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T. Rowe Price
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Annual Report
International Stock Fund
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October 31, 1996
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Report Highlights
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* Several foreign stock markets were strong during the past 12 months,
although few were able to keep pace with the exuberant U.S. market.
* The fund performed well relative to its benchmarks, largely because of its
underweighting in Japan. Returns were 1.05% and 14.87%, respectively, for
the 6- and 12-month periods ended October 31, 1996.
* The fund maintained a neutral weighting in Europe versus the index and a 6%
weighting in Latin America, which made a positive contribution to fund
performance over the past year.
* The effect of currency translation was mixed, with U.S. investors
benefiting in dollar terms from the advancing British pound and losing
ground because of the flagging Japanese yen.
* Going forward we intend to maintain about half of fund assets in European
stock markets where economic recovery continues, and to diversify remaining
assets among Asian and Latin American stocks.
<PAGE>
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Fellow Shareholders
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Few overseas markets were able to keep pace with an exuberant Wall Street
where stock prices benefited from a benign interest rate environment and strong
corporate earnings. Overseas the economic picture was more subdued. Overall,
foreign stock returns were lackluster for the past six months but respectable
for the year ended October 31.
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Performance Comparison
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Periods Ended 10/31/96 6 Months 12 Months
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International Stock Fund 1.05% 14.87%
MSCI EAFE Index * - 2.42 10.47
Lipper International Funds Average - 0.89 10.73
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*Net of withholding taxes
================================================================================
The T. Rowe Price International Stock Fund performed well against both its
index and its peer group over the 12 months ended October 31. Its return over
this period of 14.87% was significantly ahead of the Morgan Stanley Capital
International Europe, Australia, and Far East Index (MSCI EAFE) and also
exceeded the Lipper International Funds Average by a similar margin. During the
six months ended October 31, the fund's results were modest in absolute terms
but were still ahead of both the index and peer group.
PERFORMANCE REVIEW
Over the 12-month period ended October 31, fund performance against the
index was helped significantly by an underweighting in Japan where the stock
market performed poorly in dollar terms. The fund continues to be overweighted
in Southeast Asia where markets such as Hong Kong contributed well, while small
positions in markets such as Singapore, Thailand, and South Korea were
disappointing. In Europe, the portfolio has a neutral weighting against the
index but our stock selection added value. An overweighting in the Netherlands
was particularly helpful. Latin America, which is not represented in the index,
performed well over the 12 months, with Brazil making a strong contribution
during the second half.
<PAGE>
Although the fund has continued to compare favorably with its index and
peers, foreign stocks have failed to keep up with the U.S. market. In Europe,
the Continental economies have been weak, constrained by the tight fiscal
policies of those governments trying to meet the economic criteria required for
Economic Monetary Union (EMU) membership in January 1999. Countering this tight
fiscal policy, most central banks kept the monetary reins relatively loose,
which in turn has helped a number of markets produce double-digit returns.
[Geographic Diversification pie chart showing: Europe 53%, Japan 21%, Far
East 14%, Latin America 6%, Other and Reserves 6%]
Japan continued its tentative recovery but the yen has remained weak
against a background of a declining current account surplus, low domestic
interest rates, and the government's determination to keep the corporate sector
competitive in world markets. Elsewhere in the Pacific, the picture was mixed.
The economies of Hong Kong and Malaysia remained buoyant, and each stock market
produced returns of over 20% during the 12 months under review. Singapore and
Korea were both hurt by a decline in exports of electronic components to the
U.S., and their stock markets were poor performers. The best 12-month
performance came from the stock markets of Latin America where overseas
investors have been encouraged by a mix of disciplined economic policies and
more stable currencies. Brazil and Argentina each achieved returns of more than
30% in dollars and the Mexican market was not far behind.
Currency markets were much more subdued. The U.S. dollar improved steadily
against the yen for most of the year but rose only a modest amount against
leading European currencies such as the franc and deutschemark. Perhaps
surprisingly, the British pound and the Italian lira were the strongest European
currencies and each has even strengthened against the dollar over the last 12
months. On balance, the overseas currency mix hampered the fund; a U.S. dollar
return of 14.87% compares with an estimated figure of 19.97% when the currency
effect is excluded.
INVESTMENT REVIEW
Far East
A year ago, the economy in Japan was in trouble as the combination of
currency strength and a banking crisis threatened to throw it into a
deflationary spiral. Helped by a stimulatory fiscal policy and a successful
strategy of currency depreciation, the economy pulled through this difficult
period but the recovery is patchy at best. Capital expenditure - traditionally
the engine of Japanese growth - picked up strongly and this in turn fed through
to better figures for production and shipments. Significantly, there is evidence
that an inventory overhang is now being worked off, which bodes well for the
future. Dimming this brighter picture is consumer expenditure - by far the
largest component of GDP - which remains very sluggish. Despite this mixed
picture, our assumption is that the economy will continue its steady recovery.
Monetary policy is supportive and the recent weakness of the yen will be a big
help to Japan's export industry.
<PAGE>
The stock market also struggled to make progress. It still looks expensive
compared with other world markets but, against its own history, looks to be
better valued. Our strategy in the market avoids the financial sector where bad
loans continue to haunt the city banks and valuations remain unacceptably high.
We added to sectors such as retailing, pharmaceuticals, and consumer nondurables
where we can find growth at a reasonable valuation. Our holdings also focused on
a number of Japan's multinational corporations, many of which are world leaders
in their fields. These stocks performed well for us recently and we have cut
back in a number of them where prices moved ahead of realistic expectations.
==============================
China is now an important
influence even though its
stock market is undeveloped.
- ------------------------------
Elsewhere in the region, the economy of China is now an important influence
even though its stock market is undeveloped. Three years ago this economy was
blazing along at an unsustainable pace, threatening an inflationary blowout and
a sharp reversal of the trade balance. However, the current picture suggests
that the authorities have achieved a soft landing. GDP growth has moderated to a
level of about 10%, inflation is back under control, and the current account is
now in modest surplus. The improved health of the Chinese economy has provided
support for Hong Kong where, over the last six months, the stock market was one
of the best in the region. With the U.S. dollar pegged to the Hong Kong dollar,
a more benign interest rate environment in the U.S. quickly spilled over into
Hong Kong, and the Bank of China reduced its interest rates twice in the last
few months. Improved business results from the financial sector and a recovery
in residential property prices all helped this market, where we have a moderate
overweighting.
In contrast, the Singapore market performed poorly over the last six months
as a weak trend in exports put a brake on the broad economy. The government has
announced measures to dampen speculation in the residential property market, and
the recent trend in corporate earnings has been below expectations. Singapore
has one of the best managed economies in the world but the stock market is
unlikely to perform until the economy picks up again. In contrast, the Malaysian
market held up well during the summer months and smaller companies continued to
perform well. The worry here is that the economy has been growing too fast, but
recent statistics evidence a deceleration, which will in turn moderate the high
external deficit.
<PAGE>
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Market Performance
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Six Months Local Local Currency U.S.
Ended 10/31/96 Currency vs. U.S. Dollars Dollars
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France 2.15% 1.35% 3.53%
Germany 6.65 1.35 8.09
Hong Kong 10.36 0.04 10.40
Italy - 10.35 3.18 - 7.50
Japan - 8.74 - 7.90 - 15.95
Mexico 2.26 - 6.96 - 4.86
Netherlands 9.44 1.18 10.74
Singapore - 16.26 - 0.21 - 16.44
Sweden 13.97 3.55 18.01
Switzerland 2.31 - 1.11 1.17
United Kingdom 5.20 8.52 14.16
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Source: FAME Information Services, Inc., using MSCI indices.
================================================================================
In Thailand, the stock market collapsed over the last six months. Corporate
profits came in below expectations, the quality of bank balance sheets was
called into question, and a downgrade in the rating of Thai obligations was a
blow to foreign confidence. Our portfolio had less than 1% of assets in Thailand
and the companies we have chosen should weather this uncomfortable period for
the economy. South Korea is another stock market that performed poorly over the
last six months. The main culprit here was a sharp deterioration in the trade
deficit with a loss of competitiveness against Japanese companies and a very
sharp fall in semiconductor prices. Again, our position in this market is very
small but, with a number of blue chips now looking very cheap, it is probably
time to add to our positions.
In Australia, the economy is slowing but not sliding into recession. The
new Liberal Coalition government has a workable majority and its objectives of
labor reform and further integration with Southeast Asia bode well. The stock
market has been unexciting but, helped by currency appreciation, returns for the
U.S. investor were reasonable. In New Zealand, the economy is in better shape
and the market has shown solid dollar returns helped by a strong contribution
from the New Zealand dollar.
<PAGE>
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Industry Diversification
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Percent of Percent of
Net Assets Net Assets
4/30/96 10/31/96
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Services ................................. 23.9% 26.5%
Finance 17.6 ............................. 17.0
Consumer Goods ........................... 16.4 16.5
Capital Equipment ........................ 15.7 13.2
Energy ................................... 10.6 9.9
Materials ................................ 8.4 7.8
Multi-Industry ........................... 2.9 3.5
Miscellaneous ............................ 0.1 0.1
Reserves ................................. 4.4 5.5
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Total .................................... 100.0% 100.0%
================================================================================
Europe
In Europe, the economic picture is one of contrasts. On the Continent, the
German locomotive is showing a moderate recovery but there are few signs that it
is pulling its neighbors along. On the other hand, the U.K. continued a steady
growth phase and smaller economies such as Norway and Ireland are performing
strongly.
<PAGE>
Germany remains at the forefront of the move to Economic Monetary Union
and, along with the other founder members, its government must soon meet the
Maastricht criteria for debt and budget deficits as a percentage of GDP. The
budget for the old West Germany is in surplus but there is a significant deficit
in the old East Germany and, therefore, overall fiscal policy remains tight at
this point in the cycle. Recognizing this dilemma, the Bundesbank maintained a
moderately loose monetary policy and the economy is unlikely to slip into
recession. The picture should improve as unification tax surcharges phase out
and stimulate better consumer sentiment. Also, the weaker deutschemark will help
with the export sector. We continued to underweight this market but our bias
toward growth companies in the chemical and drug sectors enabled us to add
value.
The situation in the Netherlands is similar but the domestic economy is of
limited relevance to the Dutch market, which is dominated by a small number of
multinational companies. A number of our favorite multinationals are among our
largest holdings, and Royal Dutch Petroleum, together with media and publishing
stocks Wolters Kluwer and Elsevier, all performed very strongly.
<PAGE>
==============================
The U.K. Stock market made
good progress for most of the
year and was one of Europe's
better performers.
- ------------------------------
In the U.K., the economy is continuing a long period of steady growth that
has enabled corporate earnings to advance, but inflation and the current account
are well under control. It is unlikely that the U.K. will be a founding member
of EMU and, therefore, it is less constrained by the Maastricht criteria. Also,
with general elections that must be held no later than May 1997, the ruling
Conservative Party will be anxious for the "feel good" factor to reappear.
Despite all the temptations, the Chancellor has behaved prudently by raising
interest rates a notch, and his forthcoming budget will make few concessions on
taxes. The stock market made good progress for most of the year and was one of
Europe's better performers. In recent weeks, it retreated from an all-time high
but, for the U.S. investor, this was more than compensated for by sterling's
sharp advance. Our bias toward growth stocks in the service and pharmaceutical
sectors continued to be a successful strategy in this market.
In France, the picture remained bleak with the economy hardly moving and
unemployment uncomfortably high. Already this has caused some social unrest, but
the government is unable to offer fiscal stimulus given the deficit targets
required by EMU. At least the current account was in surplus and the link
between the french franc and deutschemark seemed to be holding steady. Despite
the poor economic background, we can find many investments that meet our
preference for growth at a reasonable price. These have tended to be in the
service sector where retailers such as Carrefour and Pinault Printemps performed
well.
<PAGE>
The stock market in Switzerland is another where the multinationals tend to
dominate the scene. Surprisingly, the Swiss franc has been a weak currency over
the year, but this has focused attention on the exporters where our selections
have been rewarding, even in U.S. dollars.
Turning to the smaller economies, the Nordic markets were strong, with
Sweden benefiting from a steady fall in interest rates as the government tried
to hold the strong kroner in line with other European currencies. Norway also
did well as the country's oil wealth provided healthy surpluses for both public
expenditure and external trade. Spain and Italy have indicated their ambitions
to be founding members of EMU but a cold look at the statistics suggests they
will be hardpressed to meet the required economic targets in time. Nevertheless,
the new Italian government under Mr. Prodi has shown remarkable vigor in
tackling deep-seated problems such as public sector wage discipline and fiscal
reform.
<PAGE>
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About Your Investment Manager
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Since many of you are new investors in the T. Rowe Price international
stock funds, we want to tell you briefly about the management team behind them.
The funds are managed by Rowe Price-Fleming International, Inc., a joint venture
between T. Rowe Price and Robert Fleming Holdings Ltd. of London.
Rowe Price-Fleming brings a wealth of experience to international
investing. T. Rowe Price was founded in 1937, and Robert Fleming, a British
merchant bank and investment firm, was founded in 1873. Since its birth in 1979,
Rowe Price-Fleming has grown into the largest U.S. manager of international
no-load funds,* with more than $27 billion under its stewardship, including 11
stock and bond mutual funds.
While Rowe Price-Fleming's investment team is based in London, portfolio
managers are also located in Tokyo, Hong Kong, Singapore, Baltimore, and soon in
South America. The company's equity managers are responsible for specific stock
selection, but they are supported by more than 100 analysts in 14 financial
centers worldwide.
Rowe Price-Fleming's investment philosophy is straightforward and
consistent: Each equity fund seeks broad diversification among companies that
offer above-average growth prospects at reasonable valuations. While
diversifying among many different companies and industries, each fund adheres
strictly to its prospectus.
Portfolio managers combine a macroeconomic view of each market with
extensive research on individual companies. Therefore, your portfolios can
potentially benefit from positive economic trends as well as from the selection
of individual stocks that may perform well regardless of economic conditions.
Rowe Price-Fleming believes that its emphasis on faster-growing foreign
economies, broad diversification, and strong commitment to fundamental research
helps it identify the best opportunities in international stocks.
- --------------------------------------------------------------------------------
*Strategic Insight Simfund
================================================================================
Latin America
The stock markets of Latin America made a strong contribution to the fund's
return over the last 12 months. Our largest position was in Brazil where the
economy regained momentum after a difficult 1995. Industrial production and
retail sales were both in positive territory but the government will respond
quickly to any signs of a resurgence of inflation or deterioration in the trade
position. Many analysts think the currency is overvalued although, provided the
government pursues the right policies, international confidence can be
maintained. The major stock market theme this year was the privatization and
restructuring of the telecommunications and electricity sectors, and our holding
in blue chip Telecomunicacoes Brasileiras outperformed strongly.
<PAGE>
Mexico has come a long way since the peso crisis of two years ago although
the banking system remains fragile despite a restructuring program. After a
savage recession, the economy is now growing again with the export sector
benefiting from the weak peso. Reserves are still uncomfortably low and
international confidence will depend on further improvement of the trade
position.
INVESTMENT POLICY AND OUTLOOK
Our strategy for the fund going forward is to maintain about half the
portfolio in the stock markets of Europe. Japan remains the largest individual
country position but is significantly underweighted versus the benchmark, and we
maintain important positions in the smaller markets of Southeast Asia and Latin
America. The portfolio remains well diversified in terms of its country
distribution and the number of stocks held. A common theme to our stock
selection is to find growth at a reasonable valuation, although we have been
comfortable holding more cyclical issues in markets such as Japan where we think
economic recovery will continue.
Stock markets tend to be driven by the direction of interest rate moves and
how corporate business results compare with expectations. For two years now,
these two forces have been simultaneously positive for the U.S. market but have
been less compelling overseas.
There are some signs that this may be about to change. Interest rates in
the U.S. are unlikely to fall much further and a long period of strong corporate
profit growth may be coming to an end. In contrast, interest rates can fall
further in a number of European markets and the economic recovery in Europe and
Japan may surprise on the upside. The smaller markets of Asia and Latin America
have great potential and have their part to play in a diversified international
portfolio.
The case for international diversification is as valid as ever, the fund
remains fully invested, and we are optimistic about its future.
Respectfully submitted,
[Signature]
Martin G. Wade
President
November 22, 1996
<PAGE>
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
10/31/96
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Wolters Kluwer, Netherlands ..................................... 2.2%
Royal Dutch Petroleum, Netherlands .............................. 1.9
Elsevier, Netherlands ........................................... 1.8
National Westminster Bank, United Kingdom ....................... 1.5
Smithkline Beecham, United Kingdom .............................. 1.4
Telecomunicacoes Brasileiras, Brazil ............................ 1.2
Reed International, United Kingdom .............................. 1.2
Eaux Cie Generale, France ....................................... 1.2
Astra, Sweden ................................................... 1.0
Shell Transport and Trading, United Kingdom ..................... 1.0
Roche Holdings, Switzerland ..................................... 0.9
ABB, Sweden/Switzerland 0.9
Gehe, Germany ................................................... 0.9
Mitsubishi Heavy Industries, Japan .............................. 0.9
Kyocera, Japan .................................................. 0.8
ING Groep, Netherlands .......................................... 0.8
Pinault Printemps, France ....................................... 0.8
Abbey National, United Kingdom .................................. 0.8
Nestle, Switzerland ............................................. 0.8
NEC, Japan ...................................................... 0.8
Carrefour, France ............................................... 0.8
Canon, Japan .................................................... 0.8
Kingfisher, United Kingdom ...................................... 0.7
Denso, Japan .................................................... 0.7
Bayer, Germany .................................................. 0.7
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Total ........................................................... 26.5%
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<PAGE>
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Performance Comparison
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This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
[SEC chart showing International Stock Fund $30,420; MSCI EAFE Index
$24,355; Lipper International Funds Average $26,632]
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Average Annual Compound Total Return
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This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
================================================================================
Periods Ended 10/31/96 1 Year 3 Years 5 Years 10 Years
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International Stock Fund 14.87% 8.91% 10.90% 11.77%
- --------------------------------------------------------------------------------
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
<TABLE>
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Year 10 Months++ Year
Ended Ended Ended
10/31/96 10/31/95 10/31/94 10/31/93 12/31/92 12/31/91
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
Beginning of period ............... $ 12.09 $ 12.84 $ 11.74 $ 8.89 $ 9.54 $ 8.81
Investment activities
Net investment income ..... 0.19 0.18 0.09 0.10 0.14 0.15
Net realized and
unrealized gain (loss) .... 1.57 (0.19) 1.30 2.75 (0.47) 1.22
Total from
investment activities ..... 1.76 (0.01) 1.39 2.85 (0.33) 1.37
Distributions
Net investment income ..... (0.18) (0.12) (0.09) -- (0.16) (0.15)
Net realized gain ......... (0.20) (0.62) (0.20) -- (0.16) (0.49)
Total distributions ....... (0.38) (0.74) (0.29) -- (0.32) (0.64)
NET ASSET VALUE
End of period ..................... $ 13.47 $ 12.09 $ 12.84 $ 11.74 $ 8.89 $ 9.54
Ratios/Supplemental Data
Total return ...................... 14.87% 0.38% 12.03% 32.06% (3.47)% 15.87%
Ratio of expenses to
average net assets ................ 0.88% 0.91% 0.96% 1.01%+ 1.05% 1.10%
Ratio of net investment
income to average
net assets ........................ 1.58% 1.56% 1.11% 1.52%+ 1.49% 1.51%
Portfolio turnover rate ........... 11.6% 17.8% 22.9% 29.8%+ 37.8% 45.0%
Average commission
rate paid ......................... $ 0.0020 $- $- $- $- $-
Net assets, end of period
(in millions) ..................... $ 8,776 $ 6,386 $ 6,206 $ 3,746 $ 1,950 $ 1,476
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
+ Annualized.
++ The fund's fiscal year-end was changed to 10/31.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
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Statement of Net Assets
- --------------------------------------------------------------------------------
Shares/Par Value
In thousands
- --------------------------------------------------------------------------------
ARGENTINA 0.7%
Common Stocks 0.7%
Banco de Galicia Buenos Aires (Class B) ADR (USD) ..... 345,562 $6,263
Banco Frances del Rio ADR (USD) ....................... 305,757 8,026
Enron Global Power & Pipeline (USD) ................... 79,819 2,245
Naviera Perez (Class B) ............................... 2,340,506 14,864
Sociedad Comercial del Plata * ........................ 857,750 2,024
Sociedad Comercial del Plata ADR (144a) (USD) * ....... 79,613 1,886
Telecom Argentina Stet (Class B) ...................... 485,570 1,833
Telecom Argentina Stet (Class B) ADR (USD) ............ 56,339 2,127
Telefonica de Argentina (Class B) ADR (USD) ........... 480,340 11,168
Telefonica de Argentina (Class B) ADS (USD) ........... 117,840 2,740
Transportadora de Gas del Sur ADR (USD) ............... 185,858 2,160
YPF Sociedad Anonima (Class D) ADR (USD) .............. 387,201 8,809
Total Argentina (Cost $64,305) ........................ 64,145
AUSTRALIA 1.7%
Common Stocks 1.6%
Amcor Limited .................................. 498,000 3,095
Australia & New Zealand Bank Group ............. 1,488,000 8,692
Australia Gas & Light .......................... 3,029,798 16,619
Broken Hill Proprietary ........................ 1,329,836 17,656
Coca Cola Amatil ............................... 210,404 2,893
Howard Smith ................................... 768,123 6,028
Lend Lease ..................................... 457,144 7,751
National Australia Bank ........................ 808,590 8,877
News Corporation ............................... 1,860,030 10,586
Publishing and Broadcasting .................... 1,681,850 7,572
Tabcorp Holdings ............................... 3,123,000 14,729
TNT * .......................................... 2,945,742 5,674
Westpac Banking ................................ 2,089,000 11,922
WMC ............................................ 1,240,057 7,794
Woodside Petroleum ............................. 1,875,000 13,227
143,115
Preferred Stocks 0.1%
Sydney Harbour Casino Holdings * ............... 5,144,800 7,340
7,340
Total Australia (Cost $110,786) ................ 150,455
<PAGE>
AUSTRIA 0.1%
Common Stocks 0.1%
EVN Energie Versorgung Nieder .................. 22,800 $3,092
Flughafen Wien ................................. 57,126 2,816
Total Austria (Cost $4,934) .................... 5,908
BELGIUM 0.9%
Common Stocks 0.9%
Generale Banque ............................... 61,617 21,533
Generale Banque, VVPR Strip ................... 5,601 4
Kredietbank ................................... 144,392 46,641
UCB ........................................... 5,170 11,396
79,574
Convertible Bonds 0.0%
Kredietbank, 5.75%, 11/30/03 ............ BEL 38,115,000 1,603
1,603
Total Belgium (Cost $53,973) ............ 81,177
BRAZIL 3.3%
Common Stocks 0.5%
Brazil Fund (USD) ........................... 254,600 5,347
Companhia Siderurgica Nacional .............. 171,890,000 4,266
Eletrobras .................................. 37,089,553 11,516
Eletrobras ADR (USD) * ...................... 106,277 1,661
Pao de Acucar GDR (USD) ..................... 366,930 7,201
Telecomunicacoes Brasileiras ................ 166,493,000 10,144
Telecomunicacoes de Sao Paulo * ............. 3,902,886 665
White Martins ............................... 3,000,950,000 4,644
45,444
Preferred Stocks 2.8%
Banco Bradesco .................................... 2,337,025,767 19,926
Banco Itau ........................................ 11,295,000 4,892
Brahma ............................................ 23,280,393 14,389
Brasmotor ......................................... 19,947,000 6,776
Cia Cimento Portland Itau ......................... 17,859,000 4,693
Cia Energetica de Sao Paulo ADS (USD) * ........... 156,300 1,563
Cia Energetica Minas Gerais ....................... 262,919,692 8,368
Cia Energetica Minas Gerais ADR,
sponsored, non voting (USD) * .... 435,562 13,775
Cia Tecidos Norte de Minas ........................ 13,940,000 4,681
Lojas Americanas .................................. 196,273,000 3,085
Petrol Brasileiros ................................ 70,772,184 9,162
Telecomunicacoes Brasileiras ...................... 236,993,267 17,600
Telecomunicacoes Brasileiras ADR (USD) ............ 1,023,532 76,253
Telecomunicacoes Brasileiras ADR (144a) (USD) ..... 14,601 1,088
<PAGE>
Telecomunicacoes de Minas Gerais .................. 41,766,000 4,663
Telecomunicacoes de Sao Paulo ..................... 91,069,458 16,664
Telecomunicacoes de Rio de Janeiro ................ 39,333,000 3,790
Unibanco .......................................... 405,110,000 11,238
Usiminas .......................................... 10,623,600,000 11,168
Usiminas ADS (USD) ................................ 1,223,659 12,696
246,470
Total Brazil (Cost $207,946) ...................... 291,914
CANADA 0.3%
Common Stocks 0.3%
Alcan Aluminum ................................ 574,100 18,848
Royal Bank of Canada .......................... 227,590 7,523
Total Canada (Cost $18,063) ................... 26,371
CHILE 0.5%
Common Stocks 0.5%
AFP Providia ADR (USD) ................................... 54,044 1,257
Chile Fund (USD) ......................................... 404,098 8,789
Chilectra ADR (144a) (USD) ............................... 122,656 6,731
Chilgener ADS (USD) ...................................... 186,659 4,223
Compania Cervecerias Unidas ADS (USD) .................... 160,311 3,246
Compania de Telecomunicaciones de Chile ADR (USD) ........ 71,340 7,036
Empresa Nacional de Electricidad ADS (USD) ............... 449,408 8,258
Enersis ADS (USD) ........................................ 260,256 7,645
Total Chile (Cost $49,623) ............................... 47,185
CHINA 0.5%
Common Stocks 0.5%
Huaneng Power International (Class N) ADR (USD) * ..... 1,335,000 $20,692
Shanghai Petrochemical (Class H) (HKD) ................ 43,596,000 11,699
Yizheng Chemical Fibre (Class H) (HKD) ................ 31,441,000 7,279
Total China (Cost $48,969) ............................ 39,670
CZECH REPUBLIC 0.0%
Common Stocks 0.0%
SPT Telecom ....................................... 35,764 3,824
Total Czech Republic (Cost $3,397) ................ 3,824
DENMARK 0.2%
Common Stocks 0.2%
Den Danske Bank ................................ 138,670 9,949
Tele Danmark (Class B) ......................... 60,017 3,026
Unidanmark (Class A) ........................... 146,749 6,766
Total Denmark (Cost $16,230) ................... 19,741
<PAGE>
FINLAND 0.2%
Preferred Stocks 0.2%
Nokia (Class A) ............................... 325,112 15,019
Total Finland (Cost $7,170) ................... 15,019
FRANCE 8.2%
Common Stocks and Warrants 8.2%
Accor ........................................... 104,243 13,090
Alcatel Alsthom ................................. 194,050 16,549
Assurances Generales de France .................. 239,884 7,076
AXA ............................................. 53,300 3,329
Canal Plus ...................................... 92,330 22,863
Carrefour ....................................... 122,607 68,036
Castorama Dubois ................................ 42,171 7,218
Chargeurs International ......................... 61,180 2,657
Cie de St. Gobain ............................... 255,128 34,433
Credit Local de France, bearer .................. 55,140 4,743
Credit Local de France, registered .............. 76,168 $ 6,552
Eaux Cie Generale ............................... 870,002 103,975
Ecco ............................................ 9,690 2,322
Elf Aquitaine ................................... 327,945 26,223
GTM Entrepose ................................... 108,850 5,163
Guilbert ........................................ 103,654 16,483
Havas ........................................... 87,050 5,718
L'Oreal ......................................... 34,948 11,833
Lapeyre ......................................... 212,150 10,382
Legrand ......................................... 79,363 13,769
LVMH ............................................ 233,832 53,558
Pathe ........................................... 61,180 16,502
Pinault Printemps ............................... 188,663 71,148
Primagaz ........................................ 130,989 13,528
Primagaz, warrants, exp. 6/30/98 * .............. 7,294 141
Rexel ........................................... 48,950 14,505
Sanofi .......................................... 113,935 10,320
Schneider ....................................... 344,800 16,861
Societe Generale ................................ 53,330 5,748
Sodexho ......................................... 87,350 42,218
Television Francaise ............................ 395,699 42,105
Total (Class B) ................................. 671,204 52,502
Total France (Cost $580,746) .................... 721,550
GERMANY 4.3%
Common Stocks and Warrants 4.0%
Allianz Holdings ................................... 16,370 29,607
Allianz Holdings, warrants, exp. 2/23/98 * ......... 55,000 2,906
Altana ............................................. 6,926 5,534
<PAGE>
Bayer .............................................. 1,720,334 64,978
Bilfinger and Berger ............................... 259,250 10,494
Buderus ............................................ 16,705 7,556
Deutsche Bank ...................................... 370,500 17,297
Gehe ............................................... 1,144,740 77,102
Hoechst ............................................ 269,010 10,147
Hornbach Baumarkt .................................. 63,890 2,067
Mannesmann ......................................... 40,868 15,868
Praktiker .......................................... 137,751 2,820
Rhoen Klinikum ..................................... 169,688 21,289
SAP ................................................ 60,640 8,209
Schering ........................................... 93,639 7,537
Siemens ............................................ 146,466 7,568
Siemens, warrants, exp. 6/2/98 * ................... 40,000 3,381
Veba ............................................... 754,050 40,217
Veba, warrants, exp. 4/6/98 * ...................... 30,698 8,696
Volkswagen ......................................... 19,186 7,683
350,956
Preferred Stocks 0.3%
Fielmann ........................................ 104,076 4,330
Hornbach ........................................ 121,630 7,630
Krones .......................................... 19,980 7,058
SAP ............................................. 63,959 8,607
27,625
Total Germany (Cost $299,855) ................... 378,581
HONG KONG 4.6%
Common Stocks 4.6%
Cathay Pacific Airways ........................... 10,308,000 16,131
Dao Heng Bank Group .............................. 5,029,000 22,113
First Pacific .................................... 20,573,952 28,338
Guangdong Investment ............................. 22,661,000 16,266
Guangzhou Investment ............................. 54,138,000 17,504
Guoco Group ...................................... 5,997,000 31,722
Hong Kong Land Holdings (USD) .................... 27,809,058 62,014
Hopewell Holdings ................................ 43,727,000 29,407
Hutchison Whampoa ................................ 6,820,000 47,629
New World Development ............................ 9,331,884 54,310
Swire Pacific (Class A) .......................... 3,945,500 34,826
Wharf Holdings ................................... 10,751,000 44,354
Total Hong Kong (Cost $348,697) .................. 404,614
INDIA 0.2%
Common Stocks 0.2%
State Bank of India GDR (USD) ................. 1,232,500 18,488
Total India (Cost $17,440) .................... 18,488
<PAGE>
ITALY 1.9%
Common Stocks and Warrants 1.9%
Assicurazioni Generali .......................... 423,840 8,186
Banca Fideuram .................................. 6,882,607 14,586
Danieli & Company, savings shares ............... 435,800 1,385
ENI ............................................. 4,469,820 21,406
Finanziaria Autogrill ........................... 1,183,047 1,207
IMI ............................................. 1,639,007 12,971
Industrie Natuzzi ADR (USD) ..................... 121,650 5,505
Istituto Nazionale delle Assicurazioni .......... 2,564,000 3,541
Italgas ......................................... 2,340,093 8,638
Mediolanum ...................................... 793,110 7,861
Rinascente ...................................... 745,400 4,408
Rinascente, warrants, exp. 11/30/99 * ........... 37,269 16
Sasib, savings shares ........................... 629,225 1,089
Stet ............................................ 6,565,680 22,679
Stet, savings shares ............................ 3,030,805 8,071
Telecom Italia .................................. 5,991,779 13,350
Telecom Italia Mobile ........................... 11,710,182 24,200
Telecom Italia Mobile, savings shares ........... 3,005,345 3,427
Unicem * ........................................ 387,997 2,583
165,109
Corporate Bonds 0.0%
Danieli & Company, 7.25%, 1/1/00 ........ ITL 508,500,000 312
312
Total Italy (Cost $136,934) ............. 165,421
JAPAN 21.0%
Common Stocks 21.0%
Advantest ..................................... 145,100 5,480
Alps Electric ................................. 1,212,000 15,010
Amada ......................................... 2,624,000 22,586
Canon ......................................... 3,512,000 67,245
Citizen Watch ................................. 1,637,000 12,437
Daifuku ....................................... 512,000 6,296
Daiichi Pharmaceutical ........................ 2,477,000 35,679
DaiNippon Screen Manufacturing ................ 2,306,000 18,208
Daiwa House ................................... 3,129,000 $43,422
DDI ........................................... 3,699 27,778
Denso ......................................... 3,145,000 65,190
East Japan Railway ............................ 7,786 35,766
Fanuc ......................................... 640,000 20,517
Hitachi ....................................... 3,994,000 35,431
Hitachi Zosen ................................. 4,012,000 19,592
Honda Motor ................................... 307,000 7,334
<PAGE>
Inax .......................................... 1,209,000 10,279
Ishihara Sangyo Kaisha * ...................... 1,347,000 4,034
Ito-Yokado .................................... 908,000 45,298
Kao ........................................... 1,263,000 14,865
Kawada Industries ............................. 400,000 2,881
Kokuyo ........................................ 1,207,000 29,895
Komatsu ....................................... 3,252,000 26,620
Komori ........................................ 1,056,000 23,744
Kumagai Gumi .................................. 2,315,000 7,320
Kuraray ....................................... 2,796,000 27,013
Kyocera ....................................... 1,105,000 72,887
Makita ........................................ 1,746,000 23,923
Marui ......................................... 2,098,000 38,881
Matsushita Electric Industrial ................ 3,315,000 52,991
Mitsubishi .................................... 1,704,000 19,007
Mitsubishi Heavy Industries ................... 9,873,000 75,876
Mitsubishi Paper Mills ........................ 1,676,000 8,067
Mitsui Fudosan ................................ 5,029,000 62,280
Mitsui Petrochemical Industries ............... 1,123,000 6,816
Murata Manufacturing .......................... 1,162,000 37,354
National House Industrial ..................... 691,000 9,953
NEC ........................................... 6,252,000 68,091
Nippon Hodo ................................... 642,000 8,966
Nippon Steel .................................. 14,624,000 42,643
Nippon Telephone & Telecom .................... 3,440 24,020
Nomura Securities ............................. 3,266,000 53,929
Pioneer Electronic ............................ 1,505,000 29,742
Sangetsu ...................................... 272,000 5,805
Sankyo ........................................ 2,264,000 56,076
Sega Enterprises .............................. 399,250 16,131
Sekisui Chemical .............................. 3,423,000 $38,182
Sekisui House ................................. 2,374,000 25,021
Seven Eleven Japan ............................ 338,000 19,653
Sharp ......................................... 2,926,000 44,460
Shin-Etsu Chemical ............................ 1,964,150 33,640
Sony .......................................... 819,300 49,149
Sumitomo ...................................... 4,516,000 36,452
Sumitomo Electric ............................. 4,844,000 63,818
Sumitomo Forestry ............................. 1,508,000 21,324
TDK ........................................... 807,000 47,348
Teijin ........................................ 6,274,000 29,040
Tokio Marine & Fire Insurance ................. 1,246,000 13,680
Tokyo Electronics ............................. 454,000 11,683
Tokyo Steel Manufacturing ..................... 1,227,000 18,967
Toppan Printing ............................... 2,071,000 25,284
Uny ........................................... 875,000 15,140
Yurtec ........................................ 569,100 8,297
Total Japan (Cost $1,883,752) ................. 1,844,496
<PAGE>
MALAYSIA 3.0%
Common Stocks and Warrants 3.0%
Affin Holdings .................................... 17,774,000 45,728
Affin Holdings, warrants, exp. 11/15/99 * ......... 3,530,200 3,773
Berjaya Sports Toto ............................... 6,369,000 23,948
Commerce Asset Holdings ........................... 2,822,332 18,432
MBF Capital ....................................... 10,910,000 15,027
Multi-Purpose Holdings ............................ 16,264,000 27,809
Renong ............................................ 14,053,000 22,138
Renong, warrants, exp. 11/21/00 * ................. 1,575,750 642
Resorts World ..................................... 1,853,000 10,635
Tanjong ........................................... 6,562,000 25,453
Technology Resources Industries * ................. 8,535,000 20,438
United Engineers .................................. 5,926,000 46,911
260,934
Preferred Stocks 0.0%
Renong, cv. loan stock, 4.00%, 5/21/01 ............. 2,521,200 923
923
Total Malaysia (Cost $217,170) ..................... 261,857
MEXICO 1.5%
Common Stocks and Rights 1.5%
Cemex (Class B) ................................... 1,534,044 $ 5,516
Cemex ADS (144a) (USD) ............................ 1,914,463 13,521
Cifra ADR (USD) ................................... 11,947,992 14,816
Fomentos Economico Mexicano (Class B) ............. 1,322,684 4,015
Gruma (Class B) * ................................. 2,249,268 11,180
Gruma (Class B), rights * ......................... 59,661 22
Grupo Embotellador de Mexico ...................... 1,165,327 1,450
Grupo Financiero Banamex (Class B) ................ 3,536,595 7,480
Grupo Financiero Banamex (Class L) ................ 144,991 296
Grupo Financiero Bancomer (Class L) * ............. 53,515 18
Grupo Financiero Bancomer GDS (USD) * ............. 72,250 614
Grupo Industrial Maseca (Class B) ................. 6,373,007 7,755
Grupo Modelo (Class C) ............................ 1,382,316 7,163
Grupo Televisa GDR (USD) .......................... 187,266 4,916
Kimberly-Clark Mexico (Class A) ................... 480,092 9,258
Panamerican Beverages (Class A) ADR (USD) ......... 346,871 15,132
Telefonos de Mexico (Class L) ADS (USD) ........... 941,222 28,707
Total Mexico (Cost $175,679) ...................... 131,859
NETHERLANDS 10.2%
Common Stocks and Warrants 10.2%
ABN Amro Holdings ................................ 702,807 39,724
Ahold ............................................ 594,928 34,713
Akzo Nobel ....................................... 74,504 9,388
<PAGE>
CSM .............................................. 896,436 47,286
Elsevier ......................................... 9,707,742 161,348
Fortis Amev ...................................... 841,137 25,134
Hagemeyer ........................................ 188,700 14,180
ING Groep ........................................ 1,986,100 61,923
ING Groep, warrants, exp. 3/15/01 * .............. 1,900,000 10,358
Koninklijke PTT Nederland ........................ 307,817 11,139
Nutricia ......................................... 133,248 18,691
Otra ............................................. 180,960 3,392
Polygram ......................................... 1,028,974 48,335
Royal Dutch Petroleum ............................ 994,563 164,246
Unilever ......................................... 299,424 45,530
Wolters Kluwer ................................... 1,520,298 195,425
890,812
Preferred Stocks 0.0%
ING Groep .......................................... 70,540 375
375
Total Netherlands (Cost $559,183) .................. 891,187
NEW ZEALAND 0.7%
Common Stocks and Rights 0.7%
Air New Zealand (Class B) ....................... 2,047,864 4,998
Air New Zealand (Class B), rights * ............. 558,508 581
Carter Holt Harvey .............................. 2,887,749 6,497
Fernz ........................................... 1,553,577 5,441
Fletcher Challenge Building ..................... 1,464,980 3,969
Fletcher Challenge Energy ....................... 523,980 1,494
Fletcher Challenge Forests Division ............. 5,744,702 9,591
Fletcher Challenge Paper ........................ 878,060 1,590
Telecom Corporation of New Zealand .............. 4,761,628 24,760
Total New Zealand (Cost $51,996) ................ 58,921
NORWAY 1.4%
Common Stocks 1.4%
Bergesen (Class A) ............................ 198,750 4,345
Norsk Hydro ................................... 1,344,906 61,968
Orkla (Class A) ............................... 832,266 53,217
Saga Petroleum (Class B) ...................... 314,380 4,902
Total Norway (Cost $84,094) ................... 124,432
PERU 0.1%
Common Stocks 0.1%
Credicorp Limited (USD) ............................ 108,900 1,906
Telefonica del Peru (Class B) ...................... 1,033,003 2,186
Telefonica del Peru (Class B) ADR (USD) ............ 155,259 3,202
Total Peru (Cost $7,031) ........................... 7,294
<PAGE>
PHILIPPINES 0.1%
Common Stocks 0.1%
Philippine National Bank ........................... 748,100 $ 8,611
Total Philippines (Cost $12,395) ................... 8,611
PORTUGAL 0.5%
Common Stocks 0.5%
Jeronimo Martins ................................ 448,373 40,809
Total Portugal (Cost $15,855) ................... 40,809
RUSSIA 0.0%
Common Stocks 0.0%
Gazprom ADR (USD) ............................ 145,810 2,734
Total Russia (Cost $2,296) ................... 2,734
SINGAPORE 1.9%
Common Stocks and Warrants 1.9%
DBS Land .............................................. 3,932,000 12,395
Development Bank of Singapore ......................... 1,060,000 12,719
Far East Levingston Shipbuilding ...................... 1,344,000 6,441
Fraser & Neave ........................................ 634,800 6,310
Jurong Shipyard ....................................... 321,000 1,504
Keppel ................................................ 918,000 6,843
Overseas Union Bank ................................... 4,831,000 32,927
Singapore Airlines .................................... 344,000 3,028
Singapore Land ........................................ 4,220,000 23,370
Singapore Press ....................................... 818,640 13,600
United Industrial ..................................... 6,777,000 5,629
United Overseas Bank .................................. 3,656,154 35,562
United Overseas Bank, warrants, exp. 6/17/97 * ........ 862,750 3,063
Total Singapore (Cost $155,433) ....................... 163,391
SOUTH KOREA 0.9%
Common Stocks 0.9%
Cho Hung Bank ......................................... 110,590 1,149
Hanil Bank ............................................ 634,760 5,825
Hanil Securities ...................................... 387,904 4,038
Kook Min Bank ......................................... 444,535 8,522
Korea Electric Power .................................. 562,000 16,528
<PAGE>
Pohang Iron & Steel ................................... 214,130 13,645
Samsung Electronic * .................................. 170,277 12,452
Samsung Electronic GDR (USD) * ........................ 90,961 1,480
Samsung Electronic GDS (USD) * ........................ 6,608 226
Samsung Electronic GDS, 1/2 non voting (USD) * ........ 301,820 6,580
Samsung Electronic, new * ............................. 26,408 1,806
Samsung Fire & Marine Insurance ....................... 430 226
Seoul Bank ............................................ 601,770 3,496
Shinhan Bank .......................................... 38,950 765
Yukong ................................................ 261,033 6,073
Total South Korea (Cost $116,757) ..................... 82,811
SPAIN 2.3%
Common Stocks 2.3%
Aguas de Barcelona .............................. 117,338 4,800
Argentaria Banca de Espana ...................... 265,674 10,411
Banco Popular Espanol ........................... 125,139 23,921
Banco Santander ................................. 444,304 22,808
Centros Comerciales Pryca ....................... 367,159 8,431
Continente Central .............................. 180,160 3,657
Empresa Nacional de Electricidad ................ 658,892 40,330
Fomento de Construcciones y Contra .............. 46,561 3,780
Gas Natural ..................................... 131,579 23,017
Iberdrola ....................................... 1,880,939 19,975
Repsol .......................................... 947,162 30,918
Repsol ADR (USD) ................................ 38,000 1,245
Telefonica de Espana ............................ 459,210 9,213
Total Spain (Cost $163,520) ..................... 202,506
SWEDEN 2.6%
Common Stocks 2.6%
ABB (Class A) ................................. 145,220 16,453
Astra (Class B) ............................... 1,979,453 90,308
Atlas Copco (Class B) ......................... 831,988 17,144
Electrolux (Class B) .......................... 550,243 30,626
Esselte (Class B) ............................. 173,520 3,879
Hennes & Mauritz (Class B) .................... 246,419 31,891
Sandvik (Class A) ............................. 175,000 4,125
Sandvik (Class B) ............................. 943,470 22,239
Scribona (Class B) ............................ 233,080 2,570
Stora Kopparbergs (Class B) ................... 600,800 7,720
Total Sweden (Cost $138,959) .................. 226,955
<PAGE>
SWITZERLAND 4.4%
Common Stocks 4.4%
ABB ............................................. 50,520 62,431
Adecco .......................................... 132,012 37,076
Ciba-Geigy ...................................... 29,827 36,741
CS Holding ...................................... 147,785 14,761
Nestle .......................................... 63,146 68,591
Roche Holdings .................................. 10,945 82,780
Sandoz .......................................... 50,298 58,137
Schweizerischer Bankverein ...................... 131,486 25,330
Total Switzerland (Cost $267,137) ............... 385,847
THAILAND 0.6%
Common Stocks and Warrants 0.6%
Advanced Information Service ........................ 553,576 7,513
Bangkok Bank ........................................ 1,704,203 18,182
Bank of Ayudhya ..................................... 1,297,341 3,715
Siam Cement ......................................... 106,285 3,635
Siam Commercial Bank ................................ 969,533 8,822
Thai Farmers Bank ................................... 1,004,094 7,680
Thai Farmers Bank, warrants, exp. 9/15/02 * ......... 125,511 53
Total Access Communications (USD) ................... 486,000 3,353
Total Thailand (Cost $50,037) ....................... 52,953
UNITED KINGDOM 15.7%
Common Stocks 15.7%
Abbey National ................................. 6,612,700 68,667
Argos .......................................... 3,515,848 44,063
Asda Group ..................................... 15,302,000 $ 29,389
British Gas .................................... 3,295,040 10,243
British Petroleum .............................. 2,722,500 29,157
Cable & Wireless ............................... 5,920,050 47,021
Cadbury Schweppes .............................. 4,260,793 35,368
Caradon ........................................ 7,645,821 30,115
Coats Viyella .................................. 2,707,210 6,698
Compass Group .................................. 2,333,000 23,201
David S. Smith ................................. 4,099,120 20,816
East Midlands Electricity ...................... 1,722,864 15,100
Electrocomponents .............................. 2,585,000 17,334
GKN ............................................ 504,000 9,491
Glaxo Wellcome ................................. 4,112,710 63,926
Grand Metropolitan ............................. 6,969,780 52,296
Guinness ....................................... 5,944,000 42,761
Heywood Williams Group ......................... 1,034,875 4,102
Hillsdown Holdings ............................. 2,471,000 7,078
<PAGE>
John Laing (Class A) ........................... 2,220,000 9,648
Kingfisher ..................................... 6,137,733 65,333
Ladbroke Group ................................. 3,929,940 12,697
London Electricity ............................. 2,195,691 21,728
National Grid Group ............................ 2,033,895 5,959
National Westminster Bank ...................... 11,256,780 128,801
Rank Group ..................................... 4,509,825 29,801
Reed International ............................. 5,610,430 104,556
Rolls Royce .................................... 2,043,925 8,417
RTZ ............................................ 2,835,900 45,234
Safeway ........................................ 5,642,920 33,431
Sears .......................................... 2,390,000 3,365
Shell Transport & Trading ...................... 5,169,000 84,804
Smithkline Beecham ............................. 9,771,740 120,238
Spring Ram ..................................... 817,666 173
T & N .......................................... 5,116,000 10,575
Tesco .......................................... 4,951,395 26,675
Tomkins ........................................ 12,113,430 50,670
United Newspapers .............................. 5,026,430 55,058
Total United Kingdom (Cost $1,035,804) ......... 1,373,989
SHORT-TERM INVESTMENTS 5.6%
Commercial Paper 3.1%
ABB Treasury Center (USA), 4(2), 5.35%, 12/20/96 ........ $25,000,000 $ 24,818
American Express Credit, 5.26%, 12/5/96 ................. 10,000,000 9,950
Bank of America, 5.40%, 2/5/97 .......................... 10,000,000 9,856
Caisse des Depots et Consignations, 4(2), 5.25%, 11/21/96 30,000,000 29,912
Ciesco, 5.30%, 11/25/96 ................................. 10,000,000 9,965
Countrywide Funding, 5.28%, 11/12/96-11/19/96 ........... 20,000,000 19,957
Delaware Funding, 5.25%, 11/15/96 ....................... 27,000,000 26,945
Korea Development Bank, 5.27%, 11/12/96 ................. 15,000,000 14,976
Manufacturers Investor, 5.25%, 11/20/96 ................. 30,000,000 29,917
Market Street Funding, 5.29%, 11/26/96 .................. 10,000,000 9,963
Merrill Lynch & Co., 5.26%, 12/2/96 ..................... 10,000,000 9,955
Mobil Australia Finance, 4(2), 5.32%, 11/27/96 .......... 20,000,000 19,923
Oesterrichische Kontrollbank, 5.33%, 11/29/96 ........... 30,000,000 29,876
Tasmanian Public Finance, 5.32%, 11/15/96 ............... 20,000,000 19,959
Investments in Commercial Paper through a joint account,
5.56-5.63%, 11/1/96 ............................ 9,006,737 9,007
274,979
Other 2.5%
Abbey National, CD, 5.51%, 4/8/97 ....................... 25,000,000 25,001
Australia & New Zealand Banking, CD, 5.57%, 2/6/97 ...... 15,000,000 15,000
Caisse Nationale de Credit Agricole, CD, 5.42%, 12/30/96 20,000,000 20,003
FCC National Bank, BN, 5.70%, 10/28/97 .................. 10,000,000 10,000
First National Boston, BN, 5.38%, 11/25/96 .............. 20,000,000 20,000
<PAGE>
First Tennessee Bank N.A., CD, 5.32%, 11/4/96 ........... 20,000,000 20,000
Hessische Landesbank-Girozentrale, CD, 5.44%, 12/27/96 .. 25,000,000 25,002
MBNA America Bank N.A., CD, 5.43%, 12/2/96 .............. 25,000,000 25,000
Morgan Stanley Group, Floating Rate MTN, 5.656%, 1/31/97 5,000,000 5,001
National Westminster Bank PLC, CD, 5.42%, 2/24/97 ....... 25,000,000 25,002
SMM Trust, Floating Rate MTN, 5.706%, 3/26/97 ........... 14,000,000 14,000
Societe Generale, CD, 5.37%, 12/16/96 ................... 10,000,000 10,001
214,010
Total Short-Term Investments (Cost $488,989) ............ 488,989
Total Investments in Securities
100.1% of Net Assets (Cost $7,395,155) .................... $ 8,783,704
Other Assets Less Liabilities ............................. (7,968)
NET ASSETS ................................................ $ 8,775,736
Net Assets Consist of:
Accumulated net investment income - net of distributions ........ $ 116,966
Accumulated net realized gain/loss - net of distributions ....... 110,531
Net unrealized gain (loss) ...................................... 1,388,332
Paid-in-capital applicable to 651,572,337 shares of
$0.01 par value capital stock outstanding; 2,000,000,000
shares of the Corporation authorized ........................... 7,159,907
NET ASSETS $ .................................................... 8,775,736
NET ASSET VALUE PER SHARE ....................................... $ 13.47
* Non-income producing
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors."
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers-- total of such securities at year-end amounts to
0.26% of net assets.
BEL Belgian franc
BN Bankers Note
CD Certificate of Deposit
HKD Hong Kong dollar
ITL Italian lira
MTN Medium-Term Note
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/96
- --------------------------------------------------------------------------------
Investment Income
Income
Dividend (net of foreign taxes of $ 23,946) ........... $ 165,285
Interest .............................................. 23,717
Total income .......................................... 189,002
Expenses
Investment management ................................. 52,565
Shareholder servicing ................................. 10,859
Custody and accounting ................................ 2,734
Prospectus and shareholder reports .................... 728
Registration .......................................... 555
Legal and audit ....................................... 45
Directors ............................................. 29
Miscellaneous ......................................... 76
Total expenses ........................................ 67,591
Net investment income ......................................... 121,411
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ............................................ 125,625
Foreign currency transactions ......................... (5,348)
Net realized gain (loss) .............................. 120,277
Change in net unrealized gain or loss
Securities ............................................ 758,558
Other assets and liabilities
denominated in foreign currencies ..................... (250)
Change in net unrealized gain or loss ................. 758,308
Net realized and unrealized gain (loss) ....................... 878,585
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ........................................ $ 999,996
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
Year Year
Ended Ended
10/31/96 10/31/95
Increase (Decrease) in Net Assets
Operations
Net investment income ........................... $ 121,411 $ 94,504
Net realized gain (loss) ........................ 120,277 47,559
Change in net unrealized gain or loss ........... 758,308 (115,119)
Increase (decrease) in net assets from operations 999,996 26,944
Distributions to shareholders
Net investment income ........................... (95,687) (57,811)
Net realized gain ............................... (106,311) (298,432)
Decrease in net assets from distributions ....... (201,998) (356,243)
Capital share transactions *
Shares sold ..................................... 2,646,210 1,729,049
Distributions reinvested ........................ 187,694 331,094
Shares redeemed ................................. (1,242,071) (1,550,652)
Increase (decrease) in net assets from capital
share transactions .............................. 1,591,833 509,491
Net Assets
Increase (decrease) during period ................. 2,389,831 180,192
Beginning of period ............................... 6,385,905 6,205,713
End of period ..................................... $ 8,775,736 $ 6,385,905
* Share information
Shares sold ..................................... 204,384 147,854
Distributions reinvested ........................ 15,334 29,562
Shares redeemed ................................. (96,325) (132,547)
Increase (decrease) in shares outstanding ....... 123,393 44,869
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
Notes to Financial Statements
================================================================================
- --------------------------------------------------------------------------------
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 and commenced operations on May 9,
1980.
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 amortized cost which 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.
Currency Translation
Assets and liabilities are translated into U.S. dollars at the prevailing
exchange rate at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing exchange rate on the dates of such transactions. The effect of
changes in foreign exchange rates on realized and unrealized security gains and
losses is reflected as a component of such gains and losses.
<PAGE>
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 the 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 and may differ from those determined in accordance with generally
accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Emerging Markets
At October 31, 1996, the fund held 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.
Commercial Paper Joint Account
The fund, and other affiliated funds, may transfer uninvested cash into a
commercial paper joint account, the daily aggregate balance of which is invested
in high-grade commercial paper. All securities purchased by the joint account
satisfy the fund's criteria as to quality, yield, and liquidity.
Securities Lending
To earn additional income, the fund lends its securities to approved
brokers. At October 31, 1996, the market value of securities on loan was
$978,395,000, which was fully collateralized with cash. Although the risk is
mitigated by the collateral, the fund could experience a delay in recovering its
securities and a possible loss of income or value if the borrower fails to
return them.
Other
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $2,080,819,000 and $850,991,000, respectively, for the
year ended October 31, 1996.
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.
<PAGE>
At October 31, 1996, the aggregate cost of investments for federal income
tax and financial reporting purposes was $7,395,155,000, and net unrealized gain
aggregated $1,388,549,000, of which $1,742,370,000 related to appreciated
investments and $353,821,000 to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The fund is managed by Rowe Price-Fleming International, Inc. (the
manager), 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 the manager
provides for an annual investment management fee, of which $5,067,000 was
payable at October 31, 1996. The fee is computed daily and paid monthly, and
consists 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 0.305% for assets
in excess of $50 billion. At October 31, 1996, and for the year ended then
ended, the effective annual group fee rate was 0.33%. The fund pays a pro-rata
share of the group fee based on the ratio of its net assets to those of the
group.
In addition, the fund has entered into agreements with Price Associates and
two wholly owned subsidiaries of Price Associates, pursuant to which the fund
receives certain other services. Price Associates computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services, Inc.
(TRPS) is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price Retirement
Plan Services, Inc., provides subaccounting and recordkeeping services for
certain retirement accounts invested in the fund. Additionally, 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 among 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. The
fund incurred expenses pursuant to these related party agreements totaling
approximately $8,874,000 for the year ended October 31, 1996, of which $891,000
was payable at period-end.
During the year ended October 31, 1996, the fund, in the ordinary course of
business, paid commissions of $792,000 to, and placed security purchase and sale
orders aggregating $301,435,000 with, certain affiliates of the manager in
connection with the execution of various portfolio transactions.
<PAGE>
================================================================================
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders 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 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., hereafter referred to as the "Fund") at
October 31, 1996, and the results of its operations, the changes in its net
assets and the financial highlights for each of the fiscal periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (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, 1996 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 19, 1996
<PAGE>
================================================================================
Investment Services And Information
- --------------------------------------------------------------------------------
KNOWLEDGABLE SERVICE REPRESENTATIVES
By Phone
Shareholder service representatives are available from 8 a.m. to 10 p.m. ET
Monday through Friday and from 8:30 a.m. to 5 p.m. ET on weekends. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
In Person
Visit one of our investor center locations to meet with a representative
who will be able to assist you with your accounts. While there, you can drop off
applications or obtain prospectuses and other literature.
AUTOMATED 24-HOUR SERVICES
Tele*Access(R)
Call 1-800-638-2587 to obtain information such as account balance, date and
amount of your last transaction, latest dividend payment, fund prices, and
yields. Additionally, you have the ability to request prospectuses, statements,
and account and tax forms; to reorder checks; and to initiate purchase,
redemption, and exchange orders for identically registered accounts.
T. Rowe Price OnLine
Through a personal computer via dial-up modem, you can replicate all the
services available on Tele*Access plus conduct transactions in your Discount
Brokerage and Variable Annuity accounts.
ACCOUNT SERVICES
Checking
Write checks for $500 or more on any money market and most bond fund
accounts (except the High Yield and Emerging Markets Bond Funds).
Automatic Investing
Build your account over time by investing directly from your bank account
or paycheck with Automatic Asset Builder. Additionally, Automatic Exchange
enables you to set up systematic investments from one fund account into another,
such as from a money fund into a stock fund. A low, $50 minimum makes it easy to
get started.
Automatic Withdrawal
If you need money from your fund account on a regular basis, you can
establish scheduled, automatic redemptions.
<PAGE>
Dividend and Capital Gains Payment Options
Reinvest all or some of your distributions, or take them in cash. We give
you maximum flexibility and convenience.
DISCOUNT BROKERAGE*
Investments Available
You can trade stocks, bonds, options, precious metals, and other securities
at a savings over regular commission rates.
To Open an Account
Call a shareholder service representative for more information.
INVESTMENT INFORMATION
Combined Statement
A comprehensive overview of your T. Rowe Price accounts is provided. The
summary page gives you earnings by tax category, provides total portfolio value,
and lists your investments by type--stock, bond, and money market. Detail pages
itemize account transactions by fund.
Shareholder Reports
Portfolio managers review the performance of the funds in plain language
and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report
This is a quarterly newsletter with relevant articles on market trends,
personal financial planning, and T. Rowe Price's economic perspective.
Performance Update
This quarterly report reviews recent market developments and provides
comprehensive performance information for every T. Rowe Price fund.
Insights
This library of information includes reports on mutual fund tax issues,
investment strategies, and financial markets.
Detailed Investment Guides
Our widely acclaimed Asset Mix Worksheet, College Planning Kit, Retirees
Financial Guide, and Retirement Planning Kit (also available on disk for PC use)
can help you determine and reach your investment goals.
*A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
<PAGE>
================================================================================
Mutual Funds
- --------------------------------------------------------------------------------
Stock Funds
================================================================================
Domestic
- --------------------------------------------------------------------------------
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons
OTC
Science & Technology
Small-Cap Value
Spectrum Growth
Value
International/Global
- --------------------------------------------------------------------------------
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
<PAGE>
Bond Funds
================================================================================
Domestic Taxable
- --------------------------------------------------------------------------------
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-free
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
International/Global
- --------------------------------------------------------------------------------
Global Government Bond
Emerging Markets Bond
International Bond
Money Market
================================================================================
<PAGE>
Taxable
- --------------------------------------------------------------------------------
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
- --------------------------------------------------------------------------------
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
Blended Asset
================================================================================
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
T. Rowe Price No-Load Variable Annuity
================================================================================
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
For yield, price, last transaction,
current balance or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access(R):
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
<PAGE>
Internet address:
http://www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price International Stock Fund.(R)
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor
RPRTISF 10/31/96
