Semiannual Report
April 30, 1996
Foreign Equity Fund
Fellow Shareholders
International stock markets and your fund made steady progress during the
period under review. Economic activity overseas was much more muted than in
the U.S. but, in Europe at least, this allowed further declines in interest
rates. In Japan the signs of recovery were widespread, but the pace was far
slower than previous recoveries. Southeast Asian markets came to life
following a long dull patch, and the markets of Latin America performed
strongly as confidence returned following the peso crisis 18 months ago. In
currency markets, the U.S. dollar was firm against both the yen and European
currencies.
PERFORMANCE REVIEW
The return from the Foreign Equity Fund over the six-month period ended April
30 was strong in absolute terms and was just behind the unmanaged Morgan
Stanley Capital International Europe, Australia and Far East (EAFE) Index.
During this period, country weightings against the index were moderately
helpful, and stock selection added significant value with our quality growth
stocks performing well in a number of markets.
Performance Comparison
Periods Ended 4/30/96
__________________________
6 Months 12 Months
__________ __________
Foreign Equity Fund 13.31% 17.77%
MSCI EAFE Index 13.38 11.74
Over the 12-month period, the fund's returns were well ahead of the EAFE
Index. Stock selection again added value over this period, and the
underweighting in Japan helped relative returns as the Tokyo market fell
behind. An overweighting in the buoyant markets of Southeast Asia was also
positive, while the portfolio's Latin American positions performed strongly.
INVESTMENT REVIEW
Far East
In Japan the economy continued to grow at a steady if modest pace. In common
with most developed countries, consumer expenditure is the largest component
of the economy and this sector finally showed some signs of life. Department
store sales were again positive after almost four years of decline. A year
ago, when the yen was at an all-time high, producer prices were in decline and
there was serious concern that a deflationary spiral could take hold. Today
the yen is significantly lower, but the Bank of Japan is still able to pursue
a supportive monetary policy without any serious risk of inflation. The
financial press is still dominated by the debate over who should pay for the
debts incurred by the failed housing loan companies. The banks have already
recognized large amounts of their bad debts and will report sharp losses in
the fiscal year just ended.
The stock market performed reasonably well in local currency terms but,
given the weakness of the yen, dollar returns were less compelling. Our
strategy in Tokyo was to avoid the banking sector (a large part of the index)
and to focus on international technology companies such as Kyocera, NEC, and
Canon.
In Southeast Asia, stock markets have performed well since the beginning
of the year. A number of these markets traditionally rally at the time of
Chinese New Year, but there were also clear signs that U.S. investors have
returned following two years of underperformance compared with the U.S. Most
of the economies in the region showed high rates of growth but have still
managed to keep inflation and their balance of payments under reasonable
control. Valuations compared with the rest of the world began to look
reasonable again, and an added attraction for the U.S. investor was that many
of these currencies are linked to the strengthening U.S. dollar.
Malaysia was one of the best performers in the region, up 28% during the
past six months. Foreign investors had become excessively cautious about the
Malaysian economy last year, but following a surprisingly strong trade surplus
in December and increasing signs of an economic soft landing, they rushed back
in February. With its abundance of natural resources, stable politics, and
sensible economic policies, Malaysia remained a core part of our Southeast
Asian positions. Our holdings in United Engineers and Renong are well placed
to benefit from the current infrastructure spending boom.
In Korea the market also rallied strongly. A slush fund scandal
involving two previous presidents held the market back earlier in the year,
but sentiment has now improved. With interest rates falling again and a recent
increase in the permitted levels of foreign ownership, we took the opportunity
to increase our positions here. Many of Korea's better-managed companies are
selling for under five times cash flow and they remain fierce competitors in
world markets.
Not all the markets in the region were so buoyant. Hong Kong has been
dull recently, with better sentiment in the property sector counterbalanced by
caution over the future of U.S. interest rates. Singapore also made little
progress with export growth affected by a worldwide slowdown in the
electronics industry. However, the Singapore economy continues to be very well
managed, and with interest rates staying low, our positions in property stocks
and bank stocks were able to make progress.
Market Performance
6 Months Ended 4/30/96
___________________________________________
Local Currency
Local vs. U.S. In U.S.
Currency Dollars Dollars
___________________________________________
Australia 12.5% 3.4% 16.3%
France 21.4 - 5.5 14.8
Germany 13.9 - 8.2 4.6
Hong Kong 16.0 - 0.1 16.0
Italy 15.2 1.9 17.4
Japan 21.1 - 2.4 18.2
Mexico 36.1 - 4.5 30.1
Netherlands 24.8 - 7.9 14.9
Norway 18.2 - 5.4 11.8
Singapore 15.2 0.6 15.9
Sweden 12.4 - 2.3 9.9
Switzerland 18.5 - 8.7 8.2
United Kingdom 10.8 - 4.9 5.4
Source: Randall Helms Database, using MSCI Indices.
Europe
The broad picture in Europe was one of stagnant economic activity countered by
looser monetary policy from most of the central banks.
Germany would be typical here. For some time now the economy has been
suffering from high wage costs, rising taxes, and a strong currency; therefore
the recent moves by the Bundesbank to lower interest rates together with a
weaker deutschemark must be welcome news for the German manufacturing
industry. Given the preponderance of large cyclical and interest
rate-sensitive stocks, we remained underweighted in this market but our
positions in the health care stocks Bayer and Rhoen Klinikum performed well.
We also recently added to an old favorite, Gehe, a pharmaceutical wholesaler.
Monetary easing in Germany was welcome news in France where the Chirac
administration was making better progress in tackling the country's large
budget deficit. The economy has also been depressed for some time, and a
combination of lower interest rates and a weak currency could provide a much
needed kick start. After a period of disappointing performance, the French
stock market rose strongly with growth stocks leading the way. We maintained
our overweighted position; Eaux Cie Generale, a conglomerate based on water
services, LVMH, a leader in luxury goods, and supermarket chain Carrefour
remained core holdings.
The fund was also overweighted in the Netherlands, which continued to
perform well. Our optimism here was based on individual holdings, the bulk of
which are multinational companies, rather than on the fundamentals of the
Dutch economy. Publishers Elsevier and Wolters Kluwer led the market, but we
recently trimmed our positions here following a period of outstanding
performance. It is interesting to note that a number of our Dutch holdings are
parts of Anglo-Dutch combines in which we also invest through the U.K.-listed
entity. The Royal Dutch Shell Group is jointly owned by Royal Dutch Petroleum
in the Netherlands and Shell Transport & Trading in the U.K. Similarly, Reed
Elsevier is now an international publishing business which can be bought
through Reed International in London and Elsevier in Amsterdam. We owned all
four stocks in the portfolio, a useful reminder that market weightings are to
a significant extent a function of the relative attractiveness of individual
companies.
In the U.K. the economy has recently decelerated, reviving optimism that
interest rates can fall again. With sterling weakening against the dollar,
attention focused on the large multinationals that dominate the index. Our
core holdings Glaxo Wellcome and Smithkline Beecham are two of the world's
leading pharmaceutical companies, but we also own Grand Metropolitan, the
international drinks group, and Cable & Wireless, the telecommunications
company with important interests in the Far East.
Chart 1 - Geographic Diversification
Turning to the smaller markets, in Italy both the market and the
currency performed well. Following the elections in April, the prime
minister-designate made encouraging statements about fiscal reform and
returning the lira to the European monetary system. Spain also performed well
following the election of a pro-business government, although the party failed
to win an outright majority. In Switzerland the overall market was dull but
there was a strong performance from pharmaceutical companies Ciba-Geigy and
Sandoz, both holdings in the portfolio, which announced a merger.
Latin America
The stock markets of Latin America have performed well since the beginning of
the year. In Brazil, a sharp decline in inflation combined with strong
economic growth boosted confidence and gave President Cardoso a high rating in
the opinion polls. This in turn will help him push through much-needed fiscal
reforms. With economic policy on track and the trade account in moderate
surplus, the currency remained steady with positive implications for both
inflation and interest rates.
Mexico has seen the first signs of economic recovery, and with the peso
now more stable, the stock market blazed ahead on increasing confidence that
interest rates can fall from here. Our overweighting in the region versus the
benchmark helped fund performance.
INVESTMENT POLICY AND OUTLOOK
Our current investment policy for the fund is to maintain a neutral weighting
in Europe, an underweighting in Japan, and an overweighting in the smaller
markets of Southeast Asia and Latin America. This strategy is based on several
assumptions. In Europe we see a helpful mix of improving economies and falling
interest rates and we can also find quality growth stocks with reasonable
valuations by world standards. In Japan, we expect the economic recovery to
continue, but our confidence is tempered by the high valuations in certain
areas of the market and a suspicion that interest rates have reached the
bottom of their cycle.
The overweighting of Southeast Asia assumes that this part of the world
will continue to see high rates of economic growth. Valuations are attractive
following a long period of dull market performance. In Latin America, we
remain optimistic about the long-term prospects. The portfolio remains well
diversified, and we believe that our preference for established growth
companies is appropriate given a background of muted economic activity.
This broad strategy has served the fund well recently and we believe it
will continue to do so in the future.
Respectfully submitted,
Martin G. Wade
President
May 24, 1996
Revisiting the Case for International Equity Investing
Chart 2 - Correlation of Returns
Over the past 15 years, a growing number of U.S. investors have added
international stocks to their portfolios, mixing domestic and foreign stocks
in the pursuit of higher overall returns with lower volatility. In recent
months, however, some naysayers have questioned the benefits of international
diversification. Some claim that the era of higher international returns is
over, citing the recent superior performance of U.S. stocks. Others point to
short periods when U.S. and international markets moved in tandem, so-called
"high correlation," as proof that foreign stocks no longer offer adequate
diversification.
On the contrary, performance and correlation, when viewed over the long term,
reinforce the case for international diversification. For instance, although
U.S. stocks have recently outperformed, foreign stocks have outpaced them in
seven of the last 12 years. (We used the MSCI Europe, Australia, and Far East
Index - EAFE - to measure foreign stocks and the Standard & Poor's 500 Stock
Index for domestic equities.)
Furthermore, correlations have remained low over the long term. The chart
shows the correlation of various foreign markets to the U.S. over two 10-year
periods. A measurement of 100% would indicate that foreign stocks moved in the
same direction as U.S. stocks all of the time. The overall correlation of
foreign stocks has actually declined: from 1981 through 1990, the EAFE and the
S&P 500 moved in the same direction 41% of the time, but from 1986 through
1995, the correlation dropped to 34%. Correlations declined in the
Netherlands, Germany, and Japan and rose only modestly in the U.K. and Hong
Kong.
Inevitably, there are short periods when foreign markets move with the U.S.
market, usually when the latter is experiencing significant volatility. In
general, however, foreign markets follow their own path depending mostly on
the unique fundamentals of each country. In our opinion, the case for
international diversification remains solid. Foreign stocks may be poised to
regain leadership because many international economies are at earlier stages
of expansion than the U.S. economy. If correlations remain low over the long
term, as we expect, diversifying into foreign stocks could continue to be an
effective way to limit risk and enhance returns.
INDUSTRY DIVERSIFICATION
April 30, 1996
_____________________________________________________________________________
Percent of
Net Assets
_____________________________________________________________________________
Services 23.5%
Finance 17.5
Consumer Goods 15.9
Capital Equipment 15.3
Energy 10.5
Materials 8.2
Multi-Industry 3.0
Miscellaneous 0.1
Reserves 6.0
_____________________________________________________________________________
Net Assets 1100.0%
EXCHANGE RATES TO U.S. DOLLARS
April 30, 1996
_____________________________________________________________________________
Country Exchange Rate
_____________________________________________________________________________
Argentina 0.9999
Australia 1.2730
Austria 10.7650
Belgium 31.4800
Brazil 0.9921
Canada 1.3615
Czech Republic 27.773
Denmark 5.9020
Finland 4.8396
France 5.1675
Germany 1.5309
Hong Kong 7.7355
Italy 1,562.0000
Japan 104.6050
Malaysia 2.4933
Mexico 7.4300
Netherlands 1.7135
New Zealand 1.4557
Norway 6.5696
Peru 2.3705
Portugal 156.8600
Singapore 1.4058
South Korea 778.2500
Spain 127.2000
Sweden 6.7816
Switzerland 1.2416
Thailand 25.2445
United Kingdom 0.6643
SECURITY CLASSIFICATION
April 30, 1996
_____________________________________________________________________________
Percent of Cost Market
Net Assets (000) Value
(000)
Common Stocks, Rights,
and Warrants 91.2% $1,588,131 $1,850,847
Preferred Stocks and Warrants 2.8 49,511 55,533
Bonds 0.0 537 604
Short-Term Investments 4.6 93,627 93,627
Total Investments 98.6 1,731,806 2,000,611
Other Assets Less Liabilities 1.4 28,412 28,318
_____________________________________________________________________________
Net Assets 100.0% $1,760,218 $2,028,929
TWENTY-FIVE LARGEST HOLDINGS
April 30, 1996
_____________________________________________________________________________
Percent of
Company Country Net Assets
_____________________________________________________________________________
Wolters Kluwer Netherlands 2.1%
Elsevier Netherlands 1.6
Royal Dutch Petroleum Netherlands 1.6
Smithkline Beecham United Kingdom 1.1
National Westminster Bank United Kingdom 1.1
Reed International United Kingdom 1.1
Eaux Cie Generale France 1.0
Roche Holdings Switzerland 0.9
Kyocera Japan 0.9
Telecomunicacoes Brasileiras Brazil 0.9
Astra Sweden 0.9
Mitsubishi Heavy Industries Japan 0.9
NEC Japan 0.9
Nestle Switzerland 0.9
Nippon Denso Japan 0.8
Internationale Nederlanden Groep Netherlands 0.8
Canon Japan 0.8
Nomura Securities Japan 0.7
Norsk Hydro Norway 0.7
Mitsui Fudosan Japan 0.7
Shell Transport & Trading United Kingdom 0.7
Carrefour France 0.7
Technology Resources Industries Malaysia 0.7
Gehe Germany 0.7
Sumitomo Electric Japan 0.7
_____________________________________________________________________________
Total 23.9%
SUMMARY OF INVESTMENTS AND CASH
April 30, 1996
_____________________________________________________________________________
Percent of
Country Equities! Cash Total MSCI EAFE
_____________________________________________________________________________
Austria 0.1 - 0.1 0.4
Belgium 1.0 - 1.0 1.1
Czech Republic 0.1 - 0.1 -
Denmark 0.2 - 0.2 0.8
Finland 0.1 - 0.1 0.5
France 7.5 - 7.5 6.6
Germany 4.1 - 4.1 7.0
Ireland - - - 0.3
Italy 1.9 - 1.9 2.2
Netherlands 9.1 - 9.1 4.1
Norway 1.4 - 1.4 0.5
Portugal 0.4 - 0.4 -
Spain 2.4 - 2.4 1.8
Sweden 2.3 - 2.3 2.2
Switzerland 3.9 - 3.9 6.2
United Kingdom 14.0 - 14.0 16.3
_____________________________________________________________________________
Total Europe 48.5% - 48.5% 50.0%
_____________________________________________________________________________
Australia 1.8 - 1.8 2.6
China 0.5 - 0.5 -
Hong Kong 4.3 - 4.3 3.4
Japan 24.2 - 24.2 40.0
Malaysia 3.1 - 3.1 2.4
New Zealand 0.6 - 0.6 0.4
Singapore 2.3 - 2.3 1.2
South Korea 1.6 - 1.6 -
Thailand 0.8 - 0.8 -
_____________________________________________________________________________
Total Pacific Basin 39.2% - 39.2% 50.0%
_____________________________________________________________________________
Argentina 0.7 - 0.7 -
Brazil 2.7 - 2.7 -
Canada 0.4 - 0.4 -
Chile 0.8 - 0.8 -
Mexico 1.7 - 1.7 -
Peru 0.0 - 0.0 -
United States - 4.6 4.6 -
_____________________________________________________________________________
Total Americas 6.3% 4.6% 10.9% -
_____________________________________________________________________________
Other Assets Less Liabilities - 1.4 1.4 -
_____________________________________________________________________________
Total 94.0% 6.0% 100.0% 100.0%
! Includes bonds convertible into equities.
TOTAL RETURN PERFORMANCE
Periods Ended April 30, 1996
_____________________________________________________________________________
Calendar
One Three Year- One Three Five Since
Month Months to-Date Year Years** Years** 9/7/89**
_____________________________________________________________________________
Foreign
Equity Fund* 3.00% 5.82% 8.80% 17.77% 14.26% 11.48% 9.61%
T. Rowe Price
International
Stock Fund 3.09 5.88 8.99 17.97 14.15 11.51 9.82
S&P 500 Index 1.47 3.40 6.92 30.21 17.23 14.95 13.26
MSCI EAFE
Index 2.93 5.53 5.98 11.74 11.43 9.17 5.35***
FT-A Euro
Pacific Index 3.33 5.73 6.20 11.45 10.90 8.61 5.06***
* An "institutional only" no-load mutual fund comparable to the T. Rowe
Price International Stock Fund. Net assets $2,028.9 million.
Inception 9/07/89.
** Average annual compound total return.
*** From 8/31/89.
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
PERFORMANCE COMPARISON
As of April 30, 1996
_____________________________________________________________________________
Chart 3 - Performance Comparison
Note: The index return does not reflect expenses, which have been deducted
from the fund's return.
* MSCI EAFE Index net of withholding taxes from 8/31/89.
** Commencement of operations.
STATEMENT OF NET ASSETS
Foreign Equity Fund / April 30, 1996 (Unaudited)
Value
ARGENTINA - 0.7% (000)
COMMON STOCKS
40,335 shs Banco de Galicia Buenos Aires
(Class B) ADR (USD) . . . . . . . . . . . . $ 948
30,699 Banco Frances del Rio de la Plata ADR (USD) 883
15,093 Buenos Aires Embotelladora
(Class B) ADR (USD) . . . . . . . . . . . . 240
13,780 Enron Global Power & Pipeline (USD) . . . . 339
340,532 Naviera Perez (Class B) . . . . . . . . . . 2,118
214,150 * Sociedad Comercial del Plata . . . . . . . . 640
19,896 * Sociedad Comercial del Plata ADR
(144a) (USD) . . . . . . . . . . . . . . . . 594
114,560 Telecom Argentina Stet (Class B) . . . . . . 518
20,037 Telecom Argentina Stet (Class B)
ADR (USD) . . . . . . . . . . . . . . . . . 907
124,094 Telefonica de Argentina (Class B)
ADR (USD) . . . . . . . . . . . . . . . . . 3,630
21,200 Telefonica de Argentina (Class B)
ADS (USD) . . . . . . . . . . . . . . . . . 620
32,868 Transportadora de Gas del Sur ADR (USD) . . 423
124,967 YPF Sociedad Anonima (Class D) ADR (USD) . . 2,734
_______
Total Argentina . . . . . . . . . . . . . . . . . . . . . . 14,594
AUSTRALIA - 1.8%
COMMON STOCKS
318,000 Amcor . . . . . . . . . . . . . . . . . . . 2,283
750,273 Australia Gas & Light . . . . . . . . . . . 3,124
354,338 Broken Hill Proprietary . . . . . . . . . . 5,453
572,537 Burns Philp & Company . . . . . . . . . . . 1,174
168,789 Coca Cola Amatil . . . . . . . . . . . . . . 1,775
386,089 Howard Smith . . . . . . . . . . . . . . . . 2,244
114,017 Lend Lease . . . . . . . . . . . . . . . . . 1,738
196,000 National Australia Bank . . . . . . . . . . 1,758
430,258 News Corporation . . . . . . . . . . . . . . 2,521
441,124 Publishing and Broadcasting . . . . . . . . 2,027
641,000 Tabcorp Holdings . . . . . . . . . . . . . . 2,654
576,000 * TNT . . . . . . . . . . . . . . . . . . . . 765
522,000 Westpac Banking . . . . . . . . . . . . . . 2,534
324,258 WMC . . . . . . . . . . . . . . . . . . . . 2,364
458,000 Woodside Petroleum . . . . . . . . . . . . . 2,648
_______
35,062
_______
PREFERRED STOCKS
789,000 * Sydney Harbour Casino Holdings . . . . . . . 1,196
148,000 TNT, cum. cv., 8.00%, 5/31/97 . . . . . . . 212
_______
1,408
_______
Total Australia . . . . . . . . . . . . . . . . . . . . . . 36,470
AUSTRIA - 0.1%
COMMON STOCKS
3,530 EVN . . . . . . . . . . . . . . . . . . . . 516
15,482 Flughafen Wien . . . . . . . . . . . . . . . 1,086
_______
1,602
_______
PREFERRED STOCK
11,471 Creditanstalt Bankverein . . . . . . . . . . 641
_______
Total Austria . . . . . . . . . . . . . . . . . . . . . . 2,243
BELGIUM - 1.0%
COMMON STOCKS
13,934 Generale Banque . . . . . . . . . . . . . . 4,913
36,121 Kredietbank . . . . . . . . . . . . . . . . 10,327
2,238 UCB . . . . . . . . . . . . . . . . . . . . 3,768
_______
19,008
_______
CONVERTIBLE BOND
14,782,500 BEL Kredietbank, 5.75%, 11/30/03 . . . . . . . . $ 542
_______
Total Belgium . . . . . . . . . . . . . . . . . . . . . . 19,550
BRAZIL - 2.7%
COMMON STOCKS
58,780 shs Brazil Fund (USD) . . . . . . . . . . . . . 1,271
49,720,000 Companhia Siderurgica Nacional . . . . . . . 1,403
9,970,768 Eletrobras . . . . . . . . . . . . . . . . . 2,402
20,340 Eletrobras ADR (USD) . . . . . . . . . . . . 246
37,430,000 Telecomunicacoes Brasileiras . . . . . . . . 1,588
_______
6,910
_______
PREFERRED STOCKS AND WARRANTS
391,093,493 Banco Bradesco . . . . . . . . . . . . . . . 4,415
2,166,000 Banco Itau . . . . . . . . . . . . . . . . . 847
5,261,543 Brahma . . . . . . . . . . . . . . . . . . . 2,530
267,777 wts * Brahma, 9/30/96 . . . . . . . . . . . . . . 68
5,547,410 shs Brasmotor . . . . . . . . . . . . . . . . . 1,510
3,725,000 Cia Cimento Portland Itau . . . . . . . . . 1,070
20,600 * Cia Energetica de Sao Paulo ADS (USD) . . . 185
66,062,577 Cia Energetica Minas Gerais . . . . . . . . 1,665
16,530 * Cia Energetica Minas Gerias ADR (USD) . . . 415
23,337 * Cia Energetica Minas Gerias
ADR, cv. (USD) . . . . . . . . . . . . . . . 586
79,555 * Cia Energetica Minas Gerais ADR,
non voting (USD) . . . . . . . . . . . . . . 1,999
3,724,770 Cia Tecidos Norte de Minas . . . . . . . . . 1,562
37,644,000 Lojas Americanas . . . . . . . . . . . . . . 873
7,900,000 Petrol Brasileiros . . . . . . . . . . . . . 920
60,434,525 Telecomunicacoes Brasileiras . . . . . . . . 3,271
2,213 Telecomunicacoes Brasileiras ADR (USD) . . . 120
255,939 Telecomunicacoes Brasileiras ADR,
level II (USD) . . . . . . . . . . . . . . . 13,853
22,573,681 Telecomunicacoes de Sao Paulo . . . . . . . 4,027
51,829,000 Unibanco . . . . . . . . . . . . . . . . . . 2,215
2,500,560,000 Usiminas . . . . . . . . . . . . . . . . . . 2,848
12,540 Usiminas ADR (USD) . . . . . . . . . . . . . 143
296,810 Usiminas ADS (USD) . . . . . . . . . . . . . 3,395
_______
48,517
_______
Total Brazil . . . . . . . . . . . . . . . . . . . . . . 55,427
CANADA - 0.4%
COMMON STOCKS
151,960 Alcan Aluminum . . . . . . . . . . . . . . . 4,833
76,770 Macmillan Bloedel . . . . . . . . . . . . . 1,021
61,480 Royal Bank of Canada . . . . . . . . . . . . 1,456
_______
Total Canada . . . . . . . . . . . . . . . . . . . . . . 7,310
CHILE - 0.8%
COMMON STOCKS AND WARRANTS
10,996 AFP Providia ADR (USD) . . . . . . . . . . . 252
92,740 Chile Fund (USD) . . . . . . . . . . . . . . 2,272
33,009 Chilectra ADR (144a) (USD) . . . . . . . . . 1,815
40,191 Chilgener ADS (USD) . . . . . . . . . . . . 899
17,198 Cia de Telecomunicaciones de Chile
ADR (USD) . . . . . . . . . . . . . . . . . 1,569
26,194 Compania Cervecerias Unidas ADS (USD) . . . 557
108,717 Empresa Nacional de Electric ADS (USD) . . . 2,120
65,396 Enersis ADS (USD) . . . . . . . . . . . . . 1,946
663,410 Five Arrows Chile Investment Trust (USD) . . 1,930
36,758 wts * Five Arrows Chile Investment Trust,
5/31/99 (USD) . . . . . . . . . . . . . . . 19
66,410 shs Genesis Chile Fund (USD) . . . . . . . . . . 2,706
_______
Total Chile . . . . . . . . . . . . . . . . . . . . . . 16,085
CHINA - 0.5%
COMMON STOCKS
332,700 shs * Huaneng Power International
(Class N) ADR (USD) . . . . . . . . . . . . $ 4,824
10,407,000 Shanghai Petrochemical (Class H) (HKD) . . . 3,095
8,500,000 Yizheng Chemical Fibre (Class H) (HKD) . . . 2,280
_______
Total China . . . . . . . . . . . . . . . . . . . . . . 10,199
CZECH REPUBLIC - 0.1%
COMMON STOCK
8,781 * SPT Telecom . . . . . . . . . . . . . . . . 1,075
DENMARK - 0.2%
COMMON STOCKS
37,470 Den Danske Bank . . . . . . . . . . . . . . 2,444
13,050 Tele Danmark (Class B) . . . . . . . . . . . 657
33,911 Unidanmark (Class A) . . . . . . . . . . . . 1,511
_______
Total Denmark . . . . . . . . . . . . . . . . . . . . . . 4,612
FINLAND - 0.1%
COMMON STOCK
67,160 Nokia (Class A) . . . . . . . . . . . . . . 2,399
FRANCE - 7.5%
COMMON STOCKS AND WARRANTS
26,090 Accor . . . . . . . . . . . . . . . . . . . 3,625
20,800 Alcatel Alsthom . . . . . . . . . . . . . . 1,956
52,132 Assurances Generales de France . . . . . . . 1,424
8,100 Canal Plus . . . . . . . . . . . . . . . . . 1,984
18,525 Carrefour . . . . . . . . . . . . . . . . . 14,476
10,359 Castorama Dubois . . . . . . . . . . . . . . 1,983
15,368 Chargeurs . . . . . . . . . . . . . . . . . 4,089
60,866 Cie de St. Gobain . . . . . . . . . . . . . 7,291
33,086 Credit Local de France . . . . . . . . . . . 2,613
192,562 Eaux Cie Generale . . . . . . . . . . . . . 20,942
29,532 Ecco . . . . . . . . . . . . . . . . . . . . 6,635
648 Ecco Travail Temporaire . . . . . . . . . . 54
78,150 Elf Aquitaine . . . . . . . . . . . . . . . 5,812
25,080 GTM Entrepose . . . . . . . . . . . . . . . 1,616
16,982 Guilbert . . . . . . . . . . . . . . . . . . 2,790
22,490 Havas . . . . . . . . . . . . . . . . . . . 1,868
1,339 Hermes International . . . . . . . . . . . . 355
7,832 L'Oreal . . . . . . . . . . . . . . . . . . 2,421
50,720 Lapeyre . . . . . . . . . . . . . . . . . . 2,796
9,846 Legrand . . . . . . . . . . . . . . . . . . 1,915
54,146 LVMH . . . . . . . . . . . . . . . . . . . . 13,852
40,153 Pinault Printemps . . . . . . . . . . . . . 12,192
50,460 Poliet . . . . . . . . . . . . . . . . . . . 5,175
27,076 Primagaz . . . . . . . . . . . . . . . . . . 2,903
2,012 wts * Primagaz, 6/30/98 . . . . . . . . . . . . . 39
6,340 shs Promodes . . . . . . . . . . . . . . . . . . 1,822
11,290 Rexel . . . . . . . . . . . . . . . . . . . 2,707
29,884 Sanofi . . . . . . . . . . . . . . . . . . . 2,412
40,320 * Schneider . . . . . . . . . . . . . . . . . 1,879
12,790 Societe Generale de France . . . . . . . . . 1,485
11,550 Sodexho . . . . . . . . . . . . . . . . . . 4,580
97,576 Television Francaise . . . . . . . . . . . . 10,574
89,180 Total (Class B) . . . . . . . . . . . . . . 6,052
_______
Total France . . . . . . . . . . . . . . . . . . . . . . 152,317
GERMANY - 4.1%
COMMON STOCKS AND WARRANTS
6,250 Allianz Holdings . . . . . . . . . . . . . . 10,680
13,000 wts * Allianz Holdings, 2/23/98 . . . . . . . . . $ 603
1,686 shs Altana . . . . . . . . . . . . . . . . . . . 1,040
34,677 Bayer . . . . . . . . . . . . . . . . . . . 11,132
6,356 Bilfinger & Berger . . . . . . . . . . . . . 2,406
4,012 Buderus . . . . . . . . . . . . . . . . . . 1,468
91,060 Deutsche Bank . . . . . . . . . . . . . . . 4,334
20,983 Gehe . . . . . . . . . . . . . . . . . . . . 12,116
3,503 * Gehe, new . . . . . . . . . . . . . . . . . 1,995
7,035 Hoechst . . . . . . . . . . . . . . . . . . 2,279
14,770 Hornbach Baumarkt . . . . . . . . . . . . . 560
10,227 Mannesmann . . . . . . . . . . . . . . . . . 3,494
32,915 Praktiker . . . . . . . . . . . . . . . . . 737
43,234 Rhoen Klinikum . . . . . . . . . . . . . . . 5,225
41,862 Schering . . . . . . . . . . . . . . . . . . 3,030
6,224 Siemens . . . . . . . . . . . . . . . . . . 3,408
172,030 Veba . . . . . . . . . . . . . . . . . . . . 8,551
13,526 wts * Veba, 4/06/98 . . . . . . . . . . . . . . . 3,242
4,834 shs Volkswagen . . . . . . . . . . . . . . . . . 1,658
_______
77,958
_______
PREFERRED STOCKS
27,225 Fielmann . . . . . . . . . . . . . . . . . . 1,196
32,830 Hornbach . . . . . . . . . . . . . . . . . . 2,102
4,621 Krones . . . . . . . . . . . . . . . . . . . 1,612
_______
4,910
_______
Total Germany . . . . . . . . . . . . . . . . . . . . . . 82,868
HONG KONG - 4.3%
COMMON STOCKS
1,342,000 Dao Heng Bank Group . . . . . . . . . . . . 5,135
7,292,000 First Pacific . . . . . . . . . . . . . . . 9,709
5,846,000 Guangdong Investment . . . . . . . . . . . . 3,609
20,598,000 Guangzhou Investment . . . . . . . . . . . . 5,113
1,431,000 Guoco Group . . . . . . . . . . . . . . . . 7,122
5,680,478 Hong Kong Land Holdings (USD) . . . . . . . 12,156
15,148,000 Hopewell Holdings . . . . . . . . . . . . . 9,253
1,552,000 Hutchison Whampoa . . . . . . . . . . . . . 9,630
1,958,000 New World Development . . . . . . . . . . . 8,783
987,000 Swire Pacific (Class A) . . . . . . . . . . 8,421
2,451,000 Wharf Holdings . . . . . . . . . . . . . . . 9,078
_______
Total Hong Kong . . . . . . . . . . . . . . . . . . . . . . 88,009
ITALY - 1.9%
COMMON STOCKS AND WARRANTS
602 Alleanza Assicurazioni, savings shares . . . 4
318,761 Assicurazioni Generali . . . . . . . . . . . 7,949
2,056,300 Banca Fideuram . . . . . . . . . . . . . . . 3,554
177,983 Danieli & Company, savings shares . . . . . 640
17,945 wts * Danieli & Company, 11/30/99 . . . . . . . . 16
440,000 shs * ENI . . . . . . . . . . . . . . . . . . . . 1,901
152,088 * Finanziaria Autogrill . . . . . . . . . . . 162
118,467 IMI . . . . . . . . . . . . . . . . . . . . 941
10,150 Industrie Natuzzi ADR (USD) . . . . . . . . 528
555,000 Istituto Nazionale delle Assicurazioni . . . 853
552,325 Italgas . . . . . . . . . . . . . . . . . . 1,909
25,961 RAS . . . . . . . . . . . . . . . . . . . . 290
202,500 Rinascente . . . . . . . . . . . . . . . . . 1,401
299,282 Sasib, savings shares . . . . . . . . . . . 583
152,088 SME . . . . . . . . . . . . . . . . . . . . 169
1,564,680 Stet . . . . . . . . . . . . . . . . . . . . 5,289
661,120 Stet, savings shares . . . . . . . . . . . . 1,733
1,494,258 Telecom Italia . . . . . . . . . . . . . . . 3,047
2,715,866 shs * Telecom Italia Mobile . . . . . . . . . . . $ 5,999
872,266 * Telecom Italia Mobile, savings shares . . . 1,223
84,206 * Unicem . . . . . . . . . . . . . . . . . . . 577
_______
38,768
_______
CORPORATE BOND
107,670,000 ITL Danieli & Company, 7.25%, 1/01/00 . . . . . 62
_______
Total Italy . . . . . . . . . . . . . . . . . . . . . . 38,830
JAPAN - 24.2%
COMMON STOCKS
29,800 shs Advantest . . . . . . . . . . . . . . . . . 1,479
318,000 Alps Electric . . . . . . . . . . . . . . . 3,739
695,000 Amada . . . . . . . . . . . . . . . . . . . 8,106
773,000 Canon . . . . . . . . . . . . . . . . . . . 15,371
398,000 Citizen Watch . . . . . . . . . . . . . . . 3,481
126,000 Daifuku . . . . . . . . . . . . . . . . . . 1,987
566,000 Daiichi Pharmaceutical . . . . . . . . . . . 9,523
611,000 DaiNippon Screen Manufacturing . . . . . . . 6,191
715,000 Daiwa House . . . . . . . . . . . . . . . . 11,415
925 DDI . . . . . . . . . . . . . . . . . . . . 7,950
1,949 East Japan Railway . . . . . . . . . . . . . 10,415
153,000 Fanuc . . . . . . . . . . . . . . . . . . . 6,655
952,000 Hitachi . . . . . . . . . . . . . . . . . . 10,284
862,000 Hitachi Zosen . . . . . . . . . . . . . . . 4,730
132,000 Honda Motor . . . . . . . . . . . . . . . . 3,016
288,000 Inax . . . . . . . . . . . . . . . . . . . . 3,139
270,000 * Ishihara Sangyo Kaisha . . . . . . . . . . . 1,001
200,000 Ito-Yokado . . . . . . . . . . . . . . . . . 11,797
107,000 Kawada Industries . . . . . . . . . . . . . 972
288,000 Kokuyo . . . . . . . . . . . . . . . . . . . 7,984
776,000 Komatsu . . . . . . . . . . . . . . . . . . 7,493
244,000 Komori . . . . . . . . . . . . . . . . . . . 6,485
541,000 Kumagai Gumi . . . . . . . . . . . . . . . . 2,322
593,000 Kuraray . . . . . . . . . . . . . . . . . . 6,859
250,000 Kyocera . . . . . . . . . . . . . . . . . . 18,833
462,000 Makita . . . . . . . . . . . . . . . . . . . 7,464
525,000 Marui . . . . . . . . . . . . . . . . . . . 11,594
673,000 Matsushita Electric Industrial . . . . . . . 11,902
452,000 Mitsubishi . . . . . . . . . . . . . . . . . 6,438
1,995,000 Mitsubishi Heavy Industries . . . . . . . . 17,813
392,000 Mitsubishi Paper Mills . . . . . . . . . . . 2,518
1,123,000 Mitsui Fudosan . . . . . . . . . . . . . . . 14,815
269,000 Mitsui Petrochemical Industries . . . . . . 2,271
265,000 Murata Manufacturing . . . . . . . . . . . . 10,285
170,000 National House Industrial . . . . . . . . . 3,007
1,393,000 NEC . . . . . . . . . . . . . . . . . . . . 17,711
761,000 Nippon Denso . . . . . . . . . . . . . . . . 16,587
148,000 Nippon Hodo . . . . . . . . . . . . . . . . 2,632
3,336,000 Nippon Steel . . . . . . . . . . . . . . . . 12,055
904 Nippon Telephone & Telecom . . . . . . . . . 7,009
682,000 Nomura Securities . . . . . . . . . . . . . 14,865
376,000 Pioneer Electronic . . . . . . . . . . . . . 8,411
111,000 Sangetsu . . . . . . . . . . . . . . . . . . 2,759
524,000 Sankyo . . . . . . . . . . . . . . . . . . . 12,724
101,150 Sega Enterprises . . . . . . . . . . . . . . 5,164
706,000 Sekisui Chemical . . . . . . . . . . . . . . 8,909
548,000 Sekisui House . . . . . . . . . . . . . . . 6,810
81,000 Seven Eleven Japan . . . . . . . . . . . . . 5,738
668,000 Sharp . . . . . . . . . . . . . . . . . . . 11,622
401,950 Shin-Etsu Chemical . . . . . . . . . . . . . 8,799
204,900 Sony . . . . . . . . . . . . . . . . . . . . 13,320
1,029,000 shs Sumitomo . . . . . . . . . . . . . . . . . . $ 12,296
973,000 Sumitomo Electric . . . . . . . . . . . . . 13,953
360,000 Sumitomo Forestry . . . . . . . . . . . . . 5,541
184,000 TDK . . . . . . . . . . . . . . . . . . . . 10,536
1,414,000 Teijin . . . . . . . . . . . . . . . . . . . 7,773
307,000 Tokio Marine & Fire Insurance . . . . . . . 4,226
113,000 Tokyo Electronics . . . . . . . . . . . . . 4,202
325,000 Tokyo Steel Manufacturing . . . . . . . . . 6,556
548,000 Toppan Printing . . . . . . . . . . . . . . 8,068
147,000 Yurtec . . . . . . . . . . . . . . . . . . . 2,782
_______
Total Japan . . . . . . . . . . . . . . . . . . . . . . 490,382
MALAYSIA - 3.1%
COMMON STOCKS, RIGHTS, AND WARRANTS
4,412,000 Affin Holdings . . . . . . . . . . . . . . . 10,883
604,000 wts * Affin Holdings, 11/15/99 . . . . . . . . . . 635
1,451,000 shs Berjaya Sports Toto . . . . . . . . . . . . 4,656
707,333 wts * Commerce Asset Holdings, 6/27/98 . . . . . . 2,837
2,608,000 shs MBF Capital . . . . . . . . . . . . . . . . 3,912
4,307,000 Multi-Purpose Holdings . . . . . . . . . . . 7,497
3,722,000 Renong . . . . . . . . . . . . . . . . . . . 6,479
696,200 rts * Renong, rights cv. into loan stock . . . . . 4
435,125 * Renong, rights cv. into warrants . . . . . . 122
767,000 shs Tanjong . . . . . . . . . . . . . . . . . . 2,922
4,160,000 Technology Resources Industries . . . . . . 14,182
1,423,000 United Engineers . . . . . . . . . . . . . . 9,759
_______
Total Malaysia . . . . . . . . . . . . . . . . . . . . . . 63,888
MEXICO - 1.7%
COMMON STOCKS
325,840 Cemex (Class B) . . . . . . . . . . . . . . 1,382
95,160 * Cemex ADS (USD) . . . . . . . . . . . . . . 749
410,812 * Cemex (144a) ADS (USD) . . . . . . . . . . . 3,235
3,729,827 * Cifra (Class B) ADR (USD) . . . . . . . . . 5,017
678,962 Fomentos Economico Mexicano (Class B) . . . 2,047
564,920 * Gruma (Class B) . . . . . . . . . . . . . . 2,281
554,992 * Grupo Embotellador de Mexico . . . . . . . . 844
768,552 * Grupo Financiero Banamex (Class B) . . . . . 1,771
31,801 * Grupo Financiero Banamex (Class L) . . . . . 65
8,266 * Grupo Financiero Bancomer (Class L) . . . . 3
1,247,467 Grupo Industrial Maseca (Class B) . . . . . 1,219
111,794 Grupo Modelo (Class C) . . . . . . . . . . . 526
64,492 * Grupo Televisa GDR (USD) . . . . . . . . . . 1,999
130,087 Kimberly-Clark Mexico (Class A) . . . . . . 2,381
64,584 Panamerican Beverages (Class A) ADR (USD) . 2,834
209,184 Telefonos de Mexico (Class L) ADS (USD) . . 7,112
_______
Total Mexico . . . . . . . . . . . . . . . . . . . . . . 33,465
NETHERLANDS - 9.1%
COMMON STOCKS
161,040 ABN Amro Holdings . . . . . . . . . . . . . 8,336
94,998 Ahold . . . . . . . . . . . . . . . . . . . 4,685
16,188 Akzo Nobel . . . . . . . . . . . . . . . . . 1,880
204,770 CSM . . . . . . . . . . . . . . . . . . . . 9,871
2,163,948 Elsevier . . . . . . . . . . . . . . . . . . 32,582
89,151 Fortis AMEV . . . . . . . . . . . . . . . . 6,368
38,420 Hagemeyer . . . . . . . . . . . . . . . . . 2,630
198,726 Internationale Nederlanden Groep . . . . . . 15,344
77,335 Koninklijke PTT Nederland . . . . . . . . . 2,902
31,794 Nutricia . . . . . . . . . . . . . . . . . . 3,397
215,999 Polygram . . . . . . . . . . . . . . . . . . 12,858
223,287 shs Royal Dutch Petroleum . . . . . . . . . . . $ 31,809
68,206 Unilever . . . . . . . . . . . . . . . . . . 9,307
390,023 Wolters Kluwer . . . . . . . . . . . . . . . 42,633
_______
184,602
_______
PREFERRED STOCK
10,797 Internationale Nederlanden Groep . . . . . . 57
_______
Total Netherlands . . . . . . . . . . . . . . . . . . . . . . 184,659
NEW ZEALAND - 0.6%
COMMON STOCKS
511,736 Air New Zealand (Class B) . . . . . . . . . 1,793
663,115 Carter Holt Harvey . . . . . . . . . . . . . 1,572
393,080 Fernz . . . . . . . . . . . . . . . . . . . 1,215
158,044 * Fletcher Challenge Building . . . . . . . . 375
158,044 * Fletcher Challenge Energy . . . . . . . . . 339
316,089 * Fletcher Challenge Paper . . . . . . . . . . 651
1,258,094 Fletcher Challenge, Forests Division . . . . 1,625
978,372 Telecom Corporation of New Zealand . . . . . 4,153
_______
Total New Zealand . . . . . . . . . . . . . . . . . . . . . . 11,723
NORWAY - 1.4%
COMMON STOCKS
46,430 Bergesen (Class A) . . . . . . . . . . . . . 834
29,059 Kvaerner (Class A) . . . . . . . . . . . . . 1,194
325,232 Norsk Hydro . . . . . . . . . . . . . . . . 14,852
208,340 Orkla (Class A) . . . . . . . . . . . . . . 10,180
57,910 Saga Petroleum (Class B) . . . . . . . . . . 784
_______
Total Norway . . . . . . . . . . . . . . . . . . . . . . 27,844
PERU - 0.0%
COMMON STOCK
316,910 Telefonica de Peru (Class B) . . . . . . . . 709
PORTUGAL - 0.4%
COMMON STOCK
108,734 Jeronimo Martins . . . . . . . . . . . . . . 8,741
SINGAPORE - 2.3%
COMMON STOCKS AND WARRANTS
973,000 DBS Land . . . . . . . . . . . . . . . . . . 3,945
257,000 Development Bank of Singapore . . . . . . . 3,254
295,000 Far East Levingston Shipbuilding . . . . . . 1,721
154,400 Fraser & Neave . . . . . . . . . . . . . . . 1,713
347,000 Jurong Shipyard . . . . . . . . . . . . . . 1,987
177,000 Keppel . . . . . . . . . . . . . . . . . . . 1,599
828,000 Neptune Orient Lines . . . . . . . . . . . . 919
1,008,000 Overseas Union Bank . . . . . . . . . . . . 7,816
175,000 Overseas Union Enterprises . . . . . . . . . 1,002
281,000 Sembawang . . . . . . . . . . . . . . . . . 1,459
86,000 Singapore Airlines . . . . . . . . . . . . . 869
1,006,000 Singapore Land . . . . . . . . . . . . . . . 7,156
203,820 Singapore Press . . . . . . . . . . . . . . 3,857
1,458,000 United Industrial . . . . . . . . . . . . . 1,483
742,352 United Overseas Bank . . . . . . . . . . . . 7,234
192,940 wts * United Overseas Bank, 6/17/97 . . . . . . . 823
_______
Total Singapore . . . . . . . . . . . . . . . . . . . . . . 46,837
SOUTH KOREA - 1.6%
COMMON STOCKS
170,000 shs Cho Hung Bank . . . . . . . . . . . . . . . 2,642
107,000 shs Hanil Bank . . . . . . . . . . . . . . . . . $ 1,482
98,987 Hanil Securities . . . . . . . . . . . . . . 1,615
98,238 Kook Min Bank . . . . . . . . . . . . . . . 2,439
136,400 Korea Electric Power . . . . . . . . . . . . 6,516
50,660 Pohang Iron & Steel . . . . . . . . . . . . 4,784
24,867 Samsung Electronic . . . . . . . . . . . . . 3,387
22,266 * Samsung Electronic GDR (USD) . . . . . . . . 876
1,464 * Samsung Electronic GDS (USD) . . . . . . . . 97
69,887 Samsung Electronic GDS,
1/2 non voting (USD) . . . . . . . . . . . . 2,918
4,859 Samsung Electronic GDS, 1/2 voting (USD) . . 369
6,379 Samsung Electronic, new . . . . . . . . . . 848
250 Samsung Fire & Marine Insurance . . . . . . 180
138,000 * Seoul Bank . . . . . . . . . . . . . . . . . 1,264
11,760 Shinhan Bank . . . . . . . . . . . . . . . . 299
46,122 Yukong . . . . . . . . . . . . . . . . . . . 1,719
_______
Total South Korea . . . . . . . . . . . . . . . . . . . . . . 31,435
SPAIN - 2.4%
COMMON STOCKS
67,680 Argentaria Banca de Espana . . . . . . . . . 2,740
33,181 Banco Popular Espanol . . . . . . . . . . . 5,499
111,053 Banco Santander . . . . . . . . . . . . . . 5,160
91,773 Centros Comerciales Pryca . . . . . . . . . 2,118
194,338 Empresa Nacional de Electricidad . . . . . . 12,207
11,758 Fomento de Construcciones y Contra . . . . . 1,003
34,818 Gas Natural . . . . . . . . . . . . . . . . 6,328
455,956 Iberdrola . . . . . . . . . . . . . . . . . 4,463
236,852 Repsol . . . . . . . . . . . . . . . . . . . 8,686
_______
Total Spain . . . . . . . . . . . . . . . . . . . . . . 48,204
SWEDEN - 2.3%
COMMON STOCKS
38,170 Asea (Class A) . . . . . . . . . . . . . . . 3,906
421,807 Astra (Class B) . . . . . . . . . . . . . . 18,629
198,882 Atlas Copco (Class B) . . . . . . . . . . . 3,783
131,287 Electrolux (Class B) . . . . . . . . . . . . 6,621
49,870 Esselte (Class B) . . . . . . . . . . . . . 1,000
55,261 Hennes & Mauritz (Class B) . . . . . . . . . 3,814
40,050 Sandvik (Class A) . . . . . . . . . . . . . 883
224,880 Sandvik (Class B) . . . . . . . . . . . . . 4,957
49,060 Scribona (Class B) . . . . . . . . . . . . . 470
147,510 Stora Kopparbergs (Class B) . . . . . . . . 1,979
_______
Total Sweden . . . . . . . . . . . . . . . . . . . . . . 46,042
SWITZERLAND - 3.9%
COMMON STOCKS
10,970 BBC Brown Boveri . . . . . . . . . . . . . . 13,218
7,120 Ciba-Geigy . . . . . . . . . . . . . . . . . 8,263
36,245 CS Holding . . . . . . . . . . . . . . . . . 3,291
15,803 Nestle . . . . . . . . . . . . . . . . . . . 17,577
2,450 Roche Holdings . . . . . . . . . . . . . . . 19,269
9,485 Sandoz . . . . . . . . . . . . . . . . . . . 10,359
1,674 Schweizerische Bankgesellschaft . . . . . . 1,664
15,697 Schweizerischer Bankverein . . . . . . . . . 5,879
_______
Total Switzerland . . . . . . . . . . . . . . . . . . . . . . 79,520
THAILAND - 0.8%
COMMON STOCKS
139,974 Advanced Information Service . . . . . . . . 2,373
295,817 Bangkok Bank . . . . . . . . . . . . . . . . 4,289
284,197 Bank of Ayudhya . . . . . . . . . . . . . . 1,677
46,940 shs Land & Houses . . . . . . . . . . . . . . . $ 725
26,025 Siam Cement . . . . . . . . . . . . . . . . 1,340
228,627 Siam Commercial Bank . . . . . . . . . . . . 3,369
197,576 Thai Farmers Bank . . . . . . . . . . . . . 2,270
105,630 Total Access Communications (USD) . . . . . 930
_______
Total Thailand . . . . . . . . . . . . . . . . . . . . . . 16,973
UNITED KINGDOM - 14.0%
COMMON STOCKS
1,478,440 Abbey National . . . . . . . . . . . . . . . 12,641
942,000 Argos . . . . . . . . . . . . . . . . . . . 9,132
1,231,200 Argyll Group . . . . . . . . . . . . . . . . 6,144
4,059,530 Asda Group . . . . . . . . . . . . . . . . . 6,936
195,000 BAA . . . . . . . . . . . . . . . . . . . . 1,606
788,200 British Gas . . . . . . . . . . . . . . . . 2,788
488,000 British Petroleum . . . . . . . . . . . . . 4,397
1,482,200 Cable & Wireless . . . . . . . . . . . . . . 11,647
1,118,578 Cadbury Schweppes . . . . . . . . . . . . . 8,705
1,822,350 Caradon . . . . . . . . . . . . . . . . . . 6,310
709,000 Coats Viyella . . . . . . . . . . . . . . . 2,033
557,000 Compass Group . . . . . . . . . . . . . . . 4,570
978,500 David S. Smith . . . . . . . . . . . . . . . 4,404
434,619 East Midlands Electricity . . . . . . . . . 4,089
310,000 Electrocomponents . . . . . . . . . . . . . 1,853
110,000 GKN . . . . . . . . . . . . . . . . . . . . 1,631
876,650 Glaxo Wellcome . . . . . . . . . . . . . . . 10,623
1,590,000 Grand Metropolitan . . . . . . . . . . . . . 10,412
1,354,000 Guinness . . . . . . . . . . . . . . . . . . 9,763
249,576 Heywood Williams Group . . . . . . . . . . . 928
573,300 Hillsdown Holdings . . . . . . . . . . . . . 1,553
594,300 John Laing (Class A) . . . . . . . . . . . . 2,755
1,308,977 Kingfisher . . . . . . . . . . . . . . . . . 11,724
982,000 Ladbroke Group . . . . . . . . . . . . . . . 2,883
524,288 London Electricity . . . . . . . . . . . . . 6,511
799,800 National Grid Group . . . . . . . . . . . . 2,480
2,447,490 National Westminster Bank . . . . . . . . . 22,622
1,075,000 Rank Organisation . . . . . . . . . . . . . 8,658
1,307,570 Reed International . . . . . . . . . . . . . 22,400
543,851 Rolls Royce . . . . . . . . . . . . . . . . 1,932
646,960 RTZ . . . . . . . . . . . . . . . . . . . . 10,160
504,000 Sears . . . . . . . . . . . . . . . . . . . 759
1,102,000 Shell Transport & Trading . . . . . . . . . 14,532
2,179,560 Smithkline Beecham . . . . . . . . . . . . . 23,033
103,888 Spring Ram . . . . . . . . . . . . . . . . . 40
1,224,000 T & N . . . . . . . . . . . . . . . . . . . 3,298
968,903 Tesco . . . . . . . . . . . . . . . . . . . 4,098
3,031,080 Tomkins . . . . . . . . . . . . . . . . . . 12,479
1,154,620 United Newspapers . . . . . . . . . . . . . 12,045
_______
Total United Kingdom . . . . . . . . . . . . . . . . . . . . . . 284,574
SHORT-TERM INVESTMENTS - 4.6%
COMMERCIAL PAPER
$10,000,000 Bank One Milwaukee, 5.32%, 6/07/96 . . . . . 10,000
10,000,000 Barnett Banks, 5.32%, 5/15/96 . . . . . . . 9,972
10,000,000 Bex America Finance, 5.03%, 6/06/96 . . . . 9,832
10,000,000 Delaware Funding, 4(2), 5.30%, 5/03/96 . . . 9,994
10,000,000 Korea Development Bank, 5.09%, 5/28/96 . . . 9,870
10,000,000 National Australia Funding (Delaware),
5.33%, 5/09/96 . . . . . . . . . . . . . . . 9,956
4,004,202 Investments in Commercial Paper through a
joint account, 5.36 - 5.37%, 5/01/96 . . . . 4,004
_______
63,628
OTHER
$10,000,000 Federal National Mortgage Association,
Floating Rate Medium-Term Note,
9/27/96 (Currently 5.565%) . . . . . . . . . $ 10,000
10,000,000 SMM Trust, Floating Rate Medium-Term Note,
3/26/97 (Currently 5.487%) . . . . . . . . . 9,999
10,000,000 Societe Generale, Certificate of Deposit,
5.39%, 6/14/96 . . . . . . . . . . . . . . . 10,000
_________
29,999
_________
Total Short-Term Investments . . . . . . . . . . . . . . . . . . 93,627
Total Investments in Securities - 98.6% of Net Assets
(Cost $1,731,806) $2,000,611
Other Assets Less Liabilities. . . . . . . . . . . . . . . . . . 28,318
_________
Net Assets Consist of: Value
(000)
_________
Accumulated net investment income -
net of distributions . . . . . . . . . . . . . . . $ 15,889
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . . . . . . 31,864
Net unrealized gain (loss) . . . . . . . . . . . . 268,711
Paid-in-capital applicable to 131,254,585
shares of $0.01 par value capital stock
outstanding; 1,000,000,000 shares authorized . . . 1,712,465
_________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,028,929
_________
_________
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . . . . . . . . $ 15.46
______
______
* Non-income producing
BEL Belgian franc
HKD Hong Kong dollar
ITL Italian lira
USD U.S. dollar
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
0.3% of net assets.
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."
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS
Foreign Equity Fund (Unaudited)
(in thousands)
6 Months
Ended
4/30/96
_________
INVESTMENT INCOME
Income
Dividend (net of foreign taxes of $2,659) . . . . . . . $ 20,126
Interest. . . . . . . . . . . . . . . . . . . . . . . . 2,987
________
Total income. . . . . . . . . . . . . . . . . . . . . . 23,113
________
Expenses
Investment management . . . . . . . . . . . . . . . . . 6,241
Custody and accounting. . . . . . . . . . . . . . . . . 390
Registration. . . . . . . . . . . . . . . . . . . . . . 164
Legal and audit . . . . . . . . . . . . . . . . . . . . 17
Directors . . . . . . . . . . . . . . . . . . . . . . . 8
Prospectus and shareholder reports. . . . . . . . . . . 5
Shareholder servicing . . . . . . . . . . . . . . . . . 3
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 3
________
Total expenses. . . . . . . . . . . . . . . . . . . . . 6,831
________
Net investment income. . . . . . . . . . . . . . . . . . . 16,282
________
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss)
Securities. . . . . . . . . . . . . . . . . . . . . . . 36,573
Foreign currency transactions . . . . . . . . . . . . . (667)
________
Net realized gain (loss). . . . . . . . . . . . . . . . 35,906
________
Change in net unrealized gain or loss
Securities. . . . . . . . . . . . . . . . . . . . . . . 173,191
Other assets and liabilities denominated
in foreign currencies . . . . . . . . . . . . . . . . . (88)
________
Change in net unrealized gain or loss . . . . . . . . . 173,103
________
Net realized and unrealized gain (loss). . . . . . . . . . 209,009
________
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS. . . . . $ 225,291
________
________
The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS
Foreign Equity Fund (Unaudited)
(in thousands)
6 Months Year
Ended Ended
4/30/96 10/31/95
__________ __________
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income . . . . . . . . . . . $ 16,282 $ 20,980
Net realized gain (loss). . . . . . . . . . 35,906 19,425
Change in net unrealized gain or loss . . . 173,103 (19,253)
__________ __________
Increase (decrease) in net assets
from operations . . . . . . . . . . . . . . 225,291 21,152
__________ __________
Distributions to shareholders
Net investment income . . . . . . . . . . . (21,229) (9,573)
Net realized gain . . . . . . . . . . . . . (21,229) (41,487)
__________ __________
Decrease in net assets
from distributions. . . . . . . . . . . . . (42,458) (51,060)
__________ __________
Capital share transactions*
Shares sold . . . . . . . . . . . . . . . . 376,304 632,538
Distributions reinvested. . . . . . . . . . 30,404 35,819
Shares redeemed . . . . . . . . . . . . . . (120,231) (137,308)
__________ __________
Increase (decrease) in net assets from
capital share transactions. . . . . . . . . 286,477 531,049
__________ __________
NET ASSETS
Increase (decrease) during period. . . . . . . 469,310 501,141
Beginning of period. . . . . . . . . . . . . . 1,559,619 1,058,478
__________ __________
End of period. . . . . . . . . . . . . . . . . $2,028,929 $1,559,619
__________ __________
__________ __________
*Share information
Shares sold . . . . . . . . . . . . . . . . 25,771 46,409
Distributions reinvested. . . . . . . . . . 2,138 2,775
Shares redeemed . . . . . . . . . . . . . . (8,131) (10,263)
__________ __________
Increase (decrease) in
shares outstanding. . . . . . . . . . . . . 19,778 38,921
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
Foreign Equity Fund / April 30, 1996 (Unaudited)
Note 1 - Significant Accounting Policies
T. Rowe Price Institutional International Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940. The Foreign Equity Fund
(the fund), a diversified, open-end management investment company, is the sole
portfolio currently established by the Corporation and commenced operations on
September 7, 1989.
Valuation - Equity securities listed or regularly traded on a securities
exchange (including Nasdaq) are valued at the last quoted sales price at the
time the valuations are made. A security which is listed or traded on more
than one exchange is valued at the quotation on the exchange determined to be
the primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and
are valued at a price deemed best to reflect fair value as quoted by dealers
who make markets in these securities or by an independent pricing service.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the
U.S. dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
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.
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, 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.
Other - Purchases and sales of portfolio securities, other than short-term
securities, aggregated $432,130,000 and $180,172,000, respectively, for the
six months ended April 30, 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.
At April 30, 1996, the aggregate cost of investments for federal income
tax and financial reporting purposes was $1,731,806,000 and net unrealized
gain aggregated $268,805,000, of which $310,983,000 related to appreciated
investments and $42,178,000 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
$1,133,000 was payable at April 30, 1996. The fee is computed daily and paid
monthly, and is equal to 0.70% of average daily net assets.
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., 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. The fund
incurred expenses pursuant to these related party agreements totaling
approximately $53,000 for the six months ended April 30, 1996, of which
$26,000 was payable at period-end.
During the six months ended April 30, 1996, the fund, in the ordinary
course of business, paid commissions of $129,000 to, and placed security
purchase and sale orders aggregating $45,986,000 with, certain affiliates of
the Manager in connection with the execution of various portfolio
transactions.
During fiscal year 1995, Price Waterhouse LLP succeeded Coopers & Lybrand,
L.L.P. as independent accountants for the Foreign Equity Fund, a decision that
was approved by the fund's Board of Directors. During fiscal years 1993 and
1994, the fund has received unqualified opinions and has had no disagreements
with Coopers & Lybrand, L.L.P. or reportable events that caused the change.
FINANCIAL HIGHLIGHTS
Foreign Equity Fund (Unaudited)
For a share outstanding throughout each period
_____________________________________________________________________________
6 Months Year 10 Months# Year
Ended Ended Ended Ended
4/30/96 10/31/95 10/31/94 10/31/93 12/31/92 12/31/91 12/31/90
_______ _______ _______ _______ _______ _______ _______
NET ASSET VALUE,
BEGINNING OF
PERIOD $13.99 $14.59 $13.32 $10.05 $10.73 $ 9.54 $10.62
______ ______ ______ ______ ______ ______ ______
Investment activities
Net investment
income 0.11 0.18 0.09 0.13 0.17 0.18* 0.23*
Net realized and
unrealized
gain (loss) 1.72 (0.14)+ 1.48 3.14 (0.57) 1.28 (1.10)
______ ______ ______ ______ ______ ______ ______
Total from
investment
activities 1.83 0.04 1.57 3.27 (0.40) 1.46 (0.87)
______ ______ ______ ______ ______ ______ ______
Distributions
Net investment
income (0.18) (0.12) (0.09) - (0.18) (0.18) (0.21)
Net realized
gain (0.18) (0.52) (0.21) - (0.10) (0.09) -
______ ______ ______ ______ ______ ______ ______
Total dis-
tributions (0.36) (0.64) (0.30) - (0.28) (0.27) (0.21)
______ ______ ______ ______ ______ ______ ______
NET ASSET VALUE
END OF PERIOD $15.46 $13.99 $14.59 $13.32 $10.05 $10.73 $ 9.54
______ ______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total return 13.3% 0.6% 12.0% 32.5% (3.7)% 15.4%* (8.2)%*
Ratio of expenses
to average
net assets 0.77%! 0.80% 0.82% 0.86%! 0.99% 1.00%* 1.01%*
Ratio of net
investment income
to average
net assets 1.82%! 1.69% 1.26% 1.65%! 1.49% 1.64%* 2.23%*
Portfolio
turnover rate 21.4%! 18.8% 22.0% 27.4%! 35.1% 46.7% 44.6%
Average commission
rate paid $0.0076 - - - - - -
Net assets,
end of period
(in millions) $2,029 $1,560 $1,058 $489 $239 $144 $84
* Excludes expenses in excess of a 1.10% voluntary expense limitation in
effect through 2/28/90, and a 1.00% voluntary expense limitation in effect
from 3/01/90 through 12/31/91.
! Annualized.
# The fund's fiscal year-end was changed to 10/31.
+ The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout
the period. This amount is inconsistent with the fund's aggregate gains and
losses because of the timing of sales and redemptions of the fund's shares
in relation to fluctuating market values for the investment portfolio.
Chart 1 - Geographic Diversification - pie chart showing: Europe 49%, Japan
24%, Far East 15%, Latin America 6%, Other and Reserves 6%.
Chart 2 - Correlation of Returns - A bar chart showing the correlation of
total returns of various international countries with the US stock market from
1981-1990 and from 1986-1995.
Footnote: Percentage of time that foreign markets moved in the same direction
as the U.S. market. Sources: Morgan Stanley Capital International indexes,
Standard & Poor's 500 Stock Index, and Frank Russell Company.
Chart 3 - Performance Comparison - A two-line graph showing performance of a
$10,000 investment in the Foreign Equity Fund and the MSCI EAFE Index from
9/7/89 through 4/30/96.
