- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
SemiAnnual Report
International Stock Fund
- --------------------------------------------------------------------------------
April 30, 1997
- --------------------------------------------------------------------------------
Report Highlights
================================================================================
* European and Latin American stocks posted robust returns during the past
six months, but a strong dollar dampened returns for many U.S. investors.
* The fund's underweighting in Japan and exposure to Latin America enabled it
to surpass its EAFE benchmark with a relatively strong 6% return for the
last six months.
* Stock selection also contributed to positive performance, with most of our
major holdings concentrated in the major European markets.
* Signs are emerging that Japan has seen its worst, and we have begun to
increase our purchases of select Japanese stocks.
* The fund is well diversified by country and stock exposure, providing a
balance between established markets and several less developed regions with
growth potential.
Fellow Shareholders
European and Latin American stock markets posted robust returns in U.S.
dollar terms during the past six months. However, a strong dollar that
appreciated against most foreign currencies dampened returns for U.S. investors
in many regions. Despite the unfavorable currency translation, your fund
registered respectable returns during the half.
================================================================================
Performance Comparison
Periods Ended 4/30/97 6 Months 12 Months
--------------------- -------- ---------
International Stock Fund 6.00% 7.11%
MSCI EAFE Index 1.72 -0.60
Lipper International
Funds Average 6.17 5.43
- --------------------------------------------------------------------------------
<PAGE>
The T. Rowe Price International Stock Fund maintained its steady progress
during the six months ended April 30, 1997. As can be seen from the table,
results for this period were well ahead of the unmanaged Morgan Stanley Capital
International Europe Australia Far East (EAFE) Index. The most important reasons
for this outperformance were the fund's underweighting in the disappointing
Japanese stock market and a significant position in the exuberant markets of
Latin America--particularly Brazil--which are not components of the EAFE index.
Fund performance was about in line with that of its peer group average.
Over the 12-month period the fund's returns were well ahead of both the
EAFE index and the average for Lipper peer group funds. Again, the country
weightings compared with theirs were beneficial--particularly the underweighting
in Japan--and stock selection in most markets was also positive.
INVESTMENT REVIEW
Europe
The stock markets of Europe were among the best performers in recent
months. Several got off to a strong start this year, although returns to the
U.S. investor were moderated by the strength of the dollar. The core Continental
European economies are struggling at the moment, but looser money and weakening
currencies should help them recover.
In Germany a combination of low growth and high labor costs boosted
unemployment to record levels. This in turn has raised questions as to whether
the fiscal deficit can meet the Maastricht criteria, but Germany seems as
committed as ever to European Monetary Union and a single currency. Despite the
dull economy, the stock market has been strong, led by financials such as
Deutsche Bank and manufacturers such as Volkswagen; the latter has been helped
by a weaker deutschemark and the growing focus on shareholder value.
================================================================================
Market Performance
- --------------------------------------------------------------------------------
Six Months Local Local Currency U.S.
Ended 4/30/97 Currency vs. U.S. Dollars Dollars
------------- ------------ ------------ -------
France 23.74% -12.48% 8.30%
Germany 28.30 -12.62 12.11
Hong Kong -0.04 -0.18 -0.22
Italy 25.88 -11.42 11.50
Japan -3.19 -10.38-1 3.23
Mexico 16.85 0.25 17.13
Netherlands 31.15 -12.95 14.17
Singapore -4.17 -2.58 -6.64
Sweden 26.05 -16.33 5.47
Switzerland 31.05 -14.57 11.95
United Kingdom 13.06 -0.36 12.66
Source: FAMEInformation Services, Inc.; using MSCI indices.
<PAGE>
================================================================================
In France the picture was similar with the economy subdued, unemployment
remaining stubbornly high, and consumer sentiment depressed. Despite these
difficulties, the governmen also remains committed to a single currency, but it
will prove difficult to stimulate the economy without breaching the Maastricht
guidelines for economic convergence. Looking for a firmer political base as the
country approaches this important transition, President Chirac recently called a
general election. At present it looks as though a right-of-center government
will be returned, but the majority may not be as high as Mr. Chirac's original
expectations. Given these uncertainties, the stock market has been dull but core
holdings such as the supermarket chain Carrefour and conglomerate Eaux Cie
Generale have been able to make further progress.
The picture looks somewhat brighter in Italy. Improvement in the debt
position is vital for the future of this economy, and the outlook here is more
encouraging following recent legislation and public sector wage discipline. The
lira has now returned to the European exchange rate mechanism but it is still an
open question whether Italy will be in the first round of countries to join the
single currency.
In the U.K. the most important news was the General Election on May 1 which
brought the Labour Party under Mr. Blair to power with a massive majority. Given
the strength of the economy, it was surprising to many observers that the
electorate rejected the Conservative Party so comprehensively. The explanation
lies in a deep desire for change after 17 years of Conservative rule, a sense
that Mr. Major's party was divided over Europe, and, in contrast to previous
elections, a much more professional and disciplined campaign by the Labour
Party.
The new government will at least inherit an economy in good shape with a
strong currency, falling unemployment, and inflation at low levels. The
administration has already surprised and pleased financial markets by giving
more independence to the Bank of England in setting monetary policy, and its
much more positive attitude toward Europe has been well received on the
Continent.
[edgar description: insert Geographic Diversification pie chart on page 3
of report if possible, showing: Europe 54%, Japan 20%, Pacific Rim 12%, Latin
America 8%, Other and Reserves 6%]
The stock market greeted the incoming government with enthusiasm and pushed
on to new highs. International growth stocks such as Smith-Kline Beecham and
Glaxo Wellcome have per formed well, and the conversion and public offerings of
building societies (mutually owned savings associations) stimulated interest in
financial stocks. The recently announced merger between the food and drinks
group Grand Metropolitan, which owns Burger King, and the leading wines and
spirits company Gu inness was welcomed by investors. Both stocks are in our
portfolio and each moved sharply ahead after the announcement.
<PAGE>
Some of the best performance came from Europe's smaller bourses, with
Switzerland powering ahead as investors belatedly appreciated that
multinationals such as Novartis and Roche Holdings--both major pharmaceutical
groups--were well positioned following an unprecedented period of Swiss franc
weakness. In Spain, where ambition to qualify for Monetary Union is driving
widespread reforms, the market also performed well. The sharp rise in stock
prices allowed us to take profits in some of our positions, including oil
company Repsol.
Far East
Stock market performance in the Pacific region was dragged down by the
continued poor performance of Japan. Perhaps surprisingly, the economy in Japan
is performing much better. Fourth quarter GDP growth of 2.9% was one of the
fastest among the leading industrialized countries. Industrial product ion
continued strong into the first quarter of this year with inventories declining
and shipments improving significantly. These broad statistics, however, mask a
tale of two economies: domestic consumption remains poor with the retail and
service sectors depressed, but exports are buoyant, aided by the recent weakness
of the yen. Indeed, the trade surplus has started to expand again, which will be
embarrassing for Tokyo, particularly if the surplus with the U.S. expands too
fast.
================================================================================
Industry Diversification
- --------------------------------------------------------------------------------
Percent of Percent of
Net Assets Net Assets
10/31/96 4/30/97
-------- -------
Services 26.5% 26.2%
Consumer Goods 16.5 17.1
Finance 17.0 16.5
Capital Equipment 13.2 12.8
Energy 9.9 10.0
Materials 7.8 8.1
Multi-industry 3.5 3.8
All Other 0.1 0.2
Reserves 5.5 5.3
Total 100.0% 100.0%
================================================================================
<PAGE>
This contrast in the domestic economy was also reflected in the stock
market where the export and technology stocks have performed well but the
financial sector, still struggling to work out problem loans, has dragged the
index down. The loan problems facing Japanese banks have not been helped by
several real estate transactions in Tokyo at prices some 80% below the peak of
the bubble years. However, there are signs that commercial property prices are
stabilizing at this level, and the stronger banks can survive provided that the
valuation of their loan collateral deteriorates no further.
Our strategy in the Tokyo market favored the export and technology sectors
with stocks such as NEC (communications and computers), Kyocera (ceramic
packaging), and Canon (camera s and office equipment) among our largest
positions. In contrast, your portfolio had no exposure to the bank stocks--the
largest sector in the index itself. This combination of positive stock selection
and underweighting in the market as a whole made a major contribution to the
fund's outperformance.
Elsewhere in the Pacific, stock market sentiment was adversely affected by
a small rise in U.S. interest rates; many countries in the region link their
monetary policies to those of the Federal Reserve so that their currencies will
shadow the U.S. dollar. Export performance in the region was also disappointing
with countries such as Singapore and South Korea particularly affected by the
downturn in the electronic component cycle. The worst performance came from
Thailand where the stock market has halved over the last 12 months. The problem
here centered on a significant oversupply of commercial property, and subsequent
price declines have led to the virtual bankruptcy of one of Thailand's largest
finance companies.
Turning from economics to politics, the major news was unquestionably the
death of China's paramount leader Deng Xiaoping. Although he held no official
posts at the time of his death, his influence on Chinese history has been
immense. Inheriting a backward economy at the time of his succession from Mao,
his policy of rapid modernization has turned the economy into a superpower. In
sharp contrast to previous history, the transfer of power has gone smoothly with
Xiang Zemin, Deng's hand-picked successor, assuming control. Continued political
stability and an open door policy are essential for confidence in Hong Kong,
which reverts to Chinese sovereignty on June 30. Although the Hong Kong stock
market has been subdued since the beginning of the year, we feel confident that
this transition will not affect Hong Kong's position as the dynamic financial
center of the region.
<PAGE>
Latin America
As usual, Latin America provided much of the excitement in recent months.
Brazil led the way with an advance of over 30% despite fears that a
deteriorating trade deficit would put downward pressure on the currency. The
government should rise to these challenges, and investors have been impressed by
its commitment to reform in areas such as privatization and the deregulation of
public sector tariffs. Our positions in the Brazilian market are built around
the telecommunications company Telecomunicacoes Brasileiras, which has
outperformed handsomely. Although Brazil dominates our Latin American holdings,
other countries in the region have also moved along the path of reform, and
their stock markets have made a useful contribution to fund performance.
In Mexico the picture is rather more settled, although the banking system
remains fragile and consumer sentiment has been hurt by lower real wages.
Confidence is slowly returning and the market performed much better, led by blue
chips such as telecommunications company Telefonos de Mexico and retailer Cifra.
The stock markets of Argentina and Chile produced double-digit returns this
year. Both countries have shown a mix of strong economic recovery, inflation
under much better control, and a commitment to economic reform that has
attracted the international investor.
INVESTMENT POLICY AND OUTLOOK
As usual, we have made no dramatic shifts in investment policy but, led
principally by our changing expectations for individual companies, there have
been some gradual changes in direction. We have been modest net investors in
Japan and our new investments were in the domestic sector, which has been
neglected recently while the exporters and technology stocks enjoyed the
spotlight. Our underweighting in Japan is now at the lowest level of many years,
and there are signs that this market has passed its worst. With the yen now
stronger, stocks more related to the domestic economy are likely to lead the
way, hence our push into this area. To complement this modest increase in Japan,
we have been shaving positions in the better-performing markets of Southeast
Asia such as Malaysia and Hong Kong. Our holdings in Thailand and South Korea
are negligible but we are not yet convinced that the problems in each country
have been fully addressed.
========================
. . . THE FUND'S
PORTFOLIO IS
WELL DIVERSIFIED
BY COUNTRY AND
INDIVIDUAL STOCK
EXPOSURE.
========================
<PAGE>
A little over half the portfolio is in Europe where we can find an
attractive combination of economies that are beginning to recover, a benign
interest rate environment, and an increasing focus on shareholder value. We have
been reducing holdings in the U.K. where the economic recovery is mature and the
stock market is beginning to look overextended. Valuations look more reasonable
in Continental Europe where the potential for company earnings is greater.
Latin America will probably continue to provide the excitement going
forward, but it must be remembered that these are still developing economies
with volatile capital markets. There will always be room for them in an
international portfolio but prudence will govern our exposure.
Pulling all this together, the fund's portfolio is well diversified by
country and individual stock exposure. It gives the investor a reasonable
balance between the established economies overseas where we can find quality
companies at reasonable valuations and the less developed markets where there is
perhaps more potential but at higher risk. This broad strategy has served the
fund well in the past and should continue to do so in the future.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
May 22, 1997
================================================================================
Why Japan Remains Pivotal to International Investing
The Japanese stock market has disappointed investors for most of this
decade. Since Japanese stocks make up a significant portion of many diversified
international portfolios (they represented 29% of the Morgan Stanley Europe
Australasia Far East Index as of March 31), their troubles are a major reason
why foreign stocks as a group have lagged behind their U.S. counterparts in
recent years. For most of the 1990s, your fund maintained a relatively low
exposure to Japanese stocks compared with the EAFE Index. As of April 30, 20% of
assets were invested in Japan.
Diversification Is Key
Some experts think that after its long slide, the Japanese market is poised
for a strong recovery. We believe the overall market is likely to provide
moderate returns in coming years as the economy recovers from a protracted
recession. More important, we firmly believe that investors should maintain
exposure to Japanese stocks for several reasons:
<PAGE>
* The Japanese stock market offers excellent diversification away from the
U.S. market. Over the 15 years through 1996, the two markets moved in the
same direction only 7% of the time. Therefore, adding Japanese stocks to an
all-U.S. portfolio can reduce risk by smoothing out a portfolio's overall
volatility.
* Though certainly not cheap by international standards, the valuations of
Japanese stocks are becoming more reasonable. The overall market was
recently trading at 40 times earnings, down from a high of more than 100
times earnings but still significantly above the U.S. level of about 18
times projected profits on the Standard & Poor's 500 Stock Index.
* While some sectors of the Japanese economy, particularly the banks, still
face enormous hurdles, the country is home to many internationally
competitive companies trading at fair valuations. Given their global
orientation, these companies are becoming increasingly committed to
enhancing shareholder value, a concept that has proven successful in the
U.S. but has been traditionally downplayed by Japanese corporations.
* Japan's economy, second only to that of the U.S., has been in recession for
more than five years and is now experiencing a moderate recovery. Gross
domestic product grew at an estimated 2.8% for the fiscal year ended in
March, among the highest of the industrialized countries.
* The Japanese economy is undergoing significant structural changes. Banks
are increasingly aggressive in writing off their nonperforming loans. Over
the next few years, the financial markets will be deregulated in Japan's
"Big Bang." More companies are recognizing the importance of shareholder
value. These changes should result in attractive potential investments.
Your fund will continue to target the more attractive areas of the Japanese
market. As of April 30, our holdings were concentrated in globally competitive
and export-oriented industries, such as consumer and industrial electronics,
that had benefited from the weak yen. Recently, we have bought some
domestic-oriented companies at attractive prices. In sum, while Japanese stocks
have had their problems and will continue to be volatile, we feel they provide
effective diversification and will bolster the performance of international
portfolios over the long haul.
================================================================================
<PAGE>
Portfolio Highlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/97
-------
Royal Dutch Petroleum, Netherlands .......................... 1.9%
SmithKline Beecham, United Kingdom .......................... 1.8
Telecomunicacoes Brasileiras, Brazil ........................ 1.8
Wolters Kluwer, Netherlands ................................. 1.6
Elsevier, Netherlands ....................................... 1.5
Novartis, Switzerland ....................................... 1.5
National Westminster Bank, United Kingdom ................... 1.4
Eaux Cie Generale, France ................................... 1.3
Reed International, United Kingdom .......................... 1.1
Roche Holdings, Switzerland ................................. 1.1
ING Groep, Netherlands ...................................... 1.0
Shell Transport & Trading, United Kingdom ................... 1.0
Canon, Japan ................................................ 1.0
Glaxo Wellcome, United Kingdom .............................. 0.9
ABB, Sweden/Switzerland ..................................... 0.9
Nestle, Switzerland ......................................... 0.9
NEC, Japan .................................................. 0.9
Astra, Sweden ............................................... 0.9
Denso, Japan ................................................ 0.8
Carrefour, France ........................................... 0.8
Orkla, Norway ............................................... 0.8
Kingfisher, United Kingdom .................................. 0.8
Kyocera, Japan .............................................. 0.8
Sumitomo Electric Industries, Japan ......................... 0.8
Norsk Hydro, Norway ......................................... 0.8
Total ....................................................... 28.1%
================================================================================
Performance Comparison
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.
[edgar description: SEC chart showing 10 years of MSCI EAFE Index, Lipper
International Funds Average, International Stock Fund)
Average Annual Compound Total Return
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.
<PAGE>
Periods Ended 4/30/97 1 Year 3 Years 5 Years 10 Years
- --------------------- ------ ------- ------- --------
International Stock Fund 7.11% 8.79% 11.67% 9.59%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
Unaudited
For a share outstanding throughout each period
Financial Highlights
<TABLE>
Financial Highlights
<S> <C> <C> <C> <C> <C> <C> <C>
6 Months Year 10 Months++ Year
Ended Ended Ended Ended
4/30/97 10/31/96 10/31/95 10/31/94 10/31/93 12/31/92 12/31/91
NET ASSET VALUE
Beginning of period $ 13.47 $ 12.09 $ 12.84 $ 11.74 $ 8.89 $ 9.54 $ 8.81
Investment activities
Net investment income 0.08 0.19 0.18 0.09 0.10 0.14 0.15
Net realized and
unrealized gain (loss) 0.72 1.57 (0.19) 1.30 2.75 (0.47) 1.22
Total from
investment activities 0.80 1.76 (0.01) 1.39 2.85 (0.33) 1.37
Distributions
Net investment income (0.18) (0.18) (0.12) (0.09) -- (0.16) (0.15)
Net realized gain (0.20) (0.20) (0.62) (0.20) -- (0.16) (0.49)
Total distributions (0.38) (0.38) (0.74) (0.29) -- (0.32) (0.64)
<PAGE>
NET ASSET VALUE
End of period ........... $ 13.89 $ 13.47 $ 12.09 $ 12.84 $ 11.74 $ 8.89 $ 9.54
Ratios/Supplemental Data
Total return ............ 6.00% 14.87% 0.38% 12.03% 32.06% (3.47)% 15.87%
Ratio of expenses to
average net assets ...... 0.85%+ 0.88% 0.91% 0.96% 1.01%+ 1.05% 1.10%
Ratio of net investment
income to average
net assets .............. 1.21%+ 1.58% 1.56% 1.11% 1.52%+ 1.49% 1.51%
Portfolio turnover rate . 13.7%+ 11.6% 17.8% 22.9% 29.8%+ 37.8% 45.0%
Average commission
rate paid ............... $ 0.0011 $ 0.002 $ -- $ -- $ -- $ -- $ --
Net assets, end of period
(in millions) ........... $ 9,611 $ 8,776 $ 6,386 $ 6,206 $ 3,746 $ 1,950 $ 1,476
+ Annualized.
++ The fund's fiscal year-end was changed to 10/31.
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
Unaudited
April 30, 1997
Statement of Net Assets
-----------------------
Shares/Par Value
---------- -----
ARGENTINA 0.9%
Common Stocks 0.9%
Banco de Galicia Buenos Aires (Class B) ADR (USD) ... 345,561 $ 8,407
Banco Frances del Rio ADR (USD) ..................... 351,620 10,680
Enron Global Power & Pipeline (USD) ................. 79,819 2,355
Perez Companc (Class B) ............................. 2,340,506 18,983
Sociedad Comercial del Plata ADR (144a) (USD) ....... 79,613 2,418
Telecom Argentina Stet (Class B) .................... 485,570 2,404
Telecom Argentina Stet (Class B) ADR (USD) .......... 56,339 2,817
Telefonica de Argentina (Class B) ADR (USD) ......... 598,180 19,890
Transportadora de Gas del Sur (Class B) ADS (USD) ... 185,858 2,323
YPF Sociedad Anonima (Class D) ADR (USD) ............ 716,031 19,780
Total Argentina (Cost $70,855) 90,057
<PAGE>
AUSTRALIA 1.9%
Common Stocks 1.8%
Australia & New Zealand Bank Group .................. 1,224,000 7,818
Australian Gas Light Company ........................ 3,029,798 17,366
Boral Limited ....................................... 1,052,430 3,102
Broken Hill Proprietary ............................. 1,329,836 18,750
Coca Cola Amatil .................................... 228,161 2,608
Commonwealth Bank of Australia,
Installment Receipts, 11/14/97 ..... 1,466,700 10,980
Fosters Brewing Group ............................... 2,403,000 4,947
Lend Lease .......................................... 457,144 8,749
National Australia Bank ............................. 808,590 11,067
National Mutual Holdings ............................ 3,183,000 4,716
News Corporation .................................... 3,275,729 15,098
Publishing & Broadcasting ........................... 2,158,850 11,398
St. George Bank ..................................... 1,524,000 9,365
Tabcorp Holdings .................................... 2,378,000 11,748
WMC ................................................. 1,852,057 10,977
Westpac Bank ........................................ 1,563,000 8,423
Woodside Petroleum .................................. 1,875,000 14,915
172,027
Preferred Stocks 0.1%
Sydney Harbour Casino Holdings * .................... 5,144,800 $ 8,667
8,667
Total Australia (Cost $138,828) 180,694
AUSTRIA 0.1%
Common Stocks 0.1%
EVN Energie Versorgung Nieder ....................... 22,800 2,820
Flughafen Wien ...................................... 57,126 2,368
Total Austria (Cost $4,934) 5,188
BELGIUM 1.1%
Common Stocks 1.1%
CLF-Dexia * ......................................... 50,056 4,970
Generale de Banque .................................. 61,617 25,552
Generale de Banque, VVPR Strip ...................... 5,601 3
Kredietbank ......................................... 161,632 62,957
UCB ................................................. 5,170 14,187
107,669
Convertible Bonds 0.0%
Kredietbank, 5.75%, 11/30/03 BEF .................... 38,115,000 1,945
1,945
Total Belgium (Cost $64,023) 109,614
<PAGE>
BRAZIL 4.3%
Common Stocks 0.6%
Brazil Fund (USD) ................................... 254,600 6,493
Companhia Siderurgica Nacional ...................... 171,890,000 6,140
Eletrobras .......................................... 37,089,553 16,775
Eletrobras ADR (USD) * .............................. 106,277 2,405
Telecomunicacoes Brasileiras ........................ 166,493,000 17,925
Telecomunicacoes de Sao Paulo * ..................... 4,095,886 1,134
White Martins ....................................... 1,645,831 5,602
56,474
Preferred Stocks 3.7%
Banco Bradesco ................................... 2,113,772,976 17,491
Banco Itau ....................................... 11,425,000 6,177
Brahma ........................................... 24,979,393 16,994
Brasmotor ........................................ 21,197,000 5,082
Cia Cimento Portland Itau ........................ 18,159,000 6,403
Cia Energetica de Sao Paulo ADR (USD) ............ 156,300 2,481
Cia Energetica Minas Gerais ...................... 262,919,692 11,988
Cia Energetica Minas Gerais ADR,
Sponsored, Nonvoting (USD) *..... 435,562 19,764
Cia Tecidos Norte de Minas ....................... 13,940,000 5,846
Lojas Americanas * ............................... 196,273,000 2,787
Pao de Acucar GDS (USD) ..................... 366,930 7,247
Petrol Brasileiros ............................... 76,019,184 16,012
Telecomunicacoes Brasileiras ..................... 242,125,267 27,773
Telecomunicacoes Brasileiras ADR (USD) ........... 1,070,532 122,844
Telecomunicacoes Brasileiras ADR (144a) (USD)..... 14,601 1,675
Telecomunicacoes de Minas Gerais ................. 44,972,000 7,163
Telecomunicacoes de Sao Paulo .................... 94,332,458 26,787
Telecomunicacoes do Rio de Janeiro ............... 41,143,000 6,847
Unibanco ......................................... 421,960,000 15,589
Usiminas ......................................... 12,550,282,488 14,869
Usiminas ADR (USD) ............................... 1,223,659 14,378
356,197
Total Brazil (Cost $218,843 412,671
CANADA 0.3%
Common Stocks 0.3%
Alcan Aluminium ................................... 574,100 19,479
Royal Bank of Canada .............................. 227,590 9,099
Total Canada (Cost $18,063) 28,578
CHILE 0.6%
Common Stocks 0.6%
<PAGE>
AFP Providia ADR (USD) ............................ 54,044 973
Chile Fund (USD) .................................. 201,268 4,881
Chilectra ADR (144a) (USD) ........................ 122,656 7,543
Chilgener ADS (USD) ............................... 186,659 5,320
Compania Cervecerias Unidas ADS (USD) ............. 160,311 3,567
Compania de Telecomunicaciones de Chile ADR (USD).. 303,195 9,816
Empresa Nacional de Electricidad ADS (USD) ........ 449,408 8,651
Enersis ADS (USD) ................................. 260,256 8,198
Santa Isabel ADR (USD) ............................ 185,346 4,518
Total Chile (Cost $48,986) 53,467
CHINA 0.5%
Common Stocks 0.5%
Huaneng Power International (Class N) ADR (USD) * . 1,335,000 32,374
Shanghai Petrochemical (Class H) (HKD) ............ 43,596,000 10,806
Yizheng Chemical Fibre (Class H) (HKD) ............ 31,441,000 6,169
Total China (Cost $48,969) 49,349
CZECH REPUBLIC 0.0%
Common Stocks 0.0%
SPT Telecom * ..................................... 35,764 3,780
Total Czech Republic (Cost $3,397) 3,780
DENMARK 0.2%
Common Stocks 0.2%
Den Danske Bank ................................... 138,670 11,993
Tele Danmark (Class B) ............................ 60,017 2,886
Unidanmark (Class A) .............................. 146,749 7,259
Total Denmark (Cost $16,230) 22,138
FINLAND 0.2%
Common Stocks 0.2%
Nokia (Class A) ................................... 325,112 20,280
Total Finland (Cost $7,170) 20,280
FRANCE 8.2%
Common Stocks 8.2%
<PAGE>
AXA ............................................... 160,173 9,855
Accor ............................................. 64,013 9,180
Alcatel Alsthom ................................... 270,180 30,043
Assurances Generales de France .................... 239,884 7,805
CLF-Dexia, Registered 1998 ........................ 76,168 7,047
CLF-Dexia, Registered 1999 ........................ 55,140 5,102
Canal Plus ........................................ 92,330 16,674
Carrefour ......................................... 128,107 79,983
Chargeurs International * ......................... 61,180 3,616
Cie de St. Gobain ................................. 271,828 36,421
Eaux Cie Generale ................................. 870,002 121,188
Elf Aquitaine ..................................... 349,415 33,885
GTM Entrepose ..................................... 108,850 6,555
Guilbert .......................................... 103,654 16,161
Havas ............................................. 87,050 6,518
L'Oreal ........................................... 34,948 12,401
LVMH .............................................. 224,149 54,727
Lapeyre ........................................... 212,150 12,795
Legrand ........................................... 79,363 13,394
Pathe * ........................................... 61,180 14,287
Pinault Printemps ................................. 133,366 56,098
Primagaz .......................................... 130,989 12,837
Rexel ............................................. 28,985 7,722
Sanofi ............................................ 289,598 27,042
Schneider ......................................... 548,400 30,913
Societe Generale .................................. 53,330 5,976
Sodexho ........................................... 97,750 44,885
Television Francaise .............................. 395,547 38,155
Total (Class B) ................................... 751,224 62,296
Total France (Cost $620,822) 783,561
GERMANY 4.5%
Common Stocks and Warrants 4.2%
Allianz * ......................................... 174,500 33,856
Allianz, Warrants, 2/23/98 * ...................... 55,000 4,281
Altana ............................................ 6,926 5,359
Bayer * ........................................... 1,359,008 52,766
Bayerische Hypotheken und Wechsel Bank ............ 657,137 20,490
Bilfinger & Berger * .............................. 259,250 9,641
Buderus ........................................... 16,705 7,833
Commerzbank ....................................... 354,960 9,521
Deutsche Bank ..................................... 570,758 30,087
Deutsche Telekom .................................. 481,323 10,445
Gehe .............................................. 1,032,722 68,697
Hoechst ........................................... 269,010 10,563
Hornbach Baumarkt ................................. 63,890 $ 2,029
Mannesmann ........................................ 40,868 16,071
Praktiker ......................................... 137,751 2,211
Rhoen Klinikum .................................... 169,688 21,850
SAP ............................................... 60,640 11,040
Schering .......................................... 93,639 8,949
Veba .............................................. 997,076 51,356
Veba, Warrants, 4/6/98 * .......................... 30,698 8,898
Volkswagen ........................................ 19,186 12,143
398,086
<PAGE>
Preferred Stocks 0.3%
Fielmann .......................................... 104,076 2,680
Hornbach Holdings ................................. 121,630 7,796
Krones ............................................ 19,980 7,730
SAP ............................................... 63,959 11,778
29,984
Total Germany (Cost $348,584) 428,070
HONG KONG 3.7%
Common Stocks 3.7%
Cathay Pacific Airways ............................ 10,308,000 16,035
Dao Heng Bank Group ............................... 5,029,000 23,890
First Pacific ..................................... 20,573,952 24,567
Guoco Group ....................................... 5,997,000 28,489
Hong Kong Land Holdings (USD) ..................... 22,720,058 47,258
Hopewell Holdings ................................. 36,345,000 18,885
Hutchison Whampoa ................................. 7,635,000 56,672
New World Development ............................. 10,600,034 61,166
Swire Pacific (Class A) ........................... 4,961,500 38,269
Wharf Holdings .................................... 11,196,000 42,347
Total Hong Kong (Cost $337,959) 357,578
INDIA 0.3%
Common Stocks 0.3%
State Bank of India GDR (USD) * ................... 1,042,500 25,281
Total India (Cost $14,751) ........................ 25,281
ITALY 2.2%
Common Stocks 2.2%
Assicurazioni Generali ............................ 1 $ --
Banca Fideuram .................................... 4,155,297 10,436
Credito Italiano .................................. 6,936,790 9,724
Danieli & Company, Savings Shares ................. 41,800 151
ENI ............................................... 4,469,820 22,754
Finanziaria Autogrill * ........................... 768,047 1,077
Gucci Group (USD) ................................. 136,076 9,440
IMI ............................................... 1,639,007 13,932
Industrie Natuzzi ADR (USD) ....................... 382,210 8,504
Istituto Nazionale delle Assicurazioni ............ 1,904,000 2,524
Italgas ........................................... 2,340,093 8,041
Mediolanum ........................................ 793,110 7,556
Rinascente ........................................ 745,400 3,975
Seat * ............................................ 6,565,680 2,009
Seat, Savings Shares * ............................ 3,030,805 600
Stet .............................................. 6,994,680 33,197
Stet, Savings Shares .............................. 3,030,805 11,221
Telecom Italia .................................... 5,991,779 15,863
Telecom Italia Mobile ............................. 15,493,182 48,601
Telecom Italia Mobile, Savings Shares ............. 3,005,345 5,550
Total Italy (Cost $152,776) 215,155
<PAGE>
JAPAN 20.4%
Common Stocks 20.4%
Advantest ......................................... 159,610 8,865
Alps Electric ..................................... 1,212,000 14,131
Amada ............................................. 2,624,000 19,618
Canon ............................................. 3,930,000 93,192
Citizen Watch ..................................... 1,637,000 11,774
DDI ............................................... 5,030 33,405
Daifuku ........................................... 512,000 5,889
Daiichi Pharmaceutical ............................ 2,653,000 42,637
DaiNippon Screen Manufacturing .................... 2,306,000 18,349
Daiwa House ....................................... 3,351,000 37,487
Denso ............................................. 3,520,000 80,142
East Japan Railway ................................ 7,786 $33,675
Fanuc ............................................. 640,000 21,832
Hitachi ........................................... 4,255,000 38,549
Hitachi Zosen ..................................... 4,012,000 13,939
Honda Motor ....................................... 307,000 9,529
Inax .............................................. 1,209,000 7,505
Ishihara Sangyo Kaisha * .......................... 1,347,000 3,385
Ito-Yokado ........................................ 972,000 46,634
Kao ............................................... 2,065,000 24,077
Kawada Industries ................................. 400,000 1,465
Kokuyo ............................................ 1,207,000 26,244
Komatsu ........................................... 3,252,000 23,775
Komori ............................................ 1,056,000 22,545
Kumagai Gumi ...................................... 2,315,000 3,100
Kuraray ........................................... 2,796,000 24,670
Kyocera ........................................... 1,236,000 74,003
Makita ............................................ 1,746,000 23,934
Marui ............................................. 2,611,000 42,991
Matsushita Electric Industrial .................... 3,709,000 59,316
Mitsubishi ........................................ 2,175,000 20,390
Mitsubishi Heavy Industries ....................... 11,052,000 72,963
Mitsubishi Paper Mills ............................ 1,676,000 5,334
Mitsui Fudosan .................................... 5,627,000 64,278
Mitsui Petrochemical Industries ................... 1,123,000 5,282
Murata Manufacturing .............................. 1,243,000 45,829
NEC ............................................... 6,996,000 85,428
National House Industrial ......................... 691,000 8,166
Nippon Hodo ....................................... 642,000 4,537
Nippon Steel ...................................... 15,666,000 44,677
Nippon Telephone & Telecom ........................ 3,440 24,255
Nomura Securities ................................. 3,657,000 40,910
Pioneer Electronic ................................ 1,505,000 26,914
Sangetsu .......................................... 272,000 4,607
Sankyo ............................................ 2,535,000 67,901
Sega Enterprises .................................. 399,250 10,505
<PAGE>
Sekisui Chemical .................................. 3,899,000 37,474
Sekisui House ..................................... 2,374,000 21,134
Seven Eleven Japan ................................ 338,000 $ 21,435
Sharp ............................................. 3,601,000 46,809
Shin-Etsu Chemical ................................ 2,092,000 42,191
Shiseido .......................................... 744,000 10,668
Sony .............................................. 917,300 66,773
Sumitomo .......................................... 4,839,000 32,556
Sumitomo Electric Industries ...................... 5,424,000 73,497
Sumitomo Forestry ................................. 1,508,000 15,325
TDK ............................................... 904,000 65,164
Teijin ............................................ 6,274,000 25,356
Tokio Marine & Fire Insurance ..................... 1,246,000 12,172
Tokyo Electronics ................................. 499,400 19,278
Tokyo Steel Manufacturing ......................... 1,227,000 13,146
Toppan Printing ................................... 2,071,000 26,757
Uny ............................................... 1,250,000 21,960
Yurtec ............................................ 569,000 5,469
Total Japan (Cost $2,053,714) 1,955,797
MALAYSIA 2.4%
Common Stocks 2.4%
Affin Holdings .................................... 8,635,000 20,807
Berjaya Sports Toto ............................... 5,099,000 24,370
Commerce Asset Holdings ........................... 2,822,332 16,861
MBF Capital ....................................... 9,361,000 13,869
Multi-Purpose Holdings ............................ 10,784,000 17,610
Renong ............................................ 17,926,000 24,560
Resorts World ..................................... 3,344,000 12,320
Tanjong ........................................... 6,993,000 25,345
Technology Resources Industries * ................. 5,491,000 10,060
Time Engineering .................................. 4,601,000 8,429
United Engineers .................................. 7,458,000 52,872
227,103
Preferred Stocks 0.0%
Multi-Purpose Holdings, Cv. Loan Stock,
3.00%, 1/13/02 .................................. 13,496,000 5,026
Renong, Cv. Loan Stock, 4.00%, 5/21/01 ............ 2,521,200 894
5,920
Total Malaysia (Cost $220,601) 233,023
<PAGE>
MEXICO 1.7%
Common Stocks 1.7%
Cemex (Class B) ................................... 1,534,044 $ 5,637
Cemex ADS (USD) ................................... 2,265,463 15,009
Cifra (Class B) ADR (USD) ......................... 11,947,992 17,982
Fomentos Economico Mexicano (Class B) ............. 1,322,684 6,209
Gruma (Class B) * ................................. 2,308,929 10,896
Gruma (Class B) ADS (USD) * ....................... 528,975 10,017
Grupo Financiero Banamex (Class B) * .............. 3,536,595 7,566
Grupo Financiero Banamex (Class L) * .............. 144,991 290
Grupo Financiero Bancomer (Class B) GDS (USD) * ... 72,250 506
Grupo Financiero Bancomer (Class L) * ............. 53,515 16
Grupo Industrial Maseca (Class B) * ............... 6,373,007 6,223
Grupo Modelo (Class C) ............................ 1,382,316 8,384
Grupo Televisa GDR (USD) * ........................ 187,266 4,331
Kimberly-Clark Mexico (Class A) ................... 3,610,309 13,130
Panamerican Beverages (Class A) (USD) ............. 693,742 20,118
Telefonos de Mexico (Class L) ADR (USD) ........... 972,222 40,104
Total Mexico (Cost $193,327) 166,418
NETHERLANDS 9.8%
Common Stocks and Warrants 9.8%
ABN Amro Holdings ................................. 786,607 54,061
Ahold ............................................. 594,928 40,613
Akzo Nobel ........................................ 74,504 9,598
Baan Company (USD) ................................ 200,890 10,798
CSM ............................................... 783,539 45,002
Elsevier .......................................... 8,859,829 141,881
Fortis Amev ....................................... 896,157 33,808
Hagemeyer ......................................... 188,700 16,417
ING Groep ......................................... 2,323,160 91,219
ING Groep, Warrants, 3/15/01 * .................... 800,732 7,262
Koninklijke PTT Nederland ......................... 307,817 10,933
Nutricia .......................................... 133,248 20,217
Otra .............................................. 180,960 2,879
Polygram .......................................... 1,151,664 56,451
Royal Dutch Petroleum ............................. 1,039,073 $185,703
Unilever .......................................... 335,154 65,180
Wolters Kluwer .................................... 1,264,059 149,808
941,830
Preferred Stocks 0.0%
ING Groep ......................................... 70,540 360
360
Total Netherlands (Cost $591,988) 942,190
<PAGE>
NEW ZEALAND 0.5%
Common Stocks 0.5%
Air New Zealand (Class B) ......................... 3,323,372 9,607
Carter Holt Harvey ................................ 1,890,249 4,193
Fernz ............................................. 1,111,577 3,738
Fletcher Challenge Building ....................... 3,024,380 8,491
Fletcher Challenge Energy ......................... 523,980 1,522
Fletcher Challenge Forests Division ............... 6,186,975 8,535
Fletcher Challenge Paper .......................... 1,913,960 4,246
Telecom Corporation of New Zealand ................ 2,461,628 11,041
Total New Zealand (Cost $51,295) 51,373
NORWAY 1.7%
Common Stocks 1.7%
Bergesen (Class A) ................................ 198,750 4,103
Norsk Hydro ....................................... 1,505,296 73,349
Orkla (Class A) ................................... 931,516 78,093
Saga Petroleum (Class B) .......................... 314,380 5,055
Total Norway (Cost $99,790) 160,600
PANAMA 0.0%
Common Stocks 0.0%
Banco Latinoamericano de Exportaciones
(Class E) (USD)................................. 95,636 4,387
Total Panama (Cost $4,723) 4,387
PERU 0.1%
Common Stocks 0.1%
Credicorp (USD) ................................... 196,320 $ 4,123
Telefonica del Peru (Class B) ..................... 1,033,003 2,488
Telefonica del Peru (Class B) ADS (USD) ........... 210,866 5,061
Total Peru (Cost $9,570) 11,672
PHILIPPINES 0.3%
Common Stocks 0.3%
Philippine Long Distance Telephone ................ 233,700 13,338
Philippine National Bank * ........................ 2,163,576 14,194
Total Philippines (Cost $36,659) 27,532
PORTUGAL 0.6%
Common Stocks and Warrants 0.6%
Jeronimo Martins * ................................ 896,744 53,645
Jeronimo Martins, Warrants, 9/15/03 * ............. 47,728 865
Total Portugal (Cost $17,987) 54,510
<PAGE>
RUSSIA 0.0%
Common Stocks 0.0%
Rao Gazprom ADS (USD) * ........................... 145,810 2,275
Total Russia (Cost $2,297) 2,275
SINGAPORE 2.0%
Common Stocks and Warrants 2.0%
City Developments ................................. 1,502,000 12,141
DBS Land .......................................... 3,932,000 12,713
Development Bank of Singapore ..................... 1,060,000 12,595
Fraser & Neave .................................... 1,575,800 11,431
Keppel ............................................ 828,000 3,604
Keppel (Class A), New * ........................... 207,000 882
Overseas Chinese Bank ............................. 711,000 8,301
Overseas Union Bank ............................... 4,098,000 26,895
Singapore Land .................................... 4,220,000 19,679
Singapore Press ................................... 1,689,640 31,283
United Industrial ................................. 6,777,000 $ 5,103
United Overseas Bank .............................. 4,090,154 38,429
United Overseas Bank, Warrants, 6/17/97 * ......... 717,750 2,469
Wing Tai Holdings ................................. 3,054,000 7,891
Total Singapore (Cost $201,695) 193,416
SOUTH KOREA 0.6%
Common Stocks 0.6%
Cho Hung Bank ..................................... 1,048,660 5,723
Hanil Securities * ................................ 141,000 762
Kook Min Bank ..................................... 331,535 6,348
Korea Electric Power .............................. 562,000 16,759
Pohang Iron & Steel ............................... 113,130 8,226
Samsung Electronic ................................ 196,685 16,168
Shinhan Bank ...................................... 38,950 592
Total South Korea (Cost $72,146) 54,578
SPAIN 2.2%
Common Stocks 2.2%
Aguas de Barcelona ................................ 2,865 112
Argentaria Banca de Espana ........................ 265,674 11,848
Banco Bilbao Vizcaya .............................. 157,600 10,607
Banco Popular Espanol ............................. 106,919 22,670
Banco Santander ................................... 444,304 33,428
Centros Comerciales Pryca ......................... 367,159 6,379
Continente Central ................................ 29,316 495
Empresa Nacional de Electricidad .................. 410,019 28,661
Gas Natural ....................................... 150,707 32,006
Iberdrola ......................................... 1,880,939 21,227
Repsol ............................................ 615,980 25,826
Telefonica de Espana .............................. 839,166 21,495
Total Spain (Cost $150,370) 214,754
<PAGE>
SWEDEN 2.3%
Common Stocks 2.3%
ABB (Class A) ..................................... 1,452,200 17,679
Astra (Class B) ................................... 2,068,013 82,117
Atlas Copco (Class B) ............................. 831,988 20,628
Electrolux (Class B) .............................. 550,243 31,564
Esselte (Class B) ................................. 173,520 3,959
Hennes & Mauritz (Class B) ........................ 262,549 37,987
Sandvik (Class A) ................................. 175,000 4,317
Sandvik (Class B) ................................. 943,470 23,212
Scribona (Class B) ................................ 233,080 2,897
Total Sweden (Cost $139,207) 224,360
SWITZERLAND 5.2%
Common Stocks 5.2%
ABB ............................................... 56,570 68,501
Adecco ............................................ 140,642 46,941
Ciba Specialty Chemicals * ........................ 107,689 9,278
Credit Suisse Group ............................... 147,785 16,642
Nestle ............................................ 70,676 85,822
Novartis .......................................... 107,689 141,871
Roche Holdings .................................... 12,116 102,330
Schweizerischer Bankverein ........................ 131,486 28,721
Total Switzerland (Cost $324,828) 500,106
THAILAND 0.2%
Common Stocks 0.2%
Advanced Information Service ...................... 553,576 3,687
Bangkok Bank ...................................... 935,703 8,669
Siam Cement ....................................... 106,285 2,848
Thai Farmers Bank ................................. 1,004,094 6,073
Total Thailand (Cost $29,503) 21,277
UNITED KINGDOM 15.6%
Common Stocks 15.6%
Abbey National .................................... 4,450,700 61,675
Argos ............................................. 3,766,848 39,317
Asda Group ........................................ 15,302,000 28,521
BG * .............................................. 3,295,040 9,613
British Petroleum ................................. 2,903,500 33,270
Cable & Wireless .................................. 6,624,050 50,995
Cadbury Schweppes ................................. 4,540,793 37,754
Caradon ........................................... 7,645,821 30,608
Centrica * ........................................ 3,295,040 3,017
Coats Viyella ..................................... 2,707,210 5,792
Compass Group ..................................... 2,433,000 26,656
<PAGE>
David S. Smith .................................... 4,099,120 14,882
Electrocomponents ................................. 2,585,000 16,591
GKN ............................................... 504,000 7,764
Glaxo Wellcome .................................... 4,603,710 90,507
Grand Metropolitan ................................ 7,800,780 65,365
Guinness .......................................... 6,653,000 54,777
Heywood Williams Group ............................ 1,034,875 4,118
Hillsdown Holdings ................................ 2,471,000 7,289
John Laing (Class A) .............................. 2,220,000 13,205
Kingfisher ........................................ 6,866,733 74,343
Ladbroke Group .................................... 3,929,940 14,777
National Westminster Bank ......................... 11,758,780 138,933
RTZ ............................................... 3,172,900 50,293
Rank Group ........................................ 4,509,825 31,064
Reed International ................................ 5,976,430 110,036
Rolls Royce ....................................... 2,043,925 8,050
Safeway ........................................... 6,011,920 33,031
Sears ............................................. 2,390,000 2,983
Shell Transport & Trading ......................... 5,399,000 95,642
SmithKline Beecham ................................ 10,937,740 175,146
T & N ............................................. 5,116,000 11,111
Tesco ............................................. 4,951,395 28,569
Tomkins ........................................... 13,557,430 58,449
United News & Media ............................... 5,356,430 65,718
Total United Kingdom (Cost $1,072,445) 1,499,861
VENEZUELA 0.1%
Common Stocks 0.1%
Compania Anonima Nacional Telefonos
de Venezuela (Class D) ADR (USD) * ....... 204,610 6,138
Total Venezuela (Cost $4,706) 6,138
SHORT-TERM INVESTMENTS 4.2%
Commercial Paper 2.3%
Abbey National North America, 5.37%, 6/11/97 ...... $20,000,000 $ 19,878
BHF Finance (Delaware), 5.50%, 5/23/97 ............ 15,000,000 14,950
BMW U.S. Capital, 5.52%, 5/1/97 ................... 7,225,000 7,225
Caisse des Depots et Consignations, 4(2), 5.52%,
5/16/97.......................................... 25,000,000 24,942
Falcon Asset Securitization, 4(2), 5.52%, 5/13/97 . 23,000,000 22,958
Ford Credit Europe, 5.51%, 5/22/97 ................ 20,900,000 20,833
Merrill Lynch & Co., 5.57%, 6/3/97 ................ 25,000,000 24,872
Novartis Finance Corporation, 5.53%, 5/2 - 5/7/97 . 31,000,000 30,983
Preferred Receivables Funding, 5.50%, 5/5/97 ...... 9,000,000 8,995
Progress Capital Holdings, 5.51%, 5/15/97 ......... 21,200,000 21,155
Sunamerica Incorporated, 5.52%, 5/30/97 ........... 20,000,000 19,911
Investments in Commercial Paper
through a joint account, 5.60%, 5/1/97 .... 5,415,243 5,415
<PAGE>
222,117
Other 1.9%
Banco Bilbao Vizcaya, CD, 5.61%, 6/16/97 ........... 25,000,000 25,000
Bank of Brussels, CD, 5.62%, 5/30/97 ............... 8,000,000 8,000
Commerzbank, CD, 5.54%, 5/22/97 .................... 25,000,000 25,000
Deutsche Bank, CD, 5.36%, 5/12/97 .................. 25,000,000 25,000
FCC National Bank, BN, 5.70%, 10/28/97 ............. 10,000,000 10,000
Hessische Landesbank-Girozentrale, CD, 6.13%, 4/7/98 9,000,000 8,990
Morgan Stanley Group, Floating Rate MTN,
5. 868%, 5/18/98 ........................... 10,000,000 10,035
Rabobank Nederland N.V., CD, 6.20%, 4/9/98 ......... 15,000,000 14,990
SMM Trust, VR Note, 5.688%, 3/26/98 ................ 25,000,000 25,000
United States National Bank Oregon, CD,
5.53%, 5/19/97 .................................. 25,000,000 25,000
177,015
Total Short-Term Investments (Cost $399,132) ........... 399,132
Total Investments in Securities
98.9% of Net Assets (Cost $7,791,173) .................. $ 9,508,860
Other Assets Less Liabilities .......................... 102,100
NET ASSETS ............................................. $ 9,610,960
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 54,202
Accumulated net realized gain/loss- net of distributions 130,886
Net unrealized gain (loss) 1,716,779
Paid-in-capital applicable to 691,785,367 shares of $0.01 par
value capital stock outstanding; 2,000,000,000 shares
of the Corporation authorized 7,709,093
NET ASSETS $ 9,610,960
NET ASSET VALUE PER SHARE $ 13.89
* 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 period-end amounts
to 0.1% of net assets.
BEF Belgian franc
BN Bankers Note
CD Certificate of Deposit
HKD Hong Kong dollar
MTN Medium-Term Note
USD U.S. dollar
VR Variable Rate
================================================================================
<PAGE>
Unaudited
Statement of Operations
-----------------------
In thousands
6 Months
Ended
4/30/97
-------
Investment Income
Income
Dividend (net of foreign taxes of $ 10,908) ............. $ 80,689
Interest ................................................ 14,661
Total income ............................................ 95,350
Expenses
Investment management ................................... 31,271
Shareholder servicing ................................... 5,963
Custody and accounting .................................. 1,591
Registration ............................................ 323
Prospectus and shareholder reports ...................... 222
Legal and audit ......................................... 17
Directors ............................................... 13
Miscellaneous ........................................... 21
Total expenses .......................................... 39,421
Net investment income ......................................... 55,929
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities .............................................. 156,172
Foreign currency transactions ........................... (3,932)
Net realized gain (loss) ................................ 152,240
Change in net unrealized gain or loss
Securities .............................................. 329,138
Other assets and liabilities
denominated in foreign currencies ....................... (691)
Change in net unrealized gain or loss ................... 328,447
Net realized and unrealized gain (loss) ....................... 480,687
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ........................................ $ 536,616
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/97 10/31/96
------- --------
Increase (Decrease) in Net Assets
Operations
Net investment income ........................... $ 55,929 $ 121,411
Net realized gain (loss) ........................ 152,240 120,277
Change in net unrealized gain or loss ........... 328,447 758,308
Increase (decrease) in net assets from operations 536,616 999,996
Distributions to shareholders
Net investment income ........................... (118,693) (95,687)
Net realized gain ............................... (131,885) (106,311)
Decrease in net assets from distributions ....... (250,578) (201,998)
Capital share transactions *
Shares sold ..................................... 1,367,538 2,646,210
Distributions reinvested ........................ 232,168 187,694
Shares redeemed ................................. (1,050,520) (1,242,071)
Increase (decrease) in net assets from capital
share transactions .............................. 549,186 1,591,833
Net Assets
Increase (decrease) during period ............... 835,224 2,389,831
Beginning of period ............................. 8,775,736 6,385,905
End of period ................................... $ 9,610,960 $ 8,775,736
* Share information
Shares sold .................................... 99,514 204,384
Distributions reinvested ....................... 17,059 15,334
Shares redeemed ................................ (76,360) (96,325)
Increase (decrease) in shares outstanding ...... 40,213 123,393
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
Unaudited
April 30, 1997
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 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.
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.
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.
<PAGE>
- --------------------------------------------------------------------------------
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 April 30, 1997, 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 The fund lends its securities to approved brokers to
earn additional income and takes cash and U.S. Treasury securities as collateral
to secure the loans. Collateral is maintained at not less than 100% of the value
of loaned securities. At April 30, 1997, the value of securities on loan was
$1,657,750,000. 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 $937,107,000 and $607,060,000, respectively, for the six
months ended April 30, 1997.
- --------------------------------------------------------------------------------
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
At April 30, 1997, the aggregate cost of investments for federal income tax
and financial reporting purposes was $7,791,173,000, and net unrealized gain
aggregated $1,717,687,000, of which $2,178,858,000 related to appreciated
investments and $461,171,000 to depreciated investments.
<PAGE>
- --------------------------------------------------------------------------------
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 $5,241,000 was
payable at April 30, 1997. 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 0.30% for assets in
excess of $80 billion. At April 30, 1997, and for the six months 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 and International Funds (Spectrum) invest. 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 $4,906,000 for the six months ended April 30,
1997, of which $833,000 was payable at period-end.
During the six months ended April 30, 1997, the fund, in the ordinary
course of business, placed security purchase and sale orders aggregating
$85,022,000 with certain affiliates of the manager and paid commissions of
$302,000 related thereto.
================================================================================
<PAGE>
Investment Services And Information
Knowledgeable 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. You can also
drop off applications or obtain prospectuses and other literature at these
centers.
Automated 24-Hour Services
Tele*Access (Registration Mark) 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 $50 minimum makes it easy to get started.
T. Rowe Price Shareholder Services
Automatic Withdrawal If you need money from your fund account on a regular
basis, you can establish scheduled, automatic redemptions.
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.
<PAGE>
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.
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 develop-
ments 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, Diversifying Overseas: A Guide to International Investing,
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>
T. Rowe Price 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*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
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
<PAGE>
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 FUNDS
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 FUNDS
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
T. Rowe Price No-Load
Variable Annuity
<PAGE>
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
** Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send
money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
================================================================================
T. Rowe Price Discount Brokerage
Discount Brokerage
A Division of T. Rowe Price Investment Services, Inc., Member
NASD/SIPC
This low-cost service gives you the opportunity to easily consolidate all
your investments with one company. Through T. Rowe Price Discount Brokerage, you
can buy and sell individual securities--stocks, bonds, options, and others--at
considerable commission savings over full-service brokers.* We also provide a
wide range of services, including:
Automated Telephone and Computer Services You can enter trades, access
quotes, and review account information 24 hours a day, seven days a week. Any
trades executed through these programs save you an additional 10% on
commissions.**
Investor Information A variety of informative reports, such as our
Brokerage Insights series, S&P Market Month newsletter, and select stock
reports, can help you better evaluate economic trends and investment
opportunities.
<PAGE>
Dividend Reinvestment Service Virtually all stocks held in customer
accounts are eligible for this service, free of charge.
* Based on a February 1997 telephone survey that compared our commission
rates on stock transactions of various sizes with those of other
full-service and discount brokerages. Commission rates will vary based
on size and nature of trades. Services vary by firm. For additional
information concerning our commission rates and services, call
1-800-638-5660.
** Discount applies to our current commission schedule; subject to our
$35 minimum commission.
================================================================================
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access (Registration Mark):
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
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. (Registration Mark)
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. F37-051 4/30/97
