Vanguard International Stock Index Funds Annual Report

90
Emerging Markets Stock Index Fund
Total Return Swaps
Floating Unrealized
Notional Interest Rate Appreciation
Termination Amount Received (Depreciation)
Reference Entity Date Counterparty1 ($000) (Paid) 2 ($000)
Cyrela Brazil Realty SA Jan. 21, 2010 MSCS 21,141 4.89% (4,604)
1 MSCS—Morgan Stanley Capital Services.
2 Based on one-month Fed Funds rate as of October 31, 2009.
The fund had net unrealized foreign currency gains of $1,039,000 resulting from the translation of other
assets and liabilities at October 31, 2009.
E. Distributions are determined on a tax basis and may differ from net investment income and realized
capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent
differences are reclassified among capital accounts in the financial statements to reflect their tax
character. Temporary differences arise when certain items of income, expense, gain, or loss are
recognized in different periods for financial statement and tax purposes; these differences will reverse
at some time in the future. Differences in classification may also result from the treatment of shortterm
gains as ordinary income for tax purposes.
During the year ended October 31, 2009, the fund realized net foreign currency losses of $9,547,000,
which decreased distributable net income for tax purposes; accordingly, such losses have been
reclassified from accumulated net realized losses to undistributed net investment income.
Certain of the fund’s investments are in securities considered to be “passive foreign investment
companies,” for which any unrealized appreciation and/or realized gains are required to be included
in distributable net income for tax purposes. Unrealized appreciation of $3,107,000 on the fund’s
passive foreign investment company holdings at October 31, 2008, has been distributed and is
reflected in the balance of undistributed net investment income. During the year ended October 31,
2009, the fund realized gains on the sale of passive foreign investment companies of $3,271,000,
which have been included in current and prior periods’ taxable income; accordingly, such gains
have been reclassified from accumulated net realized losses to undistributed net investment
income. Unrealized appreciation on the fund’s passive foreign investment company holdings
at October 31, 2009, was $17,309,000.
During the year ended October 31, 2009, the fund realized $179,907,000 of net capital gains resulting
from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the
fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to
shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.
For tax purposes, at October 31, 2009, the fund had $345,678,000 of ordinary income available for
distribution. The fund had available capital loss carryforwards totaling $2,235,121,000 to offset future
net capital gains of $15,143,000 through October 31, 2012, $167,331,000 through October 31, 2014,
$460,853,000 through October 31, 2016, and $1,591,794,000 through October 31, 2017.
At October 31, 2009, the cost of investment securities for tax purposes was $24,152,956,000. Net
unrealized appreciation of investment securities for tax purposes was $3,883,509,000, consisting of
unrealized gains of $5,735,715,000 on securities that had risen in value since their purchase and
$1,852,206,000 in unrealized losses on securities that had fallen in value since their purchase.