Vanguard International Stock Index Funds Annual Report
Vanguard International Stock Index Funds Annual Report
Vanguard International Stock Index Funds Annual Report
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end of 2008, as the credit markets virtually<br />
shut down, risk-averse investors flocked to<br />
U.S. Treasury bonds. The effect was to<br />
widen the difference between the lower<br />
yields of Treasuries and the higher yields<br />
of corporate bonds to a margin not seen<br />
since the Great Depression.<br />
Central banks around the world responded<br />
to the economic slowdown by lowering<br />
interest rates and implementing other<br />
aggressive stimulus programs. Meanwhile,<br />
governments boosted spending in hopes<br />
of reversing the recessionary tide. As<br />
fears of a worldwide depression eased,<br />
investors’ appetite for risk returned to<br />
more normal levels. The receding<br />
pessimism raised demand for corporate<br />
1 Derived from data provided by Lipper Inc.<br />
2 Select Emerging Markets <strong>Index</strong> through August 23, 2006; MSCI Emerging Markets <strong>Index</strong> thereafter.<br />
bonds, pushing up their prices and<br />
bringing down their yields. Over the past<br />
12 months, both taxable and municipal<br />
bonds returned more than 13%.<br />
However, the Fed’s easy-money campaign<br />
had a predictable effect on short-term<br />
savings vehicles such as money market<br />
funds, whose yields track prevailing shortterm<br />
rates. In December 2008, the Fed<br />
reduced its target for the federal funds<br />
rate, a benchmark for the interest rates<br />
paid by money market instruments<br />
and other very short-term securities,<br />
to between 0% and 0.25%. The Fed has<br />
said it expects to maintain its target at<br />
this level “for an extended period.”<br />
Total Returns<br />
Ten Years Ended October 31, 2009<br />
Average<br />
<strong>Annual</strong> Return<br />
European <strong>Stock</strong> <strong>Index</strong> Fund Investor Shares 2.83%<br />
MSCI Europe <strong>Index</strong> 2.80<br />
European Region <strong>Funds</strong> Average 1 2.96<br />
Pacific <strong>Stock</strong> <strong>Index</strong> Fund Investor Shares 0.08%<br />
MSCI Pacific <strong>Index</strong> 0.42<br />
Japan/Pacific Region <strong>Funds</strong> Average 1 –2.46<br />
Emerging Markets <strong>Stock</strong> <strong>Index</strong> Fund Investor Shares 11.14%<br />
Spliced Emerging Markets <strong>Index</strong> 2 11.64<br />
Emerging Markets <strong>Funds</strong> Average1 10.64<br />
The figures shown represent past performance, which is not a guarantee of future results. (Current performance<br />
may be lower or higher than the performance data cited. For performance data current to the most recent monthend,<br />
visit our website at www.vanguard.com/performance.) Note, too, that both investment returns and principal<br />
value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost.<br />
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