Fellow Shareholders
Although overseas stock markets grew more difficult during the final quarter,
the fiscal year ended October 31 was a good one for the T. Rowe Price
International Stock Fund. During the last three months, your Fund's return of
3.6% was slightly better than the unmanaged Morgan Stanley Capital
International Europe, Australia and Far East (MSCI EAFE) Index and, as can be
seen from the table below, the return was also better than the EAFE Index over
the 12-month period. For the second successive fiscal year, results were well
ahead of the U.S. stock market as represented by the unmanaged Standard &
Poor's 500 Stock Index.
Our weighting in Japan, which was generally strong until the last
quarter, made a modest contribution to the Fund's positive results relative to
the Index over its fiscal year. However, in the final quarter, a strong rally
in the markets of Latin America and Southeast Asia fueled most of the gain
against the Index. Superior results compared with the U.S. market were mostly
attributed to the strength of the Japanese and European currencies, in which
about three-quarters of the Fund's holdings is denominated. However, the
portfolio has significant positions in markets such as Malaysia, Singapore,
and Mexico, which performed strongly without help from their local currencies.
Performance Comparison
Periods Ended 10/31/94
3 Months 12 Months
_____________________
International Stock Fund 3.6% 12.0%
MSCI EAFE* 2.4 10.1
S&P 500 3.8 3.9
*Net of withholding taxes
The fiscal year was a turbulent one for world stock markets. The first
three months saw a final surge of the 1993 bull markets but, following the
U.S. Federal Reserve's move to increase interest rates in February, the middle
of 1994 was a much more difficult period. This tightening was quickly
translated to the smaller markets of Southeast Asia and Latin America where
the currencies have a close relationship to the U.S. dollar, and these markets
corrected sharply. European markets held up better during this period. The
most important exception to a generally weak trend was Japan, where the market
performed well and the strength of the yen was an added benefit to the U.S.
investor.
Turning to the world economy, there have been signs of recovery in both
Japan and Continental Europe, which are the last regions to emerge from the
world recession of the early '90s. In the Far East there is increasing
confidence that the runaway Chinese economy can be brought under control, but
the "tiger" economies of the region have continued to show strong growth with
little pressure on the inflation front.
The economy in Mexico has been sluggish. Although President-elect
Zedillo has outlined a conservative programme for his new administration,
there should be some acceleration in 1995. In Brazil the most important
development was the introduction of the real, a new currency linked to the
U.S. dollar, resulting in a dramatic drop in the country's inflation rate.
Fernando Henrique Cardoso, the architect of this latest plan to stabilise
Brazil's currency and inflation rate, was elected president, but it remains to
be seen whether Congress can introduce fiscal measures to underpin these
reforms.
Investment Environment
Far East
In Japan the economy is picking up, although the recovery is muted compared
with past cycles. Areas of strength include capital investment, with machine
tool orders now showing positive growth and private construction orders
clearly bottoming out. However, with half the economy accounted for by
consumer expenditure, it is likely to remain sluggish until consumers play
their part. Here the signs are discouraging; historically high unemployment
levels and slow income growth have affected sentiment and retail sales remain
dull. The construction sector is showing signs of life with orders picking up
after the vast overbuilding of the bubble period, although optimism has been
tempered by a recent fall in housing starts. The political scene seems to have
stabilised with the unlikely partnership of Japan's Liberal Democratic and
Socialist Parties lasting longer than many expected.
Having performed strongly for the first half of the calendar year, the
stock market is now becalmed with volume at very low levels. A sharp earnings
recovery is already priced into the market but, with the yen now at new highs
against the dollar, there is less confidence about the pace of the recovery in
corporate profits.
Market Performance
3 Months Ended 10/31/94
_______________________________
Local Currency
In Local vs. U.S. In U.S.
Currency Dollars Dollars
________ ____________ _______
Austria 1.4% 0.4% 1.8%
France -7.7 5.1 -2.9
Germany -2.3 5.4 3.0
Hong Kong 2.0 0.0 1.9
Italy -9.9 3.0 -7.1
Japan -2.4 3.3 0.9
Netherlands 1.9 5.4 7.4
Norway -6.0 5.7 -0.7
Singapore 11.6 2.8 14.7
Spain -5.0 4.0 -1.2
Sweden 1.6 7.7 9.4
Switzerland -2.4 7.0 4.4
United Kingdom 0.6 6.1 6.7
Elsewhere in the region, economic growth has remained strong, fueled by
the dynamics of increasing regional trade and the continuation of rapid growth
in China. If anything, the Chinese economy is probably too strong, and the
authorities must be concerned with inflation levels running at over 20%.
Another worry is the continued trade deficit. This is due principally to high
levels of capital goods imports as overseas companies have developed their
manufacturing capacity in China's Special Economic Zones. However, recently
there have been signs that this capacity is now coming on stream, suggesting
that the trade account could soon move into surplus through lower imports and
rising exports.
With strong trading links to China, Hong Kong has also shown high rates
of growth. However, inflation has remained stubbornly high and interest rates
are bound to rise, bearing in mind that further tightening by the U.S. Federal
Reserve will immediately affect Hong Kong, whose currency is pegged to the
dollar. Following its speculative binge at the end of 1993, the Hong Kong
stock market corrected sharply during the spring but recovered modestly during
the final quarter. It is unlikely to make further progress until the Federal
Reserve makes its move and the Chinese economy shows signs of a soft landing.
The best performing markets of the region were in Malaysia and
Singapore. The Malaysian economy has shown four consecutive years of 8% growth
fueled by manufacturing exports and infrastructure development. With domestic
consumption constrained, inflation has been surprisingly low, but it will be
difficult for the economy to sustain these growth rates without triggering
higher inflation. Singapore has shown equally high rates of growth and has
also kept inflation low. The current account surplus has benefited from strong
electronic exports, which in turn have contributed to high rates of growth.
Against the background of a strong economy and increased levels of equity
investment permitted in the state-sponsored saving scheme, the stock market
has performed well.
The Korean economy is well placed to benefit from accelerating world
growth given its strength in heavy industry and the prospect of improved
competitiveness with Japan as the yen strengthens. On a short-term basis, this
high growth will strain the current account and put upward pressure on
inflation. Longer term, the Japanese development path remains the model as
Korea tracks it almost perfectly with a 15-year lag.
In Australasia, both economies have shown above-trend rates of growth
with inflation sustained at remarkably low levels. In Australia, a severe
drought has affected agricultural production, but the economy is increasingly
integrated with fast-growing Southeast Asia, and a pickup in the commodity
cycle also bodes well. New Zealand continues to be one of the world's most
remarkable turnaround situations with steady growth, inflation at less than
2%, and a strong current account surplus. As one of the few countries in the
region where interest rates can fall, the stock market has performed
particularly well over the last three months.
Europe
For most of the 12 months under review, the economies of Continental Europe
have been sluggish, but recently they exhibited distinct signs of life. In
Germany the economy is entering a broad-based recovery led by exports and
capital investment. With the prospect of further tax surcharges to finance
reunification, consumer expenditure is likely to remain subdued. However,
longer term the whole economy is well placed to benefit from any economic
renaissance in the ex-communist states immediately to the east. The stock
market has made little progress over the year, although dollar returns in the
last quarter have been helped by deutschemark strength. With valuations
already looking stretched, the Fund's position in Germany is relatively small.
In the Netherlands we find valuations more attractive, especially for a
number of large, international companies well positioned to benefit from a
recovery across Europe. Our largest holdings continue to be the two publishing
companies, Elsevier and Wolters Kluwer, which exhibit steady growth; the
former sees great potential from its recent purchase of the online data
businesses of Mead of the U.S.
In Switzerland we can also find attractively valued multinationals in
areas of traditional Swiss strength such as pharmaceuticals and engineering.
This market has performed reasonably well although, in line with other
European markets, recent performance in dollars has been greatly assisted by
currency strength.
In France the economic recovery is broadening and, with manageable
government finances and a presidential election looming in 1995, this recovery
is likely to be more sustainable than others in Europe. The stock market has
been one of the weaker performers as local insurance companies have sold
equities to cover bond losses. Our own selections have held up reasonably well
and we have been adding to our favourites on weakness.
The UK market leads the cycle in Europe and the economy has shown steady
if unspectacular growth for over two years. Although inflation remains at
remarkably low levels, the next move in UK interest rates is likely to be
upward, and we have reduced our UK holdings especially in the small-cap area
which has performed so well.
Chart 1 - Geographic Diversification
The Nordic markets are a bright spot in Europe, with Finland taking the
prize as the best performing market this year. This remarkable accomplishment
was led by mobile phone manufacturer Nokia in which the Fund has a small
position. In Sweden the move away from full employment will help manufacturing
competitiveness, and exports will continue to lead the recovery. We have
increased the portfolio's exposure to this market throughout the year,
focusing our attention on multinationals that will benefit from recovery in
overseas markets.
Latin America
Latin America provides its share of excitement with drama in both the stock
market and on the political scene. In Mexico the assassination of a
presidential candidate at the beginning of the year and the uprising in the
southern state of Chiapas called into question the stability of Mexican
politics, but the PRI's victory in late summer was convincing enough. Partly
influenced by political developments, the stock market had its usual roller
coaster ride. The new government under Ernesto Zedillo will continue the
reforms that have been so successful, but in the latest accord with the unions
he has signaled a commitment to low inflation at the expense of growth.
In Brazil investors have spent most of the year awaiting the
introduction of the real and the outcome of the presidential election. The
news has been encouraging on both fronts. Brazil's new currency was
successfully introduced in July and has more than held its ground against the
U.S. dollar. Mr. Cardoso's first-round win in the presidential election was
well received by the stock market, but tougher budgetary disciplines are
needed for the stabilisation to succeed.
Investment Policy & Outlook
In recent months world stock markets have entered an uncertain period, with
attention focused on when the U.S. Federal Reserve will further tighten and to
what extent U.S. interest rates will rise. These developments will be a key
influence on overseas bond markets where historically high real yields compete
with equities for the investor's dollar. World markets are unlikely to make
much progress until this issue is resolved, but outside the U.S. prospects for
corporate earnings growth remain attractive. In Japan and Europe widening
evidence of economic recovery supports the outlook for better company profits,
and we see rapid growth in the dynamic economies of Southeast Asia. The heart
of our strategy is to invest in corporate earnings growth where we see it
attractively valued. We continue to find this in Europe, which accounts for
just under half the portfolio, and we also find it in the less developed
countries of Asia and Latin America.
Thus, we remain optimistic for the future, although investors may have
to be patient for a little longer before stock markets make a confident upward
move.
Respectfully submitted,
Martin G. Wade
President
November 18, 1994
Reviewing Your International Investing Strategy
Not so very long ago, we probably would not have addressed this issue, because
relatively few U.S. investors had an international investing strategy to
review. In recent years, however, investor focus has broadened appreciably,
and now global investing seems finally to be catching up with "global
consuming."
The merits of placing a portion of your financial assets in overseas
investments have become widely recognized, as evidenced by the dramatic growth
of international mutual fund assets. Amid all the investment uncertainties
generated by rising interest rates this year - both in the U.S. and
a number of other countries - our international equity funds continued to
expand impressively.
The historic evidence is clear that a prudent equity diversification
strategy that includes foreign stocks can reduce the year-to-year volatility
of an equity portfolio and, over time, enhance overall returns. Volatility
may be reduced because foreign stocks often move in divergent directions from
the U.S. market. With over half of all stocks in the world originating and
trading outside the U.S. - many in countries growing faster than the U.S. - it
can be argued that the investor who restricts his or her portfolio entirely to
U.S. securities is less prudent than the one who diversifies more widely.
Since you are an international investor, we do not want to preach to the
converted. Rather, we want to suggest you take a minute to review your T.
Rowe Price international investments to ensure they are in line with your
financial strategy and your overall portfolio.
An International Allocation
Except in unusual circumstances, we believe a majority of an investor's
international equity exposure should be in a core fund that has a broadly
diversified portfolio of well-established companies around the world. Our
International Stock Fund is designed to be such a core holding. If you have a
particular interest in a certain region, you may want to put some assets in a
more specialized fund. The New Asia, Europe, Latin America, and Japan Funds
have narrow geographic focuses, while our International Discovery Fund
emphasizes rapidly growing smaller companies in all of those areas. Without
the conviction to stick through potentially tough periods, you should be
cautious about investing in regional funds, which may have greater price
volatility.
Don't base your allocation decisions solely on the past performance of
any stock market, and keep in mind the risks of foreign investing, including
the possibility of unfavorable currency exchange rates. You may want to
consider shifting a portion of your investment dollars into a particular
international asset over a period of time, instead of all at once. By focusing
on your particular financial objectives, the length of time in which you hope
to achieve them, and your willingness to accept risks represented by various
investments, you should be in a good position to structure your international
investment portfolio.
This report has been preceded or is accompanied by a prospectus.
Twenty-Five Largest Holdings
October 31, 1994
Percent of
Net Assets
__________
Wolters Kluwer, Netherlands 1.8%
Elsevier, Netherlands 1.6
Royal Dutch Petroleum, Netherlands 1.2
Swire Pacific 'A', Hong Kong 1.2
TMX ADS (USD), Mexico 1.2
Kyocera, Japan 1.0
Fletcher Challenge, New Zealand 1.0
Telebras, Brazil 0.9
National Westminster Bank, United Kingdom 0.9
Technology Resources Industries, Malaysia 0.9
Nippon Steel, Japan 0.9
Wharf Holdings, Hong Kong 0.8
Eaux Cie Generale, France 0.8
Telecom Italia, Italy 0.8
BBC Brown Boveri, Switzerland 0.8
Nippon Denso, Japan 0.8
Mitsubishi Heavy Industries, Japan 0.8
Sumitomo Electric, Japan 0.8
Cable & Wireless, United Kingdom 0.7
Sharp, Japan 0.7
Valeo, France 0.7
Nestle, Switzerland 0.7
United Engineers, Malaysia 0.7
Reed International, United Kingdom 0.7
Komatsu, Japan 0.7
_____________________________________________________________________________
Total 23.1%
Industry Diversification
October 31, 1994
Percent of
Net Assets
__________
Consumer Goods 29.1%
Financial/Insurance 16.6
Basic Industry 16.5
Capital Goods 15.0
Utilities 8.6
Energy 4.6
Transport/Storage 3.1
Miscellaneous 0.2
Reserves 6.3
_____________________________________________________________________________
Net Assets 100.0%
Security Classification
October 31, 1994
Cost Market Value
Percent of Net Assets (000) (000)
__________________________ _________ ___________
Common Stocks
& Warrants, 91.2% $4,906,156 $5,665,708
Preferred Stocks, Rights,
& Warrants, 2.4% 99,284 150,044
Bonds, 0.1% 1,420 1,411
Short-Term Investments, 7.0% 431,376 431,376
_________ _________
Total Investments, 100.7% 5,438,236 6,248,539
Other Assets Less
Liabilities, -0.7% -39,140 -42,826
_____________________________________________________________________________
Net Assets, 100.0% $5,399,096 $6,205,713
Chart 2 - Fiscal-Year Performance Comparison
Fiscal-Year Performance
Periods ended October 31, 1994
1 Year 5 Years* 10 Years*
_______ ________ ________
12.0% 10.7% 18.7%
*Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Statement of Net Assets (Value in thousands)
T. Rowe Price International Stock Fund / October 31, 1994
ARGENTINA - 0.8%
Value
______
COMMON STOCKS
218,838 shs. Banco de Galicia Buenos Aires
ADR (USD). . . . . . . . . . . . . . . . $ 5,963
128,860 Banco Frances del Rio de
la Plata ADR (USD) . . . . . . . . . . . 3,302
193,620 Buenos Aires Embotelladora
ADR (USD). . . . . . . . . . . . . . . . 7,430
1,030,970 Naviera Perez. . . . . . . . . . . . . . . 5,651
823,360 Sociedad Comercial del Plata . . . . . . . 2,817
76,408 Sociedad Comercial del Plata
ADS (USD). . . . . . . . . . . . . . . . 2,541
141,060 Telefonica de Argentina
ADR (USD). . . . . . . . . . . . . . . . 8,746
58,920 Telefonica de Argentina
ADS (USD). . . . . . . . . . . . . . . . 3,697
185,858 Transportadora de Gas del Sur
ADS (USD). . . . . . . . . . . . . . . . 2,219
332,400 YPF Sociedad Anonima
ADR (USD). . . . . . . . . . . . . . . . 8,102
Total Argentina 50,468
AUSTRALIA - 2.8%
COMMON STOCKS
6,776,630 ANI. . . . . . . . . . . . . . . . . . . . 7,297
797,000 Australia & New Zealand
Bank Group . . . . . . . . . . . . . . . 2,308
1,578,000 Australia Gas & Light. . . . . . . . . . . 5,097
988,982 Broken Hill Property . . . . . . . . . . . 15,173
1,884,605 Burns Philp & Company. . . . . . . . . . . 4,814
1,559,886 Email. . . . . . . . . . . . . . . . . . . 4,691
2,058,000 Howard Smith . . . . . . . . . . . . . . . 9,475
6,091,000 John Fairfax Holdings. . . . . . . . . . . 12,574
1,747,357 MIM. . . . . . . . . . . . . . . . . . . . 3,802
3,477,056 Mayne Nickless . . . . . . . . . . . . . . 18,359
2,607,445 News Corporation . . . . . . . . . . . . . 16,052
3,567,400 Nine Network . . . . . . . . . . . . . . . 10,756
8,887,703 * TNT. . . . . . . . . . . . . . . . . . . . 15,906
4,423,057 Western Mining . . . . . . . . . . . . . . 27,558
4,210,022 Woolworths . . . . . . . . . . . . . . . . 9,004
162,866
PREFERRED STOCK
4,652,000 TNT, Cum. Cv., 8.00% . . . . . . . . . . . 8,568
Total Australia 171,434
AUSTRIA - 0.1%
COMMON STOCK
60,110 Oesterreische Elektrik Wirtsch . . . . . . 3,767
PREFERRED STOCK
44,194 shs. Creditanstalt Bankverein . . . . . . . . . $ 2,637
Total Austria 6,404
BELGIUM - 1.1%
COMMON STOCKS
54,151 AG Finanz. . . . . . . . . . . . . . . . . 4,346
98,859 Delhaize Freres. . . . . . . . . . . . . . 3,966
39,800 Generale Banque. . . . . . . . . . . . . . 9,654
114,930 Kredietbank. . . . . . . . . . . . . . . . 22,718
1,221 Obourg Financiere. . . . . . . . . . . . . 1,078
34,640 UCB. . . . . . . . . . . . . . . . . . . . 26,740
68,502
CORPORATE BOND
37,597,500 BEL Kredietbank, 5.75%, 11/30/03 . . . . . . . 1,101
Total Belgium 69,603
BRAZIL - 2.3%
COMMON STOCKS
287,100 shs. Brazil Fund (USD). . . . . . . . . . . . . 10,013
156,300 * Cia Energetica de Sao Paulo
GDS (USD). . . . . . . . . . . . . . . . 2,579
78,000 * Companhia Energetica Minas
Gerais ADR (USD) . . . . . . . . . . . . 2,135
170,440,000 Companhia Siderurgica
Nacional . . . . . . . . . . . . . . . . 7,770
23,219,553 Electrobras. . . . . . . . . . . . . . . . 9,348
166,493,000 Telebras . . . . . . . . . . . . . . . . . 7,097
64,253 * Usiminas ADR (USD) . . . . . . . . . . . . 1,084
40,026
PREFERRED STOCKS, RIGHTS & WARRANTS
104,625,701 Banco Bradesco . . . . . . . . . . . . . . 973
21,066,000 Brahma . . . . . . . . . . . . . . . . . . 7,359
1,827,222 wts. * Brahma, 9/30/96 . . . . . . . . . . . . . 162
17,719,000 shs. Cia Cimento Portland Itau. . . . . . . . . 7,918
98,498,000 Lojas Americanas . . . . . . . . . . . . . 3,068
39,958,000 Petrol Brasileiros . . . . . . . . . . . . 6,482
236,993,267 Telebras . . . . . . . . . . . . . . . . . 12,067
762,495 Telebras ADR (USD) . . . . . . . . . . . . 39,269
16,446,486 Telesp . . . . . . . . . . . . . . . . . . 8,374
243,216 rts. * Telesp . . . . . . . . . . . . . . . . . . 3
10,623,600 shs. Usiminas . . . . . . . . . . . . . . . . . 17,989
103,664
Total Brazil 143,690
CANADA - 0.3%
COMMON STOCKS
508,940 Alcan Aluminum . . . . . . . . . . . . . . 13,640
312,340 MacMillan Bloedel. . . . . . . . . . . . . 4,301
166,860 shs. Royal Bank of Canada . . . . . . . . . . . $ 3,516
Total Canada 21,457
CHILE - 0.6%
COMMON STOCKS
443,180 ! Chile Fund (USD) . . . . . . . . . . . . . 21,937
159,820 Chilectra ADR (USD). . . . . . . . . . . . 8,170
67,290 Compania de Telefonos
de Chile ADR (USD) . . . . . . . . . . . 6,275
Total Chile . . . . . . . . . . . . . . . . . . . . 36,382
DENMARK - 0.2%
COMMON STOCKS
119,090 Den Danske Bank. . . . . . . . . . . . . . 6,397
60,017 Teledanmark. . . . . . . . . . . . . . . . 3,459
112,400 Unidanmark . . . . . . . . . . . . . . . . 4,509
Total Denmark 14,365
FINLAND - 0.3%
PREFERRED STOCK
127,008 Nokia. . . . . . . . . . . . . . . . . . . 19,151
FRANCE - 7.1%
COMMON STOCKS & WARRANTS
244,043 Accor. . . . . . . . . . . . . . . . . . . 28,962
326 Burelle. . . . . . . . . . . . . . . . . . 25
169,710 CMB Packaging. . . . . . . . . . . . . . . 6,055
62,110 Carrefour. . . . . . . . . . . . . . . . . 27,385
52,580 Chargeurs. . . . . . . . . . . . . . . . . 13,123
281,028 Cie de St. Gobain. . . . . . . . . . . . . 35,644
32,220 Clarins. . . . . . . . . . . . . . . . . . 3,110
565,878 Eaux Cie Generale. . . . . . . . . . . . . 51,823
107,017 Ecco . . . . . . . . . . . . . . . . . . . 13,823
1,010 Ecco Travail Temporaire. . . . . . . . . . 63
93,700 GTM Entrepose. . . . . . . . . . . . . . . 7,152
119,452 LVMH . . . . . . . . . . . . . . . . . . . 19,257
25,451 L'Oreal. . . . . . . . . . . . . . . . . . 5,527
186,188 Lafarge Coppee . . . . . . . . . . . . . . 14,766
213,650 Lapeyre. . . . . . . . . . . . . . . . . . 11,619
11,560 Legrand. . . . . . . . . . . . . . . . . . 15,493
166,560 * Peugeot. . . . . . . . . . . . . . . . . . 24,943
86,668 Pinault Printemps Redoute. . . . . . . . . 15,638
191,410 Poliet . . . . . . . . . . . . . . . . . . 14,685
21,397 Primagaz . . . . . . . . . . . . . . . . . 3,670
5,837 wts. * Primagaz, 6/30/95. . . . . . . . . . . . . 82
28,520 shs. Promodes . . . . . . . . . . . . . . . . . 5,556
14,700 Rexel. . . . . . . . . . . . . . . . . . . 2,039
53,330 Societe Generale de France . . . . . . . . 6,018
290,980 shs. Societe Nationale Elf
Aquitaine. . . . . . . . . . . . . . . . $ 21,505
337,636 Television Francaise . . . . . . . . . . . 35,019
223,980 Total. . . . . . . . . . . . . . . . . . . 14,526
806,480 Valeo. . . . . . . . . . . . . . . . . . . 43,782
Total France 441,290
GERMANY - 3.9%
COMMON STOCKS & WARRANTS
14,426 Allianz Holdings . . . . . . . . . . . . . 22,062
3,000 wts. * Allianz Holdings, 3/29/96 . . . . . . . . 2,059
14,325 shs. Ava Allgemeine Handels -
Der Verbr. . . . . . . . . . . . . . . . 5,410
85,170 Bayer. . . . . . . . . . . . . . . . . . . 19,793
14,227 Bayerische Motoren Werke . . . . . . . . . 7,331
18,900 Bilfinger & Berger . . . . . . . . . . . . 10,669
44,669 Deutsche Bank. . . . . . . . . . . . . . . 21,732
72,605 Gehe . . . . . . . . . . . . . . . . . . . 24,814
57,120 Hoechst. . . . . . . . . . . . . . . . . . 12,400
1,639 Hornbach Baumarkt. . . . . . . . . . . . . 888
12,119 Kaufhof Holdings . . . . . . . . . . . . . 4,102
123,393 Mannesmann . . . . . . . . . . . . . . . . 32,983
18,336 Rhon Klinikum. . . . . . . . . . . . . . . 16,337
21,963 Schering . . . . . . . . . . . . . . . . . 14,611
16,173 Veba . . . . . . . . . . . . . . . . . . . 5,420
42,900 wts. * Veba, 4/6/98 . . . . . . . . . . . . . . . 4,692
60,337 shs. Volkswagen . . . . . . . . . . . . . . . . 17,532
38,000 wts. * Volkswagen International
Finance, 10/27/98. . . . . . . . . . . . 3,790
226,625
PREFERRED STOCKS
110,293 shs. * Fielmann . . . . . . . . . . . . . . . . . 3,865
3,050 Hornbach . . . . . . . . . . . . . . . . . 3,245
8,516 Krones Finance . . . . . . . . . . . . . . 7,791
14,901
Total Germany 241,526
HONG KONG - 3.9%
COMMON STOCKS
3,270,000 Citic Pacific. . . . . . . . . . . . . . . 9,839
41,791,000 Great Eagle Holdings . . . . . . . . . . . 23,796
10,326,488 Hong Kong Land Holdings. . . . . . . . . . 26,459
19,537,000 Hopewell Holdings. . . . . . . . . . . . . 20,100
7,296,000 Hutchison Whampoa. . . . . . . . . . . . . 33,705
6 New World Development. . . . . . . . . . . 1
9,637,500 Swire Pacific 'A'. . . . . . . . . . . . . 73,583
13,192,000 Wharf Holdings . . . . . . . . . . . . . . 52,068
Total Hong Kong 239,551
ITALY - 2.5%
COMMON STOCKS & WARRANTS
3,797 shs. Alleanza Assicurazioni,
savings shares . . . . . . . . . . . . . $ 35
1,030,939 Assicurazioni Generali . . . . . . . . . . 25,731
5,535,087 Banca Fideuram . . . . . . . . . . . . . . 6,566
406,800 Danieli & Company,
savings shares . . . . . . . . . . . . . 1,322
101,700 wts. * Danieli & Company, 11/30/99. . . . . . . . 87
406,527 shs. Imi. . . . . . . . . . . . . . . . . . . . 2,665
2,564,000 Istituto Naz Delle
Assicurazioni. . . . . . . . . . . . . . 3,708
2,178,270 Italgas. . . . . . . . . . . . . . . . . . 6,648
17,412,916 * Montedison . . . . . . . . . . . . . . . . 14,319
170,230 RAS. . . . . . . . . . . . . . . . . . . . 2,115
745,400 Rinascente . . . . . . . . . . . . . . . . 3,994
1,975,200 SME Meridonale Di. . . . . . . . . . . . . 5,033
1,764,605 Sasib, savings shares. . . . . . . . . . . 5,621
6,015,680 Stet . . . . . . . . . . . . . . . . . . . 18,168
2,243,805 Stet, savings shares . . . . . . . . . . . 5,551
11,022,112 Telecom Italia . . . . . . . . . . . . . . 30,120
9,037,194 Telecom Italia, savings shares . . . . . . 20,061
151,744
CORPORATE BOND
610,200,000 ITL Danieli & Company,
7.25%, 1/1/00. . . . . . . . . . . . . . 310
Total Italy . . . . . . . . . . . . . . . . . . . . 152,054
JAPAN - 22.8%
COMMON STOCKS
375,000 shs. Advantest. . . . . . . . . . . . . . . . . 13,165
1,160,000 * Alps Electric. . . . . . . . . . . . . . . 15,690
2,245,000 Amada. . . . . . . . . . . . . . . . . . . 29,671
561,000 Aoyama Trading . . . . . . . . . . . . . . 17,261
2,245,000 Canon. . . . . . . . . . . . . . . . . . . 41,724
1,195,000 Citizen Watch Company. . . . . . . . . . . 9,871
1,774,000 * Dai Nippon Screen
Manufacturing. . . . . . . . . . . . . . 14,306
512,000 Daifuku. . . . . . . . . . . . . . . . . . 7,824
2,060,000 Daiichi Pharmaceutical . . . . . . . . . . 31,267
2,431,000 Daiwa House. . . . . . . . . . . . . . . . 33,635
150,000 Dowa Fire & Marine Insurance . . . . . . . 1,013
5,792 East Japan Railway . . . . . . . . . . . . 28,885
491,000 Fanuc. . . . . . . . . . . . . . . . . . . 23,828
3,460,000 Hitachi. . . . . . . . . . . . . . . . . . 36,083
2,279,000 Hitachi Zosen. . . . . . . . . . . . . . . 13,342
806,000 Honda Motor Company. . . . . . . . . . . . 14,064
1,217,000 Inax . . . . . . . . . . . . . . . . . . . 12,943
1,347,000 * Ishihara Sangyo. . . . . . . . . . . . . . 6,022
655,000 Ito-Yokado . . . . . . . . . . . . . . . . 35,776
435,000 Kawada Industries. . . . . . . . . . . . . 4,806
909,000 Kokuyo . . . . . . . . . . . . . . . . . . 23,370
4,395,000 shs. Komatsu. . . . . . . . . . . . . . . . . . $ 41,749
843,000 Komori . . . . . . . . . . . . . . . . . . 22,544
2,315,000 Kumagai Gumi . . . . . . . . . . . . . . . 11,641
2,275,000 Kuraray. . . . . . . . . . . . . . . . . . 28,893
842,000 Kyocera. . . . . . . . . . . . . . . . . . 64,160
1,496,000 Makita Electric Works. . . . . . . . . . . 28,267
1,103,000 Marui. . . . . . . . . . . . . . . . . . . 20,158
2,246,000 Matsushita Electric Industries . . . . . . 37,337
1,245,000 Mitsubishi . . . . . . . . . . . . . . . . 16,968
5,864,000 Mitsubishi Heavy Industries. . . . . . . . 47,772
799,000 Mitsubishi Paper . . . . . . . . . . . . . 6,105
3,276,000 Mitsui Fudosan . . . . . . . . . . . . . . 36,870
1,123,000 Mitsui Petrochemical
Industries . . . . . . . . . . . . . . . 10,598
618,200 Murata Manufacturing . . . . . . . . . . . 25,277
806,000 National House . . . . . . . . . . . . . . 12,067
1,497,000 NEC. . . . . . . . . . . . . . . . . . . . 19,167
2,245,000 Nippon Denso . . . . . . . . . . . . . . . 47,983
858,000 Nippon Hodo. . . . . . . . . . . . . . . . 15,149
12,922,000 Nippon Steel . . . . . . . . . . . . . . . 53,369
1,217,000 Pioneer Electronic . . . . . . . . . . . . 31,791
272,000 Sangetsu . . . . . . . . . . . . . . . . . 8,088
936,000 Sankyo . . . . . . . . . . . . . . . . . . 24,354
214,700 Sega Enterprises . . . . . . . . . . . . . 11,151
2,996,000 Sekisui Chemical . . . . . . . . . . . . . 30,780
2,339,000 Sekisui House. . . . . . . . . . . . . . . 26,566
175,000 Seven-Eleven Japan . . . . . . . . . . . . 14,347
2,433,000 Sharp. . . . . . . . . . . . . . . . . . . 45,470
841,000 Shinetsu Chemical. . . . . . . . . . . . . 17,888
507,000 Sony . . . . . . . . . . . . . . . . . . . 30,938
3,741,000 Sumitomo . . . . . . . . . . . . . . . . . 38,627
3,180,000 Sumitomo Electric. . . . . . . . . . . . . 47,610
1,107,000 Sumitomo Forestry. . . . . . . . . . . . . 18,631
442,000 TDK. . . . . . . . . . . . . . . . . . . . 21,723
482,000 Taisho Pharmaceutical. . . . . . . . . . . 8,859
3,071,000 Teijin . . . . . . . . . . . . . . . . . . 18,201
1,779,000 Tokio Marine & Fire Insurance. . . . . . . 21,124
477,000 Tokyo Electronics. . . . . . . . . . . . . 15,957
215,000 Tokyo Steel Manufacturing. . . . . . . . . 5,394
626,000 Toppan Printing. . . . . . . . . . . . . . 9,243
521,850 Yurtec . . . . . . . . . . . . . . . . . . 11,315
Total Japan . . . . . . . . . . . . . . . . . . . . 1,418,677
MALAYSIA - 4.5%
COMMON STOCKS & WARRANTS
17,772,000 Affin Holdings . . . . . . . . . . . . . . 29,910
2,457,000 Aokam Perdana . . . . . . . . . . . . . . 20,291
1,315,400 * Aokam Perdana 'A'. . . . . . . . . . . . . 10,297
13,831,000 Berjaya Sports Toto. . . . . . . . . . . . 21,545
3,030,000 Commerce Asset Holdings. . . . . . . . . . 13,519
1,510,666 wts. * Commerce Asset Holdings,
6/27/98. . . . . . . . . . . . . . . . . 3,045
13,793,000 shs. MBF Capital. . . . . . . . . . . . . . . . 16,627
4,027,400 shs. Malaysian Helicopter . . . . . . . . . . . $ 9,931
14,483,000 Renong . . . . . . . . . . . . . . . . . . 22,674
5,143,000 Resorts World. . . . . . . . . . . . . . . 32,609
14,030,000 * Technology Resources
Industries . . . . . . . . . . . . . . . 54,637
7,952,000 United Engineers . . . . . . . . . . . . . 42,950
Total Malaysia 278,035
MEXICO - 4.1%
COMMON STOCKS
1,524,366 Cemex 'B'. . . . . . . . . . . . . . . . . 14,332
9,435,820 Cifra 'C'. . . . . . . . . . . . . . . . . 25,433
6,274,770 * Cifra ADR (USD). . . . . . . . . . . . . . 17,868
899,664 Desc 'B' . . . . . . . . . . . . . . . . . 6,809
1,128,767 Grupo Embotellador
de Mexico. . . . . . . . . . . . . . . . 14,506
755,256 Grupo Financiero Banamex 'C' . . . . . . . 5,188
5,083,339 Grupo Financiero
Bancomer 'C' . . . . . . . . . . . . . . 5,889
412,879 Grupo Financiero
Bancomer ADS (USD) . . . . . . . . . . . 9,599
72,250 Grupo Financiero Bancomer
GDS (USD). . . . . . . . . . . . . . . . 1,671
3,496,818 Grupo Industrial Maseca. . . . . . . . . . 5,700
101,916 * Grupo Iusacell ADS (USD) . . . . . . . . . 3,083
328,396 * Grupo Mexicano de Desarrollo
(Series B) ADS (USD) . . . . . . . . . . 5,952
417,502 Grupo Televisa GDS (USD) . . . . . . . . . 18,579
263,639 Panamerican Beverages
ADR (USD). . . . . . . . . . . . . . . . 9,096
1,292,830 TMX ADS (USD) . . . . . . . . . . . . . . 72,237
2,729,973 Tolmex 'B' . . . . . . . . . . . . . . . . 40,526
Total Mexico 256,468
NETHERLANDS - 7.8%
COMMON STOCKS
413,370 ABN Amro . . . . . . . . . . . . . . . . . 14,686
305,051 AMEV . . . . . . . . . . . . . . . . . . . 12,684
357,952 Ahold. . . . . . . . . . . . . . . . . . . 10,531
260,418 Akzo . . . . . . . . . . . . . . . . . . . 32,885
705,419 CSM. . . . . . . . . . . . . . . . . . . . 29,091
9,487,810 Elsevier . . . . . . . . . . . . . . . . . 96,794
643,320 International Nederlanden
Groep. . . . . . . . . . . . . . . . . . 30,106
191,731 Koninklijke PTT Nederland. . . . . . . . . 6,107
114,718 Nutricia . . . . . . . . . . . . . . . . . 6,192
690,631 Polygram . . . . . . . . . . . . . . . . . 30,723
652,180 Royal Dutch Petroleum. . . . . . . . . . . 75,896
247,975 Unilever . . . . . . . . . . . . . . . . . 29,520
1,536,109 Wolters Kluwer . . . . . . . . . . . . . . 111,066
486,281
PREFERRED STOCK
70,540 shs. International Nederlanden
Groep. . . . . . . . . . . . . . . . . . $ 302
Total Netherlands 486,583
NEW ZEALAND - 2.4%
COMMON STOCKS
5,056,100 Air New Zealand 'B'. . . . . . . . . . . . 14,471
326,260 Brierley Investments . . . . . . . . . . . 245
11,758,445 Carter Holt Harvey . . . . . . . . . . . . 28,515
1,418,577 Fernz. . . . . . . . . . . . . . . . . . . 5,064
18,487,100 Fletcher Challenge . . . . . . . . . . . . 49,839
8,072,600 Fletcher Challenge, Forests
Division . . . . . . . . . . . . . . . . 10,683
1,035,375 Independent Newspapers . . . . . . . . . . 3,091
5,932,800 Telecom Corporation of
New Zealand. . . . . . . . . . . . . . . 20,668
2,036,000 * Trust Bank . . . . . . . . . . . . . . . . 1,943
2,853,650 Wilson & Horton. . . . . . . . . . . . . . 14,051
Total New Zealand 148,570
NORWAY - 1.2%
COMMON STOCKS
198,750 Bergesen 'A' . . . . . . . . . . . . . . . 4,316
233,210 Kvaerner Industier 'A' . . . . . . . . . . 9,630
950,377 Norsk Hydro. . . . . . . . . . . . . . . . 38,300
671,050 ! Orkla 'A'. . . . . . . . . . . . . . . . . 19,705
219,720 Saga Petroleum 'B' . . . . . . . . . . . . 2,504
Total Norway 74,455
PERU - 0.1%
COMMON STOCK
1,300,000 * Compania Peruana
de Telefonos . . . . . . . . . . . . . . 1,780
PORTUGAL - 0.2%
COMMON STOCKS
158,834 Jeronimo Martins . . . . . . . . . . . . . 7,122
158,834 * Jeronimo Martins, new. . . . . . . . . . . 7,123
25,000 * Portugal Fund IDR (USD). . . . . . . . . . 122
Total Portugal 14,367
SINGAPORE - 2.4%
COMMON STOCKS & WARRANTS
3,959,000 DBS Land . . . . . . . . . . . . . . . . . 13,884
1,355,000 Far East Levingston
Shipbuilding . . . . . . . . . . . . . . 6,689
1,589,000 Jurong Shipyard. . . . . . . . . . . . . . 14,283
809,000 Keppel . . . . . . . . . . . . . . . . . . 7,437
3,831,000 shs. Neptune Orient Lines . . . . . . . . . . . $ 5,713
2,162,000 Overseas Union Enterprises . . . . . . . . 13,839
1,836,000 Sembawang Shipyard . . . . . . . . . . . . 14,253
1,521,000 Singapore Airlines . . . . . . . . . . . . 14,604
2,210,000 Singapore Land . . . . . . . . . . . . . . 14,222
538,200 Singapore Press. . . . . . . . . . . . . . 9,859
6,777,000 United Industrial. . . . . . . . . . . . . 7,015
1,868,462 United Overseas Bank . . . . . . . . . . . 20,485
697,623 wts. * United Overseas Bank,
6/17/97. . . . . . . . . . . . . . . . . 4,133
Total Singapore 146,416
SOUTH KOREA - 0.7%
COMMON STOCKS
82,334 shs. Hanil Securities . . . . . . . . . . . . . 1,498
134,000 Korea Electric Power . . . . . . . . . . . 5,093
148,600 Pohang Iron & Steel. . . . . . . . . . . . 17,171
13,714 Samsung Electronics
GDR (USD). . . . . . . . . . . . . . . . 837
331,000 Samsung Electronics
GDS (USD). . . . . . . . . . . . . . . . 20,025
Total South Korea 44,624
SPAIN - 1.8%
COMMON STOCKS
64,773 Banco Popular Espanol. . . . . . . . . . . 8,133
329,250 Banco Santander. . . . . . . . . . . . . . 13,395
769,020 Centros Commerciales Pryca . . . . . . . . 12,662
615,622 ENDESA . . . . . . . . . . . . . . . . . . 28,243
104,785 FOSCA. . . . . . . . . . . . . . . . . . . 10,552
106,227 Gas Natural. . . . . . . . . . . . . . . . 9,000
604,700 Repsol . . . . . . . . . . . . . . . . . . 19,357
38,000 Repsol ADR (USD) . . . . . . . . . . . . . 1,230
847,229 Telefonica de Espana . . . . . . . . . . . 11,478
Total Spain . . . . . . . . . . . . . . . . . . . . 114,050
SWEDEN - 1.7%
COMMON STOCKS
146,210 Asea 'A' . . . . . . . . . . . . . . . . . 10,632
1,342,740 Astra 'B'. . . . . . . . . . . . . . . . . 35,845
837,660 Atlas Copco 'B'. . . . . . . . . . . . . . 11,414
413,020 Electrolux 'B' . . . . . . . . . . . . . . 21,448
173,520 Esselte 'B'. . . . . . . . . . . . . . . . 2,388
179,960 Hennes & Mauritz 'B' . . . . . . . . . . . 9,958
491,300 Sandvik 'B'. . . . . . . . . . . . . . . . 8,334
91,820 Scribona 'B' . . . . . . . . . . . . . . . 657
120,160 Stora Kopparberg 'B' . . . . . . . . . . . 7,485
2,000 * TV 4 . . . . . . . . . . . . . . . . . . . 51
Total Sweden 108,212
SWITZERLAND - 3.2%
COMMON STOCKS & WARRANTS
56,975 shs. BBC Brown Boveri . . . . . . . . . . . . . $ 48,912
24,270 CS Holdings. . . . . . . . . . . . . . . . 10,611
18,490 wts. * CS Holdings, 12/16/94. . . . . . . . . . . 155
18,832 shs. Ciba Geigy . . . . . . . . . . . . . . . . 10,978
9,750 wts. * Landis & Gyr, 2/15/95. . . . . . . . . . . 2
46,225 shs. Nestle . . . . . . . . . . . . . . . . . . 43,218
5,692 Roche Holdings . . . . . . . . . . . . . . 25,316
47,477 Sandoz . . . . . . . . . . . . . . . . . . 23,669
58,110 Swiss Bank . . . . . . . . . . . . . . . . 16,752
18,423 Union Bank of Switzerland. . . . . . . . . 17,268
Total Switzerland 196,881
THAILAND - 1.6%
COMMON STOCKS
402,300 Advanced Information
Service. . . . . . . . . . . . . . . . . 6,973
1,757,000 Bangkok Bank . . . . . . . . . . . . . . . 19,034
2,618,000 Bank of Ayudhya. . . . . . . . . . . . . . 10,242
224,000 Land & House . . . . . . . . . . . . . . . 4,601
185,000 Shinawatra Computer &
Communications . . . . . . . . . . . . . 5,760
223,800 Siam Cement. . . . . . . . . . . . . . . . 12,913
882,710 Siam Commercial Bank . . . . . . . . . . . 9,138
1,501,140 Siam Pulp & Paper. . . . . . . . . . . . . 5,300
256,200 Siam Pulp & Paper (L). . . . . . . . . . . 905
1,643,220 Thai Farmers Bank. . . . . . . . . . . . . 14,505
280,000 United Communications. . . . . . . . . . . 8,269
Total Thailand 97,640
UNITED KINGDOM - 13.3%
COMMON STOCKS
4,560,700 Abbey National . . . . . . . . . . . . . . 30,950
3,087,980 Argos. . . . . . . . . . . . . . . . . . . 16,310
4,390,920 Argyll Group . . . . . . . . . . . . . . . 18,848
12,997,000 Asda Group . . . . . . . . . . . . . . . . 12,752
1,307,180 BAA. . . . . . . . . . . . . . . . . . . . 10,987
3,319,040 British Gas. . . . . . . . . . . . . . . . 15,794
1,968,500 British Petroleum. . . . . . . . . . . . . 14,035
30,000 CALA . . . . . . . . . . . . . . . . . . . 58
6,730,050 Cable & Wireless . . . . . . . . . . . . . 46,442
2,849,064 Cadbury Schweppes. . . . . . . . . . . . . 20,348
8,084,821 Caradon. . . . . . . . . . . . . . . . . . 35,299
3,578,410 Clyde Petroleum. . . . . . . . . . . . . . 2,341
2,707,210 Coats Viyella. . . . . . . . . . . . . . . 8,655
1,874,560 David S. Smith . . . . . . . . . . . . . . 15,710
2,748,710 East Midlands Electricity. . . . . . . . . 30,834
626,210 Eastern Electricity. . . . . . . . . . . . 8,131
1,345,000 First National Finance . . . . . . . . . . 1,474
2,990,710 shs. Glaxo Holdings . . . . . . . . . . . . . . $ 29,197
5,334,480 Grand Metropolitan . . . . . . . . . . . . 36,376
4,394,000 Guinness . . . . . . . . . . . . . . . . . 33,483
642,000 Heath. . . . . . . . . . . . . . . . . . . 2,446
1,034,875 Heywood Williams Group . . . . . . . . . . 4,874
2,471,000 Hillsdown Holdings . . . . . . . . . . . . 6,768
2,112,000 John Laing . . . . . . . . . . . . . . . . 8,168
3,594,098 Kingfisher . . . . . . . . . . . . . . . . 27,682
3,956,940 Ladbroke Group . . . . . . . . . . . . . . 9,706
2,660,640 London Electricity . . . . . . . . . . . . 31,456
7,028,780 National Westminster Bank. . . . . . . . . 57,699
2,097,000 * Polly Peck International . . . . . . . . . 103
2,140,900 RTZ. . . . . . . . . . . . . . . . . . . . 29,968
3,904,825 Rank Organisation. . . . . . . . . . . . . 25,605
3,420,430 Reed International . . . . . . . . . . . . 41,893
1,716,750 Rolls Royce. . . . . . . . . . . . . . . . 4,885
2,390,000 Sears. . . . . . . . . . . . . . . . . . . 4,162
3,161,500 Shell Transport & Trading. . . . . . . . . 37,895
6,317,740 Smithkline Beecham,
equity units . . . . . . . . . . . . . . 38,535
652,630 South Western Electricity. . . . . . . . . 8,474
817,666 Spring Ram . . . . . . . . . . . . . . . . 595
5,151,000 T & N. . . . . . . . . . . . . . . . . . . 18,110
3,719,395 Tesco. . . . . . . . . . . . . . . . . . . 14,263
9,945,430 Tomkins. . . . . . . . . . . . . . . . . . 34,478
3,180,430 United Newspapers. . . . . . . . . . . . . 26,420
822,209
PREFERRED STOCK
400,000 First National Finance,
Cum. Cv., 7.00%. . . . . . . . . . . . . 821
Total United Kingdom 823,030
SHORT-TERM INVESTMENTS - 7.0%
COMMERCIAL PAPER
$16,000,000 American General Investment,
4.90%, 11/21/94. . . . . . . . . . . . . 15,928
30,000,000 Asset Securitization
Cooperative, 4.85 - 5.45%,
11/29/94 - 1/18/95 . . . . . . . . . . . 29,617
48,973,000 Associates Corporation,
4.65%, 11/1/94 . . . . . . . . . . . . . 48,973
11,000,000 Banc One Diversified Services,
4.75%, 11/8/94 . . . . . . . . . . . . . 10,871
1,525,000 Ciesco, 4.80%, 11/1/94 . . . . . . . . . . 1,525
39,000,000 General Electric Capital
Corporation, 4.62%, 11/1/94. . . . . . . 39,000
15,000,000 Goldman Sachs Group, Variable
Rate, 5.13%, 12/2/94 . . . . . . . . . . 15,000
10,000,000 H.J. Heinz, 4.90%, 11/28/94. . . . . . . . 9,944
1,586,000 Harvard University,
4.75%, 11/1/94 . . . . . . . . . . . . . 1,586
25,000,000 Household Finance
Corporation, 4.90%, 12/12/94 . . . . . . 24,690
$13,000,000 J. P. Morgan, 4.90%, 11/28/94. . . . . . . $ 12,927
15,000,000 John Hancock Capital,
4.85%, 11/1/94 . . . . . . . . . . . . . 14,998
20,000,000 Koch Industries,
4.80%, 11/1/94 . . . . . . . . . . . . . 19,997
21,400,000 Leeds Permanent Building
Society, 4.75%, 11/14/94 . . . . . . . . 21,132
61,500,000 Lilly Eli & Company,
4.82%, 11/1/94 . . . . . . . . . . . . . 61,492
2,500,000 New South Wales Treasury,
4.85%, 11/23/94. . . . . . . . . . . . . 2,472
11,000,000 PNC Funding, 4.83%, 11/29/94 . . . . . . . 10,848
7,850,000 Preferred Receivables
Funding, 4.85%, 11/29/94 . . . . . . . . 7,754
20,000,000 SBNSW, Variable Rate,
4.88%, 1/3/95. . . . . . . . . . . . . . 20,000
12,000,000 Safeco Credit Company,
4.75%, 11/10/94. . . . . . . . . . . . . 11,857
20,000,000 Smith Barney Shearson,
5.45%, 1/9/95. . . . . . . . . . . . . . 19,767
400,378
OTHER
21,000,000 Commercial Bank of Illinois,
Floating Rate Medium-
Term Note, 5.36%, 3/14/95. . . . . . . . 21,000
10,000,000 Corporate Asset Funding,
Floating Rate Medium-
Term Note, 4.98%, 12/12/94 . . . . . . . 9,998
30,998
Total Short-Term Investments 431,376
Total Investments in Securities -
100.7% (Cost - $5,438,236) 6,248,539
Other Assets Less Liabilities - (0.7)% (42,826)
Net Assets Consisting of:
Accumulated net investment income -
net of distributions . . . . . . . . . . . . . . $ 54,550
Accumulated realized gains/losses -
net of distributions . . . . . . . . . . . . . . 297,258
Net unrealized appreciation of
investments. . . . . . . . . . . . . . . . . . . 806,617
Paid-in-capital applicable to
483,310,464 shares of $0.01 par
value capital stock outstanding;
2,000,000,000 shares of the
Corporation authorized . . . . . . . . . . . . . 5,047,288
_________
Net Assets - 100.0% $6,205,713
__________
__________
Net Asset Value Per Share $12.84
______
______
* - Non-income producing (ITL) - Italian lira denominated
! - Affiliated company (JPY) - Japanese yen denominated
(BEL) - Belgian franc denominated (NLG) - Dutch guilder denominated
(DEM) - German deutschemark denominated (USD) - U.S. dollar denominated
(FRF) - French franc denominated (L) - Local registered shares
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price International Stock Fund / Year Ended October 31, 1994
Amounts in Thousands
______________________
INVESTMENT INCOME
Income
Dividends (net of foreign taxes of $12,797) . . . $ 88,276
Interest. . . . . . . . . . . . . . . . . . . . . 16,593
_________
Total income. . . . . . . . . . . . . . . . . . . $104,869
Expenses
Investment management fees. . . . . . . . . . . . 35,176
Shareholder servicing fees & expenses . . . . . . 8,550
Custodian and accounting fees & expenses. . . . . 3,006
Registration fees & expenses. . . . . . . . . . . 830
Prospectus & shareholder reports. . . . . . . . . 485
Proxy & annual meeting expenses . . . . . . . . . 214
Legal & auditing fees . . . . . . . . . . . . . . 58
Directors' fees & expenses. . . . . . . . . . . . 46
Miscellaneous expenses. . . . . . . . . . . . . . 102
_________
Total expenses. . . . . . . . . . . . . . . . . . 48,467
_________
Net investment income. . . . . . . . . . . . . . . . 56,402
_________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
Securities. . . . . . . . . . . . . . . . . . . . 308,223
Foreign currency transactions . . . . . . . . . . (5,778)
_________
Net realized gain . . . . . . . . . . . . . . . . . 302,445
Change in net unrealized appreciation or depreciation
Securities. . . . . . . . . . . . . . . . . . . . 189,795
Other assets and liabilities denominated
in foreign currencies . . . . . . . . . . . . . (9,698)
_________
Change in net unrealized appreciation
or depreciation . . . . . . . . . . . . . . . . . 180,097
_________
Net gain on investments. . . . . . . . . . . . . . . 482,542
_________
INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . $538,944
_________
_________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price International Stock Fund
Year Ended Ten Months Ended Year Ended
Oct. 31, 1994 Oct. 31, 1993* Dec. 31, 1992
_____________ _______________ _____________
Amounts in Thousands
_______________________________________________
INCREASE (DECREASE) IN
NET ASSETS
Operations
Net investment income . . . . . $ 56,402 $ 32,527 $ 26,428
Net realized gain
on investments . . . . . . . . 302,445 78,593 26,983
Change in net unrealized
appreciation or
depreciation of
investments. . . . . . . . . . 180,097 632,374 (125,939)
___________ ___________ ___________
Increase (decrease) in
net assets from
operations . . . . . . . . . . 538,944 743,494 (72,528)
___________ ___________ ___________
Distributions to shareholders
Net investment income . . . . . (31,352) - (33,997)
Net realized gain
on investments . . . . . . . . (67,269) - (34,010)
___________ ___________ ___________
Decrease in net
assets from
distributions
to shareholders. . . . . . . . (98,621) - (68,007)
___________ ___________ ___________
Capital share transactions
Sold 225,584, 138,616
and 97,917 shares. . . . . . . 2,767,911 1,439,918 916,511
Distributions reinvested
of 7,630, 0, and 6,852
shares . . . . . . . . . . . . 90,880 - 60,907
Redeemed 68,902, 38,992,
and 40,072 shares. . . . . . . (839,456) (386,988) (370,046)
___________ ___________ ___________
Increase in net assets
from capital share
transactions . . . . . . . . . 2,019,335 1,052,930 607,372
___________ ___________ ___________
Net equalization . . . . . . . . - - 6,485
___________ ___________ ___________
Total increase . . . . . . . . . 2,459,658 1,796,424 473,322
NET ASSETS
Beginning of period . . . . . . 3,746,055 1,949,631 1,476,309
___________ ___________ __________
End of period . . . . . . . . . $ 6,205,713 $ 3,746,055 $ 1,949,631
___________ ___________ ___________
___________ ___________ ___________
*The Fund's fiscal year-end was changed to October 31.
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price International Stock Fund / October 31, 1994
Note 1 - Significant Accounting Policies
T. Rowe Price International Funds, Inc. (the Corporation) is registered under
the Investment Company Act of 1940. The International Stock Fund (the Fund), a
diversified, open-end management investment company, is one of the portfolios
established by the Corporation.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including NASDAQ) are valued at the last quoted sales price at the
time the valuations are made. A security which is listed or traded on more
than one exchange is valued at the quotation on the exchange determined to be
the primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and
are valued at a price deemed best to reflect fair value as quoted by dealers
who make markets in these securities or by an independent pricing service.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
For purposes of determining the Fund's net asset value per share, the
U.S. dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
Fund, as authorized by the Board of Directors.
B) Affiliated Companies - Investments in companies 5% or more of whose
outstanding voting securities are held by the Fund are defined as "Affiliated
Companies" in Section 2(a)(3) of the Investment Company Act of 1940.
C) Currency translation - Foreign currency amounts are translated into U.S.
dollars at prevailing exchange rates as follows: assets and liabilities at the
rate of exchange at the end of the respective period, purchases and sales of
securities and income and expenses at the rate of exchange prevailing on the
dates of such transactions. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a component
of such gains or losses.
D) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an identified cost basis. Dividend income and distributions to
shareholders are recorded by the Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income
tax regulations which may differ from generally accepted accounting
principles. Effective January 1, 1993, the Fund discontinued its practice of
equalization. The results of operations and net assets were not affected by
this change.
Note 2 - Investment Transactions
As a part of its investment program, the Fund engages in the following
activities, the nature and risk of which are set forth more fully in the
Fund's Prospectus and Statement of Additional Information.
A) Emerging Markets - The Fund has investments in securities of companies
located in emerging markets. Future economic or political developments could
adversely affect the liquidity or value, or both, of such securities.
B) Forward Currency Exchange Contracts - At October 31, 1994, the Fund was a
party to various forward currency exchange contracts under which it is
obligated to exchange currencies at specified future dates. Risks arise from
the possible inability of counterparties to meet the terms of their contracts
and from movements in currency values. Outstanding contracts at October 31,
1994, are as follows:
Unrealized
Contract to Apprec.
Value ________________________________ (Deprec.)
Date Receive Deliver in USD Counterparty
_____ _______________ _______________ _______ ___________
Amounts in Thousands
_________________________________
11/94 DEM 83,585 JPY 5,247,036 1,290 Chase Manhattan Bank
11/94 JPY 5,224,050 DEM 83,585 (1,531) Chase Manhattan Bank
11/94 JPY 5,214,473 FRF 286,431 (1,653) Chase Manhattan Bank
11/94 FRF 286,431 JPY 5,409,819 (368) Chase Manhattan Bank
11/94 JPY 5,226,861 NLG 93,778 (1,533) Chase Manhattan Bank
11/94 NLG 93,778 JPY 5,430,594 (574) Chase Manhattan Bank
Net unrealized depreciation of $4,369,000 on these contracts at October 31,
1994, is included in the accompanying financial statements, of which
$1,290,000 relates to appreciated contracts and $5,659,000 to depreciated
contracts.
C) Securities Lending - To earn additional income, the Fund lends its
securities to approved brokers. At October 31, 1994, the market value of
securities on loan was $84,024,000, for which the Fund has received cash
collateral of $87,973,000. Although the risk is mitigated by the collateral,
the Fund could experience a delay in recovering its securities and possibly
experience a capital loss if the borrower fails to return them.
D) Other - Purchases and sales of portfolio securities, other than short-term
and U.S. Government securities, aggregated $2,940,084,000 and $1,073,392,000,
respectively, for the year ended October 31, 1994.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since the Fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
In order for the Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, $14,645,000
of undistributed net investment income and $18,119,000 of undistributed net
realized gains were reclassified as a net decrease of $3,474,000 to
paid-in-capital during the year ended October 31, 1994. The results of
operations and net assets were not affected by the reclassifications.
At October 31, 1994, the aggregate cost of investments for federal
income tax and financial reporting purposes was $5,438,236,000 and net
unrealized appreciation aggregated $810,303,000, of which $925,684,000 related
to appreciated investments and $115,381,000 to depreciated investments.
Note 4 - Related Party Transactions
The Fund is managed by Rowe Price-Fleming International, Inc. (Price-Fleming),
which is owned by T. Rowe Price Associates, Inc. (Price Associates), Robert
Fleming Holdings Limited, and Jardine Fleming Holdings Limited under a joint
venture agreement.
The investment management agreement between the Fund and Price-Fleming
(the Manager) provides for an annual investment management fee, computed daily
and paid monthly, consisting of an Individual Fund Fee equal to 0.35% of
average daily net assets and a Group Fee. The Group Fee is based on the
combined assets of certain mutual funds sponsored by the Manager or Price
Associates (the Group). The Group Fee rate ranges from 0.48% for the first $1
billion of assets to 0.31% for assets in excess of $34 billion. The effective
annual Group Fee rate at October 31, 1994, and for the year then ended was
0.34%. The Fund pays a pro rata portion of the Group Fee based on the ratio of
the Fund's net assets to those of the Group.
During the year ended October 31, 1994, the Fund, in the ordinary course
of business, paid commissions of $1,608,000 to, and placed security purchase
and sale orders aggregating $392,034,000 with, certain affiliates of the
Manager in connection with the execution of various portfolio transactions at
the direction of Price-Fleming.
T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc.
(RPS) are wholly owned subsidiaries of Price Associates. TRPS provides
transfer and dividend disbursing agent functions and shareholder services for
all accounts. RPS provides subaccounting and recordkeeping services for
certain retirement accounts invested in the Fund. Price Associates, under a
separate agreement, calculates the daily share price and maintains the
financial records of the Fund. The Fund is one of several T. Rowe Price mutual
funds (the Underlying Funds) in which the T. Rowe Price Spectrum Growth Fund
(Spectrum) invests. In accordance with an Agreement between Spectrum, the
Underlying Funds, Price Associates and TRPS, expenses from the operation of
Spectrum are borne by the Underlying Funds based on each Underlying Fund's
proportionate share of assets owned by Spectrum. For the year ended October
31, 1994, the Fund incurred fees totalling approximately $7,112,000 for these
services provided by related parties. At October 31, 1994, these investment
management and service fees payable were $4,171,000.
<TABLE>
Financial Highlights
T. Rowe Price International Stock Fund
<CAPTION>
For a share outstanding throughout each period
_________________________________________________________________________
Ten Months
Year Ended Ended Year Ended December 31,
October 31, October 31, _____________________________________________
1994 1993* 1992 1991 1990 1989
_________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . $11.74 $ 8.89 $ 9.54 $ 8.81 $10.24 $ 8.97
______ ______ ______ ______ ______ ______
Investment Activities
Net investment income . . . . . . 0.09 0.10 0.14 0.15 0.22 0.16
Net realized and unrealized
gain (loss). . . . . . . . . . 1.30 2.75 (0.47) 1.22 (1.13) 1.94
______ ______ ______ ______ ______ ______
Total from Investment
Activities. . . . . . . . . . . . 1.39 2.85 (0.33) 1.37 (0.91) 2.10
______ ______ ______ ______ ______ ______
Distributions
Net investment income . . . . . . (0.09) - (0.16) (0.15) (0.16) (0.16)
Net realized gain . . . . . . . . (0.20) - (0.16) (0.49) (0.36) (0.67)
______ ______ ______ ______ ______ ______
Total Distributions. . . . . . . . . (0.29) - (0.32) (0.64) (0.52) (0.83)
______ ______ ______ ______ ______ ______
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . $12.84 $11.74 $ 8.89 $ 9.54 $ 8.81 $10.24
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . . . . . 12.0% 32.1% (3.5)% 15.9% (8.9)% 23.7%
Ratio of Expenses to
Average Net Assets. . . . . . . . 0.96% 1.01%! 1.05% 1.10% 1.09% 1.10%
Ratio of Net Investment Income to
Average Net Assets. . . . . . . . 1.11% 1.52%! 1.49% 1.51% 2.16% 1.63%
Portfolio Turnover Rate. . . . . . . 22.9% 29.8%! 37.8% 45.0% 47.1% 47.8%
Net Assets, End of Period
(in thousands). . . . . . . . . .$6,205,713$3,746,055 $1,949,631 $1,476,309 $1,030,848 $970,214
<FN>
*The Fund's fiscal year-end was changed to October 31.
!Annualized.
</FN>
</TABLE>
Report of Independent Accountants
To the Shareholders and Board of Directors of
T. Rowe Price International Stock Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the selected per
share data and information (which appears under the heading "Financial
Highlights") present fairly, in all material respects, the financial position
of T. Rowe Price International Stock Fund (one of the portfolios constituting
T. Rowe Price International Funds, Inc.) at October 31, 1994, the results of
its operations, the changes in its net assets and the selected per share data
and information for each of the fiscal periods presented in conformity with
generally accepted accounting principles. These financial statements and
selected per share data and information (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1994 by correspondence with
custodians and brokers and, where appropriate, the application of alternative
auditing procedures for unsettled security transactions, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
November 17, 1994
Chart 1 - "Geographic Diversification": Europe 44%, Japan 23%, Far East 18%,
Latin America 8%, All others 7%
Chart 2 - "Fiscal-Year Performance Comparison": shows growth of $10,000
investment in International Stock Fund in October 1984 to $53,284 on October
31, 1994, and growth of $10,000 investment in MSCI EAFE Index in October 1984
to $53,833 on October 31, 1994.
