8.1 Israel 5.1 5.6 India 3.5 0.0 Thailand 2.3 2.4 Hungary 1.7 1.7 Turkey 1.6 1.8 Poland 1.5 1.6 Indonesia 1.5 1.6 Czech Republic 0.7 0.7 Argentina 0.7 0.8 Philippines 0.6 0.7 Chile 0.6 0.0 Peru 0.1 0.0 -------------------------------------------------------------------------------- Total 100.0% 100.0% ================================================================================ *Select Emerging Markets Free Index. **MSCI All Country World Index Free ex USA. +Annualized. VISIT OUR WEBSITE AT WWW.VANGUARD.COM FOR REGULARLY UPDATED FUND INFORMATION. 9 FUND PROFILES (CONTINUED) EMERGING MARKETS STOCK INDEX FUND ================================================================================ SECTOR DIVERSIFICATION (% OF PORTFOLIO) COMPARATIVE BROAD FUND INDEX* INDEX** -------------------------------------------------------------------------------- Consumer Discretionary 6.7% 6.7% 11.1% Consumer Staples 7.6 6.6 9.1 Energy 8.4 7.5 9.6 Financials 18.4 18.1 24.8 Health Care 3.6 3.0 9.3 Industrials 5.4 5.3 7.9 Information Technology 15.5 18.7 7.2 Materials 17.9 17.3 7.5 Telecommunication Services 13.6 14.0 8.4 Utilities 2.9 2.8 5.1 -------------------------------------------------------------------------------- *Select Emerging Markets Free Index. **MSCI All Country World Index Free ex USA. 10 TOTAL INTERNATIONAL STOCK INDEX FUND ================================================================================ PORTFOLIO CHARACTERISTICS FUND -------------------------------------------------------------------------------- Expense Ratio 0% Average Weighted Expense Ratio* 0.38% -------------------------------------------------------------------------------- ================================================================================ TEN LARGEST HOLDINGS++ (% OF TOTAL NET ASSETS) BP PLC 2.4% (oil) Vodafone Group PLC 2.3 (cellular telecommunications) GlaxoSmithKline PLC 2.1 (pharmaceuticals) HSBC Holdings PLC 2.0 (banking) Novartis AG (Registered) 1.9 (pharmaceuticals) Toyota Motor Corp. 0.9 (automotive and transport equipment) NTT DoCoMo Inc. 0.6 (telecommunications) Samsung Electronics Co. Ltd. 0.5 (electronics) Anglo American PLC 0.4 (metals and mining) Teva Pharmaceutical Industries Ltd. 0.2 (pharmaceuticals) -------------------------------------------------------------------------------- Top Ten 13.3% ================================================================================ 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 66.4% Pacific Stock Index Fund Investor Shares 24.4 Emerging Markets Stock Index Fund Investor Shares 9.2 -------------------------------------------------------------------------------- Total 100.0% ================================================================================ ================================================================================ SECTOR DIVERSIFICATION (% OF PORTFOLIO) COMPARATIVE BROAD FUND++ INDEX** INDEX+ -------------------------------------------------------------------------------- Consumer Discretionary 11.3% 11.3% 11.1% Consumer Staples 9.4 9.3 9.1 Energy 9.0 8.9 9.6 Financials 24.2 24.4 24.8 Health Care 9.8 9.7 9.3 Industrials 8.0 7.9 7.9 Information Technology 7.3 7.5 7.2 Materials 7.4 7.3 7.5 Telecommunication Services 8.7 8.7 8.4 Utilities 4.9 5.0 5.1 ================================================================================ *For underlying funds; annualized. **Total International Composite Index. +MSCI All Country World Index Free ex USA. ++Reflects holdings of underlying funds. VISIT OUR WEBSITE AT WWW.VANGUARD.COM FOR REGULARLY UPDATED FUND INFORMATION. 11 FUND PROFILES (CONTINUED) DEVELOPED MARKETS INDEX FUND ================================================================================ PORTFOLIO CHARACTERISTICS FUND -------------------------------------------------------------------------------- Expense Ratio 0% Average Weighted Expense Ratio* 0.36% -------------------------------------------------------------------------------- ================================================================================ TEN LARGEST HOLDINGS** (% OF TOTAL NET ASSETS) BP PLC 2.7% (oil) Vodafone Group PLC 2.5 (cellular telecommunications) GlaxoSmithKline PLC 2.3 (pharmaceuticals) HSBC Holdings PLC 2.2 (banking) Novartis AG (Registered) 2.1 (pharmaceuticals) Royal Dutch Petroleum Co. 1.6 (energy) TotalFinaElf SA 1.6 (integrated oil) Toyota Motor Corp. 1.0 (automotive and transport equipment) NTT DoCoMo Inc. 0.7 (telecommunications) Canon Inc. 0.6 (computer hardware) -------------------------------------------------------------------------------- Top Ten 17.3% ================================================================================ The "Ten Largest Holdings" excludes any temporary cash investments and equity index products. ================================================================================ ALLOCATION TO UNDERLYING VANGUARD FUNDS European Stock Index Fund Investor Shares 73.1% Pacific Stock Index Fund Investor Shares 26.9 -------------------------------------------------------------------------------- Total 100.0% ================================================================================ ================================================================================ SECTOR DIVERSIFICATION (% OF PORTFOLIO) COMPARATIVE BROAD FUND** INDEX+ INDEX++ -------------------------------------------------------------------------------- Consumer Discretionary 11.8% 11.8% 11.1% Consumer Staples 9.6 9.6 9.1 Energy 9.0 9.0 9.6 Financials 24.8 24.9 24.8 Health Care 10.5 10.4 9.3 Industrials 8.2 8.2 7.9 Information Technology 6.5 6.4 7.2 Materials 6.3 6.3 7.5 Telecommunication Services 8.2 8.2 8.4 Utilities 5.1 5.2 5.1 ================================================================================ *For underlying funds; annualized. **Reflects holdings of underlying funds. +MSCI EAFE Index. ++MSCI All Country World Index Free ex USA. 12 INSTITUTIONAL DEVELOPED MARKETS INDEX FUND ================================================================================ PORTFOLIO CHARACTERISTICS FUND -------------------------------------------------------------------------------- Expense Ratio 0% Average Weighted Expense Ratio* 0.20% -------------------------------------------------------------------------------- ================================================================================ TEN LARGEST HOLDINGS** (% OF TOTAL NET ASSETS) BP PLC 2.7% (oil) Vodafone Group PLC 2.5 (cellular telecommunications) GlaxoSmithKline PLC 2.3 (pharmaceuticals) HSBC Holdings PLC 2.2 (banking) Novartis AG (Registered) 2.1 (pharmaceuticals) Royal Dutch Petroleum Co. 1.6 (energy) TotalFinaElf SA 1.6 (integrated oil) Toyota Motor Corp. 1.0 (automotive and transport equipment) NTT DoCoMo Inc. 0.7 (telecommunications) Canon Inc. 0.6 (computer hardware) -------------------------------------------------------------------------------- Top Ten 17.3% ================================================================================ The "Ten Largest Holdings" excludes any temporary cash investments and equity index products. ================================================================================ ALLOCATION TO UNDERLYING VANGUARD FUNDS European Stock Index Fund Institutional Shares 73.1% Pacific Stock Index Fund Institutional Shares 26.9 -------------------------------------------------------------------------------- Total 100.0% ================================================================================ ================================================================================ SECTOR DIVERSIFICATION (% OF PORTFOLIO) COMPARATIVE BROAD FUND** INDEX+ INDEX++ -------------------------------------------------------------------------------- Consumer Discretionary 11.8% 11.8% 11.1% Consumer Staples 9.6 9.6 9.1 Energy 9.0 9.0 9.6 Financials 24.8 24.9 24.8 Health Care 10.5 10.4 9.3 Industrials 8.2 8.2 7.9 Information Technology 6.5 6.4 7.2 Materials 6.3 6.3 7.5 Telecommunication Services 8.2 8.2 8.4 Utilities 5.1 5.2 5.1 -------------------------------------------------------------------------------- *For underlying funds; annualized. **Reflects holdings of underlying funds. +MSCI EAFE Index. ++MSCI All Country World Index Free ex USA. VISIT OUR WEBSITE AT WWW.VANGUARD.COM FOR REGULARLY UPDATED FUND INFORMATION. 13 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 comparative index and an overall market index. Each 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%. However, 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 benchmark, 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 comparative index or an overall market 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 are taxable to investors). ================================================================================ 14 PERFORMANCE SUMMARIES AS OF APRIL 30, 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 ================================================================================ FISCAL-YEAR TOTAL RETURNS (%) OCTOBER 31, 1992--APRIL 30, 2003 -------------------------------------------------------------------------------- EUROPEAN STOCK FUND YEAR INVESTOR SHARES MSCI EUROPE INDEX -------------------------------------------------------------------------------- 1993 25.1 26.3 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* 4.1 4.2 ================================================================================ *Six months ended April 30, 2003. Note: See Financial Highlights tables on pages 54 and 55 for dividend and capital gains information. ================================================================================ AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED MARCH 31, 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. ================================================================================ ONE FIVE TEN YEARS INCEPTION DATE YEAR YEARS CAPITAL INCOME TOTAL -------------------------------------------------------------------------------- EUROPEAN STOCK INDEX FUND Investor Shares* 6/18/1990 -25.58% -7.42% 4.35% 2.12% 6.47% Admiral Shares 8/13/2001 -25.49 -17.92** - - - Institutional Shares 5/15/2000 -25.45 -17.35** - - - -------------------------------------------------------------------------------- *Total return figures do not reflect the $10 annual account maintenance fee applied on balances under $10,000. **Returns are since inception. 15 PERFORMANCE SUMMARIES (CONTINUED) PACIFIC STOCK INDEX FUND ================================================================================ FISCAL-YEAR TOTAL RETURNS (%) OCTOBER 31, 1992-APRIL 30, 2003 -------------------------------------------------------------------------------- PACIFIC STOCK FUND YEAR INVESTOR SHARES MSCI PACIFIC INDEX -------------------------------------------------------------------------------- 1993 49.0 49.6 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** -4.0 -4.0 -------------------------------------------------------------------------------- *Six months ended April 30, 2003. Note: See Financial Highlights tables on pages 56 and 57 for dividend information. EMERGING MARKETS STOCK INDEX FUND ================================================================================ FISCAL-YEAR TOTAL RETURNS (%) MAY 4, 1994-APRIL 30, 2003 -------------------------------------------------------------------------------- EMERGING MARKETS STOCK INDEX FUND SELECT EMERGING MARKETS YEAR 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** 6.3 6.5 ================================================================================ *Consists of stocks that can be bought free of restrictions in 15 emerging markets of Europe, Asia, Africa, and Latin America (95%) and a cash component (5%) based on the Lipper Money Market average. The stock component of the index is administered exclusively for Vanguard by MSCI. **Six months ended April 30, 2003. Note: See Financial Highlights tables on pages 58 and 59 for dividend information. ================================================================================ AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED MARCH 31, 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. ================================================================================ ONE FIVE TEN YEARS INCEPTION DATE YEAR YEAR CAPITAL INCOME TOTAL -------------------------------------------------------------------------------- PACIFIC STOCK INDEX FUND Investor Shares* 6/18/1990 -17.30% -6.07% -4.46% 0.87% -3.59% Admiral Shares 8/13/2001 -17.27 -16.96** - - - Institutional Shares 5/15/2000 -17.19 -20.50** - - - -------------------------------------------------------------------------------- EMERGING MARKETS STOCK INDEX FUND Investor Shares* 5/14/1994 -20.87% -5.28% -3.58% 1.96% -1.62% Fee-Adjusted Returns+ -21.65 -5.45 -3.58 1.86 -1.72 Institutional Shares 6/22/2000 -20.72 -12.47** - - - Fee-Adjusted Returns+ -21.50 -12.77** - - - ================================================================================ *Total return figures do not reflect the $10 annual account maintenance fee applied on balances under $10,000. **Returns are since inception. +Performance figures are adjusted for the 0.5% transaction fee on purchases and redemptions. 16 TOTAL INTERNATIONAL STOCK INDEX FUND ================================================================================ FISCAL-YEAR TOTAL RETURNS (%) APRIL 29, 1996-APRIL 30, 2003 -------------------------------------------------------------------------------- TOTAL INTERNATIONAL STOCK TOTAL INTERNATIONAL YEAR INDEX FUND COMPOSITE INDEX* -------------------------------------------------------------------------------- 1996 -2.0 -2.25 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* 2.2 2.2 -------------------------------------------------------------------------------- *Consists of the MSCI Europe Index (65%), the MSCI Pacific Index (26%), and the Select Emerging Markets Free Index (9%). **Six months ended April 30, 2003. Note: See Financial Highlights table on page 60 for dividend and capital gains information. DEVELOPED MARKETS INDEX FUND ================================================================================ FISCAL-YEAR TOTAL RETURNS (%) MAY 8, 2000-APRIL 30, 2003 -------------------------------------------------------------------------------- DEVELOPED MARKETS YEAR INVESTOR SHARES MSCI EAFE INDEX -------------------------------------------------------------------------------- 2000 -7.3 -7.9 2001 -25.1 -24.9 2002 -13.6 -13.2 2003* 1.9 1.8 ================================================================================ *Six months ended April 30, 2003. Note: See Financial Highlights table on page 61 for dividend information. ================================================================================ AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED MARCH 31, 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. ================================================================================ ONE FIVE TEN YEARS INCEPTION DATE YEAR YEAR CAPITAL INCOME TOTAL -------------------------------------------------------------------------------- Total International Stock Index Fund* 4/29/1996 -23.12% -6.99% -5.04% 1.68% -3.36% -------------------------------------------------------------------------------- Developed Markets Index Fund* 5/8/2000 -23.38% -- 19.85% 1.51% 18.34% ================================================================================ *Total return figures do not reflect the $10 annual account maintenance fee applied on balances under $10,000. 17 PERFORMANCE SUMMARIES (CONTINUED) INSTITUTIONAL DEVELOPED MARKETS INDEX FUND ================================================================================ FISCAL-YEAR TOTAL RETURNS (%) JUNE 1, 2000-APRIL 30, 2003 -------------------------------------------------------------------------------- INSTITUTIONAL DEVELOPED MARKETS YEAR INDEX FUND MSCI EAFE INDEX -------------------------------------------------------------------------------- 2000 -8.0 -7.9 2001 -25.1 -24.9 2002 -13.4 -13.2 2003* 1.9 1.8 ================================================================================ *Six months ended April 30, 2003. Note: See Financial Highlights table on page 62 for dividend information. ================================================================================ AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED MARCH 31, 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. ================================================================================ ONE TEN YEARS INCEPTION DATE YEAR CAPITAL INCOME TOTAL -------------------------------------------------------------------------------- Institutional Developed Markets Index Fund 6/1/2000 -23.30% -20.53% 1.65% -18.88% -------------------------------------------------------------------------------- 18 NOTICE TO SHAREHOLDERS At a special meeting of shareholders on December 3, 2002, fund shareholders approved the following proposals: o Elect trustees for each fund.* The individuals listed in the tables below were elected as trustees for each fund. All trustees served as trustees to the funds prior to the shareholder meeting. EUROPEAN STOCK INDEX FUND, PACIFIC STOCK INDEX FUND, EMERGING MARKETS STOCK INDEX FUND ================================================================================ TRUSTEE FOR WITHHELD PERCENTAGE FOR -------------------------------------------------------------------------------- John J. Brennan 5,281,736,317 113,840,134 97.9% Charles D. Ellis 5,291,490,574 104,085,876 98.1 Rajiv L. Gupta 5,282,636,844 112,939,606 97.9 JoAnn Heffernan Heisen 5,290,908,540 104,667,911 98.1 Burton G. Malkiel 5,283,768,860 111,807,590 97.9 Alfred M. Rankin, Jr. 5,291,340,761 104,235,689 98.1 J. Lawrence Wilson 5,277,749,566 117,826,885 97.8 ================================================================================ *Results are for all funds within the same trust. TOTAL INTERNATIONAL STOCK INDEX FUND, DEVELOPED MARKETS INDEX FUND, INSTITUTIONAL DEVELOPED MARKETS INDEX FUND ================================================================================ TRUSTEE FOR WITHHELD PERCENTAGE FOR -------------------------------------------------------------------------------- John J. Brennan 14,890,605,500 210,628,324 98.6% Charles D. Ellis 14,884,597,360 216,636,465 98.6 Rajiv L. Gupta 14,860,083,637 241,150,188 98.4 JoAnn Heffernan Heisen 14,880,145,951 221,087,874 98.5 Burton G. Malkiel 14,854,652,159 246,581,665 98.4 Alfred M. Rankin, Jr. 14,888,363,273 212,870,551 98.6 J. Lawrence Wilson 14,863,134,431 238,099,393 98.4 ================================================================================ *Results are for all funds within the same trust. o Change the following funds' policy on investing in other mutual funds. This change enables each fund to invest its cash reserves in specially created money market and short-term bond funds. This new cash management program, which is similar to those of other large mutual fund complexes, should help the funds to achieve greater diversification and to earn modestly higher returns on their cash reserves. The funds will need Securities and Exchange Commission approval before implementing this new cash management program.
================================================================================================================== BROKER PERCENTAGE VANGUARD FUND FOR AGAINST ABSTAIN NON-VOTES FOR ------------------------------------------------------------------------------------------------------------------ European Stock Index 3,076,621,598 183,922,847 88,905,016 130,119,646 88.4% Pacific Stock Index 1,188,453,873 64,727,924 28,494,499 31,255,344 90.5 Emerging Markets Stock Index 557,383,623 19,753,479 11,917,016 14,021,584 92.4 ==================================================================================================================
Note: Vote tabulations are rounded to the nearest whole number. 19 NOTICE TO SHAREHOLDERS (CONTINUED) o Reclassify the following funds as nondiversified. This change to "nondiversified" status enables each fund to continue tracking its target index in the event that the index becomes dominated by a small number of stocks.
================================================================================================================== BROKER PERCENTAGE VANGUARD FUND FOR AGAINST ABSTAIN NON-VOTES FOR ------------------------------------------------------------------------------------------------------------------ European Stock Index 3,106,340,457 146,943,516 96,165,489 130,119,646 89.3% Pacific Stock Index 1,199,299,158 52,485,281 29,891,857 31,255,344 91.3 Emerging Markets Stock Index 562,231,923 15,670,955 11,151,240 14,021,584 93.2 ==================================================================================================================
Note: Vote tabulations are rounded to the nearest whole number. 20 FINANCIAL STATEMENTS APRIL 30, 2003 (UNAUDITED) STATEMENT OF NET ASSETS This Statement provides a detailed list of each fund's holdings, including each security's market value on the last day of the reporting period. European, Pacific, and Emerging Markets Stock Index Fund securities are grouped and subtotaled by asset type (common stocks, bonds, etc.) and by country; 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 (99.6%)(1) -------------------------------------------------------------------------------- AUSTRIA (0.2%) Erste Bank der Oesterreichischen Sparkassen AG 35,588 $ 2,816 * Telekom Austria AG 267,223 2,738 OMV AG 17,925 2,153 Wienerberger AG 42,471 801 Voestalpine AG 22,657 637 Oesterreichische Elektrizitaetswirtschafts AG Class A 5,949 550 Mayr-Melnhof Karton AG 6,395 542 Flughafen Wien AG 14,521 507 Boehler-Uddeholm AG 7,527 392 * VA Technologies AG 13,171 330 * RHI AG 23,655 261 ----------------------- 11,727 ----------------------- BELGIUM (1.4%) Fortis Group 1,282,056 21,519 Dexia 844,884 9,684 Electrabel SA 39,783 9,537 Interbrew 197,483 4,408 KBC Bankverzekeringsholding 119,898 4,242 Solvay SA 56,372 3,982 Groupe Bruxelles Lambert SA 90,956 3,741 UCB SA 115,804 3,205 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Agfa Gevaert NV 150,324 2,986 Delhaize Group 97,922 $ 2,069 Colruyt NV 22,129 1,446 Umicore 21,169 962 Bekaert NV 18,678 858 Omega Pharma SA 26,589 690 Barco NV 11,039 638 D'Ieteren SA 3,630 461 Compagnie Maritime Belge SA 5,484 343 ----------------------- 70,771 ----------------------- DENMARK (1.1%) Danske Bank A/S 725,073 13,951 Novo Nordisk A/S B Shares 356,872 12,928 TDC A/S 172,545 4,292 D/S Svendborg B Shares 248 3,254 D/S 1912 B Shares 358 3,213 Danisco A/S 69,998 2,557 ISS A/S 58,443 2,187 H. Lundbeck A/S 93,457 1,939 Novozymes A/S 72,634 1,774 Group 4 Falck A/S 89,667 1,564 Coloplast A/S B Shares 17,362 1,284 Carlsberg A/S B Shares 32,663 1,188 * Topdanmark A/S 34,303 1,119 Vestas Wind Systems A/S 139,432 1,090 * William Demant A/S 39,690 990 21 ================================================================================ MARKET VALUE* EUROPEAN STOCK INDEX FUND SHARES (000) ================================================================================ * GN Store Nord A/S 289,140 $ 987 * East Asiatic Co. A/S 26,669 629 DSV, De Sammensluttede Vognmaend A/S 26,600 572 Kobenhavns Lufthavne A/S 8,248 538 * FLS Industries A/S B Shares 39,335 340 Bang & Olufsen A/S B Shares 14,447 291 * NEG Micon A/S 24,925 251 NKT Holding A/S 20,210 222 ----------------------- 57,160 ----------------------- FINLAND (2.9%) Nokia Oyj 6,318,167 106,896 Stora Enso Oyj R Shares 898,946 9,772 UPM-Kymmene Oyj 653,470 9,554 Fortum Oyj 448,676 3,220 Sampo Oyj A Shares 365,751 2,653 Instrumentarium Oyj 64,405 2,411 TietoEnator Oyj B Shares 111,769 1,852 Kone Corp. B Shares 45,285 1,541 * Elisa Oyj Class A 184,000 1,417 Metso Oyj 134,437 1,275 Outokumpu Oyj A Shares 117,043 967 Amer Group Ltd. 30,806 928 Kesko Oyj 77,401 881 Uponor Oyj 39,606 796 Orion-Yhtyma Oyj B Shares 47,399 793 Wartsila Oyj B Shares 49,140 568 * Rautaruuki Oyj 110,515 481 KCI Konecranes Oyj 17,739 386 Pohjola Group PLC D Shares 22,761 344 ----------------------- 146,735 ----------------------- FRANCE (13.2%) TotalFinaElf SA 842,436 110,471 BNP Paribas SA 1,063,454 49,918 Aventis SA 895,466 45,481 Carrefour SA 756,563 32,904 L'Oreal SA 446,827 31,940 Sanofi-Synthelabo SA 531,957 31,732 AXA 1,860,878 28,265 France Telecom SA 1,074,921 24,832 Societe Generale Class A 397,311 24,299 Groupe Danone 163,182 23,092 L'Air Liquide SA (Registered) 133,257 20,181 Suez SA 1,095,951 17,845 STMicroelectronics NV 772,635 15,969 Vivendi Universal SA 927,029 15,105 Cie. de St. Gobain SA 406,048 14,057 * Alcatel SA 1,589,981 13,024 Schneider Electric SA 269,501 12,759 LVMH Louis Vuitton Moet Hennessy 290,975 12,697 Lafarge SA 175,089 11,763 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ PSA Peugeot Citroen 239,400 $ 11,205 Renault SA 206,796 8,943 Accor SA 249,602 8,226 Lagardere S.C.A. 176,160 6,732 Compagnie Generale des Etablissements Michelin SA B Shares 178,447 6,602 Pinault-Printemps-Redoute SA 89,260 6,236 Pernod Ricard SA 70,600 6,197 Bouygues SA 228,109 5,580 Vinci SA 85,113 5,543 Essilor International SA 127,759 5,231 * Arcelor 457,169 5,174 Societe Television Francaise 1 169,108 4,750 Vivendi Universal SA ADR 272,160 4,466 * Cap Gemini SA 132,065 4,109 Unibail Company 56,116 3,754 European Aeronautic Defence and Space Co. 379,922 3,532 * Thomson SA 239,478 3,509 * Wanadoo 498,900 3,408 Etablissements Economiques du Casino Guichard-Perrachon SA 49,433 3,365 Valeo SA 103,825 2,974 * Autoroutes du Sud de la France 106,312 2,907 Publicis Groupe SA 128,564 2,837 Sodexho Alliance SA 115,677 2,632 Pechiney SA A Shares 91,091 2,628 Thales SA 90,365 2,417 Technip-Coflexip SA 25,191 2,064 Sagem SA 25,381 2,054 * Business Objects SA 83,819 1,814 Societe BIC SA 45,234 1,590 Dassault Systemes SA 53,157 1,536 Imerys 10,573 1,403 Zodiac SA 52,778 1,191 Air France 102,988 1,147 * Atos Origin SA 27,163 969 * Alstom 329,130 669 * Club Mediterranee SA 16,906 377 Altran Technologies SA 86,292 317 ----------------------- 674,422 ----------------------- GERMANY (8.6%) Siemens AG 1,058,090 52,749 Deutsche Bank AG 738,484 38,192 E.On AG 777,025 37,193 Deutsche Telekom AG 2,772,474 37,068 BASF AG 693,304 30,926 SAP AG 269,950 27,657 DaimlerChrysler AG (Registered) 809,876 26,121 Allianz AG 362,071 25,598 22 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Bayer AG 916,568 $ 16,725 Muenchener Rueckversicherungs- Gesellschaft AG (Registered) 141,566 14,140 RWE AG 484,741 13,038 DaimlerChrysler AG 327,337 10,606 Schering AG 235,694 10,508 Volkswagen AG 295,719 10,396 Deutsche Post AG 516,753 6,165 Bayerische Hypo-und Vereinsbank AG 446,320 5,942 Metro AG 192,838 5,357 Henkel KGaA 78,794 5,116 Adidas-Salomon AG 57,122 4,915 Beiersdorf AG 39,156 4,868 Altana AG 92,825 4,571 ThyssenKrupp AG 443,461 4,543 Linde AG 110,661 4,169 Deutsche Boerse AG 81,785 3,834 Porsche AG 10,399 3,830 Volkswagen AG Pfd. 139,021 3,545 * Infineon Technologies AG 473,611 3,515 * Deutsche Lufthansa AG 254,447 2,681 Man AG 140,598 2,561 * Continental AG 141,878 2,538 TUI AG 163,075 2,386 Wella AG 31,341 2,343 Fresenius Medical Care AG 46,377 2,328 Buderus AG 53,980 1,776 Merck KGaA 60,336 1,621 Gehe AG 34,513 1,369 RWE AG Pfd. 51,525 1,259 Fresenius Medical Care AG 35,229 1,254 * Qiagen NV 173,062 1,209 HeidelbergerCement AG 38,777 1,196 * EPCOS AG 63,647 983 Karstadt Quelle AG 55,844 944 MLP AG 72,180 835 * WCM Beteiligungs-und Grundbesitz AG 215,666 587 ProSieben Sat.1 Media AG 96,637 549 Hugo Boss AG Pfd. 36,340 503 Douglas Holding AG 27,051 497 Aixtron AG 64,915 220 ----------------------- 440,926 ----------------------- GREECE (0.5%) Hellenic Telecommunication Organization SA 431,000 4,618 * National Bank of Greece SA 192,960 2,705 * Alpha Credit Bank SA 191,480 2,658 * EFG Eurobank Ergasias 206,329 2,607 Coca-Cola Hellenic Bottling Co. SA 123,500 1,806 ================================================================================ MARKET VALUE* EUROPEAN STOCK INDEX FUND SHARES (000) ================================================================================ * Public Power Corp. 93,100 $ 1,411 Titan Cement Co. SA 37,600 1,385 Vodafone-Panafon SA 210,910 1,337 Commercial Bank of Greece SA 87,860 1,230 Greek Organization of Football Prognostics 108,100 987 Bank of Piraeus 152,010 936 Hellenic Petroleum SA 121,200 730 Intracom SA 100,480 572 Viohalco, Hellenic Copper & Aluminum Industry SA 130,600 554 Hellenic Technodomiki Tev SA 81,200 507 Papastratos Cigarettes Co. SA 22,300 474 Technical Olympic SA 93,299 301 Hellenic Duty Free Shops SA 28,900 298 Aluminum of Greece SA 10,900 215 Folli-Follie SA 18,097 202 Attica Enterprises SA 68,600 172 Athens Water Supply and Sewage Co. SA 36,900 139 M. J. Maillis SA 42,000 127 ----------------------- 25,971 ----------------------- IRELAND (1.2%) Allied Irish Banks PLC 1,186,675 18,210 Bank of Ireland 1,334,355 16,306 * CRH PLC 692,272 10,623 Irish Life & Permanent PLC 355,631 4,128 * Ryanair Holdings PLC 453,693 3,104 Kerry Group PLC A Shares 158,865 2,349 * Elan Corp. PLC 412,036 1,380 DCC PLC 105,528 1,307 * Independent News & Media PLC 739,649 974 Greencore Group PLC 219,489 674 * Ryanair Holdings PLC ADR 8,400 333 * Waterford Wedgewood PLC 816,839 219 * Elan Corp. PLC ADR 45,229 153 * Independent News & Media PLC Rights Exp. 5/14/2003 150,958 79 ----------------------- 59,839 ----------------------- ITALY (5.4%) ENI SpA 3,696,189 52,677 Assicurazioni Generali SpA 1,345,028 30,907 Telecom Italia SpA 3,120,409 25,491 Telecom Italia Mobile SpA 5,000,028 23,548 Unicredito Italiano SpA 4,550,289 19,907 ENEL SpA 2,799,227 16,745 Telecom Italia SpA Risp. 2,701,638 13,297 Banca Intesa SpA 4,839,363 12,530 San Paolo-IMI SpA 1,145,912 9,451 Mediaset SpA 783,555 6,698 Riunione Adriatica di Sicurta SpA 447,912 6,458 23 ================================================================================ MARKET VALUE* EUROPEAN STOCK INDEX FUND SHARES (000) ================================================================================ Alleanza Assicurazioni SpA 616,772 $ 5,768 Mediobanca Banca di Credito Finanziaria SpA 565,696 5,234 Banca Monte dei Paschi di Siena SpA 1,598,476 4,638 * Seat Pagine Gialle SpA 6,636,441 4,503 Snam Rete Gas SpA 1,032,776 3,746 * Banca Nazionale del Lavoro (BNL) 2,130,482 3,452 Capitalia SpA 1,623,042 2,563 Fiat SpA 311,507 2,371 Banca Intesa SpA Non Convertible Risp. 1,239,585 2,248 Banca Popolare di Milano SpA 508,205 2,116 Banca Fideuram SpA 395,304 2,087 Luxottica Group SpA 180,995 2,068 Mediolanum SpA 285,003 1,489 * Autogrill SpA 150,661 1,470 Parmalat Finanziaria SpA 533,245 1,363 Pirelli SpA 1,271,663 1,255 Mondadori (Arnoldo) Editore SpA 169,308 1,200 Italcementi SpA 106,982 1,118 * Tiscali SpA 212,023 1,022 * FinecoGroup SpA 2,117,570 997 Gruppo Editoriale L'Espresso SpA 227,330 893 Bulgari SpA 171,461 800 * Snia SpA 386,374 740 Benetton Group SpA 71,082 615 ACEA SpA 148,233 604 * Alitalia SpA 2,546,797 597 Fiat SpA Risp. 108,546 486 * e.Biscom SpA 16,294 470 Fiat SpA Pfd. 97,897 428 ----------------------- 274,050 ----------------------- NETHERLANDS (7.1%) Royal Dutch Petroleum Co. 2,772,436 113,399 Unilever NV 754,911 47,559 ING Groep NV 2,235,223 36,296 Koninklijke (Royal) Philips Electronics NV 1,738,883 32,350 * ABN-AMRO Holding NV 1,889,990 31,934 * Aegon NV 1,553,552 15,795 * Koninklijke KPN NV 2,299,615 15,296 Heineken NV 258,457 9,597 Reed Elsevier NV 827,191 9,416 Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit 294,657 8,550 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Akzo Nobel NV 376,519 $ 8,370 TPG NV 446,706 6,969 * ASML Holding NV 569,477 4,919 Wolters Kluwer NV 366,153 4,769 * Koninklijke Ahold NV 858,464 3,928 * IHC Caland NV 40,137 2,072 * Koninklijke Numico NV 197,797 1,845 Aegon NV ARS 169,466 1,742 Koninklijke Vendex KBB NV 125,539 1,233 Oce NV 110,599 1,042 * Vedior NV 149,712 987 Hagemeyer NV 146,724 711 * Aegon NV Rights Exp. 5/13/2003 1,556,794 633 Buhrmann NV 128,174 428 * ASML Holding (New York) 38,580 340 KLM Royal Dutch Airlines NV 32,897 232 ----------------------- 360,412 ----------------------- NORWAY (0.6%) Norsk Hydro ASA 193,601 8,189 Statoil ASA 579,350 4,595 Orkla ASA 258,019 4,498 DNB Holding ASA 513,436 2,451 Telenor ASA 599,282 2,398 Gjensidige NOR ASA 68,750 2,382 Norske Skogindustrier ASA 141,964 1,948 Tomra Systems ASA 237,610 1,124 * Storebrand ASA 198,970 810 Schibsted ASA 65,288 756 Bergesen D.Y. ASA A Shares 29,443 724 * Tandberg ASA 159,412 620 Frontline Ltd. 55,077 582 * Aker Kvaerner ASA 644,944 380 Bergesen D.Y. ASA B Shares 13,506 285 Smedvig ASA A Shares 55,983 274 * EDB Business Partner ASA 64,900 163 * Nera ASA 130,409 156 * Merkantildata ASA 192,771 110 Smedvig ASA B Shares 20,440 85 ----------------------- 32,530 ----------------------- PORTUGAL (0.5%) Portugal Telecom SGPS SA 1,241,502 8,881 Electricidade de Portugal SA 2,359,988 4,267 Banco Comercial Portugues SA 2,220,871 3,148 Brisa-Auto Estradas de Portugal SA 397,499 2,143 Banco Espirito Santo SA 139,078 1,994 Banco BPI SA 502,169 1,339 Banco Comercial Portugues SA Pfd. 27,639 1,337 24 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ * PT Multimedia-Servicos de Telecomunicacoes e Multimedia, SGPS, SA 63,780 $ 1,000 Cimpor-Cimento de Portugal SA 228,955 848 * Sonae SGPS SA 1,307,629 569 * Jeronimo Martins & Filho, SGPS, SA 48,099 381 ----------------------- 25,907 ----------------------- SPAIN (5.1%) * Telefonica SA 5,773,745 63,856 Banco Santander Central Hispano SA 5,662,800 44,491 Banco Bilbao Vizcaya Argentaria SA 4,005,572 40,322 Repsol-YPF SA 1,209,101 17,609 Endesa SA 1,190,461 16,886 Iberdrola SA 1,014,057 16,331 Altadis SA 384,181 9,904 * Telefonica SA ADR 190,682 6,340 Industria de Diseno Textil SA 287,709 5,735 Gas Natural SDG SA 267,442 5,119 Union Fenosa SA 301,715 4,199 Grupo Dragados SA 163,757 3,129 * Terra Networks, SA 518,935 2,757 Acesa Infraestructuras SA 180,630 2,348 Grupo Ferrovial, SA 83,739 2,222 Acerinox SA 57,641 2,148 ACS, Actividades de Construccion y Servicios, SA 54,392 2,049 Acciona SA 37,768 1,812 Fomento de Construc y Contra SA 69,264 1,773 Iberia (Linea Aer Espana) 606,130 1,062 Vallehermoso SA 151,788 1,569 Amadeus Global Travel Distribution SA 308,989 1,545 * Zeltia SA 176,311 1,377 * NH Hoteles SA 133,285 1,197 Corporacion Mapfre SA 109,456 1,026 Telefonica Publicidad e Informacion, SA 218,027 934 Sociedad General de Aguas de Barcelona SA 75,921 883 Promotora de Informaciones SA 99,059 752 Sol Melia SA 101,266 398 * TelePizza, SA 237,907 279 ----------------------- 260,052 ----------------------- SWEDEN (3.0%) * Telefonaktiebolaget LM Ericsson AB Class B 20,210,343 18,408 Nordea AB 2,956,376 15,686 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Hennes & Mauritz AB B Shares 626,644 $ 13,943 Svenska Handelsbanken AB A Shares 730,836 11,615 * TeliaSonera AB 2,470,268 8,788 Svenska Cellulosa AB B Shares 250,884 8,496 Electrolux AB Series B 411,369 7,720 Sandvik AB 289,911 7,372 Skandinaviska Enskilda Banken AB A Shares 622,542 6,469 Volvo AB B Shares 280,025 5,597 Securitas AB B Shares 388,082 4,555 * Tele2 AB B Shares 124,348 4,150 Assa Abloy AB 388,791 3,707 Atlas Copco AB A Shares 148,269 3,598 Swedish Match AB 478,754 3,541 Skandia Forsakrings AB 1,156,644 3,365 SKF AB B Shares 105,338 3,052 * Skanska AB B Shares 512,172 2,962 Volvo AB A Shares 129,603 2,488 Atlas Copco AB B Shares 93,361 2,112 Eniro AB 223,800 1,710 Holmen AB 63,800 1,650 Nobel Biocare Holding AG 28,750 1,601 Gambro AB A Shares 231,532 1,302 Drott AB B Shares 123,018 1,301 Svenskt Stal AB A Shares 81,352 1,069 Trelleborg AB B Shares 102,099 974 SKF AB A Shares 30,275 885 Svenska Handelsbanken AB B Shares 54,496 836 * Modern Times Group AB 69,083 773 Hoganas AB B Shares 38,800 723 Gambro AB B Shares 121,697 687 * WM-Data AB Class B 354,140 481 * SAS AB 93,688 449 OM AB 69,671 398 Svenskt Stal AB 29,119 361 SAPA AB 14,100 276 * Eniro AB Rights Exp. 5/6/2003 230,400 23 ----------------------- 153,123 ----------------------- SWITZERLAND (11.1%) Novartis AG (Registered) 3,620,770 142,827 Nestle SA (Registered) 523,037 106,631 UBS AG 1,621,592 76,939 Roche Holdings AG 927,882 59,042 Credit Suisse Group (Registered) 1,577,446 37,684 Swiss Re (Registered) 425,338 27,786 Zurich Financial Services AG 190,255 20,060 Swisscom AG 35,040 10,838 Cie. Financiere Richemont AG 693,038 10,245 25 ================================================================================ MARKET VALUE* EUROPEAN STOCK INDEX FUND SHARES (000) ================================================================================ * Syngenta AG 141,415 $ 7,299 Holcim Ltd. B Shares 36,485 6,846 Adecco SA (Registered) 171,669 6,582 * CIBA Specialty Chemicals AG (Registered) 91,457 6,318 Serono SA Class B 9,207 4,996 Roche Holdings AG (Bearer) 42,556 4,377 Swatch Group AG (Bearer) 43,825 3,684 Synthes-Stratec Inc. 5,807 3,661 * ABB Ltd. 1,187,391 3,651 Givaudan SA 9,254 3,582 Lonza AG (Registered) 57,235 3,475 * Centerpulse (Registered) 14,260 3,117 SGS Societe Generale de Surveillance Holding SA (Registered) 6,261 2,190 * Logitech International SA 56,606 2,087 Clariant AG 182,630 2,040 UBS AG 35,370 1,678 Swatch Group AG (Registered) 75,218 1,289 * Schindler Holding AG (Ptg. Ctf.) 7,276 1,218 Unaxis Holding AG 13,325 1,064 Valora Holding AG 5,697 1,023 * Kuoni Reisen Holding AG (Registered) 4,100 901 * Kudelski SA 43,599 754 * Forbo Holding AG (Registered) 1,807 560 Phonak Holding AG 50,124 532 Sulzer AG (Registered) 4,223 521 * Georg Fischer AG (Registered) 4,947 490 * Publigroupe SA 2,505 464 Tecan AG 16,775 441 ----------------------- 566,892 ----------------------- UNITED KINGDOM (37.7%) BP PLC 26,103,021 165,418 GlaxoSmithKline PLC 7,959,223 159,520 HSBC Holdings PLC 14,198,090 155,555 Vodafone Group PLC 78,275,213 154,504 Royal Bank of Scotland Group PLC 3,630,230 95,212 AstraZeneca Group PLC 2,270,995 89,108 Shell Transport & Trading Co. PLC 12,779,988 76,545 Barclays PLC 8,657,155 59,808 HBOS PLC 4,994,316 58,510 Lloyds TSB Group PLC 7,370,388 48,474 Diageo PLC 4,175,698 46,316 Unilever PLC 3,653,622 35,913 BT Group PLC 11,454,963 32,817 Tesco PLC 9,534,726 30,173 National Grid Transco PLC 4,096,552 26,910 Rio Tinto PLC 1,407,518 26,905 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Vodafone Group PLC ADR 1,177,400 $ 23,265 BP PLC ADR 575,360 22,174 Aviva PLC 2,978,611 20,947 British American Tobacco PLC 2,159,558 20,709 BG Group PLC 4,662,326 18,648 * British Sky Broadcasting Group PLC 1,664,847 17,256 Prudential PLC 2,638,580 16,152 Imperial Tobacco Group PLC 961,927 16,097 BHP Billiton PLC 3,094,604 15,827 Cadbury Schweppes PLC 2,719,701 15,149 Centrica PLC 5,610,626 14,908 Marks & Spencer Group PLC 3,017,252 14,057 Compass Group PLC 2,935,842 13,514 Kingfisher PLC 3,447,983 13,474 Reed Elsvier PLC 1,678,309 13,385 Reckitt Benckiser PLC 745,091 13,141 GUS PLC 1,330,309 12,295 Scottish & Southern Energy PLC 1,134,999 11,664 ScottishPower PLC 1,829,287 11,366 BAA PLC 1,406,199 10,855 Legal & General Group PLC 8,575,201 10,622 Boots Group PLC 1,110,005 10,157 Pearson PLC 1,059,472 8,831 BOC Group PLC 656,064 8,273 BAE Systems PLC 4,040,086 8,200 Smith & Nephew PLC 1,229,327 8,198 WPP Group PLC 1,134,011 8,070 Smiths Group PLC 736,379 7,874 Land Securities Group PLC 622,256 7,529 Rentokil Initial PLC 2,465,684 7,369 Wolseley PLC 761,642 7,365 SABMiller PLC 1,059,502 7,298 J. Sainsbury PLC 1,926,812 7,283 United Utilities PLC 732,764 7,039 Amersham PLC 928,520 6,674 Safeway PLC 1,394,159 6,061 3i Group PLC 811,321 6,030 * InterContinental Hotels Group PLC 971,586 5,901 Man Group PLC 346,964 5,850 Next PLC 386,363 5,826 Scottish & Newcastle PLC 1,015,501 5,802 Carnival PLC 219,189 5,472 Hanson PLC 971,985 5,445 Severn Trent PLC 456,197 5,213 Hilton Group PLC 2,096,353 5,126 Dixons Group PLC 2,573,243 4,575 Amvesco PLC 836,206 4,544 Bunzl PLC 620,097 4,465 British Land Co., PLC 667,876 4,355 26 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Reuters Group PLC 1,897,341 $ 4,094 Granada PLC 3,657,430 3,990 Whitbread PLC 392,785 3,889 Johnson Matthey PLC 291,865 3,888 ScottishPower PLC ADR 154,280 3,812 Rexam PLC 606,738 3,792 Exel PLC 393,175 3,770 Cable and Wireless PLC 3,008,101 3,618 Capita Group PLC 878,830 3,561 The Sage Group PLC 1,600,856 3,550 Daily Mail and General Trust 403,177 3,483 Kelda Group PLC 520,761 3,425 Royal & Sun Alliance Insurance Group PLC 1,906,642 3,329 Imperial Chemical Industries PLC 1,581,313 3,279 * Mitchells & Butlers PLC 962,986 3,263 BPB PLC 648,876 3,215 GKN PLC 970,257 3,194 Provident Financial PLC 337,687 3,098 Rank Group PLC 787,181 3,041 Signet Group PLC 2,259,389 3,033 Hays PLC 2,173,492 2,901 Electrocomponents PLC 575,271 2,873 Brambles Industries PLC 958,439 2,849 Rolls-Royce PLC 1,950,661 2,829 The Peninsular & Oriental Steam Navigation Co. 910,823 2,810 WPP Group PLC ADR 78,406 2,796 Slough Estates PLC 548,787 2,778 Associated British Ports Holdings PLC 432,210 2,711 * International Power PLC 1,476,957 2,644 Hammerson PLC 362,213 2,634 Tate & Lyle PLC 539,548 2,561 Misys PLC 768,589 2,352 Taylor Woodrow PLC 729,775 2,286 RMC Group PLC 351,470 2,247 Barratt Developments PLC 315,148 2,105 FirstGroup PLC 546,015 2,094 IMI PLC 472,024 2,071 AWG PLC 237,052 2,029 EMI Group PLC 1,049,050 2,012 * George Wimpey PLC 495,956 1,982 BBA Group PLC 620,082 1,925 United Business Media PLC 446,511 1,784 The Berkeley Group PLC 178,571 1,783 LogicaCMG PLC 993,288 1,754 Aegis Group PLC 1,481,819 1,735 Close Brothers Group PLC 189,109 1,630 Canary Wharf Group PLC 618,848 1,612 Balfour Beatty PLC 555,766 1,592 Schroders PLC 162,899 1,582 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ * Celltech Group PLC 367,443 $ 1,500 Amec PLC 401,303 1,488 * British Airways PLC 723,494 1,463 Carlton Communications PLC 850,368 1,427 Serco Group PLC 579,759 1,396 * ARM Holdings PLC 1,356,341 1,387 Pilkington PLC 1,365,893 1,332 Kidde PLC 1,096,995 1,262 Securicor PLC 821,918 1,235 Chubb PLC 1,112,097 1,186 Invensys PLC 4,692,398 1,106 Novar PLC 583,560 1,031 Stagecoach Group PLC 1,440,369 1,013 De La Rue Group PLC 250,300 916 * Corus Group PLC 4,068,388 901 FKI PLC 746,167 885 Great Portland Estates PLC 250,689 879 Aggreko PLC 334,833 859 SSL International PLC 244,523 832 ----------------------- 1,929,401 ----------------------- -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $5,452,661) 5,089,918 ================================================================================ FACE AMOUNT (000) -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS (21.4%)(1) -------------------------------------------------------------------------------- Federal National Mortgage Assn. (2) 1.168%, 7/2/2003 $3,000 2,994 Repurchase Agreement Collateralized by U.S. Government Obligations in a Pooled Cash Account 1.32%, 5/1/2003--Note F 1,092,003 1,092,003 -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,094,997) 1,094,997 -------------------------------------------------------------------------------- TOTAL INVESTMENTS (121.0%) (Cost $6,547,658) 6,184,915 -------------------------------------------------------------------------------- 27 ================================================================================ MARKET VALUE* EUROPEAN STOCK INDEX FUND (000) ================================================================================ OTHER ASSETS AND LIABILITIES (-21.0%) -------------------------------------------------------------------------------- Other Assets--Note B $ 63,551 Security Lending Collateral Payable to Brokers--Note F (1,092,003) -------------------------------------------------------------------------------- Other Liabilities (44,257) -------------------------------------------------------------------------------- (1,072,709) -------------------------------------------------------------------------------- NET ASSETS (100%) $5,112,206 ================================================================================ *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 100.1% and 20.9%, 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. ARS--American Registered Share. (Ptg. Ctf.)--Participating Certificate. ================================================================================ AMOUNT (000) ================================================================================ AT APRIL 30, 2003, NET ASSETS CONSISTED OF: -------------------------------------------------------------------------------- Paid-in Capital $5,819,378 Undistributed Net Investment Income 54,667 Accumulated Net Realized Losses (402,242) Unrealized Appreciation (Depreciation) Investment Securities (362,743) Futures Contracts 1,121 Foreign Currencies and Forward Currency Contracts 2,025 -------------------------------------------------------------------------------- NET ASSETS $5,112,206 ================================================================================ Investor Shares--Net Assets Applicable to 254,912,676 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $4,257,647 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE-- INVESTOR SHARES $16.70 ================================================================================ Admiral Shares--Net Assets Applicable to 8,968,506 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $351,692 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE-- ADMIRAL SHARES $39.21 ================================================================================ Institutional Shares--Net Assets Applicable to 30,089,972 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $502,867 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE-- INSTITUTIONAL SHARES $16.71 ================================================================================ See Note D in Notes to Financial Statements for the tax-basis components of net assets. 28 ================================================================================ MARKET VALUE* PACIFIC STOCK INDEX FUND SHARES (000) ================================================================================ COMMON STOCKS (98.8%)(1) -------------------------------------------------------------------------------- AUSTRALIA (19.3%) National Australia Bank Ltd. 1,851,018 $ 37,632 Commonwealth Bank of Australia 1,517,198 25,834 BHP Billiton Ltd. 4,497,076 25,431 Australia & New Zealand Bank Group Ltd. 1,823,167 21,270 Westpac Banking Corp., Ltd. 2,123,970 21,139 News Corp. Ltd. Pfd. 2,326,596 13,739 News Corp. Ltd. 1,777,093 12,651 Woolworths Ltd. 1,286,438 10,397 AMP Ltd. 1,405,678 7,676 Rio Tinto Ltd. 377,845 7,511 Foster's Group Ltd. 2,499,975 7,006 Wesfarmers Ltd. 454,714 6,969 Telstra Corp. Ltd. 2,640,659 6,954 Coles Myer Ltd. 1,369,092 5,892 Westfield Trust (Units) 2,455,016 5,268 Amcor Ltd. 1,007,604 5,238 Macquarie Infrastucture Group 2,294,442 4,722 Westfields Holdings Ltd. 514,756 4,701 Suncorp-Metway Ltd. 636,524 4,527 General Property Trust 2,339,928 4,391 Woodside Petroleum Ltd. 564,043 4,044 Insurance Australia Group Ltd. 2,003,335 3,885 Australian Gas Light Co., Ltd. 541,653 3,873 Macquarie Bank Ltd. 244,362 3,834 Brambles Industries Ltd. 1,178,336 3,796 QBE Insurance Group Ltd. 688,706 3,679 Alumina Ltd. 1,346,659 3,673 * Rinker Group Ltd. 1,130,438 3,437 * WMC Resources Ltd. 1,347,964 3,373 Stockland 1,007,578 3,151 Lend Lease Corp. 474,868 3,003 Tabcorp Holdings Ltd. 442,091 2,931 M.I.M. Holdings Ltd. 2,423,710 2,577 Santos Ltd. 697,989 2,532 Origin Energy Ltd. 779,680 2,190 Mirvac Group 812,351 2,124 Orica Ltd. 336,091 2,081 Boral Ltd. 684,903 2,039 James Hardie Industries NV 496,737 2,038 BHP Steel Ltd. 957,146 2,030 CSL Ltd. 193,492 1,893 Mayne Group Ltd. 996,982 1,846 Southcorp Ltd. 772,180 1,826 Coca-Cola Amatil Ltd. 500,233 1,780 John Fairfax Holdings Ltd. 852,719 1,627 Patrick Corp. Ltd. 199,700 1,623 Newcrest Mining Ltd. 383,430 1,571 Transurban Group 523,145 1,545 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Cochlear Ltd. 64,050 $ 1,357 Paperlinx Ltd. 421,721 1,353 CSR Ltd. 1,148,439 1,279 CFS Gandel Retail Trust 1,373,500 1,203 Sonic Healthcare Ltd. 265,558 1,057 Tab Ltd. 519,058 1,049 Commonwealth Property Office Fund 1,362,030 1,014 AMP Diversified Property Ltd. 538,509 997 Leighton Holdings Ltd. 158,558 964 Deutsche Office Trust 1,324,428 928 Harvey Norman Holdings Ltd. 635,325 906 Principal Office Fund 1,027,602 893 Australian Stock Exchange Ltd. 121,307 873 Publishing & Broadcasting Ltd. 149,509 826 * Ansell Ltd. 215,474 783 Futuris Corp., Ltd. 730,754 699 Iluka Resources Ltd. 271,159 697 OneSteel Ltd. 602,291 644 Computershare Ltd. 532,341 566 Aristocrat Leisure Ltd. 334,276 326 David Jones Ltd. 406,821 267 Sons of Gwalia Ltd. 191,296 221 * Energy Developments Ltd. 103,208 136 ----------------------- 331,987 ----------------------- HONG KONG (5.5%) Hutchison Whampoa Ltd. 2,584,600 14,383 Cheung Kong Holdings Ltd. 1,826,100 10,092 Hang Seng Bank Ltd. 924,446 9,157 CLP Holdings Ltd. 2,181,899 8,924 Sun Hung Kai Properties Ltd. 1,597,800 7,498 Hong Kong Electric Holdings Ltd. 1,675,400 6,724 Hong Kong & China Gas Co., Ltd. 4,462,651 5,264 Swire Pacific Ltd. A Shares 1,127,400 4,467 Boc Hong Kong Holdings Ltd. 3,193,500 3,112 Bank of East Asia Ltd. 1,633,133 3,026 Wharf Holdings Ltd. 1,470,714 2,574 Li & Fung Ltd. 1,915,500 2,149 Johnson Electric Holdings Ltd. 1,770,100 1,906 Henderson Land Development Co. Ltd. 724,000 1,796 MTR Corp. 1,580,500 1,702 Cathay Pacific Airways Ltd. 1,206,000 1,454 Hong Kong Exchanges & Clearing Ltd. 1,239,000 1,446 * PCCW Ltd. 2,241,569 1,423 Esprit Holdings Ltd. 635,000 1,246 Hang Lung Properties Ltd. 1,380,500 1,195 Cheung Kong Infrastructure Holdings Ltd. 541,000 1,013 29 ================================================================================ MARKET VALUE* PACIFIC STOCK INDEX FUND SHARES (000) ================================================================================ Television Broadcasts Ltd. 330,000 $ 1,009 Shangri-La Asia Ltd. 1,150,744 727 SCMP Group Ltd. 1,654,546 626 Hysan Development Co., Ltd. 727,211 545 New World Development Co., Ltd. 1,685,697 513 ASM Pacific Technology Ltd. 200,000 496 Sino Land Co. 1,759,600 468 Giordano International Ltd. 1,719,108 463 ----------------------- 95,398 ----------------------- JAPAN (70.3%) Toyota Motor Corp. 2,792,500 63,221 NTT DoCoMo, Inc. 20,639 42,572 Canon, Inc. 997,000 40,295 Takeda Chemical Industries Ltd. 957,000 35,067 Tokyo Electric Power Co. 1,374,100 27,883 Sony Corp. 1,048,238 25,490 Honda Motor Co., Ltd. 753,300 24,950 Nippon Telegraph and Telephone Corp. 6,323 22,162 Matsushita Electric Industrial Co., Ltd. 2,633,945 20,981 Nomura Holdings Inc. 2,114,000 20,934 Nissan Motor Co., Ltd. 2,674,300 20,518 East Japan Railway Co. 3,822 17,306 Mitsubishi Tokyo Financial Group Inc. 4,772 16,167 Chubu Electric Power Co. 746,500 15,023 Kansai Electric Power Co., Inc. 801,500 13,408 Fuji Photo Film Co., Ltd. 523,000 13,331 Rohm Co., Ltd. 127,800 13,170 Shin-Etsu Chemical Co., Ltd. 429,200 12,848 Kao Corp. 682,000 12,438 Hitachi Ltd. 3,418,000 11,407 Ricoh Co. 738,000 11,318 Sharp Corp. 1,060,000 11,110 Millea Holdings, Inc. 1,659 10,767 Seven Eleven Japan Co. Ltd. 438,000 10,430 Ito-Yokado Co., Ltd. 425,000 9,996 Murata Manufacturing Co., Ltd. 277,400 9,886 Tokyo Gas Co., Ltd. 3,014,000 9,806 Yamanouchi Pharmaceuticals Co., Ltd. 388,300 9,800 Kyocera Corp. 194,100 9,472 Nintendo Co. 118,200 9,237 Toshiba Corp. 3,269,000 8,717 Bridgestone Corp. 718,500 8,151 Tohoku Electric Power Co. 506,800 8,070 Denso Corp. 564,200 8,042 Mitsubishi Heavy Industries Ltd. 3,423,000 7,606 Hoya Corp. 124,700 7,372 Mitsubishi Corp. 1,209,000 7,187 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Mitsui Sumitomo Insurance Co. 1,498,530 $ 7,037 Dai-Nippon Printing Co., Ltd. 722,000 7,010 Kyushu Electric Power Co., Inc. 450,000 6,996 Osaka Gas Co., Ltd. 2,398,000 6,937 Sumitomo Mitsui Financial Group, Inc. 4,415 6,923 Central Japan Railway Co. 1,057 6,860 Nippon Steel Corp. 6,087,000 6,788 Ajinomoto Co., Inc. 659,000 6,686 Tokyo Electron Ltd. 178,230 6,680 Mitsui & Co., Ltd. 1,410,000 6,680 JFE Holdings, Inc. 548,600 6,610 Nippon Oil Corp. 1,626,600 6,479 Mitsubishi Estate Co., Ltd. 1,083,000 6,339 Kirin Brewery Co., Ltd. 818,000 6,310 Aeon Co., Ltd. 275,900 6,269 Sankyo Co., Ltd. 427,600 6,196 Keyence Corp. 37,980 6,105 Sanyo Electric Co., Ltd. 1,786,000 5,586 Secom Co., Ltd. 236,000 5,501 Daiwa Securities Group Inc. 1,360,000 5,348 * Fujitsu Ltd. 1,907,000 5,325 Yamato Transport Co., Ltd. 475,000 5,313 * NEC Corp. 1,675,000 5,239 Fanuc Co., Ltd. 128,000 5,238 Eisai Co., Ltd. 282,500 4,986 Mitsubishi Electric Corp. 1,913,000 4,957 Asahi Glass Co., Ltd. 913,000 4,861 Japan Tobacco, Inc. 832 4,849 TDK Corp. 135,000 4,686 Shizuoka Bank Ltd. 707,000 4,671 Fujisawa Pharmaceutical Co., Ltd. 275,000 4,658 Olympus Optical Co., Ltd. 267,000 4,623 Takefuji Corp. 87,090 4,535 SMC Corp. 59,800 4,503 Mitsui Fudosan Co., Ltd. 834,000 4,490 Nitto Denko Corp. 155,400 4,469 Sekisui House Ltd. 598,000 4,392 Komatsu Ltd. 1,129,000 4,307 * Kinki Nippon Railway Co. 1,713,150 4,281 Toppan Printing Co., Ltd. 664,000 4,209 Nikko Securities Co., Ltd. 1,541,000 4,135 Orix Corp. 90,200 4,122 Omron Corp. 251,000 4,041 Sompo Japan Insurance Inc. 880,000 4,021 Asahi Kasei Corp. 1,459,000 3,976 Shionogi & Co., Ltd. 334,000 3,966 Bank of Yokohama Ltd. 1,079,000 3,809 Sumitomo Electric Industries Ltd. 668,000 3,736 Nippon Yusen Kabushiki Kaisha Co. 1,095,000 3,700 30 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Shiseido Co., Ltd. 404,000 $ 3,689 West Japan Railway Co. 1,181 3,684 OJI Paper Co., Ltd. 947,000 3,581 * Mizuho Financial Group, Inc. 6,626 3,539 Terumo Corp. 212,600 3,535 NTT Data Corp. 1,491 3,526 Sumitomo Chemical Co. 1,275,000 3,453 Daiichi Pharmaceutical Co., Ltd. 272,200 3,446 Pioneer Corp. 170,900 3,425 Toray Industries, Inc. 1,407,000 3,398 Nippon Unipac Holding 1,054 3,385 Itochu Corp. 1,602,000 3,358 Sumitomo Corp. 824,000 3,316 Nippon Express Co., Ltd. 881,000 3,287 Mitsubishi Chemical Corp. 1,941,000 3,223 Daiwa House Industry Co., Ltd. 531,000 3,206 Tostem Inax Holding Corp. 296,408 3,161 Promise Co., Ltd. 96,650 3,161 Daikin Industries Ltd. 188,000 3,127 Tokyu Corp. 1,152,000 3,120 Keio Electric Railway Co., Ltd. 642,000 3,117 * UFJ Holdings Inc. 3,862 3,109 Marui Co., Ltd. 369,600 3,077 Chugai Pharmaceutical Co., Ltd. 293,200 3,073 Sumitomo Trust & Banking Co., Ltd. 1,038,000 2,942 Taisho Pharmaceutical Co. 202,000 2,847 Advantest Corp. 83,100 2,787 Asahi Breweries Ltd. 455,000 2,705 Credit Saison Co., Ltd. 139,400 2,624 Chiba Bank Ltd. 740,000 2,618 Hirose Electric Co., Ltd. 35,100 2,510 Bank of Fukuoka, Ltd. 588,000 2,509 Konica Corp. 274,000 2,507 Kubota Corp. 1,081,000 2,493 Mitsui Chemicals, Inc. 612,000 2,489 Mabuchi Motor Co. 33,300 2,488 Matsushita Electric Works, Ltd. 472,000 2,474 Joyo Bank Ltd. 852,000 2,465 * Softbank Corp. 219,100 2,456 Yakult Honsha Co., Ltd. 167,000 2,451 Kuraray Co., Ltd. 430,000 2,445 Acom Co., Ltd. 86,190 2,421 Toyoda Automatic Loom Works Ltd. 161,900 2,396 Tobu Railway Co., Ltd. 839,000 2,350 Lawson Inc. 76,200 2,338 Keihin Electric Express Railway Co., Ltd. 471,000 2,255 Mitsui Osk Lines Ltd. 858,000 2,245 * Resona Holdings Inc. 4,674,000 2,234 ToneGeneral Sekiyu K.K. 347,000 2,205 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Oriental Land Co., Ltd. 52,700 $ 2,205 Nissin Food Products Co., Ltd. 97,900 2,134 Taisei Corp. 985,000 2,098 Stanley Electric Co. 166,000 2,088 Yamaha Corp. 183,500 2,076 JSR Corp. 197,000 2,055 Teijin Ltd. 933,000 2,042 * Nikon Corp. 306,000 2,040 Fast Retailing Co., Ltd. 68,900 2,005 Nidec Corp. 37,400 1,973 Gunma Bank Ltd. 418,000 1,963 Kajima Corp. 920,000 1,959 Uni-Charm Corp. 48,700 1,940 Ohbayashi Corp. 695,000 1,894 Aiful Corp. 49,950 1,876 Daito Trust Construction Co., Ltd. 97,800 1,866 Alps Electric Co., Ltd. 172,000 1,856 Yokogawa Electric Corp. 254,000 1,810 NTN Corp. 471,000 1,801 JGC Corp. 250,000 1,761 Toto Ltd. 351,000 1,760 Nippon Meat Packers, Inc. 194,000 1,742 Sumitomo Metal Mining Co. 578,000 1,740 Shimizu Corp. 665,000 1,740 Kyowa Hakko Kogyo Co. 385,000 1,727 Citizen Watch Co., Ltd. 312,000 1,645 Mitsui Mining & Smelting Co., Ltd. 624,000 1,638 * Showa Denko K.K. 1,077,000 1,635 Yamada Denki Co., Ltd. 84,200 1,624 77 Bank Ltd. 374,000 1,587 Sumitomo Metal Industries Ltd. 3,415,000 1,518 NGK Insulators Ltd. 313,000 1,517 Toyo Seikan Kaisha Ltd. 166,000 1,480 Konami Corp. 106,700 1,403 Ushio Inc. 121,000 1,360 Shimano, Inc. 85,500 1,357 Japan Airlines System Co. 760,000 1,351 Mitsubishi Rayon Co., Ltd. 584,000 1,337 Casio Computer Co. 219,000 1,331 NGK Spark Plug Co. 186,000 1,329 Marubeni Corp. 1,400,000 1,327 CSK Corp. 74,900 1,322 Toho Co., Ltd. 152,300 1,314 Uny Co., Ltd. 155,000 1,311 NSK Ltd. 490,000 1,307 Shimamura Co., Ltd. 23,600 1,306 FamilyMart Co., Ltd. 68,300 1,303 Hino Motors, Ltd. 269,000 1,281 Kawasaki Kisen Kaisha Ltd. 558,000 1,277 Takashimaya Co. 284,000 1,267 31 ================================================================================ MARKET VALUE* PACIFIC STOCK INDEX FUND SHARES (000) ================================================================================ Tosoh Corp. 561,000 $ 1,265 Sekisui Chemical Co. 490,000 1,257 Sumitomo Realty & Development Co. 384,000 1,256 * Trend Micro Inc. 102,500 1,246 Taiheiyo Cement Corp. 894,000 1,237 * Oki Electric Industry Co. Ltd. 575,000 1,234 Nisshin Seifun Group Inc. 180,000 1,226 Isetan Co. 179,500 1,209 Kaneka Corp. 266,000 1,207 Susuken Co., Ltd. 45,200 1,194 Ishikawajima-Harima Heavy Industries Co. 1,303,000 1,191 * Kawasaki Heavy Industries Ltd. 1,397,000 1,148 Minebea Co., Ltd. 374,000 1,110 Meiji Seika Kaisha Ltd. 331,000 1,105 Kikkoman Corp. 174,000 1,084 Denki Kagaku Kogyo K.K. 487,000 1,082 Dai-Nippon Ink & Chemicals, Inc. 697,000 1,081 Ube Industries Ltd. 836,000 1,080 * Ashikaga Financial Group, Inc. 870,000 1,065 Mitsukoshi Ltd. 422,000 1,037 THK Co., Inc. 112,400 1,037 Toyoda Gosei Co., Ltd. 58,000 1,033 Nippon Mining Holdings Inc. 591,500 1,032 Meitec Corp. 39,900 1,014 Kamigumi Co., Ltd. 221,000 1,012 Skylark Co., Ltd. 94,200 1,011 Dowa Mining Co. Ltd. 304,000 1,007 Kurita Water Industries Ltd. 115,700 1,003 Benesse Corp. 75,200 1,003 Furukawa Electric Co. 543,000 997 Fuji Electric Co. , Ltd. 581,000 994 * Mitsui Trust Holding Inc. 518,400 991 Makita Corp. 132,000 991 * All Nippon Airways Co., Ltd. 590,000 989 The Suruga Bank, Ltd. 233,000 985 Q.P. Corp. 121,500 978 Yamaha Motor Co., Ltd. 131,000 975 Showa Shell Sekiyu K.K. 151,000 966 Yamazaki Baking Co., Ltd. 154,000 963 Dentsu Inc. 320 952 * Hokuriku Bank Ltd. 745,000 943 Oracle Corp. Japan 37,200 939 * Mitsubishi Materials Corp. 1,056,000 939 Toyobo Ltd. 639,000 916 Daicel Chemical Industries Ltd. 272,000 910 Taiyo Yuden Co., Ltd. 119,000 907 Nippon Shokubai Co., Ltd. 173,000 895 Nichirei Corp. 290,000 888 Obic Co., Ltd. 5,800 885 Meiji Dairies Corp. 242,000 885 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Ito En, Ltd. 28,900 $ 872 Onward Kashiyama Co., Ltd. 121,000 870 Daimaru, Inc. 240,000 863 Fuji Television Network, Inc. 244 861 Seino Transportation Co., Ltd. 144,000 850 Aoyama Trading Co., Ltd. 62,800 845 Takara Holdings Inc. 188,000 842 Shimachu Co. 50,700 838 Gunze Ltd. 220,000 828 Fujikura Ltd. 361,000 814 Mitsui Engineering & Shipbuilding Co., Ltd. 778,000 809 Nissan Chemical Industries, Ltd. 176,000 792 Ebara Corp. 277,000 792 Coca-Cola West Japan Co. Ltd. 47,100 784 Wacoal Corp. 106,000 771 Tokyo Style Co. 91,000 765 Okumura Corp. 239,000 762 Nishimatsu Construction Co. 267,000 752 Nippon Sheet Glass Co., Ltd. 364,000 748 Aderans Co. Ltd. 40,100 735 Sapparo Breweries Ltd. 287,000 717 Net One Systems Co., Ltd. 176 716 Nippon Kayaku Co., Ltd. 170,000 716 Kokuyo Co., Ltd. 93,500 711 Hankyu Department Stores, Inc. 129,000 706 Katokichi Co., Ltd. 46,900 689 Koyo Seiko Co., Ltd. 117,000 677 Nippon Sanso Corp. 241,000 675 Mitsubishi Logistics Corp. 116,000 660 Teikoku Oil Co., Ltd. 230,000 660 Amada Co., Ltd. 278,000 655 World Co., Ltd. 39,400 654 Asatsu-DK Inc. 38,700 649 Itochu Techno-Science Corp. 36,000 646 House Foods Industry Corp. 69,700 633 * Sega Corp. 114,200 632 Nisshinbo Industries, Inc. 146,000 626 Autobacs Seven Co., Ltd. 30,300 603 Sumitomo Bakelite Co. Ltd. 164,000 580 Ariake Japan Co., Ltd. 21,340 578 Mitsumi Electric Co., Ltd. 76,200 578 Namco Ltd. 41,200 577 Aeon Credit Service Co. Ltd. 24,130 576 Sumitomo Osaka Cement Co., Ltd. 406,000 562 Mitsubishi Gas Chemical Co. 388,000 560 TIS Inc. 40,500 554 * Dai-Nippon Screen Manufacturing Co., Ltd. 156,000 541 Komori Corp. 66,000 532 Sanden Corp. 119,000 496 32 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Kinden Corp. 157,000 $ 491 Nippon Comsys Corp. 133,000 481 * Kanebo Ltd. 463,000 474 Sumitomo Forestry Co. 130,000 471 Bellsystem24, Inc. 3,640 467 * Sumitomo Heavy Industries Ltd. 568,000 462 Tokyo Broadcasting System, Inc. 39,000 457 Hitachi Software Engineering Co., Ltd. 29,400 451 * Seiyu Ltd. 195,000 435 Toda Corp. 207,000 403 Takuma Co., Ltd. 77,000 390 * Ishihara Sangyo Kaisha Ltd. 297,000 386 Kaken Pharmaceutical Co. 92,000 386 Hitachi Cable Ltd. 189,000 374 Amano Corp. 75,000 367 Fuji Soft ABC Inc. 33,700 356 Paris Miki Inc. 29,200 351 Capcom Co., Ltd. 43,500 347 * Anritsu Corp. 105,000 342 * Hitachi Zosen Corp. 505,000 318 Union Tool Co. 11,200 311 * Snow Brand Milk Products Co. 135,500 307 * Daiei, Inc. 270,000 290 Noritake Co., Ltd. 115,000 286 Fuji Machine Manufacturing Co., Ltd. 42,400 284 Mori Seiki Co. 64,500 270 Daifuku Co., Ltd. 101,000 269 Saizeriya Co., Ltd. 33,050 258 * Mitsubishi Paper Mills Ltd. 232,000 245 Fujitsu Support & Service Inc. 22,900 226 Nippon System Development Co., Ltd. 22,500 222 * Sanrio Co., Ltd. 51,200 214 Kyowa Exeo Corp. 93,000 200 Avex Inc. 22,900 180 ----------------------- 1,209,581 ----------------------- NEW ZEALAND (0.8%) Telecom Corp. of New Zealand Ltd. 2,307,367 6,182 Sky City Entertainment Group Ltd. 245,389 1,139 Carter Holt Harvey Ltd. 1,066,374 972 Fletcher Building Ltd. 479,715 899 Contact Energy Ltd. 344,538 838 Auckland International Airport Ltd. 287,896 834 Fisher & Paykel Healthcare Corp. Ltd. 90,818 546 The Warehouse Group Ltd. 166,623 522 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Fisher & Paykel Appliances Holdings Ltd. 68,704 $ 411 Independent Newspapers Ltd. 168,679 391 Tower Ltd. 184,139 230 * Fletcher Challenge Forests Ltd. Pfd. 395,467 223 * Fletcher Challenge Forests Ltd. 245,070 137 ----------------------- 13,324 ----------------------- SINGAPORE (2.9%) United Overseas Bank Ltd. 1,425,567 8,350 DBS Group Holdings Ltd. 1,339,161 6,562 Oversea-Chinese Banking Corp., Ltd. 1,169,510 6,224 Singapore Telecommunications Ltd. 7,527,612 6,147 Singapore Press Holdings Ltd. 440,455 4,093 Singapore Airlines Ltd. 674,962 3,592 Venture Corporation Ltd. 246,000 2,050 Keppel Corp., Ltd. 647,750 1,627 Singapore Technologies Engineering Ltd. 1,563,407 1,409 City Developments Ltd. 540,412 1,029 Fraser & Neave Ltd. 223,000 1,005 Sembcorp Industries Ltd. 1,103,419 733 Capitaland Ltd. 1,249,300 725 * Neptune Orient Lines Ltd. 992,000 682 Singapore Exchange Ltd. 791,000 543 * Chartered Semiconductor Manufacturing Ltd. 1,202,000 467 Creative Technology Ltd. 64,150 408 Sembcorp Logistics Ltd. 359,000 362 United Overseas Land Ltd. 339,500 331 SembCorp Marine Ltd. 590,000 314 Singapore Land Ltd. 161,000 305 Overseas Union Enterprise Ltd. 92,000 295 Keppel Land Ltd. 436,000 268 Haw Par Brothers International Ltd. 143,193 263 * ST Assembly Test Services Ltd. 337,000 239 Cycle & Carriage Ltd. 97,200 225 Allgreen Properties Ltd. 493,000 223 Parkway Holdings Ltd. 550,640 219 SMRT Corp. Ltd. 705,000 204 * Datacraft Asia Ltd. 325,000 172 Wing Tai Holdings Ltd. 436,000 117 Hotel Properties Ltd. 226,000 116 GES International Ltd. 501,800 78 Guocoland Ltd. 165,000 64 ----------------------- 49,441 ----------------------- -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $2,561,069) 1,699,731 ================================================================================ 33 ================================================================================ FACE MARKET AMOUNT VALUE* PACIFIC STOCK INDEX FUND (000) (000) ================================================================================ TEMPORARY CASH INVESTMENTS (9.5%)(1) -------------------------------------------------------------------------------- Federal National Mortgage Assn. (2) 1.168%, 7/2/2003 $ 1,500 $ 1,497 Repurchase Agreements Collateralized by U.S. Government Obligations in a Pooled Cash Account 1.32%, 5/1/2003 20,608 20,608 1.32%, 5/1/2003--Note F 141,501 141,501 -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $163,606) 163,606 -------------------------------------------------------------------------------- TOTAL INVESTMENTS (108.3%) (Cost $2,724,675) 1,863,337 -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES (-8.3%) -------------------------------------------------------------------------------- Other Assets--Note B 12,372 Security Lending Collateral Payable to Brokers--Note F (141,501) Other Liabilities (14,001) ----------------------- (143,130) ----------------------- -------------------------------------------------------------------------------- NET ASSETS (100%) $1,720,207 ================================================================================ *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 8.3%, 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 APRIL 30, 2003, NET ASSETS CONSISTED OF: -------------------------------------------------------------------------------- Paid-in Capital $2,752,536 Undistributed Net Investment Income 8,427 Accumulated Net Realized Losses (179,348) Unrealized Appreciation (Depreciation) Investment Securities (861,338) Futures Contracts 108 Foreign Currencies and Forward Currency Contracts (178) -------------------------------------------------------------------------------- NET ASSETS $1,720,207 ================================================================================ Investor Shares--Net Assets Applicable to 253,994,810 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $1,421,421 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE-- INVESTOR SHARES $5.60 ================================================================================ Admiral Shares--Net Assets Applicable to 2,955,207 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $108,210 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE-- ADMIRAL SHARES $36.62 ================================================================================ Institutional Shares--Net Assets Applicable to 34,030,028 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $190,576 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE-- INSTITUTIONAL SHARES $5.60 ================================================================================ See Note D in Notes to Financial Statements for the tax-basis components of net assets. 34 ================================================================================ MARKET VALUE* EMERGING MARKETS STOCK INDEX FUND SHARES (000) ================================================================================ COMMON STOCKS (92.9%)(1) -------------------------------------------------------------------------------- ARGENTINA (0.6%) * Petrobas Energia Participaciones SA 2,062,560 $ 1,513 * Telecom Argentina STET- France Telecom SA 1,008,685 1,124 * Tenaris SA 473,655 1,103 * Siderar SA Class A 216,207 625 * Molinos Rio de la Plata SA 239,696 400 * BBVA Banco Frances SA 199,870 367 * Tenaris SA ADR 14,634 344 * Transportadora de Gas Sur SA 554,855 325 * Irsa Inversiones y Representaciones SA 298,972 285 * Solvay Indupa S.A.I.C. 362,538 220 * Cresud SA 210,263 174 * Perez Companc SA ADR 20,000 148 ----------------------- 6,628 ----------------------- BRAZIL (10.0%) Petroleo Brasileiro SA Pfd. 867,189 14,969 Companhia de Bebidas das Americas Pfd. 54,549,680 10,948 Petroleo Brasileiro SA 500,462 9,385 Companhia Vale do Rio Doce Pfd. Class A 326,915 8,770 Banco Itau Holding Financeira SA PFD 112,663,694 7,537 Banco Bradesco SA Pfd. 1,600,883,915 6,653 * Cia Vale do Rio Doce (CVRD) 230,700 6,493 Tele Norte Leste Participacoes SA Pfd. 559,651,075 6,101 Brasil Telecom Participacoes SA Pfd. 520,328,750 3,735 Unibanco-Uniao de Bancos Brasileiros SA 72,638,308 2,656 Empresa Brasileira de Aeronautica SA Pfd. 646,991 2,254 Companhia Energetica de Minas Gerais Pfd. 209,175,023 2,240 Aracruz Celulose SA Pfd. B Shares 1,040,923 2,219 * Centrais Electricas Brasileiras SA 261,932,568 2,006 Gerdau SA 117,705,500 1,453 * Telesp Celular Participacoes SA Pfd. 936,266,092 1,444 * Centrais Electricas Brasileiras SA Pfd. B Shares 148,289,776 1,277 Companhia Siderurgica Nacional SA 64,042,381 1,276 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Souza Cruz SA 189,393 $ 1,179 Companhia Brasileira de Distribuicao Grupo Pao de Acucar Pfd. 71,221,119 1,086 * Tele Centro Oeste Celular Participacoes SA Pfd. 535,079,437 1,020 Votorantim Celulose e Papel SA Pfd. 24,838,876 940 * Usiminas-Usinas Siderurgicas de Minas Gerais SA Pfd. Class A 232,981 880 Tele Norte Leste Participacoes SA 105,214,585 828 * Embratel Participacoes SA Pfd. 467,555,318 746 * Companhia Paranaense de Energia-COPEL 226,381,532 739 Brasil Telecom Participacoes SA 132,073,538 728 Companhia de Saneamento Basico do Estado de Sao Paulo 18,759,500 665 Telemig Celular Participacoes SA Pfd. 492,328,347 466 Companhia de Tecidos Norte de Minas Pfd. 6,712,568 456 Tele Celular Sul Participacoes SA Pfd. 500,847,400 429 Tractebel Energia SA 217,653,794 415 Tele Nordeste Celular Participacoes SA Pfd. 492,083,342 413 Sadia SA Pfd. 866,438 378 Duratex SA Pfd. 14,022,556 277 * Embratel Participacoes SA 126,140,509 227 Braskem SA Pfd. A 1,735,756 202 * Companhia Brasileira de Petroleo Ipiranga Pfd. 52,247,802 156 Electropaulo Metropolitana SA 13,996,064 139 ----------------------- 103,785 ----------------------- CHILE (0.5%) * Compania de Telecomunicaciones de Chile SA 500,000 1,429 Compania de Petroleos de Chile SA 170,000 755 * Empresa Nacional de Electricidad SA 1,920,000 570 Empresa Nacional de Telecomunicaciones SA 67,000 371 * Enersis SA 3,900,000 348 Distribucion y Servicio D&S SA 490,000 344 35 ================================================================================ MARKET VALUE* EMERGING MARKETS STOCK INDEX FUND SHARES (000) ================================================================================ * Banco Santander Chile SA 14,000,000 $ 292 Sociedad Quimica y Minera de Chile SA 103,000 270 Compania Cervecerias Unidas SA 79,930 267 Banco de Chile 7,700,000 255 Empresas CMPC SA 20,000 213 S.A.C.I. Falabella, SA 180,000 170 Embotelladora Andina SA Pfd. Class B 66,460 90 Embotelladora Andina SA 66,000 89 Masisa SA 315,000 83 Empresas Iansa SA 1,663,640 62 Vina Concha y Toro SA 76,000 59 * Compania Acero del Pacifico SA (CAP) 43,600 56 SM-Chile SA 970,000 38 Cristalerias de Chile 1,000 8 ----------------------- 5,769 ----------------------- CHINA (7.5%) China Mobile (Hong Kong) Ltd. 11,174,500 22,423 PetroChina Co. Ltd. 34,072,000 7,776 CNOOC Ltd. 3,984,500 5,237 China Petroleum & Chemical Corp. 24,378,000 4,814 CITIC Pacific Ltd. 2,443,000 4,166 * China Telecom Corp. Ltd. 18,489,000 3,532 Huaneng Power International, Inc. H Share 3,472,000 3,294 Legend Group Ltd. 7,596,000 2,143 Cosco Pacific Ltd. 2,370,000 2,036 China Merchants Holdings International Co. Ltd. 2,474,000 1,951 China Resources Enterprise Ltd. 2,240,659 1,781 Denway Motors Ltd. 4,582,000 1,513 Zhejiang Expressway Co., Ltd. 3,422,000 1,316 Shanghai Industrial Holding Ltd. 872,000 1,045 Zhejiang Southeast Electric Power Co., Ltd. 1,573,200 1,035 Brilliance China Automotive Holdings Ltd. 4,178,000 975 * Beijing Datang Power Generation Co. Ltd. 2,416,000 953 Yanzhou Coal Mining Co. Ltd. H Share 2,468,000 902 Jiangsu Expressway Co. Ltd. H Share 2,590,000 872 * Sinopec Shanghai Petrochemical Co. Ltd. 5,438,000 844 Aluminum Corp. of China Ltd. 4,702,000 820 * Guangdong Electric Power Development Co., Ltd. 1,394,100 813 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ China Shipping Development Co. 3,092,000 $ 793 Huadian Power International Corp. Ltd. 3,448,000 747 China Travel International 4,680,000 576 The Guangshen Railway Co., Ltd. 3,322,000 575 China Southern Airlines Company Ltd. 2,420,000 518 China Pharmaceutical Group Ltd. 1,668,000 465 TCL International Holdings Ltd. 2,404,000 450 Beijing Enterprises Holdings Ltd. 610,000 450 China Overseas Land & Investment Ltd. 5,018,000 405 China Everbright Ltd. 1,730,000 388 Sinopec Yizheng Chemical Fibre Co., Ltd. 3,142,000 355 China Eastern Airlines Corp. Ltd. 3,294,000 329 Qingling Motors Co. Ltd. H Share 2,464,000 316 Digital China Holdings Ltd. 1,071,000 282 Shenzhen Investment Ltd. 2,703,000 274 * Top Glory International Holdings Ltd. 3,828,000 211 Eastern Communications Co. Ltd. 340,000 210 Jiangxi Copper Co. Ltd. 1,588,000 195 China Resources Land 2,254,000 188 * Founder Holdings Ltd. 566,000 38 ----------------------- 78,006 ----------------------- CZECH REPUBLIC (0.7%) Komercni Banka a.s. 36,408 2,537 Ceske Energeticke Zavody a.s. 503,715 1,879 * Cesky Telecom a.s. 157,383 1,820 Philip Morris CR a.s. 2,402 949 * Unipetrol a.s. 176,302 297 ----------------------- 7,482 ----------------------- HUNGARY (1.6%) OTP Bank Rt. 585,590 6,287 Magyar Tavkozlesi Rt. 1,072,475 4,226 MOL Magyar Olaj-es Gazipari Rt. 144,054 3,760 Richter Gedeon Rt. 32,839 2,385 Raba Rt. 13,575 66 * Pannonplast Rt. 8,390 64 * Zalakeramia Rt. 6,430 44 ----------------------- 16,832 ----------------------- 36 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ INDIA (3.4%) Reliance Industries Ltd. 928,190 $ 5,389 Infosys Technologies Ltd. 68,230 4,022 Hindustan Lever Ltd. 1,247,080 3,802 Housing Development Finance Corp. Ltd. 267,880 1,930 * ICICI Bank Ltd. 728,840 1,869 Ranbaxy Laboratories Ltd. 120,880 1,723 Dr. Reddy's Laboratories Ltd. 91,350 1,685 ITC Ltd. 109,210 1,573 HDFC Bank Ltd. 250,970 1,306 Satyam Computer Services Ltd. 358,480 1,154 Wipro Ltd. 55,480 1,016 Larsen & Toubro Ltd. 176,100 746 Hindalco Industries Ltd. 57,000 743 Hindustan Petroleum Corporation Ltd. 104,400 615 Mahanagar Telephone Nigam Ltd. 303,450 586 * Tata Engineering and Locomotive Co. Ltd. 160,030 510 Zee Telefilms Ltd. 304,950 495 Hero Honda Motors Ltd. 110,850 476 Bharat Petroleum Corp. Ltd. 93,280 455 Grasim Industries Ltd. 55,070 420 Bajaj Auto Ltd. 36,920 377 Bharat Heavy Electricals Ltd. 70,960 344 Tata Iron and Steel Company Ltd. 122,560 342 Gujarat Ambuja Cements Ltd. 94,970 334 BSES Ltd. 64,970 306 Cipla Ltd. 22,350 298 Videsh Sanchar Nigam Ltd. 180,600 288 Nestle India Ltd. 21,880 245 Associated Cement Companies Ltd. 78,300 216 Tata Power Company Ltd. 76,340 193 Sun Pharmaceutical Industries Ltd. 31,030 182 Digital Globalsoft Ltd. 15,880 176 GlaxoSmithKline Pharmaceuticals (India) Ltd. 22,200 152 GTL Ltd. 118,340 145 Mahindra & Mahindra Ltd. 59,570 140 Tata Tea Ltd. 33,000 140 Bank of Baroda 66,750 117 * Himachal Futuristic Communications, Ltd. 319,820 114 NIIT Ltd. 37,970 99 * Silverline Technologies Ltd. 683,270 87 Dabur India Ltd. 97,210 76 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ ABB (India) Ltd. 6,770 $ 44 Indian Hotels Company Ltd. 9,470 34 Punjab Tractors Ltd. 12,620 34 Asian Paints (India) Ltd. 4,650 33 Castrol (India) Ltd. 6,580 26 Industrial Development Bank of India Ltd. 60,910 23 EIH Ltd. 6,750 22 ----------------------- 35,102 ----------------------- INDONESIA (1.5%) PT Telekomunikasi Indonesia Tbk 11,857,584 5,605 PT Hanjaya Mandala Sampoerna Tbk 5,967,500 2,460 * PT Astra International Tbk 4,732,100 1,650 PT Gudang Garam Tbk 1,181,500 1,178 PT Indonesian Satellite Corp. Tbk 1,125,000 1,128 PT Indofood Sukses Makmur Tbk 12,370,252 1,034 * PT Bank Indonesia Tbk 16,775,040 455 PT Ramayana Lestari Sentosa Tbk 1,142,760 346 PT Semen Gresik Tbk 369,232 328 PT Bimantara Citra Tbk 727,752 229 PT Tempo Scan Pacific Tbk 366,956 226 * PT Kalbe Farma Tbk 4,841,848 223 * PT Matahari Putra Prima Tbk 3,502,316 212 PT Makindo Tbk 928,600 134 PT Bhakti Investama Tbk 3,199,500 131 PT Aneka Tambang Tbk 1,474,315 123 ----------------------- 15,462 ----------------------- ISRAEL (5.0%) Teva Pharmaceutical Industries Ltd. 549,590 26,229 * Check Point Software Technologies Ltd. 418,190 6,578 * Bank Hapoalim Ltd. 1,803,563 3,120 Bezeq Israeli Telecommunication Corp., Ltd. 1,747,790 1,990 * Bank Leumi Le-Israel 1,368,809 1,676 Israel Chemicals Ltd. 1,164,367 1,380 Elbit Systems Ltd. 57,204 1,030 * Orbotech Ltd. 74,075 1,018 * IDB Development Corp. Ltd. 55,452 992 Makhteshim-Agan Industries Ltd. 400,346 870 * United Mizrahi Bank Ltd. 254,796 673 Discount Investment Corp. Ltd. 30,533 585 Migdal Insurance Holdings Ltd. 494,228 543 * Israel Discount Bank Ltd. 821,336 538 37 ================================================================================ MARKET VALUE* EMERGING MARKETS STOCK INDEX FUND SHARES (000) ================================================================================ * Clal Industries Ltd. 153,566 $ 499 Clal Insurance Enterprise Holdings Ltd. 31,897 473 * M-Systems Flash Disk Pioneers Ltd. 55,500 461 Super Sol Ltd. 221,787 429 * Koor Industries Ltd. 24,356 394 The Israel Corp. Ltd.-ILS 1 Par 3,351 282 * ECI Telecom Ltd. 126,465 266 Elite Industries Ltd. -ILS 5 Par 9,285 259 * Audiocodes Ltd. 69,000 245 Blue Square-Israel Ltd. 24,020 229 Property & Building Corp. 3,434 204 * Scitex Corp., Ltd. 107,600 187 Azorim Investment Development & Construction Ltd. 35,750 187 * Formula Systems (1985) Ltd. 15,480 166 * Matav-Cable Systems Media Ltd. 20,369 145 * Lumenis Ltd. 71,400 114 ----------------------- 51,762 ----------------------- MEXICO (9.8%) Telefonos de Mexico SA Series L 11,900,759 18,038 Cemex SA CPO 2,704,147 12,257 America Movil SA de CV Series L 11,387,798 9,516 Wal-Mart de Mexico SA 3,166,142 8,768 Telefonos de Mexico SA Series A 5,555,377 8,501 * Grupo Financiero BBVA Bancomer, SA de CV Class B 8,269,956 7,192 * Grupo Televisa SA CPO 4,771,022 7,185 Fomento Economico Mexica UBD 1,483,454 5,607 America Movil SA de CV Series A 5,555,377 4,642 Wal-Mart de Mexico SA de CV 1,361,790 3,467 Kimberly Clark de Mexico SA de CV Series A 1,206,632 2,964 Grupo Modelo SA de CV Series C 1,255,481 2,805 * Grupo Carso SA de CV Series A1 525,196 1,498 Coca-Cola Femsa SA de CV 657,322 1,405 * Tenaris SA 450,275 1,124 * Corporacion Interamericana de Entretenimiento SA de CV 540,193 955 Alfa SA de CV Series A 534,831 912 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ * Grupo Bimbo SA 575,309 $ 907 TV Azteca SA CPO 2,353,400 835 Grupo Aeroportuario del Sureste SA 442,800 593 * Consorcio ARA, SA de CV 315,600 582 Grupo Continental SA 354,622 545 Grupo Elektra SA 193,488 522 Controladora Comercial Mexicana SA de CV (Units) 821,871 499 * Grupo Mexico SA de CV 393,581 493 Industrias Penoles SA Series CP 249,739 476 Vitro SA 388,060 271 ----------------------- 102,559 ----------------------- PERU (0.1%) Compania de Minas Buenaventura S.A.u. 46,137 618 Southern Peru Copper Corp. 17,550 274 Credicorp Ltd. 24,041 230 Minsur SA 139,940 167 Union de Cervecerias Backus y Johnston S.A.A 361,732 149 Cementos Lima SA 1,017 19 ----------------------- 1,457 ----------------------- PHILIPPINES (0.6%) Bank of Philippine Islands 1,557,800 1,084 San Miguel Corp. Class B 737,313 927 Ayala Land, Inc. 9,076,071 865 * Philippine Long Distance Telephone Co. 102,296 741 SM Prime Holdings, Inc. 7,176,120 670 * Metropolitan Bank & Trust Co. 1,173,985 649 Ayala Corp. 6,719,300 512 * Equitable PCI Bank, Inc. 545,400 249 Petron Corp. 4,364,146 171 * ABS-CBN Broadcasting Corp. 615,200 141 * Manila Electric Co. 705,693 138 * Megaworld Corp. 7,030,000 78 * Philippine National Bank Corp. 157,064 73 * Filinvest Land, Inc. 3,891,518 64 Universal Robina Corp. 774,410 59 ----------------------- 6,421 ----------------------- POLAND (1.5%) Bank Polska Kasa Opieki Grupa Pekao SA 160,697 3,609 * Telekomunikacja Polska SA 1,030,308 3,478 Polski Koncern Naftowy SA 710,934 3,352 Bank Przemyslowo Handlowy PBK SA 20,683 1,223 * KGHM Polska Miedz SA 268,819 816 * Prokom Software SA 16,978 549 * Agora SA 49,216 528 Bank Rozwoju Eksportu SA 26,979 490 38 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Frantschach Swiecei SA 29,834 $ 404 Orbis SA 63,650 252 * Computerland SA 9,454 211 * Budimex SA 22,300 148 * Elektrim Spolka Akcyjna SA 162,885 125 Przedsiebiorstwo Farmaceutyczne JELFA SA 10,791 121 * Softbank SA 16,390 89 ----------------------- 15,395 ----------------------- SOUTH AFRICA (15.4%) Anglo American PLC 3,169,069 45,905 Sasol Ltd. 1,287,473 13,959 Old Mutual PLC 8,432,252 12,377 Gold Fields Ltd. 856,704 8,701 Standard Bank Group Ltd. 2,118,474 8,501 Anglogold Ltd. 256,364 7,311 Sappi Ltd. 488,175 6,031 Firstrand Ltd. 6,162,724 6,013 Sanlam Ltd. 6,192,590 5,132 Anglo American Platinum Corp. 172,974 4,850 Nedcor Ltd. 317,447 4,275 Impala Platinum Holdings Ltd. 83,629 4,138 Bidvest Group Ltd. 722,208 3,930 Tiger Brands Ltd. 399,590 3,506 Barloworld Ltd. 372,115 2,549 Imperial Holdings Ltd. 370,194 2,518 Liberty Group Ltd. 312,806 2,021 Nampak Ltd. 1,200,633 1,870 * MTN Group Ltd. 1,096,378 1,838 Naspers Ltd. 552,860 1,652 Woolworths Holdings Ltd. 2,164,746 1,547 Alexander Forbes Ltd. 704,500 967 Pick'n Pay Stores Ltd. 508,982 913 Metro Cash & Carry Ltd. 3,790,779 886 New Africa Capital Ltd. 1,226,125 885 Iscor Ltd. 438,165 882 JD Group Ltd. 268,672 875 Truworths International Ltd. 1,004,597 870 Shoprite Holdings Ltd. 1,127,857 868 Investec Ltd. 70,854 843 African Bank Investments Ltd. 1,061,807 803 Foschini Ltd. 484,210 789 * Dimension Data Holdings PLC 2,620,905 648 Coronation Holdings Ltd. 82,224 567 Tongaat-Hulett Group Ltd. 123,145 523 * Comparex Holdings Ltd. 311,720 257 * Datatec Ltd. 230,080 139 ----------------------- 160,339 ----------------------- SOUTH KOREA (18.2%)(1) Samsung Electronics Co., Ltd. 192,170 48,240 Kookmin Bank 569,652 15,988 POSCO 110,660 9,336 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Korea Electric Power Corp. 512,500 $ 8,626 SK Telecom Co., Ltd. 60,450 8,408 Hyundai Motor Co. Ltd. 309,960 7,322 LG Electronics Inc. 198,601 6,849 KT Corporation 166,300 6,830 Samsung Electronics Co., Ltd. Pfd. 46,830 5,743 Samsung SDI Co. Ltd. 74,950 4,688 POSCO ADR 220,000 4,521 Shinhan Financial Group Ltd. 382,500 3,778 Samsung Fire & Marine Insurance Co. 74,050 3,657 Samsung Electro-Mechanics Co. 122,180 3,605 LG Chem Ltd. 104,812 3,476 * Korea Telecom Freetel 124,183 2,755 KT & G Corp. 171,500 2,625 Shinsegae Co. Ltd. 20,854 2,489 Hyundai Mobis 121,100 2,407 * Samsung Securities Co. Ltd. 109,930 2,262 * Hyundai Heavy Industries Co., Inc. 89,820 1,748 * LG Investment & Securities Co. Ltd. 179,620 1,685 Samsung Corp. 309,420 1,627 Samsung Heavy Industries Co. Ltd. 343,360 1,520 Kia Motors 214,990 1,495 S-Oil Corp. 86,440 1,409 CJ Corp. 35,370 1,208 * Daishin Securities Co. 85,430 1,146 Cheil Industrial, Inc. 86,750 1,096 LG Engineering & Construction Co., Ltd. 72,660 1,053 Hana Bank 113,918 980 Daelim Industrial Co. 55,830 910 * Daum Communications Corp. 22,271 907 * Hyundai Securities Co. 217,070 849 * Korea Exchange Bank 274,380 797 S1 Corp. 41,410 770 Korean Air Co. Ltd. 79,018 751 Hite Brewery Co., Ltd. 14,740 740 Amorepacific Corp. 8,220 727 Kumkang Korea Chemical Co., Ltd. 8,510 725 * NCsoft Corp. 7,261 633 Humax Co., Ltd. 52,731 631 Cheil Communications Inc. 6,770 588 * Daewoo Securities Co., Ltd. 158,750 577 Nong Shim Co. Ltd. 7,560 563 Hanjin Shipping Co., Ltd. 79,610 550 LG Household & Health Care Ltd. 22,842 541 Honam Petrochemical Corp. 20,430 514 Hankook Tire Co. Ltd. 172,560 496 39 ================================================================================ MARKET VALUE* EMERGING MARKETS STOCK INDEX FUND SHARES (000) ================================================================================ Hyundai Department Store Co., Ltd. 28,668 $ 470 Dae Duck Electronics Co. 67,043 467 Yuhan Corp. 10,894 442 Hyosung Corp. 44,943 420 LG Cable Ltd. 42,560 413 * Kookmin Credit Card Co., Ltd. 36,262 404 * Dongwon Securities Co. 96,200 404 * Shinhan Good Morning Securities Co., Ltd. 137,658 401 Samsung Fine Chemicals Co., Ltd. 31,090 397 * Trigem Computer, Inc. 91,330 383 * Asiana Airlines 198,712 370 Poongsan Corp. 41,350 309 * Hanwha Chemical Corp. 96,180 298 * Anam Semiconductor Inc. 104,550 288 Hansol Paper Co. Ltd. 65,190 282 Dong-A Pharmaceutical Co. Ltd. 15,059 265 Hankuk Electric Glass Co., Ltd. 5,920 257 * Serome Technology Inc. 67,169 226 * SK Global Co., Ltd. 110,688 219 Korea Zinc Co., Ltd. 13,110 211 Hotel Shilla Co. 54,020 207 * Korea Technology & Banking Network Corp. 111,670 180 Hanjin Heavy Industries Co. Ltd. 65,940 170 * Hyundai Merchant Marine Co., Ltd. 106,320 167 Green Cross Corp. 6,020 144 * Handysoft Corp. 51,809 137 * Doosan Corp. 19,600 134 * Haansoft Inc. 138,078 118 * Daou Technology Inc. 80,780 101 * Hyundai Department Store H&S Co. Ltd. 8,402 99 * Korea Information & Communications Co. Ltd. 10,127 44 ----------------------- 189,268 ----------------------- TAIWAN (12.7%)(1) * Taiwan Semiconductor Manufacturing Co., Ltd. 16,845,900 23,099 * United Microelectronics Corp. 12,799,300 7,343 Formosa Plastic Corp. 5,251,800 6,478 Nan Ya Plastic Corp. 6,982,790 6,049 Cathay Financial Holding Co. 4,817,980 5,376 Hon Hai Precision Industry Co., Ltd. 1,432,050 4,478 China Steel Corp. 7,867,180 4,401 * Mega Financial Holding Co. Ltd. 8,773,247 3,901 * China Development Financial Holding Corp. 9,592,508 3,343 Formosa Chemicals & Fibre Corp. 3,361,260 3,240 ================================================================================ MARKET VALUE* EMERGING MARKETS STOCK INDEX FUND SHARES (000) ================================================================================ Asustek Computer Inc. 1,508,000 $ 2,942 * Chinatrust Financial Holding 3,307,000 2,580 Fubon Financial Holding Co., Ltd. 3,610,000 2,465 Acer Inc. 2,550,935 2,320 Quanta Computer Inc. 1,222,800 2,140 Hau Nan Financial Holdings Co., Ltd. 3,599,832 2,045 Compal Electronics Inc. 1,754,200 1,892 Taiwan Cellular Corp. 2,734,000 1,765 * First Financial Holding Co., Ltd. 2,990,000 1,715 * Advanced Semiconductor Engineering Inc. 3,045,000 1,572 * Pou Chen Corp. 1,988,402 1,569 * Taishin Financial Holdings 3,427,000 1,553 China Motor Co., Ltd. 896,575 1,427 Yulon Motor Co., Ltd. 1,321,240 1,380 Lite-On Technology Corp. 1,524,267 1,355 BENQ Corp. 1,282,640 1,303 Delta Electronics Inc. 1,160,550 1,282 * SinoPac Holdings 4,092,491 1,274 Chang Hwa Commercial Bank 3,130,880 1,212 Uni-President Enterprises Co. 4,121,590 1,171 * AU Optronics Corp. 2,271,000 1,153 Inventec Co., Ltd. 1,905,300 1,104 International Bank of Taipei 2,635,735 1,081 Via Technologies Inc. 923,140 1,059 Far Eastern Textile Ltd. 3,378,400 989 Realtek Semiconductor Corp. 521,600 988 CMC Magnetics Corp. 2,044,200 962 * Winbond Electronics Corp. 2,700,000 922 * Walsin Lihwa Corp. 4,153,000 870 Micro-Star International Co., Ltd. 489,500 864 Synnex Technology International Corp. 672,800 791 Ritek Corp. 1,850,500 770 Cheng Shin Rubber Industry Co., Ltd. 651,640 742 President Chain Store Corp. 562,189 711 * Tatung Co., Ltd. 4,379,000 697 Taiwan Glass Industrial Corp. 1,157,000 694 * Siliconware Precision Industries Co. 1,416,000 670 * Teco Electric & Machinery Co., Ltd 2,361,000 630 * Macronix International Co., Ltd. 3,580,600 616 Gigabyte Technology Co., Ltd. 413,000 616 Evergreen Marine Corp. 995,200 608 Premier Image Technology Corp. 445,000 581 * Yang Ming Marine Transport 1,326,000 557 Ambit Microsystems Corp. 185,430 529 Nien Hsing Textile Co. Ltd. 564,000 526 * Taiwan Cement Corp. 1,831,080 525 40 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ D-Link Corp. 611,800 $ 521 * Accton Technology Corp. 763,475 515 * Yageo Corp. 2,558,520 492 Formosa Taffeta Co., Ltd. 1,329,640 473 Asia Cement Corp. 1,489,000 472 Kinpo Electronics, Inc. 1,092,460 470 * Systex Corp. 856,200 457 China Airlines 1,213,245 409 Sampo Corp. 1,172,000 361 Phoenixtec Power Co., Ltd. 446,000 343 * Cathay Construction Corp. 1,489,000 333 * Taiwan Styrene Monomer Corp. 506,000 332 Giant Manufacturing Co., Ltd. 314,270 325 Taiwan Secom Corp., Ltd. 413,700 318 * Compeq Manufacturing Co., Ltd. 970,750 308 * Mosel Vitelic Inc. 4,719,000 306 * Pacific Electric Wire & Cable Co., Ltd. 4,283,600 295 * Arima Computer Corp. 1,025,100 294 Eternal Chemical Co., Ltd. 548,100 269 Continental Engineering Corp. 897,840 259 Shihlin Electric & Engineering Corp. 578,000 247 * Picvue Electronics, Ltd. 920,150 198 * Prodisc Technology Inc. 425,730 191 Far Eastern Department Stores Ltd. 1,022,000 182 * Wus Printed Circuit Co., Ltd. 574,000 181 * Tung Ho Enterprise Corp. 680,400 163 * Microelectronics Technology Inc. 473,100 136 * BES Engineering Corp. 1,593,720 124 * Taiwan Tea Corp. 1,392,000 123 * China Synthetic Rubber Corp. 469,760 119 * Aurora Corp. 321,600 107 ----------------------- 132,248 ----------------------- THAILAND (2.2%) Advanced Information Services Co. Ltd. (Foreign) 2,142,740 2,249 PTT Public Co., Ltd. (Foreign) 2,023,900 2,219 * Kasikornbank Public Co. Ltd. (Foreign) 2,605,100 2,203 * Bangkok Bank PLC (Foreign) 1,464,034 2,049 PTT Exploration & Production PLC (Foreign) 632,736 1,815 Siam Cement PLC (Foreign) 374,790 1,110 BEC World Public Co. Ltd. (Foreign) 219,023 1,052 Siam Cement PLC (Local) 328,190 926 Shin Corp. Public Co. Ltd. 2,443,000 826 Land and Houses Public Co. Ltd. 4,402,800 791 * Siam Commercial Bank PLC (Foreign) 979,891 783 ================================================================================ MARKET VALUE* SHARES (000) ================================================================================ Siam City Cement PLC (Foreign) 149,806 $ 706 * Siam Commercial Bank Cvt. Pfd. 867,444 688 Delta Electronics (Thailand) Public Co. Ltd. (Foreign) 1,014,050 674 Hana Microelectronics Public Co. Ltd. (Foreign) 263,600 553 Charoen Pokphand Foods Public Co., Ltd. (Foreign) 4,869,012 391 Ratchaburi Electricity Generating Holding Public Co. Ltd. (Foreign) 694,400 389 * National Finance & Securities PLC (Foreign) 1,276,630 369 * Bank of Ayudhya PLC (Foreign) 1,482,084 311 Thai Union Frozen Products Public Co. Ltd. (Foreign) 628,700 308 Bangkok Expressway PLC (Foreign) 865,000 301 * Bank of Asia Public Co. Ltd. (Foreign) 2,502,400 290 * TelecomAsia PLC (Foreign) 2,649,988 286 Electricity Generating PLC (Foreign) 259,048 258 * DBS Thai Danu Bank PLC (Foreign) 2,006,200 250 National Petrochemical PLC (Foreign) 171,916 201 Kiatnakin Finance Public Co. Ltd. (Foreign) 298,900 190 * Industrial Finance Corp. of Thailand PLC (Foreign) 1,102,508 147 * United Broadcasting Corp. PLC (Foreign) 394,096 143 Siam Makro Public Co. (Foreign) 165,400 122 * Bangkok Bank PLC (Local) 96,400 118 Electricity Generating Public Co. Ltd. 54,500 53 * TelecomAsia Corp. Public Co. Ltd. (Foreign) Warrants Exp. 4/3/2010 1,020,789 -- ----------------------- 22,771 ----------------------- TURKEY (1.6%) Akbank TAS 562,079,286 1,992 * Turkiye Is Bankasi A.S. C Shares 558,536,940 1,721 Tupras-Turkiye Petrol Rafinerileri A.S. 239,517,016 1,667 * Anadolu Efes Biracilik ve Malt Sanayii A.S. 59,451,116 1,186 Haci Omer Sabanci Holding A.S. 461,898,815 1,040 * Turkcell Iletisim Hizmetleri A.S. 154,589,700 928 41 ================================================================================ MARKET VALUE* EMERGING MARKETS STOCK INDEX FUND SHARES (000) ================================================================================ * KOC Holding A.S. 90,386,500 $ 912 * Yapi ve Kredi Bankasi A.S. 757,064,998 783 * Turkiye Garanti Bankasi A.S. 604,246,421 729 * Eregli Demir ve Celik Fabrikalari A.S. 53,378,071 644 Migros Turk A.S. 65,469,054 577 Arcelik A.S. 58,815,793 571 * Vestel Elektronik Sanayi ve Ticaret A.S. 164,892,707 395 * Ford Otomotiv Sanayi A.S. 29,673,385 341 Trakya Cam Sanayii A.S. 116,299,873 282 * Turk Sise ve Cam Fabrikalari A.S. 231,944,089 270 * Hurriyet Azetecilik ve Matbaacillik A.S. 108,305,078 246 * Tofas Turk Otomobil Fabrikasi A.S. 85,876,317 244 * Aygaz A.S. 32,047,503 219 Cimsa Cemento Sanayi ve Ticaret A.S. 71,772,960 206 * Is Gayrimenkul Yatirim Ortakligi A.S. 298,017,775 196 Aksa Akrilik Kimya Sanayii A.S. 17,348,218 194 Alarko Holdings A.S. 11,207,152 177 Ak Enerji Elektrik Uretimi Otoproduktor Gruba A.S. 35,418,896 171 * Tansas Perakende Magazacilik Ticaret A.S. 238,238,496 157 * Dogan Yayin Holding A.S. 109,997,996 152 Adana Cimento Sanayii T.A.S. 25,930,604 137 Akcansa Cimento A.S. 42,916,790 119 Netas-Northern Elektrik Telekomunikasyon A.S. 4,056,924 78 Aksigorta A.S. 24,340,282 73 Kordsa Kord Bezi Sanayi ve Ticaret A.S. 13,864,936 52 ----------------------- 16,459 ----------------------- -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $1,242,727) 967,745 ================================================================================ ================================================================================ FACE MARKET AMOUNT VALUE* (000) (000) ================================================================================ TEMPORARY CASH INVESTMENTS (10.0%)(1) -------------------------------------------------------------------------------- Federal Home Loan Bank (2) 1.17%, 5/9/2003 $ 3,000 $ 2,999 Federal National Mortgage Assn. (2) 1.16%-1.17%, 5/1/2003 21,000 21,000 Repurchase Agreement Collateralized by U.S. Government Obligations in a Pooled Cash Account 1.32%, 5/1/2003 80,407 80,407 -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $104,406) 104,406 -------------------------------------------------------------------------------- TOTAL INVESTMENTS (102.9%) (Cost $1,347,133) 1,072,151 -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES (-2.9%) -------------------------------------------------------------------------------- Receivables for Investment Securities Sold 29,009 Other Assets--Note B 19,622 Payables for Investment Securities Purchased (50,890) Other Liabilities (28,012) ----------------------- (30,271) ----------------------- -------------------------------------------------------------------------------- NET ASSETS (100%) $1,041,880 ================================================================================ *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 equity swap contracts. Investments in swap contracts increased the fund's equity investments in South Korea and Taiwan to 20.6% and 14.1%, respectively. After giving effect to swap investments, the fund's effective common stock and temporary cash investment positions represent 96.7% and 6.2%, respectively, of net assets. See Note D in Notes to Financial Statements. (2)Securities with an aggregate value of $23,999,000 have been segregated in connection with open swap contracts. ADR--American Depositary Receipt. ILS--Israeli Shekel. 42 ================================================================================ AMOUNT (000) ================================================================================ AT APRIL 30, 2003, NET ASSETS CONSISTED OF: -------------------------------------------------------------------------------- Paid-in Capital $1,486,805 Undistributed Net Investment Income 10,278 Accumulated Net Realized Losses (167,256) Unrealized Appreciation (Depreciation) Investment Securities (274,982) Foreign Currencies 253 Swap Contracts (13,218) -------------------------------------------------------------------------------- NET ASSETS $1,041,880 ================================================================================ Investor Shares--Net Assets Applicable to 122,565,137 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $959,409 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE-- INVESTOR SHARES $7.83 ================================================================================ Institutional Shares--Net Assets Applicable to 10,529,135 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $82,471 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE-- INSTITUTIONAL SHARES $7.83 ================================================================================ See Note D in Notes to Financial Statements for the tax-basis components of net assets. 43 ================================================================================ MARKET VALUE* TOTAL INTERNATIONAL STOCK INDEX FUND SHARES (000) ================================================================================ INVESTMENT COMPANIES (100.0%) -------------------------------------------------------------------------------- Vanguard European Stock Index Fund Investor Shares 127,440,422 $ 2,128,255 Vanguard Pacific Stock Index Fund Investor Shares 139,755,875 782,633 Vanguard Emerging Markets Stock Index Fund Investor Shares 37,504,443 293,660 -------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANIES (Cost $4,292,763) 3,204,548 -------------------------------------------------------------------------------- FACE AMOUNT (000) ================================================================================ TEMPORARY CASH INVESTMENT -------------------------------------------------------------------------------- Repurchase Agreement Collateralized by U.S. Government Obligations in a Pooled Cash Account 1.32%, 5/1/2003 (Cost $1,077) $1,077 1,077 -------------------------------------------------------------------------------- TOTAL INVESTMENTS (100.0%) (Cost $4,293,840) 3,205,625 -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -------------------------------------------------------------------------------- Other Assets 5,104 Liabilities (6,334) ----------------------- (1,230) ----------------------- -------------------------------------------------------------------------------- NET ASSETS (100%) -------------------------------------------------------------------------------- Applicable to 411,056,883 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $3,204,395 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE $7.80 ================================================================================ *See Note A in Notes to Financial Statements. ================================================================================ AT APRIL 30, 2003, NET ASSETS CONSISTED OF: -------------------------------------------------------------------------------- AMOUNT PER (000) SHARE -------------------------------------------------------------------------------- Paid-in Capital $4,343,356 $10.57 Undistributed Net Investment Income 508 -- Accumulated Net Realized Losses (51,254) (.12) Unrealized Depreciation (1,088,215) (2.65) -------------------------------------------------------------------------------- NET ASSETS $3,204,395 $7.80 ================================================================================ See Note D in Notes to Financial Statements for the tax-basis components of net assets. 44 ================================================================================ MARKET VALUE* DEVELOPED MARKETS INDEX FUND SHARES (000) ================================================================================ INVESTMENT COMPANIES (100.0%) -------------------------------------------------------------------------------- Vanguard European Stock Index Fund Investor Shares 19,035,894 $317,899 Vanguard Pacific Stock Index Fund Investor Shares 20,889,727 116,983 -------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANIES (Cost $517,926) 434,882 -------------------------------------------------------------------------------- FACE AMOUNT (000) ================================================================================ TEMPORARY CASH INVESTMENT -------------------------------------------------------------------------------- Repurchase Agreement Collateralized by U.S. Government Obligations in a Pooled Cash Account 1.32%-5/1/2003 (Cost $163) $163 163 -------------------------------------------------------------------------------- TOTAL INVESTMENTS (100.0%) (Cost $518,089) 435,045 -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -------------------------------------------------------------------------------- Other Assets 503 Liabilities (722) ----------------------- (219) ----------------------- -------------------------------------------------------------------------------- NET ASSETS (100%) ================================================================================ Applicable to 75,118,853 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $434,826 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE $5.79 ================================================================================ *See Note A in Notes to Financial Statements. ================================================================================ AT APRIL 30, 2003, NET ASSETS CONSISTED OF: -------------------------------------------------------------------------------- AMOUNT PER (000) SHARE -------------------------------------------------------------------------------- Paid-in Capital $522,246 $6.95 Undistributed Net Investment Income 81 -- Accumulated Net Realized Losses (4,457) (.06) Unrealized Depreciation (83,044) (1.10) -------------------------------------------------------------------------------- NET ASSETS $434,826 $5.79 ================================================================================ See Note D in Notes to Financial Statements for the tax-basis components of net assets. 45 ================================================================================ MARKET VALUE* INSTITUTIONAL DEVELOPED MARKETS INDEX FUND SHARES (000) ================================================================================ INVESTMENT COMPANIES (100.0%) -------------------------------------------------------------------------------- Vanguard European Stock Index Fund Institutional Shares 18,917,393 $316,110 Vanguard Pacific Stock Index Fund Institutional Shares 20,765,827 116,288 -------------------------------------------------------------------------------- TOTAL INVESTMENTS (100.0%) (Cost $528,791) 432,398 ================================================================================ OTHER ASSETS AND LIABILITIES -------------------------------------------------------------------------------- Other Assets 469 Liabilities (489) ----------------------- (20) ----------------------- -------------------------------------------------------------------------------- NET ASSETS (100%) ================================================================================ Applicable to 75,383,534 outstanding $.001 par value shares of beneficial interest (unlimited authorization) $432,378 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE $5.74 ================================================================================ *See Note A in Notes to Financial Statements. ================================================================================ AT APRIL 30, 2003, NET ASSETS CONSISTED OF: -------------------------------------------------------------------------------- AMOUNT PER (000) SHARE -------------------------------------------------------------------------------- Paid-in Capital $537,083 $7.12 Undistributed Net Investment Income 58 -- Accumulated Net Realized Losses (8,370) (.11) Unrealized Depreciation (96,393) (1.27) -------------------------------------------------------------------------------- NET ASSETS $432,378 $5.74 ================================================================================ See Note D in Notes to Financial Statements for the tax-basis components of net assets. 46 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.
=============================================================================================================================== EUROPEAN PACIFIC EMERGING STOCK INDEX STOCK INDEX MARKETS STOCK FUND FUND INDEX FUND ------------------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2003 ------------------------------------------------------------------------------------------------------------------------------- (000) (000) (000) ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Income Dividends* $ 71,630 $ 16,085 $ 13,884 Interest 58 149 666 Security Lending 1,542 391 -- Swap Income -- -- 1,122 ------------------------------------------------------------------------------------------------------------------------------- Total Income 73,230 16,625 15,672 ------------------------------------------------------------------------------------------------------------------------------- EXPENSES The Vanguard Group--Note B Investment Advisory Services 62 62 62 Management and Administrative--Investor Shares 5,099 2,332 1,576 Management and Administrative--Admiral Shares 267 123 -- Management and Administrative--Institutional Shares 238 169 79 Marketing and Distribution--Investor Shares 297 114 63 Marketing and Distribution--Admiral Shares 17 6 -- Marketing and Distribution--Institutional Shares 36 16 7 Custodian Fees 1,213 376 795 Shareholders' Reports and Proxies--Investor Shares 122 47 33 Shareholders' Reports and Proxies--Admiral Shares 1 -- -- Shareholders' Reports and Proxies--Institutional Shares 1 -- -- Trustees' Fees and Expenses 4 1 1 ------------------------------------------------------------------------------------------------------------------------------- Total Expenses 7,357 3,246 2,616 ------------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME 65,873 13,379 13,056 ------------------------------------------------------------------------------------------------------------------------------- REALIZED NET GAIN (LOSS) Investment Securities Sold (70,596) (2,636) (1,380) Futures Contracts (2,147) (3,151) -- Foreign Currencies and Forward Currency Contracts 1,547 320 (85) ------------------------------------------------------------------------------------------------------------------------------- REALIZED NET GAIN (LOSS) (71,196) (5,467) (1,465) ------------------------------------------------------------------------------------------------------------------------------- CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) Investment in Securities 209,379 (81,120) 63,641 Futures Contracts 1,189 1,020 - Foreign Currencies and Forward Currency Contracts 1,393 148 394 Swap Contracts - - (6,744) ------------------------------------------------------------------------------------------------------------------------------- CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 211,961 (79,952) 47,291 ------------------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $206,638 $(72,040) $58,882 ===============================================================================================================================
*Dividends are net of foreign withholding taxes of $9,513,000, $1,167,000, and $1,055,000, respectively. 47 STATEMENT OF OPERATIONS (CONTINUED)
=============================================================================================================================== TOTAL INSTITUTIONAL INTERNATIONAL DEVELOPED DEVELOPED STOCK INDEX MARKETS INDEX MARKETS INDEX FUND FUND FUND ------------------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2003 ------------------------------------------------------------------------------------------------------------------------------- (000) (000) (000) ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME INCOME Income Distributions Received $ 59,766 $ 6,561 $ 8,152 Interest 15 4 9 ------------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME--Note C 59,781 6,565 8,161 ------------------------------------------------------------------------------------------------------------------------------- REALIZED NET GAIN (LOSS) Capital Gain Distributions Received -- -- -- Investment Securities Sold -- (4,457) (8,381) ------------------------------------------------------------------------------------------------------------------------------- REALIZED NET GAIN (LOSS) -- (4,457) (8,381) ------------------------------------------------------------------------------------------------------------------------------- CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES 10,221 6,010 5,932 ------------------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $70,002 $8,118 $5,712 ===============================================================================================================================
48 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 INDEX FUND ================================================================================ SIX MONTHS YEAR ENDED ENDED APR. 30, 2003 OCT. 31, 2002 (000) (000) -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS Net Investment Income $ 65,873 $ 110,556 Realized Net Gain (Loss) (71,196) (248,573) Change in Unrealized Appreciation (Depreciation) 211,961 (586,241) -------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations 206,638 (724,258) -------------------------------------------------------------------------------- DISTRIBUTIONS Net Investment Income Investor Shares (95,319) (93,901) Admiral Shares (8,302) (7,397) Institutional Shares (10,645) (6,895) Realized Capital Gain Investor Shares -- -- Admiral Shares -- -- Institutional Shares -- -- -------------------------------------------------------------------------------- Total Distributions (114,266) (108,193) -------------------------------------------------------------------------------- Capital Share Transactions--Note G Investor Shares 312,221 414,037 Admiral Shares 9,933 141,385 Institutional Shares 181,811 119,523 -------------------------------------------------------------------------------- Net Increase (Decrease) from Capital Share Transactions 503,965 674,945 -------------------------------------------------------------------------------- Total Increase (Decrease) 596,337 (157,506) -------------------------------------------------------------------------------- NET ASSETS Beginning of Period 4,515,869 4,673,375 -------------------------------------------------------------------------------- End of Period $5,112,206 $4,515,869 ================================================================================ 49 STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) PACIFIC STOCK INDEX FUND ================================================================================ SIX MONTHS YEAR ENDED ENDED APR. 30, 2003 OCT. 31, 2002 (000) (000) -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS Net Investment Income $ 13,379 $ 17,523 Realized Net Gain (Loss) (5,467) (68,609) Change in Unrealized Appreciation (Depreciation) (79,952) (180,859) -------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations (72,040) (231,945) -------------------------------------------------------------------------------- DISTRIBUTIONS Net Investment Income Investor Shares (15,919) (6,460) Admiral Shares (1,318) (464) Institutional Shares (2,312) (556) -------------------------------------------------------------------------------- Realized Capital Gain Investor Shares -- -- Admiral Shares -- -- Institutional Shares -- -- -------------------------------------------------------------------------------- Total Distributions (19,549) (7,480) -------------------------------------------------------------------------------- Capital Share Transactions--Note G Investor Shares 110,942 201,347 Admiral Shares 11,344 37,503 Institutional Shares 69,696 61,788 -------------------------------------------------------------------------------- Net Increase (Decrease) from Capital Share Transactions 191,982 300,638 -------------------------------------------------------------------------------- Total Increase (Decrease) 100,393 61,213 -------------------------------------------------------------------------------- NET ASSETS Beginning of Period 1,619,814 1,558,601 -------------------------------------------------------------------------------- End of Period $1,720,207 $1,619,814 ================================================================================ 50 EMERGING MARKETS STOCK INDEX FUND ================================================================================ SIX MONTHS YEAR ENDED ENDED APR. 30, 2003 OCT. 31, 2002 (000) (000) -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS Net Investment Income $ 13,056 $ 16,364 Realized Net Gain (Loss) (1,465) (66,301) Change in Unrealized Appreciation (Depreciation) 47,291 76,421 -------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations 58,882 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 78,036 66,374 Institutional Shares 2,928 10,755 -------------------------------------------------------------------------------- Net Increase (Decrease) from Capital Share Transactions 80,964 77,129 -------------------------------------------------------------------------------- Total Increase (Decrease) 124,338 82,817 -------------------------------------------------------------------------------- NET ASSETS Beginning of Period 917,542 834,725 -------------------------------------------------------------------------------- End of Period $1,041,880 $917,542 ================================================================================ 51 STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) TOTAL INTERNATIONAL STOCK INDEX FUND ================================================================================ SIX MONTHS YEAR ENDED ENDED APR. 30, 2003 OCT. 31, 2002 (000) (000) -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS Net Investment Income $ 59,781 $ 50,696 Realized Net Gain (Loss) -- (43,870) Change in Unrealized Appreciation (Depreciation) 10,221 (396,552) -------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations 70,002 (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 Transactions--Note G 310,418 592,307 -------------------------------------------------------------------------------- Total Increase (Decrease) 320,796 151,935 -------------------------------------------------------------------------------- NET ASSETS Beginning of Period 2,883,599 2,731,664 -------------------------------------------------------------------------------- End of Period $3,204,395 $2,883,599 ================================================================================ DEVELOPED MARKETS INDEX FUND ================================================================================ SIX MONTHS YEAR ENDED ENDED APR. 30, 2003 OCT. 31, 2002 (000) (000) -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS Net Investment Income $ 6,565 $ 3,033 Realized Net Gain (Loss) (4,457) -- Change in Unrealized Appreciation (Depreciation) 6,010 (46,600) -------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations 8,118 (43,567) -------------------------------------------------------------------------------- DISTRIBUTIONS Net Investment Income (6,494) (3,023) Realized Capital Gain -- -- -------------------------------------------------------------------------------- Total Distributions (6,494) (3,023) -------------------------------------------------------------------------------- Net Increase (Decrease) from Capital Share Transactions--Note G 125,002 209,397 -------------------------------------------------------------------------------- Total Increase (Decrease) 126,626 162,807 -------------------------------------------------------------------------------- NET ASSETS Beginning of Period 308,200 145,393 -------------------------------------------------------------------------------- End of Period $434,826 $308,200 ================================================================================ 52 INSTITUTIONAL DEVELOPED MARKETS INDEX FUND ================================================================================ SIX MONTHS YEAR ENDED ENDED APR. 30, 2003 OCT. 31, 2002 (000) (000) -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS Net Investment Income $ 8,161 $ 4,413 Realized Net Gain (Loss) (8,381) -- Change in Unrealized Appreciation (Depreciation) 5,932 (42,863) -------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations 5,712 (38,450) -------------------------------------------------------------------------------- DISTRIBUTIONS Net Investment Income (8,134) (4,448) Realized Capital Gain -- -- -------------------------------------------------------------------------------- Total Distributions (8,134) (4,448) -------------------------------------------------------------------------------- Net Increase (Decrease) from Capital Share Transactions--Note G 173,687 97,692 -------------------------------------------------------------------------------- Total Increase (Decrease) 171,265 54,794 -------------------------------------------------------------------------------- NET ASSETS Beginning of Period 261,113 206,319 -------------------------------------------------------------------------------- End of Period $432,378 $261,113 ================================================================================ 53 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
================================================================================================================================= SIX MONTHS ENDED YEAR ENDED JAN. 1 TO FOR A SHARE OUTSTANDING APR. 30, OCT. 31, OCT. 31, YEAR ENDED DECEMBER 31, --------------------------------------------------------------------------------------------------------------------------------- THROUGHOUT EACH PERIOD 2003 2002 2001* 2000 1999 1998 1997 --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $16.44 $19.50 $25.99 $28.82 $25.28 $20.13 $16.57 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT OPERATIONS Net Investment Income .20 .39 .37 .335 .50 .41 .38 Net Realized and Unrealized Gain (Loss) on Investments .46 (3.01) (6.85) (2.692) 3.69 5.40 3.63 --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations .66 (2.62) (6.48) (2.357) 4.19 5.81 4.01 --------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS Dividends from Net Investment Income (.40) (.44) (.01) (.423) (.50) (.52) (.37) Distributions from Realized Capital Gains -- -- -- (.050) (.15) (.14) (.08) --------------------------------------------------------------------------------------------------------------------------------- Total Distributions (.40) (.44) (.01) (.473) (.65) (.66) (.45) --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.70 $16.44 $19.50 $25.99 $28.82 $25.28 $20.13 --------------------------------------------------------------------------------------------------------------------------------- Total Return** 4.13% -13.81% -24.94% -8.18% 16.62% 28.86% 24.23% --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $4,258 $3,870 $4,165 $5,611 $6,106 $4,479 $2,432 Ratio of Total Expenses to Average Net Assets 0.34%+ 0.33% 0.30%+ 0.29% 0.29% 0.29% 0.31% Ratio of Net Investment Income to Average Net Assets 2.80%+ 2.24% 2.08%+ 1.64% 1.99% 1.97% 2.19% Portfolio Turnover Rate 4%+ 15% 3% 8% 7% 7% 3% =================================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective October 31, 2001. **Total returns do not reflect the transaction fee on purchases (0.5% from 11/3/1997 through 3/31/2000, 1.0% from 1/1/1997 through 11/2/1997) or the $10 annual account maintenance fee applied on balances under $10,000. +Annualized. 54 EUROPEAN STOCK INDEX FUND ADMIRAL SHARES
======================================================================================================================== SIX MONTHS YEAR ENDED ENDED AUG. 13* APR. 30, OCT. 31, 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 .497 .96 .12 Net Realized and Unrealized Gain (Loss) on Investments 1.078 (7.08) (4.35) ------------------------------------------------------------------------------------------------------------------------ Total from Investment Operations 1.575 (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 $39.21 $38.61 $45.77 ------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN 4.20% -13.74% -8.46% ------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $352 $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 2.28%+ 2.41% 0.70%+ Portfolio Turnover Rate 4%+ 15% 3% ========================================================================================================================
*Inception. **The fund's fiscal year-end changed from December 31 to October 31, effective October 31, 2001. +Annualized. EUROPEAN STOCK INDEX FUND INSTITUTIONAL SHARES
============================================================================================================================= SIX MONTHS YEAR ENDED ENDED JAN. 1 TO MAY 15** APR. 30, OCT. 31, OCT. 31, TO DEC. 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 .215 .414 .390 .172 Net Realized and Unrealized Gain (Loss) on Investments .460 (3.015) (6.848) (.965) ----------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations .675 (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 $16.71 $16.46 $19.52 $25.99 ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 4.22% -13.71% -24.85% -2.89% ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $503 $311 $248 $284 Ratio of Total Expenses to Average Net Assets 0.18%+ 0.18% 0.20%+ 0.20%+ Ratio of Net Investment Income to Average Net Assets 3.11%+ 2.46% 2.13%+ 1.19%+ Portfolio Turnover Rate 4%+ 15% 3% 8% =============================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective October 31, 2001. **Inception. +Annualized. 55 FINANCIAL HIGHLIGHTS (CONTINUED) PACIFIC STOCK INDEX FUND INVESTOR SHARES
================================================================================================================================= SIX MONTHS ENDED YEAR ENDED JAN. 1 TO FOR A SHARE OUTSTANDING APR. 30, OCT. 31, OCT. 31, YEAR ENDED DECEMBER 31, THROUGHOUT EACH PERIOD 2003 2002 2001* 2000 1999 1998 1997 --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $5.90 $6.79 $8.95 $12.22 $ 7.84 $7.72 $10.51 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT OPERATIONS Net Investment Income .041 .065 .07 .077 .08 .085 .09 Net Realized and Unrealized Gain (Loss) on Investments (.274) (.923) (2.23) (3.222) 4.39 .100 (2.79) --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations (.233) (.858) (2.16) (3.145) 4.47 .185 (2.70) --------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS Dividends from Net Investment Income (.067) (.032) -- (.125) (.09) (.065) (.09) Distributions from Realized Capital Gains -- -- -- -- -- -- -- --------------------------------------------------------------------------------------------------------------------------------- Total Distributions (.067) (.032) -- (.125) (.09) (.065) (.09) --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $5.60 $5.90 $6.79 $ 8.95 $12.22 $7.84 $ 7.72 --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN** -3.97% -12.67% -24.13% -25.74% 57.05% 2.41% -25.67% --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $1,421 $1,386 $1,389 $1,823 $2,526 $1,033 $827 Ratio of Total Expenses to Average Net Assets 0.41%+ 0.40% 0.37%+ 0.38% 0.37% 0.40% 0.35% Ratio of Net Investment Income to Average Net Assets 1.55%+ 1.04% 1.06%+ 0.68% 0.95% 1.17% 1.03% Portfolio Turnover Rate 1%+ 20% 2% 6% 6% 4% 8% =================================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective October 31, 2001. **Total returns do not reflect the transaction fee on purchases (0.5% from 1/1/1997 through 3/31/2000) or the $10 annual account maintenance fee applied on balances under $10,000. +Annualized. 56 PACIFIC STOCK INDEX FUND ADMIRAL SHARES
======================================================================================================================== SIX MONTHS ENDED YEAR ENDED AUG. 13* TO APR. 30, OCT. 31, 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 .291 .461 .20 Net Realized and Unrealized Gain (Loss) on Investments (1.828) (6.016) (5.80) ------------------------------------------------------------------------------------------------------------------------ Total from Investment Operations (1.537) (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 $36.62 $38.63 $44.40 ------------------------------------------------------------------------------------------------------------------------ Total Return -4.00% -12.55% -11.20% ------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $108 $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 1.66%+ 1.16% 2.05%+ Portfolio Turnover Rate 1%+ 20% 2% ========================================================================================================================
*Inception. **The fund's fiscal year-end changed from December 31 to October 31, effective October 31, 2001. +Annualized. PACIFIC STOCK INDEX FUND INSTITUTIONAL SHARES
============================================================================================================================= SIX MONTHS YEAR ENDED ENDED JAN. 1 TO MAY 15** APR. 30, OCT. 31, OCT. 31, TO DEC. 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 .039 .081 .08 .052 Net Realized and Unrealized Gain (Loss) on Investments (.274) (.923) (2.24) (2.071) ----------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations (.235) (.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 $5.60 $5.91 $6.79 $ 8.95 ============================================================================================================================= Total Return -4.00% -12.44% -24.13% -18.19% ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $191 $131 $90 $102 Ratio of Total Expenses to Average Net Assets 0.25%+ 0.25% 0.29%+ 0.29%+ Ratio of Net Investment Income to Average Net Assets 1.76%+ 1.20% 1.18%+ 0.79%+ Portfolio Turnover Rate 1%+ 20% 2% 6% =============================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective October 31, 2001. **Inception. +Annualized. 57 FINANCIAL HIGHLIGHTS (CONTINUED) EMERGING MARKETS STOCK INDEX FUND INVESTOR SHARES
================================================================================================================================= SIX MONTHS ENDED YEAR ENDED JAN. 1 TO FOR A SHARE OUTSTANDING APR. 30, OCT. 31, OCT. 31, YEAR ENDED DECEMBER 31, --------------------------------------------------------------------------------------------------------------------------------- THROUGHOUT EACH PERIOD 2003 2002 2001* 2000 1999 1998 1997 --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $7.48 $7.28 $8.84 $12.50 $ 7.91 $9.98 $12.28 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT OPERATIONS Net Investment Income .096 .15 .19 .141 .24 .27 .24 Net Realized and Unrealized Gain (Loss) on Investments .376 .25 (1.74) (3.583) 4.62 (2.08) (2.31) --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations .472 .40 (1.55) (3.442) 4.86 (1.81) (2.07) --------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS Dividends from Net Investment Income (.122) (.20) (.01) (.218) (.27) (.26) (.23) Distributions from Realized Capital Gains -- -- -- -- -- -- -- --------------------------------------------------------------------------------------------------------------------------------- Total Distributions (.122) (.20) (.01) (.218) (.27) (.26) (.23) --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.83 $7.48 $7.28 $ 8.84 $12.50 $7.91 $ 9.98 --------------------------------------------------------------------------------------------------------------------------------- Total Return** 6.30% 5.27% -17.55% -27.56% 61.57% -18.12% -16.82% --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $959 $841 $770 $913 $1,138 $577 $660 Ratio of Total Expenses to Average Net Assets 0.55%+ 0.57% 0.60%+ 0.59% 0.58% 0.61% 0.57% Ratio of Net Investment Income to Average Net Assets 2.67%+ 1.67% 2.69%+ 1.51% 2.55% 2.99% 1.96% Portfolio Turnover Rate 18%+ 65% 23% 40% 22% 22% 19% =================================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective October 31, 2001. **Total returns do not reflect the transaction fee on purchases (0.5% beginning 4/1/2000, 1.0% from 11/3/1997 through 3/31/2000, 1.5% from 1/1/1997 through 11/2/1997), the transaction fee on redemptions (0.5% beginning 4/1/2000, 1.0% through 3/31/2000), or the $10 annual account maintenance fee applied on balances under $10,000. +Annualized. 58 EMERGING MARKETS STOCK INDEX FUND INSTITUTIONAL SHARES
============================================================================================================================= SIX MONTHS YEAR ENDED ENDED JAN. 1 TO JUNE 22** APR. 30, OCT. 31, OCT. 31, TO DEC. 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 .099 .165 .200 .021 Net Realized and Unrealized Gain (Loss) on Investments .376 .246 (1.739) (2.126) ----------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations .475 .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 $7.83 $7.49 $7.29 $ 8.84 ----------------------------------------------------------------------------------------------------------------------------- Total Return+ 6.33% 5.40% -17.42% -18.86% ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $82 $76 $65 $19 Ratio of Total Expenses to Average Net Assets 0.39%++ 0.41% 0.45%++ 0.45%++ Ratio of Net Investment Income to Average Net Assets 2.80%++ 1.85% 2.75%++ 1.34%++ Portfolio Turnover Rate 18%++ 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 and redemptions. ++Annualized. 59 FINANCIAL HIGHLIGHTS (CONTINUED) TOTAL INTERNATIONAL STOCK INDEX FUND
================================================================================================================================= SIX MONTHS ENDED YEAR ENDED JAN. 1 TO FOR A SHARE OUTSTANDING APR. 30, OCT. 31, OCT. 31, YEAR ENDED DECEMBER 31, THROUGHOUT EACH PERIOD 2003 2002 2001* 2000 1999 1998 1997 --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $7.79 $8.99 $11.83 $14.31 $11.19 $ 9.87 $10.14 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT OPERATIONS Net Investment Income .157 .165 -- .20 .21 .21 .18 Capital Gain Distributions Received -- -- -- .01 .04 .02 .02 Net Realized and Unrealized Gain (Loss) on Investments .010 (1.200) (2.84) (2.44) 3.09 1.31 (.28) --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations .167 (1.035) (2.84) (2.23) 3.34 1.54 (.08) --------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS Dividends from Net Investment Income (.157) (.165) -- (.20) (.21) (.21) (.17) Distributions from Realized Capital Gains -- -- -- (.05) (.01) (.01) (.02) --------------------------------------------------------------------------------------------------------------------------------- Total Distributions (.157) (.165) -- (.25) (.22) (.22) (.19) --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.80 $7.79 $ 8.99 $11.83 $14.31 $11.19 $ 9.87 --------------------------------------------------------------------------------------------------------------------------------- Total Return** 2.21% -11.80% -24.01% -15.61% 29.92% 15.60% -0.77% --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $3,204 $2,884 $2,732 $2,920 $2,570 $1,375 $903 Ratio of Total Expenses to Average Net Assets 0% 0% 0% 0% 0% 0% 0% Ratio of Net Investment Income to Average Net Assets 2.01% 1.70% 0.05%+ 1.68% 2.04% 2.18% 2.19% Portfolio Turnover Rate 2%+ 5% 2% 3% 1% 2% 0% =================================================================================================================================
*The fund's fiscal year-end changed from December 31 to October 31, effective October 31, 2001. **Total returns do not reflect the transaction fee on purchases (0.5% from 11/3/1997 through 3/31/2000, 0.75% from 1/1/1997 through 11/2/1997) or the $10 annual account maintenance fee applied on balances under $10,000. +Annualized. 60 DEVELOPED MARKETS INDEX FUND
============================================================================================================================= SIX MONTHS YEAR ENDED ENDED JAN. 1 TO MAY 8** APR. 30, OCT. 31, OCT. 31, TO DEC. 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 (.010) (1.03) (2.24) (.93) ----------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations .106 (.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 $5.79 $5.80 $6.83 $ 9.07 ----------------------------------------------------------------------------------------------------------------------------- Total Return+ 1.89% -13.61% -24.70% -7.78% ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $435 $308 $145 $99 Ratio of Total Expenses to Average Net Assets 0% 0% 0% 0% Ratio of Net Investment Income to Average Net Assets 1.75% 1.30% 0.04%++ 1.68%++ Portfolio Turnover Rate 9%++ 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 $10 annual account maintenance fee applied on balances under $10,000. ++Annualized. 61 FINANCIAL HIGHLIGHTS (CONTINUED) INSTITUTIONAL DEVELOPED MARKETS INDEX FUND
============================================================================================================================= SIX MONTHS YEAR ENDED ENDED JAN. 1 TO JUNE 1** APR. 30, OCT. 31, OCT. 31, TO DEC. 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 (.020) (1.020) (2.23) (.99) ----------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations .106 (.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 $5.74 $5.76 $6.78 $ 9.01 ----------------------------------------------------------------------------------------------------------------------------- Total Return 1.92% -13.41% -24.75% -8.38% ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (Millions) $432 $261 $206 $171 Ratio of Total Expenses to Average Net Assets 0% 0% 0% 0% Ratio of Net Investment Income to Average Net Assets 2.08% 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. +Annualized. 62 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 their 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). 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 63 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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 obligations under the contracts. Futures and forward currency contracts are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the financial statements. Fluctuations in the value of the contracts are recorded in the Statement of Net Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures or forward currency contracts. 4. 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 is expected to provide 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 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. 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. 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. 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. 64 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 April 30, 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 $846 0.02% 0.85% Pacific 322 0.02 0.32 Emerging Markets 179 0.02 0.18 ================================================================================ 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 six months ended April 30, 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. 65 During the six months ended April 30, 2003, the European, Pacific, and Emerging Markets Stock Index Funds realized net foreign currency gains (losses) of $31,000, $19,000, and $(85,000), 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 funds' tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2002, the following funds had tax-basis capital losses available to offset future net capital gains: ================================================================================ CAPITAL LOSSES -------------------------------------------------------------------------------- EXPIRATION: FISCAL AMOUNT YEARS ENDING INDEX FUND (000) OCTOBER 31 -------------------------------------------------------------------------------- European $329,517 2008-2010 Pacific 174,264 2006-2010 Emerging Markets 165,400 2006-2010 Total International 51,127 2009-2010 -------------------------------------------------------------------------------- The funds will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2003; should the funds realize net capital losses for the year, the losses will be added to the loss carryforward balances above. At April 30, 2003, net unrealized depreciation of investment securities for tax purposes was: ================================================================================ (000) -------------------------------------------------------------------------------- NET UNREALIZED APPRECIATED DEPRECIATED APPRECIATION INDEX FUND SECURITIES SECURITIES (DEPRECIATION) -------------------------------------------------------------------------------- European $642,208 $(1,004,951) $ (362,743) Pacific 87,075 (948,413) (861,338) Emerging Markets 64,801 (339,783) (274,982) Total International -- (1,088,215) (1,088,215) Developed Markets -- (83,044) (83,044) Institutional Developed Markets -- (96,393) (96,393) -------------------------------------------------------------------------------- 66 At April 30, 2003, the aggregate settlement value of open futures contracts and the related unrealized appreciation were: ================================================================================ (000) -------------------------------------------------------------------------------- AGGREGATE UNREALIZED NUMBER OF SETTLEMENT APPRECIATION INDEX FUND/FUTURES CONTRACTS LONG CONTRACTS VALUE (DEPRECIATION) -------------------------------------------------------------------------------- European/ MSCI Pan-Euro Index, exp. 6/2003 1,902 $29,191 $1,121 Pacific/ Topix Index, exp. 6/2003 297 19,689 108 -------------------------------------------------------------------------------- At April 30, 2003, the European and Pacific Stock Index Funds had open forward currency contracts to receive and deliver currencies as follows: ================================================================================ (000) -------------------------------------------------------------------------------- UNREALIZED CONTRACT AMOUNT APPRECIATION INDEX FUND/CONTRACT SETTLEMENT DATE RECEIVE DELIVER (DEPRECIATION) -------------------------------------------------------------------------------- European 6/25/2003 EUR 25,130 USD 27,996 $1,270 Pacific 6/18/2003 JPY 2,336,775 USD 19,627 (222) -------------------------------------------------------------------------------- EUR--euro. JPY--Japanese yen. USD--U.S. dollars. Unrealized appreciation (depreciation) on open forward currency contracts is treated as realized gain (loss) for tax purposes. The European, Pacific, and Emerging Markets Stock Index Funds had net unrealized foreign currency gains of $755,000, $44,000, and $253,000, respectively, resulting from the translation of other assets and liabilities at April 30, 2003. 67 At April 30, 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 Kia Motors 5/7/2003 $ 689 5.94% $ 556 (133) KT Corp. 5/12/2003 1,794 3.94% 1,646 (148) KT Corp. 5/12/2003 88 3.93% 80 (8) Samsung Electronics Co. Ltd. 5/12/2003 19,209 3.69% 18,325 (884) SK Telecom Co., Ltd. 5/13/2003 3,052 3.93% 2,047 (1,005) SK Telecom Co., Ltd. 5/15/2003 1,894 3.92% 1,291 (603) Korea Free Telecom 8/18/2003 1,978 3.18% 1,282 (696) TAIWAN Ambit Microsystems Corp. 5/8/2003 526 3.84% 446 (80) AU Optronics Corp. 8/13/2003 535 3.18% 217 (318) AU Optronics Corp. 8/14/2003 439 3.18% 188 (251) Austek Computer Inc. 8/18/2003 2,012 3.18% 1,184 (828) BENQ Corp. 5/7/2003 797 4.34% 427 (370) China Development Financial Holding Corp. 6/2/2003 962 3.70% 608 (354) Chinatrust Financial Co. 8/14/2003 1,930 3.18% 1,596 (334) CMC Magnetics Corp. 5/12/2003 584 4.69% 409 (175) Compal Electronics Inc. 8/12/2003 1,000 3.18% 1,229 229 Fubon Financial Holding Co., Ltd. 5/12/2003 1,323 3.93% 930 (393) Gigabyte Technology Co., Ltd. 5/8/2003 479 3.84% 269 (210) Hon Hai Precision Ind. 8/18/2003 2,012 3.18% 1,568 (444) Lite-On Technology Corp. 5/8/2003 517 4.69% 305 (212) Macronix International Co., Ltd. 5/7/2003 1,057 3.94% 227 (830) Quanta Computer Inc. 5/12/2003 1,475 4.34% 829 (646) Realtek Semiconductor Corp. 5/7/2003 720 5.84% 349 (371) Ritek Corp. 5/12/2003 708 4.69% 315 (393) Siliconware Precision Industries Co. 5/8/2003 648 4.69% 308 (340) United Microelectronics Corp. 8/6/2003 5,123 3.19% 2,639 (2,484) Via Technologies Inc. 6/10/2003 922 3.69% 371 (551) Winbond Electronics Corp. 8/12/2003 967 3.18% 581 (386) ---------------------------------------------------------------------------------------------------------------- (13,218) ================================================================================================================
*Based on one-month London Inter-Bank Offer-Rate (LIBOR). Each contract provides for the payment of interest based on LIBOR less a fixed interest rate spread. At April 30, 2003, the spread was greater than LIBOR, resulting in net interest earned by the fund at the rate shown above. 68 E. During the six months ended April 30, 2003, purchases and sales of investment securities other than temporary cash investments were: ================================================================================ (000) -------------------------------------------------------------------------------- INDEX FUND PURCHASES SALES -------------------------------------------------------------------------------- European $556,523 $104,302 Pacific 191,671 6,684 Emerging Markets 167,491 81,577 Total International 345,276 34,284 Developed Markets 142,576 17,192 Institutional Developed Markets 195,372 21,744 ================================================================================ F. The market value of securities on loan to broker/dealers at April 30, 2003, and collateral received with respect to such loans were: ================================================================================ (000) -------------------------------------------------------------------------------- MARKET VALUE CASH OF LOANED COLLATERAL INDEX FUND SECURITIES RECEIVED -------------------------------------------------------------------------------- European $1,044,659 $1,092,003 Pacific 134,194 141,501 -------------------------------------------------------------------------------- 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:
================================================================================================================= SIX MONTHS ENDED YEAR ENDED APRIL 30, 2003 OCTOBER 31, 2002 ----------------------------------------------------------------------------------------------------------------- AMOUNT SHARES AMOUNT SHARES INDEX FUND (000) (000) (000) (000) ----------------------------------------------------------------------------------------------------------------- EUROPEAN INVESTOR SHARES Issued $ 459,896 28,964 $ 994,408 52,718 Issued in Lieu of Cash Distributions 90,696 5,679 88,639 4,506 Redeemed (238,371) (15,160) (669,010) (35,340) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease)--Investor Shares 312,221 19,483 414,037 21,884 ----------------------------------------------------------------------------------------------------------------- ADMIRAL SHARES Issued 44,119 1,191 194,610 4,268 Issued in Lieu of Cash Distributions 6,400 171 5,932 128 Redeemed (40,586) (1,080) (59,157) (1,409) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease)--Admiral Shares 9,933 282 141,385 2,987 ----------------------------------------------------------------------------------------------------------------- INSTITUTIONAL SHARES Issued 212,200 13,085 171,326 8,794 Issued in Lieu of Cash Distributions 10,145 635 6,351 323 Redeemed (40,534) (2,505) (58,154) (2,949) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease)--Institutional Shares 181,811 11,215 119,523 6,168 =================================================================================================================
69 NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================================================= SIX MONTHS ENDED YEAR ENDED APRIL 30, 2003 OCTOBER 31, 2002 ----------------------------------------------------------------------------------------------------------------- AMOUNT SHARES AMOUNT SHARES INDEX FUND (000) (000) (000) (000) ----------------------------------------------------------------------------------------------------------------- PACIFIC INVESTOR SHARES Issued $181,382 31,449 $ 434,864 65,614 Issued in Lieu of Cash Distributions 15,104 2,640 5,988 942 Redeemed (85,544) (14,909) (239,505) (36,348) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease)--Investor Shares 110,942 19,180 201,347 30,208 ----------------------------------------------------------------------------------------------------------------- ADMIRAL SHARES Issued 23,288 617 56,944 1,315 Issued in Lieu of Cash Distributions 1,055 28 387 9 Redeemed (12,999) (343) (19,828) (464) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease)--Admiral Shares 11,344 302 37,503 860 ----------------------------------------------------------------------------------------------------------------- INSTITUTIONAL SHARES Issued 95,361 16,301 93,950 13,831 Issued in Lieu of Cash Distributions 2,099 367 556 87 Redeemed (27,764) (4,888) (32,718) (4,903) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease)--Institutional Shares 69,696 11,780 61,788 9,015 ----------------------------------------------------------------------------------------------------------------- EMERGING MARKETS INVESTOR SHARES Issued 121,201 15,818 $257,448 29,712 Issued in Lieu of Cash Distributions 12,798 1,624 17,319 2,122 Redeemed* (55,963) (7,380) (208,393) (24,995) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease)--Investor Shares 78,036 10,062 66,374 6,839 ----------------------------------------------------------------------------------------------------------------- INSTITUTIONAL SHARES Issued 13,942 1,826 93,950 13,831 Issued in Lieu of Cash Distributions 2,099 367 556 87 Redeemed* (27,764) (4,888) (32,718) (4,903) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease)--Institutional Shares 69,696 11,780 61,788 9,015 ----------------------------------------------------------------------------------------------------------------- TOTAL INTERNATIONAL Issued $520,698 68,652 $ 1,039,674 118,131 Issued in Lieu of Cash Distributions 54,512 7,211 46,919 5,083 Redeemed (264,792) (35,170) (494,286) (56,538) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) 310,418 40,693 592,307 66,676 ----------------------------------------------------------------------------------------------------------------- DEVELOPED MARKETS Issued $173,014 30,571 $ 274,440 41,801 Issued in Lieu of Cash Distributions 5,661 1,009 2,495 361 Redeemed (53,673) (9,570) (67,538) (10,343) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) 125,002 22,010 209,397 31,819 ----------------------------------------------------------------------------------------------------------------- INSTITUTIONAL DEVELOPED MARKETS Issued $192,077 33,336 $ 126,752 19,187 Issued in Lieu of Cash Distributions 3,270 589 2,261 330 Redeemed (21,660) (3,882) (31,321) (4,593) ----------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) 173,687 30,043 97,692 14,924 =================================================================================================================
*Emerging Markets Stock Index Fund amounts are net of redemption fees of $239,000 and $949,000, respectively (fund totals). 70 INVESTING IS FAST AND EASY ON VANGUARD.COM If you're like many Vanguard investors, you believe in planning and taking control of your own investments. Vanguard.com(R) was built for you--and it's getting better all the time. MANAGE YOUR INVESTMENTS WITH EASE Log on to Vanguard.com and: * See what you own (at Vanguard and elsewhere) and how you're doing by using our Consolidated View(TM) tool. * Check your overall asset allocation, no matter where your assets are held. * Compare your holdings with industry benchmarks. * Analyze your personal performance. * Invest online and even manage the mail you get from us. (Prefer to get fund reports like this one online? Just let us know!) * Set up a Watch List to make it easy to track funds and securities of interest. PLAN YOUR INVESTMENTS WITH CONFIDENCE Go to our Planning & Advice and Research Funds & Stocks sections and: * Take our Investor Questionnaire to find out what asset allocation might best suit your needs. * Find out how much you should save for retirement and for college costs. * Discover how investment costs affect your bottom line by using our Compare Fund Costs tool. * Find out how to maximize your after-tax returns in our PlainTalk(R) guide Be a Tax-Savvy Investor. * Attend our quarterly PlainTalk webcasts on investing. Find out what Vanguard.com can do for you. Log on today! 71 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. o 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. o 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. o 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. o 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. 72 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(R) 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 investments they have made as private individuals. Our independent board members bring distinguished backgrounds in business, academia, and public service to their task of working with Vanguard officers to establish the policies and oversee the activities of the funds. Among board members' responsibilities are selecting investment advisers for the funds; monitoring fund operations, performance, and costs; reviewing contracts; nominating and selecting new trustees/directors; and electing Vanguard officers. The dates in parentheses below show when each trustee was initially elected. ================================================================================ JOHN J. BRENNAN* Chairman of the Board, Chief Executive Officer, and Director/Trustee of The Vanguard Group, Inc., and of each of the (1987) investment companies served by The Vanguard Group. -------------------------------------------------------------------------------- INDEPENDENT TRUSTEES CHARLES D. ELLIS The Partners of '63 (pro bono ventures in education); Senior Adviser to Greenwich Associates (international business (2001) strategy consulting); Successor Trustee of Yale University; Overseer of the Stern School of Business at New York University; Trustee of the Whitehead Institute for Biomedical Research. -------------------------------------------------------------------------------- RAJIV L. GUPTA Chairman and Chief Executive Officer (since October 1999), Vice Chairman (January-September 1999), and Vice (2001) President (prior to 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; Trustee of Drexel University. -------------------------------------------------------------------------------- JOANN HEFFERNAN HEISEN Vice President, Chief Information Officer, and Member of the Executive Committee of Johnson & Johnson (1998) (pharmaceuticals/consumer products); Director of the Medical Center at Princeton and Women's Research and Education Institute. -------------------------------------------------------------------------------- BURTON G. MALKIEL Chemical Bank Chairman's Professor of Economics, Princeton University; Director of Vanguard Investment Series plc (1977) (Irish investment fund) (since November 2001), Vanguard Group (Ireland) Limited (Irish investment management firm) (since November 2001), Prudential Insurance Co. of America, BKF Capital (investment management firm), The Jeffrey Co. (holding company), and NeuVis, Inc. (software company). -------------------------------------------------------------------------------- ALFRED M. RANKIN, JR. Chairman, President, Chief Executive Officer, and Director of NACCO Industries, Inc. (forklift trucks/housewares/ (1993) lignite); Director of Goodrich Corporation (industrial products/aircraft systems and services); Director until 1998 of Standard Products Company (a supplier for the automotive industry). -------------------------------------------------------------------------------- J. LAWRENCE WILSON Retired Chairman and Chief Executive Officer of Rohm and Haas Co. (chemicals); Director of Cummins Inc. (diesel (1985) engines), MeadWestvaco Corp. (paper products), and AmerisourceBergen Corp. (pharmaceutical distribution); Trustee of Vanderbilt University. ================================================================================ EXECUTIVE OFFICERS* R. GREGORY BARTON Secretary; Managing Director and General Counsel of The Vanguard Group, Inc. (since September 1997); Secretary of The Vanguard Group and of each of the investment companies served by The Vanguard Group; Principal of The Vanguard Group (prior to September 1997). -------------------------------------------------------------------------------- THOMAS J. HIGGINS Treasurer; Principal of The Vanguard Group, Inc.; Treasurer of each of the investment companies served by The Vanguard Group. ================================================================================ *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. F. WILLIAM MCNABB, III, Client Relationship Group. JAMES H. GATELY, Investment Programs and Services. MICHAEL S. MILLER, Planning and Development. KATHLEEN C. GUBANICH, Human Resources. RALPH K. PACKARD, Finance. IAN A. MACKINNON, Fixed Income Group. GEORGE U. SAUTER, Quantitative Equity Group. -------------------------------------------------------------------------------- JOHN C. BOGLE, Founder; Chairman and Chief Executive Officer, 1974-1996. -------------------------------------------------------------------------------- [SHIP LOGO] THE VANGUARD GROUP POST OFFICE BOX 2600 VALLEY FORGE, PA 19482-2600 Vanguard, The Vanguard Group, Vanguard.com, Admiral, Wellington, Consolidated View, PlainTalk, Vanguard IRA, and the ship logo are trademarks of The Vanguard Group, Inc. 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. 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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. Q722 062003 Item 2: Code(s) of Ethics for senior financial officers - Item not applicable to semi-annual report. Item 3: Audit Committee Financial Expert - Item not applicable to semi-annual report. Item 4: Principal Accountant Fees and Services - Item not applicable to semi-annual report. 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 Controls. There were no significant changes in Registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 10: Exhibits attached hereto. (Attach certifications as exhibits) 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: (Insert date used on the certifications) 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: : June 16, 2003 VANGUARD INTERNATIONAL EQUITY INDEX FUNDS BY:_____________(signature)________________ (HEIDI STAM) THOMAS J. HIGGINS* TREASURER Date: : June 16, 2003 *By Power of Attorney. See File Number 2-57689, filed on December 26, 2002. Incorporated by Reference.