LETTER TO SHAREHOLDERS
Dear Shareholder:
As May 31, 1994 represented the close of this Fund's first fiscal year
reporting period, we are pleased to report a total return on your Fund of
22.32% since inception on June 29, 1993.* This handsome return has been
obtained from a broad spread of international investments over an 11-month
period, and compares very favorably with a total return of 3.94% for the
Standard & Poor's 500 Composite Stock Price Index** and 15.37% for the Morgan
Stanley Europe, Australasia and Far East (EAFERegistration Mark) Index
measured from June 30, 1993.*** This latter Index is commonly used as a
benchmark for international funds which invest widely around the world but
not in the U.S.A.
Indeed, the year's result would have been even better both absolutely and
relatively had it not been for a less satisfactory second half-year. This was
in itself respectable with a 6.85% rise for the Fund versus only .24% for the
Standard & Poor's Composite, although the total return of the Morgan Stanley
EAFERegistration Mark Index was a spectacular 15.01%.
SECOND HALF RESULTS
The last half-year of the reporting period breaks down into two fairly
distinct periods, namely the events prior to and after the Federal Reserve
Board's interest rate hikes that began February 4th. In December and January,
international equity markets were generally very strong, fueled in part by
considerable mutual fund investments from the U.S. The stock markets of the
Far East were outstanding in their rate of ascent but were stopped in their
tracks by the change in U.S. monetary policy. Thereafter most markets
declined, with the volatile winners of year-end 1993, such as Hong Kong and
Mexico, particularly heavily hit. Only the stock markets of Japan, Italy and
a few other European countries continued to improve (in dollar terms) and
this particularly benefited the Morgan Stanley (EAFERegistration Mark) Index
which is very heavily weighted towards Japan. More recently, it has been the
European markets underperforming while others have been rallying nicely.
The all-critical Japanese content of your Fund was raised from an
end-of-November 1993 level of 14% to the fiscal year-end figure of 25%, but
alas, while making out well on the stocks, some portion of the gain was given
back on the currency. The Fund has, during the last six months, remained
hedged against at least 50% of its yen exposure and adopted a similar
strategy regarding German marks and French francs. The dollar has failed to
strengthen as anticipated despite successive interest rate rises, and this
stance has lost the Fund a couple of percentage points of gain in the short
term. Looking to the future, we continue to consider it prudent to hedge,
partially at any rate, against the risk of some devaluation of foreign
currencies against a fundamentally cheap dollar.
INVESTMENT OBJECTIVES
Over the last year, it has been our target to build for shareholders a
well-spread list of international investments, and by year-end the number of
countries involved amounted to 22. Our preference for an above-average
weighting in the "tiger" economies of Southeast Asia was well rewarded by
their superior market performance, as was the significant U.K. investment up
to the February hiatus. Both areas were reduced in the second half-year to
provide funds for Japan, which at last appears to be showing some encouraging
signs of an economic turn and hopefully greater political stability.
As far as some of the smaller markets were concerned, we timed our
additions to Mexico quite nicely last summer and well ahead of the passage of
the North American Free Trade Agreement Treaty (NAFTA). Likewise, our entry
into South African industrials just before the April elections proved highly
profitable, and we have had a good experience so far with our initial forays
into India and Indonesia, small though they are. In Australia, we were able
to make money initially in the banks and more recently from the general
cyclical upturn and commodity-related companies in particular.
LOOKING AHEAD
Meanwhile, the stock markets of continental Europe presented a changing
picture of stubborn recession, interest rate reductions and muted recovery as
the last year unfolded. We continue to believe that the longer-term
opportunities in the relatively unsophisticated markets of Europe are great,
particularly among the less researched and often small-capitalized companies.
Privatizations abound as do restructurings of family-owned companies and many
that are rich in assets but poor on earnings. For value investors such as
ourselves, it is a fertile field of opportunity as no doubt Eastern Europe
will become at a later stage. Meanwhile, in the U.K., as a result of
political as well as economic anxieties, both bonds and equities have
retreated to attractive levels for a country showing expansion with minimal
inflation.
We welcome your investment in this new Fund and are pleased that the net
asset value per share has made reasonably steady progress to the level of
$15.20 as of May 31, an increase of more than 20% during the period.
Sincerely,
(Paul D.A. Nix Signature Logo)
Paul D.A. Nix
Senior Vice President and Investment Officer
Dreyfus International Equity Fund
Director, M & G Investment Management, Ltd.
June 1, 1994
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of stock market performance.
*** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - The Morgan Stanley Capital
International Europe, Australasia, Far East (EAFERegistration Mark) Index is
an unmanaged index composed of a sample of companies representative of the
market structure of 16 European and Pacific Basin countries. The return
indicated includes net dividends reinvested. The Index is the property of
Morgan Stanley & Co., Incorporated.
PERFORMANCE
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN Dreyfus international
equity fund, inc.
AND THE morgan stanley capital international europe, australasia, far east
(eafE (Registration Mark)) index
[Exhibit A]
*Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
AGGREGATE TOTAL RETURN
<S> <C>
From Inception (6/29/93) to May 31, 1994............................................. 22.32%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment in Dreyfus International Equity
Fund on 6/29/93 (Inception Date) to a $10,000 investment made in the Morgan
Stanley Capital International Europe, Australasia, Far East (EAFERegistration
Mark) Index on that date. For comparative purposes, the value of the Index on
6/30/93 is used as the beginning value on 6/29/93. All dividends and capital
gain distributions are reinvested.
The Fund's aggregate total return is not annualized. The Fund's performance
takes into account all applicable fees and expenses. The Morgan Stanley
Capital International Europe, Australasia, Far East (EAFERegistration Mark)
Index, which is the property of Morgan Stanley & Co. Incorporated, is an
unmanaged index composed of a sample of companies representative of the
market structure of 16 European and Pacific Basin countries and includes net
dividends reinvested. Further information relating to Fund performance,
including expense reimbursements, if applicable, is contained in the
Condensed Financial Information section of the Prospectus and elsewhere in
this report.
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL EQUITY FUND, INC. MAY 31, 1994
DIVERSIFICATION OF FOREIGN INVESTMENTS
[Exhibit B]
(Foreign Securities Equal 96.7% of Total Net Assets)
<S> <S> <C> <C>
ASSET ALLOCATION
Common Stocks........................................... 94.2%
Preferred Stocks........................................ 1.0
Convertible Preferred Stocks............................ 0.3
Convertible Bonds....................................... 1.2
Cash Equivalents........................................ 3.3
-------
100.0%
TEN LARGEST HOLDINGS
South African Breweries................................. 1.3%
Tiger Oats.............................................. 1.3
Telefonos De Mexico S.A., A.D.R......................... 1.2
Honda Motor............................................. 1.2
Nissan Chemical Industries.............................. 1.2
Indofood Sukses Makmur.................................. 1.2
NGK Spark Plug.......................................... 1.1
Grupo Carso S.A., Ser. B, A.D.R......................... 1.1
Premier Group Holdings.................................. 1.1
Nippon Yusen K.K........................................ 1.1
All percentages shown above are based on Total Net Assets.
DREYFUS INTERNATIONAL EQUITY FUND, INC.
STATEMENT OF INVESTMENTS MAY 31, 1994
COMMON STOCKS--94.2% SHARES VALUE
-------------- --------------
ARGENTINA--1.1% YPF S.A., Cl. D, A.D.R. 75,000 $ 1,978,125
--------------
AUSTRALIA--3.7% Brambles Industries 100,000 1,055,340
Commonwealth Bank of Australia... 250,000 1,494,450
Mayne Nickless................... 300,000 1,948,320
Newcrest Mining.................. 300,000 1,560,870
Queensland Metals..............(a) 500,000 627,300
--------------
6,686,280
--------------
AUSTRIA--1.6% BWT.............................. 7,900 1,107,509
Bau Holdings...................(a) 9,000 863,281
Burgenland Holding............... 24,000 872,917
--------------
2,843,707
--------------
CANADA--1.8% Franco Nevada Mining............. 7,000 401,121
Franco Nevada Mining (Warrants)(a) 7,000 37,961
Placer Dome...................... 60,000 1,382,863
TVX Gold.......................(a) 200,000 1,337,672
--------------
3,159,617
--------------
DENMARK--1.1% Tele Danmark A/S, Cl. B........(a) 38,000 1,916,460
--------------
FRANCE--6.0% Assurance Generale de France..... 9,000 762,658
BUT S.A.......................... 7,000 1,057,026
Banque Nationale de Paris......(a) 31,400 1,388,986
Compagnie de Saint Gobain........ 9,272 1,087,141
Compagnie Signaux et
Equipements Electronique.....(a) 12,200 1,332,919
Groupe Zannier................... 3,085 649,445
Imetal........................... 18,000 1,806,715
Naf Naf S.A. ..................(a) 24,000 1,696,927
Skis Rossignol S.A. ............. 3,190 1,092,046
--------------
10,873,863
--------------
GERMANY--3.4% BASF AG.......................... 9,250 1,753,342
Continental AG.................(a) 11,500 1,914,338
Etienne Aigner AG................ 4,000 1,494,532
Felten & Guilleaume Energietechnik 4,200 870,109
--------------
6,032,321
--------------
HONG KONG--5.4% B & B Asia....................... 1,085,000 445,852
Cheung Kong Holdings............. 152,000 767,230
China Light & Power.............. 121,600 676,736
Citic Pacific.................... 500,000 1,449,557
Dah Sing Financial Holdings...... 272,650 864,547
Lamex Holdings................... 1,594,000 624,066
New Island Printing Holdings..... 4,297,000 650,681
Shaw Brothers.................... 529,000 869,514
Swire Pacific, Cl. A............. 230,000 1,786,061
Vitasoy International Holdings.(a) 2,440,000 1,042,128
Vtech Holdings................... 437,000 554,274
--------------
9,730,646
--------------
DREYFUS INTERNATIONAL EQUITY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
INDIA--.6% Tube Investments...............(a) 121,000 $ 1,076,900
--------------
INDONESIA--.8% Freeport McMoRan Copper & Gold, Cl. A 60,000 1,477,500
--------------
ITALY--3.0% Edison S.P.A..................... 340,000 1,624,231
Fila Holding S.P.A., A.D.R. ...(a) 115,000 1,796,875
SIP.............................. 720,000 1,943,503
--------------
5,364,609
--------------
JAPAN--25.2% Amway Japan...................... 30,000 1,230,916
Anritsu Electric................. 120,000 1,557,252
Asahi Concrete Works............. 50,000 935,115
Canon............................ 70,000 1,162,214
DDI.............................. 22 1,666,794
East Japan Railway............... 280 1,349,237
Enix............................. 29,000 1,383,588
Hitachi Credit................... 100,000 1,908,397
Hogy Medical..................... 11,500 712,166
Honda Motor...................... 120,000 2,152,672
Kissei Pharmaceutical............ 20,000 832,061
Mitsubishi Bank.................. 60,000 1,603,053
NEC.............................. 125,000 1,419,370
NGK Spark Plug................... 160,000 2,061,069
Nippon Express................... 170,000 1,768,130
Nippon Kayaku.................... 150,000 1,140,744
Nippon Shokubai K.K. ............ 120,000 1,213,740
Nippon Steel..................... 500,000 1,793,893
Nippon Telegraph & Telephone..... 200 1,650,763
Nippon Yusen K.K. ............... 325,000 1,997,137
Nissan Chemical Industries....... 300,000 2,109,733
Rinnai........................... 60,000 1,723,282
Seven Eleven Japan............... 20,000 1,475,191
Sharp............................ 80,000 1,374,046
Sony............................. 30,000 1,780,534
Sumitomo Bank.................... 60,000 1,288,168
Sumitomo Metal Mining............ 200,000 1,826,336
Tokio Marine & Fire Insurance.... 50,000 653,626
Toshoku.......................... 200,000 1,610,687
Ushio............................ 200,000 1,893,130
--------------
45,273,044
--------------
MALAYSIA--3.1% Berjaya Singer Berhad (Warrants)(a) 100,560 37,432
Hong Leong Credit Berhad......... 180,000 998,061
Hong Leong Properties Berhad...(a) 485,000 635,634
Kuala Lumpur Industries Holdings Berhad(a) 1,000,000 1,318,341
Leader Universal Holdings Berhad. 173,000 932,416
Metacorp Berhad................(a) 200,000 767,739
Renong Berhad.................... 660,000 813,804
--------------
5,503,427
--------------
MEXICO--4.6% Cemex S.A., Cl. B., A.D.R. 118,125 1,727,578
Cifra S.A. de C.V., A.D.R. ...... 350,000 980,000
Grupo Carso S.A., Ser. B., A.D.R. (a,b) 100,000 2,025,000
Panamerican Beverages, Cl. A .... 10,000 298,750
DREYFUS INTERNATIONAL EQUITY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
MEXICO (CONTINUED) Telefonos De Mexico S.A., A.D.R. . 35,000 $ 2,174,375
Transportacion Maritima
Mexicana S.A., A.D.R........... 125,000 1,062,500
--------------
8,268,203
--------------
NETHERLANDS--2.2% Ahrend Groep N.V. ............... 15,000 1,238,830
Akzo N.V. ....................... 17,000 1,914,974
Internationale Nederlanden Groep N.V. 21,422 880,547
--------------
4,034,351
--------------
NEW ZEALAND--1.0% Brierley Investments............. 2,350,000 1,788,256
--------------
SINGAPORE--2.9% Fraser & Neave................... 97,300 1,167,093
Haw Par Brothers International... 400,000 886,571
IPCO International............... 185,000 971,250
Keppel........................... 164,600 1,158,853
Robinson & Co.................... 247,000 1,102,966
--------------
5,286,733
--------------
SOUTH AFRICA--3.7% Premier Group Holdings........... 1,500,000 2,003,154
South African Breweries.......... 115,000 2,321,767
Tiger Oats....................... 220,000 2,267,087
--------------
6,592,008
--------------
SPAIN--4.0% Acerinox S.A..................... 15,000 1,524,300
Centros Commercial Pryca......... 86,250 1,251,197
Hidroelectrica del Cantabrico S.A. 46,000 1,449,779
Iberdrola S.A. .................. 234,000 1,717,953
Repsol S.A. ..................... 40,000 1,260,677
--------------
7,203,906
--------------
SWEDEN--1.2% Autoliv AB.....................(a) 60,000 1,387,283
Volvo AB......................... 9,180 851,376
--------------
2,238,659
--------------
SWITZERLAND--4.7% Baloise Holdings................. 900 1,587,669
Elektrowatt AG (Warrants)......(a) 7,000 468,995
Hilti AG......................... 2,100 1,571,632
Pelikan Holding AG............... 7,000 648,610
Rieter Holding AG................ 1,400 1,706,344
Sika Finanz AG................... 4,300 1,219,815
Zurich Versicherungs............. 1,300 1,244,405
--------------
8,447,470
--------------
UNITED KINGDOM--13.1% BAT Industries PLC............... 250,000 1,544,997
Blue Circle Industries PLC....... 250,000 1,099,252
Booker PLC....................... 300,000 1,745,205
British Gas PLC.................. 275,000 1,099,064
British Steel PLC................ 650,000 1,323,447
Burton Group PLC................. 2,125,000 1,814,144
Commercial Union PLC............. 150,000 1,176,597
Cookson Group PLC................ 200,000 746,812
Glaxo Holdings PLC............... 185,000 1,498,308
Hammerson Property Investment &
Development, Cl. A............. 175,000 899,045
Johnson, Matthey PLC............. 145,000 1,233,505
DREYFUS INTERNATIONAL EQUITY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
UNITED KINGDOM (CONTINUED) Lloyds Bank PLC.................. 135,000 $ 1,093,360
Lucas Industries PLC............. 700,000 1,872,129
Royal Doulton PLC................ 500,000 1,956,745
Saatchi & Saatchi..............(a) 400,000 809,896
Welsh Water PLC.................. 175,000 1,537,631
World Fluids PLC...............(a) 900,000 367,173
Zeneca Group PLC................. 175,000 1,796,768
--------------
23,614,078
--------------
TOTAL COMMON STOCKS
(cost $163,048,699)............ $169,390,163
==============
PREFERRED STOCK--1.0%
GERMANY; Herlitz AG
(cost $1,626,581).............. 8,444 $ 1,803,199
==============
CONVERTIBLE PREFERRED STOCK--.3%
JAPAN; Sakura Bank, 2.25%
(cost $620,456)..............(a) 32,000 $ 610,687
==============
CONVERTIBLE BONDS--1.2%
PRINCIPAL
AMOUNT
--------------
INDONESIA--1.2% Indofood Sukses Makmur, 2.25%, 4/6/97 $ 2,000,000 $ 2,100,000
--------------
MALAYSIA--.0% Berjaya Leisure Berhad, 5%, 5/4/99(c) 38,992 326
--------------
TOTAL CONVERTIBLE BONDS
(cost $2,000,221).............. $ 2,100,326
==============
SHORT-TERM INVESTMENTS--5.0%
UNITED STATES; U.S. TREASURY BILLS:
3.56%, 6/16/94................. $ 1,302,000 $ 1,300,071
3.70%, 6/30/94................. 577,000 575,280
3.63%, 7/21/94................. 2,554,000 2,541,115
4.16%, 8/25/94................. 4,687,000 4,640,963
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $9,057,429).............. $ 9,057,429
==============
TOTAL INVESTMENTS (cost $176,353,386)....................................... 101.7% $182,961,804
====== ==============
LIABILITIES, LESS CASH AND RECEIVABLES ..................................... (1.7%) $ (3,055,286)
====== ==============
NET ASSETS.................................................................. 100.0% $179,906,518
====== ==============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31,
1994, this security amounted to $2,025,000, or 1.1% of net assets.
(c) Denominated in Malaysian Ringgits.
See notes to financial statements.
DREYFUS INTERNATIONAL EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
ASSETS:
Investments in securities, at value
(cost $176,353,386)_see statement..................................... $182,961,804
Receivable for investment securities sold............................... 7,194,115
Dividends and interest receivable....................................... 585,023
Receivable for subscriptions to Common Stock............................ 5,770
Prepaid expenses_Note 1(e).............................................. 134,698
---------------
190,881,410
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 229,467
Due to Custodian........................................................ 3,237,386
Payable for investment securities purchased............................. 6,742,809
Net unrealized (depreciation) on forward currency exchange
contracts_Note 3(a)................................................... 544,082
Accrued expenses........................................................ 221,148 10,974,892
----------- ---------------
NET ASSETS ................................................................ $179,906,518
===============
REPRESENTED BY:
Paid-in capital......................................................... $171,674,023
Accumulated distributions in excess of investment income--net_Note 1(c). (98,669)
Accumulated undistributed net realized gain on investments and
foreign currency transactions......................................... 2,336,185
Accumulated net unrealized appreciation on investments
and foreign currency transactions..................................... 5,994,979
---------------
NET ASSETS at value applicable to 11,832,802 shares outstanding
(300 million shares of $.001 par value Common Stock authorized)......... $179,906,518
===============
NET ASSET VALUE, offering and redemption price per share
($179,906,518 / 11,832,802 shares)...................................... $15.20
=======
See notes to financial statements.
DREYFUS INTERNATIONAL EQUITY FUND, INC.
STATEMENT OF OPERATIONS
FROM JUNE 29, 1993 (COMMENCEMENT OF OPERATIONS) TO MAY 31, 1994
INVESTMENT INCOME:
INCOME:
Cash dividends (net of $208,554 foreign taxes withheld at source)..... $1,598,556
Interest (net of $1,604 foreign taxes withheld at source)............. 322,936
------------
TOTAL INCOME.................................................... $1,921,492
EXPENSES:
Management fee_Note 2(a).............................................. 731,828
Shareholder servicing costs_Note 2(b,c)............................... 844,306
Custodian fees........................................................ 172,718
Prospectus and shareholders' reports_Note 2(b)........................ 73,183
Registration fees..................................................... 68,783
Professional fees..................................................... 48,522
Organization expenses_Note 1(e)....................................... 20,073
Directors' fees and expenses_Note 2(d)................................ 16,630
Miscellaneous......................................................... 3,155
------------
1,979,198
Less--reduction in management fee due to
undertakings_-Note 2(a)........................................... 174,169
------------
TOTAL EXPENSES.................................................. 1,805,029
------------
INVESTMENT INCOME--NET.......................................... 116,463
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments and foreign currency
transactions_Note 3(a)................................................ $2,792,970
Net unrealized appreciation on investments and foreign currency
transactions.......................................................... 5,994,979
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 8,787,949
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $8,904,412
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL EQUITY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FROM JUNE 29, 1993 (COMMENCEMENT OF OPERATIONS) TO MAY 31, 1994
OPERATIONS:
<S> <C>
Investment income_net..................................................................... $ 116,463
Net realized gain on investments.......................................................... 2,792,970
Net unrealized appreciation on investments for the period................................. 5,994,979
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... 8,904,412
---------------
DIVIDENDS TO SHAREHOLDERS:
From investment income--net............................................................... (136,536)
In excess of investment income_net........................................................ (286,348)
From net realized gain on investments..................................................... (269,107)
---------------
TOTAL DIVIDENDS......................................................................... (691,991)
---------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................................. 350,172,480
Dividends reinvested...................................................................... 648,010
Cost of shares redeemed................................................................... (179,226,393)
---------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.................................. 171,594,097
---------------
TOTAL INCREASE IN NET ASSETS........................................................ 179,806,518
NET ASSETS:
Beginning of period_Note 1................................................................ 100,000
---------------
End of period [including distributions in excess of investment
income_net; ($98,669)].................................................................. $ 179,906,518
==============
SHARES
---------------
CAPITAL SHARE TRANSACTIONS:...................................................................
Shares sold............................................................................... 23,578,540
Shares issued for dividends reinvested.................................................... 42,773
Shares redeemed........................................................................... (11,796,511)
---------------
NET INCREASE IN SHARES OUTSTANDING...................................................... 11,824,802
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for the period June 29, 1993 (commencement
of operations) to May 31, 1994. This information has been derived from the
Fund's financial statements.
PER SHARE DATA:
<S> <C>
Net asset value, beginning of period...................................................... $12.50
-------
INVESTMENT OPERATIONS:
Investment income--net.................................................................... .05
Net realized and unrealized gain on investments........................................... 2.74
-------
TOTAL FROM INVESTMENT OPERATIONS........................................................ 2.79
-------
DISTRIBUTIONS:
Dividends from investment income_net...................................................... (.02)
Dividends in excess of investment income_net.............................................. (.04)
Dividends from net realized gain on investments........................................... (.03)
-------
TOTAL DISTRIBUTIONS..................................................................... (.09)
-------
Net asset value, end of period............................................................ $15.20
-------
-------
TOTAL INVESTMENT RETURN 22.32%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................................... 1.71%*
Ratio of net investment income to average net assets...................................... .11%*
Decrease reflected in above expense ratio due to undertakings by Dreyfus.................. .16%*
Portfolio Turnover Rate................................................................... 51.32%*
Net Assets, end of period (000's Omitted)................................................. $179,907
- ------------------
*Not annualized.
See notes to financial statements.
</TABLE>
DREYFUS INTERNATIONAL EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus International Equity Fund, Inc. (the "Fund") was incorporated on
January 27, 1993 and had no operations until June 29, 1993 (commencement of
operations) other than matters relating to its organization and registration
as a non-diversified open-end management investment company under the
Investment Company Act of 1940 ("Act") and the Securities Act of 1933 and the
sale and issuance of 8,000 shares of Common Stock ("Initial Shares") to The
Dreyfus Corporation ("Dreyfus"), the Fund's investment adviser. M&G
Investment Management Limited ("M&G") serves as the Fund's sub-investment
adviser. Dreyfus Service Corporation ("Distributor"), a wholly-owned
subsidiary of Dreyfus, acts as the distributor of the Fund's shares, which
are sold to the public without a sales load.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Short-term investments are carried at amortized cost, which approximates
value. Investments denominated in foreign currencies are translated to U.S.
dollars at the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
Dividends in excess of investment income_net result from Federal income
tax distribution requirements, primarily unrealized gains on Passive Foreign
Investment Companies and foreign currency transactions.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income taxes.
(E) OTHER: Organization expenses paid by the Fund are included in prepaid
expenses and are being amortized to operations from June 29, 1993, the date
operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At May 31, 1994, the
unamortized balance of such expenses amounted to $91,046. In the event that
any of the Initial Shares are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization expenses
in the same proportion as the number of such shares being redeemed bears to
the number of such shares outstanding at the time of such redemption.
DREYFUS INTERNATIONAL EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a Management Agreement with Dreyfus, the management fee
is computed at the annual rate of .75 of 1% of the average daily value of the
Fund's net assets and is payable monthly. Dreyfus and M&G have agreed that if
in any full fiscal year the Fund's aggregate expenses, exclusive of interest,
taxes, brokerage and extraordinary expenses, exceed the expense limitation of
any state having jurisdiction over the Fund, Dreyfus and M&G will bear the
excess expense in proportion to their management fee and sub-advisory fee to
the extent required by state law. The most stringent state expense limitation
applicable to the Fund presently requires reimbursement of expenses in any
full fiscal year that such expenses (exclusive of distribution expenses and
ce rtain expenses as described above) exceed 21/2% of the first $30 million, 2%
of the next $70 million and 11/2% of the excess over $100 million of the
average value of the Fund's net assets in accordance with California "blue
sky" regulations.
However, Dreyfus had undertaken from June 29, 1993 through January 12,
1994, to reduce the management fee paid by the Fund, by certain specified
annual percentages of the Fund's average net assets. The reduction in
management fee pursuant to the undertakings amounted to $174,169 for the
period ended May 31, 1994.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and M&G,
the sub-advisory fee is computed at the annual rate of .30 of 1% of the
average daily value of the Fund's net assets and is payable monthly by
Dreyfus.
(B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule
12b-1 under the Act, the Fund pays the Distributor, at an annual rate of .50
of 1% of the value of the Fund's average daily net assets, for costs and
expenses in connection with advertising, marketing and distributing the
Fund's shares and for servicing shareholder accounts. The Distributor may
make payments to one or more Service Agents (a securities dealer, financial
institution, or other industry professional) based on the value of the Fund's
shares owned by clients of the Service Agent. The Plan also separately
provides for the Fund to bear the costs of preparing, printing and
distributing certain of the Fund's prospectuses and statements of additional
information and costs associated with implementing and operating the Plan,
not to exceed the greater of $100,000 or .005 of 1% of the Fund's average
daily net assets for any full fiscal year. During the period ended May 31,
1994, the Fund was charged $541,442 pursuant to the Plan.
(C) Pursuant to the Fund's Shareholder Services Plan, the Fund pays the
Distributor an annual rate of .25 of 1% of the value of the Fund's average
daily net assets for servicing shareholder accounts. The services provided
may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports and
other information, and services related to the maintenance of shareholder
accounts. During the period ended May 31, 1994, the Fund was charged an
aggregate of $243,943 pursuant to the Shareholder Services Plan.
(D) Certain officers and directors of the Fund are "affiliated persons,"
as defined in the Act, of Dreyfus and/or the Distributor. Each director who
is not an "affiliated person" receives an annual fee of $2,500 and an
attendance fee of $500 per meeting. Prior to March 15, 1994, the annual fee
was $1,000 and the attendence fee was $250 per meeting.
(E) On December 5, 1993, Dreyfus entered into an Agreement and Plan of
Merger (the "Merger Agreement") providing for the merger of Dreyfus with a
subsidiary of Mellon Bank Corporation ("Mellon").
DREYFUS INTERNATIONAL EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Following the merger, it is planned that Dreyfus will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including receipt of certain regulatory approvals and
approvals of the stockholders of Dreyfus and of Mellon. The merger is
expected to occur in August 1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, Dreyfus will seek various approvals from the Fund's shareholders
before completion of the merger. Proxy materials, approved by the Fund's
Board, recently have been mailed to Fund shareholders.
NOTE 3--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts,
during the period ended May 31, 1994 amounted to $214,333,387 and
$50,708,802, respectively.
In addition, the following summarizes open forward currency exchange
contracts at May 31, 1994:
<TABLE>
<CAPTION>
U.S. DOLLAR UNREALIZED
FORWARD CURRENCY SALE CONTRACTS PROCEEDS VALUE (DEPRECIATION)
- ------------------------------------------ ---------- ----------- ---------------
<S> <C> <C> <C>
French Francs, expiring 10/12/94..... $ 4,645,898 $ 4,871,567 $(225,669)
German Marks, expiring 10/12/94...... 4,113,348 4,300,704 (187,356)
Japanese Yen, expiring 10/12/94...... 22,992,558 23,123,615 (131,057)
-----------
$(544,082)
===========
</TABLE>
When executing forward currency exchange contracts, the Fund is obligated
to buy or sell a foreign currency at a specified rate on a certain date in
the future. With respect to sales of forward currency exchange contracts, the
Fund would incur a loss if the value of the contract increases between the
date the forward contract is opened and the date the forward contract is
closed. The Fund realizes a gain if the value of the contract decreases
between those dates. With respect to purchases of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract decreases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
increases between those dates.
(B) At May 31, 1994, accumulated net unrealized appreciation on
investments was $6,608,418, consisting of $13,377,916 gross unrealized
appreciation and $6,769,498 gross unrealized depreciation, excluding foreign
currency transactions.
At May 31, 1994, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS INTERNATIONAL EQUITY FUND, INC.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS INTERNATIONAL EQUITY FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus International Equity Fund, Inc., including the statement of
investments, as of May 31, 1994, and the related statements of operations and
changes in net assets and financial highlights for the period from June 29,
1993 (commencement of operations) to May 31, 1994. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 1994 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus International Equity Fund, Inc. at May 31, 1994, and the
results of its operations, the changes in its net assets and the financial
highlights for the period from June 29, 1993 to May 31, 1994, in conformity
with generally accepted accounting principles.
(Ernst & Young Signature Logo)
New York, New York
July 11, 1994
DREYFUS INTERNATIONAL EQUITY FUND, INC.
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby makes the following
designations regarding the dividend of $.09 per share paid by the Fund on
December 21, 1993:
-- taxes paid to foreign countries amounts to $.0045 per share. This
amount was included as ordinary income in arriving at the rate of $.0945 per
share reported on the 1993 Form 1099--DIV, and
-- the portion of the $.0945 per share representing income sourced
from all foreign countries is $.0315 per share.
(Dreyfus Logo)
International
Equity
Fund, Inc.
Annual Report
May 31, 1994
(Dreyfus Lion Logo)
(Dreyfus `D' Logo)
DREYFUS INTERNATIONAL EQUITY FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISER
M&G Investment Management Limited
Three Quays, Tower Hill
London, EC3R 6BQ, England
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 095AR945
Registration Mark
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS INTERNATIONAL EQUITY FUND, INC. AND THE MORGAN
STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR
EAST (EAFE(R)) INDEX
EXHIBIT A:
________________________________________________________
| | | MORGAN STANLEY |
| | | CAPITAL |
| PERIOD | DREYFUS | INTERNATIONAL EUROPE,|
| | INTERNATIONAL | AUSTRALASIA, FAR EAST|
| | EQUITY | (EAFE(R)) INDEX * |
|-----------|----------------- | ---------------------|
| 6/29/93 | 10,000 | 10,000 |
| 7/31/93 | 10,496 | 10,350 |
| 8/31/93 | 10,984 | 10,909 |
| 9/30/93 | 11,024 | 10,663 |
| 10/31/93 | 11,664 | 10,992 |
| 11/30/93 | 11,448 | 10,031 |
| 12/31/93 | 12,393 | 10,755 |
| 1/31/94 | 12,989 | 11,664 |
| 2/28/94 | 12,675 | 11,632 |
| 3/31/94 | 12,087 | 11,130 |
| 4/30/94 | 12,425 | 11,602 |
| 5/31/94 | 12,232 | 11,537 |
|-------------------------------------------------------|
* Source: Lipper Analytical Services, Inc.
Aggregate Total Return
--------------------------------------------------------
From Inception (6/29/93) to May 31, 1994........ 22.32%
Dreyfus International Equity Fund, Inc. May 31, 1994
Diversification of Foreign Investments
|------------------------------------------------------------- |
|Japan 25.5 % |
|United Kingdom 13.1 % |
|France 6.0 % |
|Hong Kong 5.4 % |
|Switzerland 4.7 % |
|Mexico 4.6 % |
|Germany 4.4 % |
|Spain 4.0 % |
|Australia 3.7 % |
|South Africa 3.7 % |
|Malaysia 3.1 % |
|Italy 3.0 % |
|Singapore 2.9 % |
|Netherlands 2.2 % |
|Indonesia 2.0 % |
|Canada 1.8 % |
|Austria 1.6 % |
|Sweden 1.2 % |
|Argentina 1.1 % |
|Denmark 1.1 % |
|New Zealand 1.0 % |
|India 0.6 % |
|------------------------------------------------------------- |
(Foreign Securities equal 96.7% of Total Net Assets)
