-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UX7eSVkJrzkg2MeBNXPZiH4aUNH+h0Phkx/CX7mdfMSBgAORt5wPfD9O+QPPKiaJ uggxcam1WEz/QgY5UPus7Q== 0000950109-95-005026.txt : 19951204 0000950109-95-005026.hdr.sgml : 19951204 ACCESSION NUMBER: 0000950109-95-005026 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951201 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUNDS INC CENTRAL INDEX KEY: 0000313212 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 521175211 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02958 FILM NUMBER: 95598514 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 3015472000 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL TRUST DATE OF NAME CHANGE: 19900301 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUND INC DATE OF NAME CHANGE: 19890914 N-30D 1 INTERNATIONAL DISCOVERY FUND - -------------------------------------------------------------------------------- Fellow Shareholders - -------------------------------------------------------------------------------- International stock markets drifted over the three months ended October 31, a dull performance exacerbated for U.S. investors by the strength of the U.S. dollar. Japan was the strongest major market in local currency terms, rebounding after weakness in the first half of the year. European and Southeast Asian markets were mixed, with several reversing course after a strong rise in the second quarter. Latin American stocks lurched downward, led by Mexico. During the past 12 months, international returns sharply lagged the U.S. market. The U.S. dollar was weak earlier in the year, but strengthened against the yen in the final quarter. During the fund's fiscal year, the dollar rose versus the yen but fell against the deutschemark. Your fund was in negative territory in the last quarter but led the benchmark shown below, aided by both country allocation and stock selection. However, performance trailed the benchmark over the past 12 months, hindered by generally weak returns for international small-cap stocks as well as by disappointing stock holdings earlier in the year. - -------------------------------------------------------------------------------- Performance Comparison - --------------------------------------------------------------------------------
Periods Ended 10/31/95 3 Months 12 Months -------- --------- International Discovery Fund -3.74% -13.06% FTA Euro-Pacific Small Cap Index -6.45 -8.20 - --------------------------------------------------------------------------------
Market Review Japan Japanese equities exploded in recent months after a dismal start to the year. Unquestionably, the rebound was induced by the yen, which declined against the dollar after rising too far earlier. However, the strong dollar meant that gains turned into losses for U.S. investors. The most important change in the quarter was in the attitude of government authorities. Finally acknowledging the threat of deflation, the Bank of Japan cut a key lending rate to 0.5%. It also intervened in the foreign exchange market and injected liquidity into the system. These steps were necessary, since the economic picture remains bleak. Industrial production suffered a seventh consecutive monthly decline, housing starts fell 5% from a year ago, and retail sales were weak. The only bright areas were capital expenditure and monetary growth. The danger posed by deflation cannot be overemphasized. While consumer price inflation is flat, the wholesale price index is falling. This presents a difficult problem for everyone, particularly companies with high fixed costs that are reluctant to lay off employees for social reasons. The auto industry is a case in point: major assemblers, forced to compete with an inflated yen in foreign markets, have asked their suppliers for significant price cuts, which erode profit margins. Nonetheless, we are encouraged by measures to address these problems and are content with the valuations of the fund's Japanese stock holdings. We have concentrated on companies with strong balance sheets and promising long-range strategies that exhibit signs of growth in their niche areas. Performance was helped by Glory, a manufacturer of money handling machines; SMC, a producer of pneumatic equipment; and Disco and Shinkawa, semiconductor stocks. Southeast Asia We increased our exposure to China, both directly and through companies in Hong Kong with activities on the mainland. Our research reveals a successful soft landing in progress for - -------------------------------------------------------------------------------- Market Performance: Small-Cap Indices - --------------------------------------------------------------------------------
3 Months Ended 10/31/95 ---------------------------------- Local Currency Local vs. U.S. In U.S. Currency Dollars Dollars ---------------------------------- Australia -3.8% 2.9% -1.0% France -4.0 -2.4 -6.3 Germany -3.1 -2.0 -5.0 Hong Kong 2.6 0.1 2.7 Italy -7.3 -0.5 -7.8 Japan 6.2 -13.9 -8.6 Mexico -2.6 -14.4 -16.2 Netherlands -0.7 -2.0 -2.7 Norway -5.4 -1.8 -7.0 Singapore -4.1 -1.5 -5.6 Sweden 0.1 6.1 6.2 Switzerland 9.7 0.9 10.6 United Kingdom 2.1 -1.4 0.7 - --------------------------------------------------------------------------------
Source: NWSL Quantitative Products Group, utilizing MSCI indices this formerly overheated economy. Credit is being eased, inflation is falling, and foreign reserves are healthy. More important, possible successors to Chairman Deng seem committed to a smooth takeover of Hong Kong on July 1, 1997. We bought Shanghai Friendship Company, which enjoys good management and a dominant presence in the booming Shanghai retail market, and China Merchants Shekou, a port with expanding capacity. In Hong Kong we added Aeon Credit Service, a leading issuer of credit cards. The economy of Singapore remains the envy of Asia, characterized by low inflation, a large current account surplus, and gently easing interest rates. With stock valuations at the low end of historical ranges, we view this market favorably. Malaysian stocks weakened in the quarter, but the economy seems to be on steroids after having grown 8% or more annually for eight straight years. However, the side effects of this growth are increasingly evident with developing labor shortages, barely contained inflation, and a ballooning current account deficit. Rising interest rates cut into earnings and attract money away from stocks. We took profits in property stocks that had led the market through late summer. We added two new stocks: Gemtech Resources, the leading domestic manufacturer of disposable diapers, and Malaya Glass, which supplies a Singapore soft drink conglomerate. A similar picture of economic overheating is evident in Thailand, Indonesia, and the Philippines, where widening current account deficits and inflationary pressures weighed on their respective markets. However, our confidence in the long-run potential of these countries remains unshaken for two reasons. The first is renewed direct foreign investment in the region, a trend we expect to continue. The second reason is strong export growth, despite rising cost pressures and wage competition from China and other nations with labor surpluses. The Korean economy seemed to have turned the corner over the summer. The trade picture improved with lower import growth, which allowed interest rates to fall and bond prices to rise. Korea is an interest rate-driven market. With foreign ownership limits rising to 15% from 12%, we added significantly to our holdings here, primarily in small bank stocks. Europe Despite underperforming over the year, European smaller-company stocks picked up in recent months, due mainly to a combination of lower interest rates, modest growth, and low inflation. Weightings in the region did not change significantly over the quarter. We are heavily invested in Norway and Sweden and underweighted in France and Germany. In Germany, the threat of economic overheating eased as the deutschemark rose against the dollar, undermining the outlook for exporters. The pessimists were in full voice at the end of the second quarter, but there was relief over the past quarter when the mark weakened somewhat. Our exposure here is primarily in companies benefiting from a recovery in the former East Germany. In Switzerland, we took profits in Von Moos, the specialty steelmaker threatened by 2 a construction slowdown. We added a new position in an investment bank expected to profit from falling rates and a recovery in emerging markets. Italy and Spain have both reported improvement in inflation. Smaller companies in Italy have produced excellent earnings, among them Fila, the sportswear manufacturer; Safilo, an eyewear producer; Saes Getters, a technology company; and Industrie Natuzzi, a pioneer in discounted leather furniture. In Spain, we took profits in the chemicals company Aragonesas, whose products are running into price resistance. We acquired the glass company Cristaleria Espanola, whose prospects seem promising. Scandinavia registered the best returns on the Continent. Norwegian smaller companies are benefiting from a strong domestic economy, with auto and retail sales growing and inflation subdued. Technology stocks Sysdeco Group and Multisoft have performed well. Economic growth is up in Sweden, and construction stocks BPA and Finnveden have done well there. We sold the cement supplier Euroc and medical supply manufacturer Arjo. Small stock valuations are attractive in this market and our enthusiasm for them remains intact. - -------------------------------------------------------------------------------- Geographic Diversification - -------------------------------------------------------------------------------- [PIE CHART APPEARS HERE] Europe 41% Japan 15% Far East 30% Latin America 10% All Other 4% Based on net assets as of 10/31/95. - -------------------------------------------------------------------------------- Smaller-company stocks in the U.K. enjoyed a good summer after many sluggish months. However, returns varied from sector to sector. The biotech, technology, and service areas had powerful runs, while construction and retailing experienced difficulty. We sold the engineering stock Wellman at a profit, and added to positions in Stoves, a stove manufacturer, and Precoat International, a producer of prepainted rolled steel. Latin America Mexico's progress toward economic rehabilitation has been fitful. While a trade surplus exists and inflation is falling, the currency recently staggered to new lows. Interest rates spiked up, and investors feared that the recession, which showed no signs of abating, might never end. The government introduced a package enabling borrowers to reschedule credit card debt and bank overdrafts at more favorable interest rates. We added to smaller-company stocks with good earnings such as the food company Sigma Alimentos and juice manufacturer Jugos de Valle, but remain underweighted here. Argentina has become obsessed with the relationship between Finance Minister Cavallo, the architect of the economic transformation, and the rest of the political establishment. Despite President Menem's reassurances that Cavallo's position is secure, a sharp drop in economic activity and high rates of unemployment suggest the contrary. During the last quarter, we bought shares of energy conglomerate Sociedad Comercial del Plata, whose growth prospects appear strong even in a weak economy. Swift moves by the government of Brazil earlier this year produced a down- turn in the overheating economy. Retail sales plunged, automobile sales evaporated, and unemployment rose sharply. By mid-July, the government relaxed its restrictive policy with lower interest rates after several retailers filed for bankruptcy. Although inflation is dropping, profit margins are still under pressure. As the country moves through this painful adjustment period into an era of sustainable growth 3 and low inflation, well-managed smaller-company stocks should revive. We added to our position in the stainless steel manufacturer Cia Acos Espec Itabira. Investment Policy and Outlook The economic cycle continues to turn upward throughout much of the world, earnings growth is solid, strong bond markets are a plus, and stock valuations range from neutral to favorable. Japan offers opportunities in selected industries. Some growth companies throughout Europe offer good value, the smaller Asian markets seem to have recovered from 18 months of uncertainty, and the gloom should begin to recede in Latin America during the months ahead. All in all, we believe that international markets overall should perform well in 1996. Smaller-company stocks have endured considerable discomfort in recent years. Nevertheless, we are hopeful that the more encouraging trend witnessed in the established markets over the past quarter will broaden into other areas. Respectfully submitted, /s/ Martin G. Wade Martin G. Wade President November 17, 1995 - -------------------------------------------------------------------------------- Portfolio Highlights - -------------------------------------------------------------------------------- Periods Ended October 31, 1995
Change in Price Per Share - --------------------------------- 3 Months (From $14.99 to $14.43) $ -0.56 12 Months (From $17.63 to $14.43) -3.20 - -------------------------------------------------------------------------------- Total Net Assets $325.4 Million - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Industry Diversification - -------------------------------------------------------------------------------- October 31, 1995
Percent of Net Assets ---------- Capital Equipment 25.1% Services 22.5 Consumer Goods 16.2 Finance 14.3 Materials 13.8 Energy 2.2 Multi-Industry 2.0 Miscellaneous 0.8 Reserves 3.1 - -------------------------------------------------------------------------------- Total Net Assets 100.0% - --------------------------------------------------------------------------------
4 - -------------------------------------------------------------------------------- Twenty-Five Largest Holdings - -------------------------------------------------------------------------------- October 31, 1995
Percent of Net Assets ---------- Samsung Engineering & Construction, South Korea 0.8% L.G. Information & Communications, South Korea 0.7 MTD Capital, Malaysia 0.7 JBA Holdings, United Kingdom 0.6 Ashtead Group, United Kingdom 0.6 Matthew Clark, United Kingdom 0.5 Randstad Holdings, Netherlands 0.5 Hock Hua Bank, Malaysia 0.5 Britton Group, United Kingdom 0.5 Mayflower, United Kingdom 0.5 Pacific Basin Bulk Shipping (USD), Hong Kong 0.5 Apollo Electronics, Japan 0.5 Phileo Allied, Malaysia 0.5 Southeast Asia Cement, Philippines 0.5 Barlow Limited, South Africa 0.5 Mulia Industrindo, Indonesia 0.5 Keyence, Japan 0.5 Amway Asia Pacific (USD), Hong Kong 0.5 Wing Hang Bank, Hong Kong 0.5 Sysdeco Group, Norway 0.4 Hagemeyer, Netherlands 0.4 Generale D'Affichage, Switzerland 0.4 Shah Alam Properties, Malaysia 0.4 Malaysian Assurance Alliance, Malaysia 0.4 China Hong Kong Photo Products, Hong Kong 0.4 - -------------------------------------------------------------------------------- Total 12.8% - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Security Classification - -------------------------------------------------------------------------------- October 31, 1995
Percent Market of Net Cost Value Assets (000) (000) -------- ------ ------ Common Stocks, Rights, and Warrants 88.2% $298,426 $287,089 Preferred Stocks and Rights 7.4 26,386 23,971 Bonds 1.4 4,801 4,779 Short-Term Investments 2.2 7,042 7,042 ----- -------- -------- Total Investments 99.2 336,655 322,881 Other Assets Less Liabilities .8 2,494 2,493 - -------------------------------------------------------------------------------- Total Net Assets 100.0% $339,149 $325,374 - --------------------------------------------------------------------------------
5 - -------------------------------------------------------------------------------- Performance Comparison - -------------------------------------------------------------------------------- [PERFORMANCE GRAPH APPEARS HERE]
INTERNATIONAL MSCI DISCOVERY EAFE FUND INDEX* ---- ----- 1988** 10,000 10,000 1989 12,850 10,150 1990 13,462 8,849 1991 13,973 9,464 1992 12,672 8,213 1993 17,357 11,289 1994 19,036 12,429 1995 16,551 12,382
* Net of withholding taxes. While not appropriate for this fund, the large company EAFE index is used for this required comparison because the fund's benchmark (FTA-Euro-Pacific Small Cap) lacks a seven-year history. Note: The index return does not reflect expenses, which have been deducted from the fund's return. **Commencement of operations. - -------------------------------------------------------------------------------- Average Annual Compound Total Return - -------------------------------------------------------------------------------- Periods Ended October 31, 1995
Since Inception 1 Year 5 Years 12/30/88 -------- --------- --------------- -13.06% 4.22% 7.65%
- -------------------------------------------------------------------------------- Note: For the above periods ended 9/30/95, the fund's returns were -10.31%, 6.83%, and 8.21%, respectively. Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. - -------------------------------------------------------------------------------- 6 - -------------------------------------------------------------------------------- Statement of Net Assets T. Rowe Price International Discovery Fund/October 31, 1995 - -------------------------------------------------------------------------------- (values in thousands)
Value ----------- ARGENTINA -- 0.9% COMMON STOCKS 298,000 shs * Cadipsa 'B'............................. $ 196 9,100 Capex GDR (USD)......................... 116 23,500 Capex 'A' GDR (USD)..................... 300 31,000 Enron Global Power & Pipeline (USD)...................... 732 90,000 * Fiplasto 'B'............................ 202 594,000 * Indupa.................................. 297 12,471 Juan Minetti............................ 30 35,000 Mirgor 'C' ADS (USD).................... 57 351,294 * Polledo 'B'............................. 190 25,000 Quilmes Industrial (USD)................ 440 137,200 Sociedad Comercial del Plata............ 277 Total Argentina 2,837 AUSTRALIA -- 2.3% COMMON STOCKS AND RIGHTS 914,865 AAPC Limited............................ 530 285,000 * Acacia Resources........................ 467 108,000 Advance Bank of Australia............... 798 154,421 BRL Hardy............................... 193 200,000 Burswood Property Trust................. 258 358,714 * Crown Limited........................... 500 547,750 E.R.G. Limited.......................... 663 115,050 Elders Australia........................ 136 69,233 Eltin Limited........................... 159 77,000 Finemore Holdings....................... 117 275,800 Healthscope Limited..................... 189 266,028 Henry Walker Group...................... 340 283,000 JNA Telecommunications.................. 291 276,000 Just Jeans Holdings..................... 437 212,659 Leighton Holdings....................... 491 151,666 Mildara Blass Limited................... 757 242,730 * Stanilite Pacific....................... 277 96,746 rts * Stanilite Pacific....................... 52 483,005 shs Tyndall Australia....................... 526 449,000 Walker.................................. 157 7,338 PREFERRED STOCK 294,000 * Sydney Harbour Casino Holdings.............................. 363 Total Australia 7,701 BELGIUM -- 0.1% WARRANTS 25,000 wts * National Portefeuille, 6/15/99.............................. 71 BELIZE -- 0.1% COMMON STOCK 20,750 shs BHI (USD).............................. 324 BRAZIL -- 4.5% COMMON STOCK 65,000 Capco Automotive Products (USD)....................... 496 PREFERRED STOCKS AND RIGHTS 30,100,000 * Arapua Import............................ 291 118,000,000 Artex.................................... 442 563,000 * Bahia Sul Celulose....................... 293 45,992,000 Banco Nacional........................... 909 3,076,000 Casa Anglo Bras.......................... 192 42,200,000 Ceval Alimentos.......................... 548 85,172,356 Cia Acos Espec Itabira................... 708 6,337,347 rts * Cia Acos Espec Itabira................... 0 279,000 shs Cia Siderurgiga Paulista Cosipa 'B'............................. 418 3,505,758 Cia Tecidos Norte de Minas............... 1,093 1,145,965 Dixie Toga............................... 1,072 20,700,000 Duratex.................................. 1,012 10,888,000 * Eluma.................................... 396 1,044,000 Eucatex.................................. 148 750,000 Frigobras Cia Bras de Frigorificos........................ 561 451,392,000 Industia e Comercio Chapeco................................ 103 46,100,000 Ipiranga Petroleo........................ 527 4 Lojas Americanas......................... 0 28,746,000 Lojas Renner............................. 658 7,379,900 * Mesbla................................... 138 6,000,000 Metalurgica Schulz....................... 211 535,000 * Moinho Santista.......................... 356 582,354 rts * Moinho Santista.......................... 0 682,000 shs Multibras Eletrodomesticos............... 603 7,300,000 Pettenati sa Malhas Confeccoes............................. 216 213,387,676 Refrigeracao Parana...................... 504
7 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value ---------- 4,191,920 shs * Sifco................................... $ 196 2,443,000 Weg..................................... 1,219 875,000 * Wentex Textile.......................... 1,190 14,004 Total Brazil 14,500 CANADA -- 0.1% COMMON STOCK 54,000 * Arakis Energy (USD)..................... 283 CHILE -- 0.4% COMMON STOCKS 32,000 Chilquinta ADR (USD).................... 556 9,150 Genesis Chile Fund (USD)................ 354 10,550 Sociedad Quimica Minera de Chile ADR (USD).................... 458 Total Chile 1,368 CHINA -- 0.9% COMMON STOCKS 240,600 China Merchants Shekou (HKD)................................. 100 288,000 * China North Industries Investment (USD)...................... 262 1,011,500 Shanghai Diesel Engine 'B' (USD)...................... 447 300,000 Shanghai Friendship Company 'B' (USD)..................... 150 1,826,000 Shanghai Haixing Shipping 'H' (HKD).................... 189 898,000 * Shanghai New Asia 'B' (USD)............. 431 355,000 Shanghai Shangling Electric Appliance 'B' (USD)................... 312 291,800 Shenzhen Nanshan 'B' (HKD).............. 70 1,583,000 * Shenzhen North Jianshe Motorcycle 'B' (HKD).................. 972 Total China 2,933 COLOMBIA -- 0.3% COMMON STOCKS 20,000 Cementos Diamante 'B' GDS (USD)............................. 350 20,000 Gran Cadena de Almacemes 'B' ADS (USD)............................. 275 29,500 Maderas y Sinteticos Sociedad Anoma ADR (USD)....................... 527 Total Colombia 1,152 CZECH REPUBLIC -- 0.2% COMMON STOCK 6,297 IPS Praha............................... 522 DENMARK -- 0.3% COMMON STOCK 7,353 * Silcon 'B'.............................. 269 CONVERTIBLE BOND 3,100,000 DKK Danske Traelastkompagni, 5.25%, 1/1/02......................... 599 Total Denmark 868 ECUADOR -- 0.1% COMMON STOCK 1,705 shs La Cemento Nacional GDS (USD)............................. 355 FINLAND -- 0.1% COMMON STOCK 15,000 Huhtamaki Oy 'I'........................ 445 FRANCE -- 3.7% COMMON STOCKS AND RIGHTS 3,682 But..................................... 937 6,400 Cardif.................................. 596 17,300 Cipe France............................. 1,015 6,100 * Club Mediterranee....................... 478 6,100 rts * Club Mediterranee....................... 6 2,240 shs * Concorde................................ 279 6,000 Dauphin................................. 209 15,000 De Dietrich & Cie....................... 760 9,896 Ecco Travail Temporaire................. 690 16,601 Groupe Zannier.......................... 213 8,586 Guilbert................................ 1,031 6,100 Manutan................................. 695 6,000 MGI Coutier............................. 356 23,000 * Moulinex................................ 458 3,100 Rexel................................... 501 19,037 Rochefortaise Communication............. 623 4,860 SITA.................................... 834 5,906 Societe Des Immeubles de France............................. 268 9,940 Spir Communication...................... 844 14,500 * Vallourec............................... 569 3,312 Virbac.................................. 440 11,802 CONVERTIBLE BOND 410,760 FRF Virbac, 5.00%, 1/1/01................... 94 Total France 11,896
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Value ----------- GERMANY -- 4.3% COMMON STOCKS AND WARRANTS 1,800 shs Altana.................................. $ 1,047 3,000 Balcke Durr............................. 737 1,250 Buderus................................. 536 37,500 * Dorries Scharmann....................... 213 1,000 Duerr Beteiligungs...................... 323 91 F.A. Gunther & Sohn..................... 7 9,142 Kampa Haus.............................. 361 1,000 Klein, Schanzlin & Becker............... 213 903 Nordstern Lebensmittel.................. 176 1,125 Pfleiderer Bau und Verkehrssysteme....................... 377 9,300 * Pittler Maschinenfabrik................. 548 1,952 Plettac................................. 447 92 Sixt.................................... 26 125 wts * Sixt.................................... 97 2,250 shs Vereinigte Baubeschlag Handel................................ 574 1,000 wts * Wella International Finance, 3/18/96............................... 65 5,747 PREFERRED STOCKS AND RIGHTS 21,000 shs Berentzen Gruppe........................ 589 1,600 Edding.................................. 515 1,600 Hach.................................... 823 2,400 Klein, Schanzlin & Becker............... 392 2,000 Leffers................................. 352 1,200 Marschollek Lautenschlaeger............. 806 11,900 Rhon Klinikum........................... 1,015 11,900 rts * Rhon Klinikum........................... 228 4,050 shs Signal Bau Huber........................ 429 268 Sixt.................................... 77 3,500 Spar Handells........................... 756 1,386 Sto..................................... 743 3,200 Villeroy & Boch......................... 605 4,424 Westag & Getalit........................ 990 8,320 Total Germany 14,067 GUATEMALA -- 0.3% COMMON STOCK 38,000 * Basic Petroleum (USD)................... 1,045 HONG KONG -- 6.3% COMMON STOCKS AND WARRANTS 2,477,000 * Aeon Credit Service..................... 471 46,000 Amway Asia Pacific (USD)................ 1,484 2,889,035 China Hong Kong Photo Products........................ 1,326 904,000 Esprit Asia............................. 307 1,100,000 Fairyoung Holdings...................... 484 343,200 wts * Fairyoung Holdings, 6/30/96............. 13 2,181,000 shs Goldlion Holdings....................... 1,241 7,607,000 Harbour Ring International.............. 787 1,023,166 wts * Harbour Ring International, 7/17/97............................... 13 224,400 Hon Kwok Land Investment................ 68 762,000 Hong Kong Ferry......................... 788 4,214,000 Hualing Holdings........................ 654 1,139,000 IMC Holdings............................ 685 852,000 JCG Holdings............................ 623 881,000 Joyce Boutique.......................... 188 346,000 Kingboard Chemical...................... 106 1,603,000 National Mutual Asia.................... 1,234 152,000 * Ng Fung Hong............................ 68 1,248,000 Orient Overseas International......................... 718 113,000 Pacific Basin Bulk Shipping (USD)........................ 1,596 113,000 wts * Pacific Basin Bulk Shipping, 9/30/99 (USD)............... 78 2,000,000 shs Pokphand................................ 802 1,786,000 QPL International....................... 1,224 3,133,540 Siu Fung Ceramics....................... 770 540,000 Swank International Manufacturers......................... 64 664,000 Tian Teck Land.......................... 137 1,951,000 * Ultronics International................. 81 750,000 Wah Kwong Ship Holding.................. 1,052 3,200,000 Wai Kee Holdings........................ 393 452,000 Wing Hang Bank.......................... 1,456 2,390,000 Yeebo................................... 331 993,800 wts * Yeebo, 8/31/96.......................... 41 4,119,000 shs Yue Yuen Industrial..................... 1,079 Total Hong Kong 20,362 HUNGARY -- 0.2% COMMON STOCKS 1,125 * Chinoin................................. 317 28,050 Richter Gedeon (USD)................... 428 Total Hungary 745 INDIA -- 1.5% COMMON STOCKS 36,000 Ashok Leyland GDR (USD)................. 378 31,000 * Core Parenterals GDR (USD).............. 128 8,000 * East India Hotels GDR (USD)............. 145
9 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value ----------- 30,000 shs Grasim Industries GDS (USD)............. $ 622 25,800 Hindalco GDR (USD)...................... 823 42,000 * Indian Hotels GDS (USD)................. 772 10,000 Reliance Industries GDS (USD)............................. 152 137,000 Videocon International GDR (USD)............................. 343 3,363 CONVERTIBLE BONDS 760,000 USD Essar Gujarat, Cv., 5.50%, 8/5/98......................... 755 565,000 Gujarat Ambuja Cements, 3.50%, 6/30/99........................ 788 1,543 Total India 4,906 INDONESIA -- 3.9% COMMON STOCKS 279,250 shs Bank Dagang Nasional.................... 249 239,000 Bank International Indonesia............ 837 179,583 Duta Anggada Realty..................... 113 114,950 Enseval Putera Megatrading.............. 86 81,500 Hanjaya Mandala Sampoerna............... 754 198,656 Indah Kiat Paper & Pulp................. 195 210,350 Indofoods Sukses Makmur................. 972 207,600 Indorama Synthetic...................... 688 131,000 Indosat 'B'............................. 444 17,000 Indosat 'B' ADR (USD)................... 563 245,000 Inti Indorayon Utama.................... 302 161,500 Jakarta International Hotels & Development......................... 222 234,500 Jaya Real Property...................... 669 714,000 Mayora Indah............................ 511 110,500 Modernland Realty....................... 156 507,800 Mulia Industrindo....................... 1,498 641,820 Pabrik Kertas Tjiwi Kimia............... 1,187 646,125 Panin Bank.............................. 711 265,200 Semen Cibinong.......................... 695 404,000 Semen Gresik............................ 1,049 169,000 United Tractors......................... 335 12,236 CORPORATE BOND 200,000 CHF Indorama Synthetic, 4.50%, 12/31/97....................... 224 CONVERTIBLE BOND 265,200,000 IDR Modernland Realty, 6.00%, 1/4/03......................... 110 Total Indonesia 12,570 IRELAND -- 0.5% COMMON STOCKS AND WARRANTS 600,000 Barlo Group............................. 272 494,505 wts * Dragon Oil (GBP)........................ 4 700,000 shs * Kenmare Resources (GBP)................. 249 386,000 Kingspan Group.......................... 1,097 Total Ireland 1,622 ISRAEL -- 0.5% COMMON STOCKS 314,000 Bank Hapoalim.......................... 499 90,000 * Blue Square............................ 588 18,000 Teva Pharmaceutical ADR (USD)............................ 711 Total Israel 1,798 ITALY -- 2.5% COMMON STOCKS AND WARRANTS 69,000 * Cementeria di Augusta................... 108 343,000 Danieli & Company, savings shares........................ 947 55,500 wts * Danieli & Company, 11/30/99............. 29 635,000 shs * Editoriale la Republica................. 545 24,000 Fila Holdings ADR (USD)................. 1,020 117,000 * Industria Macchine Automatiche........................... 816 16,300 Industrie Natuzzi ADR (USD)............................. 624 634,081 Merloni Elettrodomestici, savings shares........................ 716 67,700 Saes Getters............................ 1,291 46,000 Safilo.................................. 488 524,500 Tecnost................................. 1,086 90,000 Telecocavi, savings shares.............. 217 90,000 Vianini Lavori.......................... 151 15,000 Zucchi, savings shares.................. 35 8,073 CORPORATE BOND 333,000,000 ITL Danieli & Company, 6.34375%, 1/1/00...................... 166 Total Italy 8,239 JAPAN -- 14.7% COMMON STOCKS AND WARRANTS 26,000 shs Amway Japan............................. 991 64,000 Apollo Electronics...................... 1,583 26,000 Asatsu.................................. 897
10 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value ----------- 97,000 shs Avon Products........................... $ 403 20,000 Chofu Seisakusho........................ 469 112,000 Daibiru................................. 1,139 41,000 Daifuku................................. 489 14,000 Disco................................... 527 28,000 Eidensha................................ 326 1,450 wts * Eidensha, 2/14/96 (DEM)................. 23 26,000 shs Emoto Industry.......................... 348 29,000 Enix.................................... 1,049 8,000 Enplas.................................. 174 25,000 F.C.C. ................................. 770 6,000 Fanuc................................... 260 35,000 Glory................................... 1,228 73,000 * Hamada Printing Press................... 503 15,500 Higashi Nihon House..................... 208 9,500 Hirose Electric......................... 606 65,000 Hitachi Tool Engineering................ 355 49,000 Horiba.................................. 551 110,000 Idec Izumi.............................. 946 53,000 Ishiguro Homa........................... 948 67,000 Iwata Air Compressor Manufacturing......................... 331 81,000 Japan Airport Terminal.................. 926 70,000 Japan Living Service.................... 443 35,000 Juel Verite Ohkubo...................... 241 100 wts * Juel Verite Ohkubo, 3/10/98 (CHF)......................... 8 71,000 shs Juntendo................................ 451 13,000 Kato Denki.............................. 341 700 wts * Kawasaki Electric, 12/20/96 (CHF)........................ 2 12,100 shs Keyence................................. 1,490 31,000 Kirin Beverage.......................... 470 37,000 KOA..................................... 600 46,200 KTK Telecommunications Engineering........................... 465 26,100 Kyokuto Kaihatsu Kogyo.................. 574 21,000 Levi Strauss Japan Kabushiki Kaisha...................... 310 47,000 Lintec.................................. 671 21,700 Mabuchi Motor........................... 1,313 7,000 * Maruwa Ceramic.......................... 527 23,000 Masaru.................................. 170 54,000 Meitec.................................. 882 89,000 Meitetsu Transport...................... 512 1,300 wts * Meitetsu Transport, 4/30/97 (CHF)......................... 55 34,000 shs Mori Seiki.............................. 671 27,000 Mos Food Services....................... 676 49,000 Namura Shipbuilding..................... 273 18,000 Natoco Paint............................ 264 38,000 New Japan Securities.................... 178 51,000 Nichicon................................ 688 16,000 Nichiei................................. 993 8,000 Nihon Dempa Kogyo....................... 205 56,000 * Nippon Columbia......................... 318 75,000 Nippon Denwa Shisetsu................... 621 39,000 Nippon Kagaku Yakin..................... 368 56,000 Nippon Konpo Unyu Soko.................. 454 55,000 Nippon Seiki............................ 608 80,000 Nippon Thompson......................... 653 83,000 Nippon Yusoki........................... 326 14,000 Nissha Printing......................... 171 56,000 Nitta................................... 925 47,000 Okasan Securities....................... 187 30,000 Osaka Organic Chemical.................. 267 39,000 Paltac.................................. 419 22,100 Promise................................. 871 23,400 Rinnai.................................. 517 41,000 Sanken Electric......................... 386 22,000 * Sankyo Engineering...................... 353 39,000 Sanoyas Hishino Meisho.................. 191 54,000 * Sanyo Securities........................ 165 16,000 Seiko................................... 311 31,800 Sekisui House........................... 367 24,000 Senshukai............................... 450 17,000 Shinkawa................................ 607 131,000 Sintokogio.............................. 973 9,600 SMC..................................... 675 104,000 * Sodick.................................. 986 92,000 Sogo Denki.............................. 409 28,000 Tamura.................................. 181 18,000 Techno Ryowa............................ 341 81,000 Toc..................................... 755 28,000 Tohoku Telecommunications............... 140 34,000 Tokai Rubber Industries................. 382 13,000 Tokyo Ohka Kogyo........................ 397 68,000 Topre................................... 485 56,000 * Toshiba Tungaloy........................ 348 23,000 Toyo Communication Equipment............................. 427 71,000 Toyo Steel.............................. 226 14,400 Trusco Nakayama......................... 274 16,000 Uniden.................................. 258 69,000 Wako Securities......................... 459 17,000 Xebio................................... 632 68,000 * Yamatane Securities..................... 213 69,000 Yamato Kogyo............................ 546 Total Japan 48,165
11 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Value ----------- MALAYSIA -- 5.1% COMMON STOCKS AND WARRANTS 32,333 shs Arab Malaysian Finance.................. $ 113 249,000 Asas Dunia.............................. 784 235,000 Bandar Raya Developments................ 351 418,000 wts * Bandar Raya Developments, 9/1/97................................ 354 484,000 shs Chemical Company of Malaysia........................... 971 445,000 * Gemtech Resources....................... 855 595,000 Hock Hua Bank........................... 1,756 250,000 LB Aluminum............................. 531 142,000 Lityan Holdings......................... 377 109,000 Malaya Glass............................ 365 329,000 Malaysian Assurance Alliance............ 1,334 402,666 MTD Capital............................. 2,250 748,750 Muda Holdings........................... 825 221,000 Peladang Kimia.......................... 626 522,000 Pelangi................................. 510 375,000 Phileo Allied........................... 1,579 43,000 Public Finance.......................... 81 545,000 Shah Alam Properties.................... 1,341 416,000 Sunway Building Technology.............. 1,113 170,000 Westmont................................ 589 16,705 PREFERRED STOCK 113,333 Arab Malaysian Finance, Cv. Loan Stock, 7.50%, 11/20/99....................... 60 Total Malaysia 16,765 MEXICO -- 1.7% COMMON STOCKS 46,000 * Altos Hornos Mexico..................... 245 109,740 Apasco.................................. 402 738,850 Embotelladores del Valle Anahuac `B'..................... 672 255,000 * Empaques Ponderosa `B'.................. 537 90,000 Grupo Elektra........................... 354 73,000 Grupo Financiero Inbursa `B'............ 198 14,926 * Grupo Mexicano de Desarrollo `B' ADS (USD)......................... 37 26,000 * Grupo Mexicano de Desarrollo Units ADS (USD)....................... 78 39,000 Grupo Radio Centro ADS (USD)............................. 278 106,200 * Grupo Sidek `B' ADR (USD)............... 199 2,640 * Grupo Sidek `L' ADR (USD)............... 7 24,936 * Grupo Simec `B' ADR (USD)............... 162 61,190 * Grupo Situr Convertible ADR (USD)............................. 195 180,888 International de Ceramica............... 208 180,000 * Jugos de Valle `B'...................... 313 45,000 * Sears Roebuck de Mexico `B' ADS (USD)............................. 242 56,000 * Sears Roebuck de Mexico `B' GDS (USD)............................. 301 1,125,000 * Seguros Comercial Americana `B'......................... 268 77,210 * Servicios Financieros Quadram ADR (USD)..................... 396 29,200 Sigma Alimentos `B'..................... 205 92,000 Tolmex `B'.............................. 345 Total Mexico 5,642 NETHERLANDS -- 2.9% COMMON STOCKS 8,750 Aalberts Industries..................... 513 28,925 Ahrend Groep............................ 1,023 7,500 Atag.................................... 499 22,500 Content Beheer.......................... 610 17,000 * Frans Maas Groep Koninklijke............ 543 28,000 Hagemeyer............................... 1,395 9,700 International - Muller.................. 695 15,000 Nedlloyd Groep.......................... 381 5,250 Otra.................................... 1,081 5,600 Polynorm................................ 590 39,000 Randstad Holdings....................... 1,760 13,200 Sphinx Gustavsberg...................... 366 Total Netherlands 9,456 NEW ZEALAND -- 1.0% COMMON STOCKS 892,000 * CDL Hotels.............................. 377 116,000 Independent Newspapers.................. 354 41,000 PDL Holdings............................ 235 163,800 Ports of Auckland....................... 381 292,888 Skellerup Group......................... 396 76,000 Steel & Tube Holdings................... 361 158,000 The Helicopter Line..................... 459 184,857 Whitcoulls Group........................ 275 353,000 Wrightson............................... 284 Total New Zealand 3,122 NORWAY -- 3.0% COMMON STOCKS 40,400 * Bona Ship Holdings...................... 415 9,680 Det Norske Luftfartselskap `B'.......... 448
12 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Value ----------- 9,500 shs Elkjop Norge............................ $ 244 30,670 Kverneland Gruppen...................... 532 76,400 Merkantildata........................... 675 72,762 * Moelven Industrier...................... 69 24,100 Multisoft............................... 580 17,000 Nera.................................... 609 19,900 Norske Skogsindustrier.................. 577 78,750 Schibsted............................... 873 52,000 * Sensonor................................ 442 37,000 * Smedvig................................. 642 64,000 * Sysdeco Group........................... 1,429 207,500 Tomra Systems........................... 1,309 59,436 Transocean.............................. 907 Total Norway 9,751 PERU -- 1.0% COMMON STOCKS 218,278 Backus y Johnston Cerveceria `T'........................ 391 20,070 Cementos Lima........................... 298 34,100 * Cementos Yura `C' (USD)................. 264 26,071 Compania de Seguard la Fenix Peru......................... 294 280,000 * Compania Embotelladora del Pacifico `B' (USD)................ 146 129,838 Enrique Ferreyros....................... 149 155,641 * Explosivos `C'.......................... 232 155,641 * Explosivos `T'.......................... 232 28,222 Minsur `T'.............................. 196 1,013,333 * Peru Real Estate `B'.................... 532 1 * Southern Peru Copper `T'................ 0 2,734 CORPORATE BOND 370,000 USD International Financial Holdings,6.50%, 8/1/99................ 503 Total Peru 3,237 PHILIPPINES -- 2.4% COMMON STOCKS 464,000 shs Ayala Land `B'.......................... 535 1,743,000 C & P Homes............................. 1,122 247,640 First Philippine Holdings `B'........... 524 95,000 Manila Electric......................... 709 107,000 Philippine Commerce International Bank.................... 876 7,600 Philippine Long Distance Telephone ADR (USD)................... 426 885,000 * Pilipino Telephone...................... 783 2,518,000 * SM Prime................................ 678 11,942,000 * Southeast Asia Cement................... 1,561 7,214 CONVERTIBLE BOND 253,300 USD Benpres Holdings, 4.20%, 11/26/49....................... 481 Total Philippines 7,695 POLAND -- 0.3% COMMON STOCKS 1,329,372 shs * International UNP Holdings (CAD)........................ 476 200,000 Mostostal Export........................ 469 Total Poland 945 PORTUGAL -- 0.4% COMMON STOCKS 30,000 * Jornalgeste............................. 465 10,080 Salvador Caetano........................ 145 47,250 * Sempa................................... 454 1,064 PREFERRED STOCK 41,610 * Filmes Lusomundo........................ 393 Total Portugal 1,457 PUERTO RICO -- 0.1% COMMON STOCK 40,000 * Pepsi Cola Puerto Rico Bottling Company `B' (USD)............................. 545 RUSSIA -- 0.4% COMMON STOCKS 96,000 * Petersburg Long Distance (USD)................................. 588 35,000 * Petersburg Long Distance (CAD)................................. 209 2,750,000 * Star Mining (AUD)....................... 440 Total Russia 1,237 SINGAPORE -- 1.6% COMMON STOCKS AND WARRANTS 538,000 * Acer Computer International (USD)................... 969 289,000 CSA Holdings............................ 276 71,000 Far East Levingston Shipbuilding.......................... 307 507,000 Hong Fok................................ 739
13 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Value ----------- 230,000 shs Hour Glass............................. $ 191 332,000 Hwa Tat Lee............................ 150 140,000 Intraco................................ 205 247,000 Malayan Credit......................... 453 292,000 Marco Polo Development................. 351 506,000 Pacific Carrier........................ 451 220,000 Republic Hotels & Resorts.............. 255 184,000 wts * Republic Hotels & Resorts, 7/12/00.............................. 76 206,000 shs Tiger Medicals......................... 315 266,000 Wing Tai Holdings...................... 461 Total Singapore 5,199 SOUTH AFRICA -- 1.3% COMMON STOCKS 6,750 Anglo America Industrial............... 341 120,200 Barlow Limited......................... 1,549 519,200 Iscor.................................. 527 9,300 * Polifin................................ 20 140,000 Rembrandt Group........................ 1,276 62,000 Sasol.................................. 535 Total South Africa 4,248 SOUTH KOREA -- 2.1% COMMON STOCKS AND RIGHTS 10,000 Coryo Securities....................... 182 19,170 HS Chemical............................ 584 22 Korea Growth Trust IDR (USD)................................ 781 26,361 Kun Young Construction................. 413 6,141 rts * Kun Young Construction................. 0 20,000 shs * L.G. Information & Communications....................... 1,576 10,000 * L.G. Information & Communications, new.................. 788 57,753 * Samsung Engineering & Construction......................... 1,917 21,681 * Samsung Engineering & Construction, new.................... 697 1,321 * Samsung Electronic GDS 1/2 Voting Shares, new (USD)................................ 23 Total South Korea 6,961 SPAIN -- 1.9% COMMON STOCKS 53,000 * Algodonera de St. Antonia.............. 396 15,000 Azkoyen................................ 934 187,500 Corporacion Financiaera Reunida.............................. 607 8,500 * Cristaleria Espanola................... 529 135,000 Filo................................... 608 23,821 Grupo Anaya............................ 565 139,000 * Grupo Duro Felguera.................... 547 65,670 Marco Iberica Distribucion de Edic................. 683 27,000 Prosegur Compania Securidad............................ 661 125,000 * Sotogrande............................. 247 5,777 CONVERTIBLE BOND 32,910,000 ESP Grupo Anaya, 7.00%, 3/18/98.............................. 271 Total Spain 6,048 SWEDEN -- 3.3% COMMON STOCKS 51,170 shs Angpanne Foreningen `B'................ 863 411,000 * BPA `A'................................ 842 100,500 Catena `A'............................. 757 91,337 * Finnveden `B'.......................... 928 37,532 Gambro `B'............................. 656 22,100 Getinge Industrier `B'................. 942 43,950 Hoganas `B'............................ 1,185 95,150 ICB Shipping `B'....................... 788 42,000 Kalmar Industries...................... 683 29,770 Linjebuss `A'.......................... 269 18,000 Securitas `B'.......................... 697 140,000 Stena Line `B'......................... 712 58,000 TV 4 `A'............................... 1,266 10,588 CONVERTIBLE BOND 900,000 SEK Stena Line, 7.00%, 4/30/01....................... 122 Total Sweden 10,710 SWITZERLAND -- 2.6% COMMON STOCKS 1,255 shs Bil GT Gruppe.......................... 774 460 Bossard Holdings....................... 820 2,050 Bucher Holding......................... 1,291 3,200 Generale D'Affichage................... 1,375 360 Gurit Heberlien........................ 755 1,200 Hilti.................................. 989 2,500 Lem Holding............................ 951 1,375 * Saurer................................. 497 340 Sig Schweiz............................ 737 2,000 * Von Moos............................... 194 Total Switzerland 8,383
14 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Value ----------- TAIWAN -- 0.7% COMMON STOCKS 60,304 shs * GVC Corporation GDR (USD)............................. $ 543 12,428 * Tung Ho Steel Enterprise GDR (USD)............................. 133 63,510 * Yageo GDR (USD)......................... 619 22,739 * Yageo GDR, new (USD).................... 222 1,517 CONVERTIBLE BONDS 150,000 USD Acer, 4.00%, 6/10/01.................... 461 150,000 United Micro Electronics, 1.25%, 6/8/04......................... 205 666 Total Taiwan 2,183 THAILAND -- 1.5% COMMON STOCKS, RIGHTS AND WARRANTS 20,000 Bangkok Insurance Public................ 342 18,333 Bangkok Metropolitan Bank............... 18 41,900 Goodyear................................ 390 85,000 Hana Microelectronics................... 338 232,000 Industrial Finance of Thailand.............................. 761 67,000 Precious Shipping....................... 402 67,000 rts * Precious Shipping....................... 375 59,000 shs Property Perfect........................ 469 20,444 wts * Property Perfect, 7/7/99................ 37 252,000 shs Robinson Deposit Store.................. 526 135,000 * Sahavirya Steel......................... 206 67,000 Sanyo Universal Electric................ 306 114,300 Swedish Motors.......................... 509 56,800 Unithai Line Public..................... 334 Total Thailand 5,013 UNITED KINGDOM -- 14.1% COMMON STOCKS, RIGHTS AND WARRANTS 99,000 wts * Abtrust Lloyds Insurance................ 45 204,000 shs * Acorn Computer Group.................... 471 291,666 Ashtead Group........................... 1,951 110,000 Baggeridge Brick........................ 164 900,000 BCE Holdings............................ 345 250,000 Berisford International................. 585 78,664 * British Biotechnology................... 1,109 705,047 Britton Group........................... 1,750 750,000 Bruntcliffe Aggregates.................. 237 282,600 CALA.................................... 509 185,000 Carpetright............................. 1,018 1,280,585 Casket.................................. 162 223,000 Chamberlain Phipps...................... 296 577,500 Corporate Services Group................ 785 397,222 CRT Group............................... 754 265,000 Devro International..................... 1,018 13,846,152 * Dragon Oil.............................. 383 35,000 Druck Holdings.......................... 1,212 587,734 Enviromed............................... 167 100,952 Ferraris Group.......................... 88 105,000 FII Group............................... 739 95,000 First Technology........................ 701 247,200 Frost Group............................. 860 5,207,860 Graystone............................... 1,070 480,000 Halkin Holdings......................... 410 150,000 Helical Bar............................. 757 32,500 Henderson Administration Group................................. 640 320,000 HTV Group............................... 1,305 178,000 Iceland Group........................... 467 300,000 Ingham.................................. 180 340,500 JBA Holdings............................ 2,078 120,000 * JKX Oil & Gas........................... 347 130,000 Kewill Systems.......................... 678 287,330 London & Overseas Freighters............................ 382 93,000 Mackie International Group.............. 522 173,000 Matthew Clark........................... 1,762 1,115,000 Mayflower............................... 1,648 467,000 Mirror Group............................ 1,237 706,176 * Monument Oil & Gas...................... 656 450,000 NSM..................................... 626 300,000 Oliver Group............................ 173 733,333 * Pentos.................................. 0 141,000 Peter Black Holdings.................... 620 100,000 Pillar Property Investments............. 237 235,000 Pizza Express........................... 721 139,000 Powerscreen International............... 855 177,000 Precoat International................... 442 941,856 Princedale Group........................ 417 263,575 Prowting................................ 392 194,979 Quadramatic............................. 601 1,861,159 * Regal Hotel Group....................... 1,118 115,140 RJB Mining.............................. 900 2,000,000 * Roxspur................................. 206 1,126,525 * Roxspur, new............................ 116 50,000 Serco Group............................. 293 635,555 Spring Ram.............................. 271 418,750 Stakis.................................. 510 210,000 Sterling Publishing..................... 93 332,000 Stordata Solutions...................... 92 221,333 rts * Stordata Solutions...................... 19
15 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Value ----------- 94,000 shs * Stoves.................................. $ 312 618,530 Taylor Nelson........................... 425 165,000 TLG..................................... 447 655,000 Transtec................................ 888 63,500 Trifast................................. 355 475,000 Ugland International.................... 586 4,578,501 Verity Group............................ 905 265,000 Vibroplant.............................. 352 1,116,000 * Videologic Group........................ 582 323,888 Wickes.................................. 638 5,015,000 * Wiggins Group........................... 258 394,000 WPP Group............................... 959 44,897 PREFERRED STOCKS 550,000 Berisford International, 5.00% Cv. Loan Stock, 2015.................. 583 120,000 Iceland Group, Cum. Cv.................. 248 831 Total United Kingdom 45,728 VENEZUELA -- 0.5% COMMON STOCKS 15,000 Corimon ADR (USD)....................... 64 83,212 Mavesa ADR (USD)........................ 333 112,066 Mavesa ADS (USD)........................ 448 52,800 * Sudamtex de Venezuela `B' ADR (USD)............................. 218 80,000 Venezolana de Prerreducidos Caroni GDS (USD)...................... 432 Total Venezuela 1,495 VIETNAM -- 0.4% COMMON STOCK 118,600 * Lazard Frier & Co. Vietnam Fund (USD).................... 1,245 SHORT-TERM INVESTMENTS -- 2.2% COMMERCIAL PAPER $2,000,000 Delaware Funding, 5.70%, 11/3/95........................ 1,973 3,000,000 Preferred Receivables Funding, 5.73%, 11/27/95....................... 2,978 2,091,603 Investments in Commercial Paper through a joint account, 5.87 - 5.88%, 11/1/95................. 2,091 Total Short-Term Investments 7,042 - ------------------------------------------------------------------------------ Total Investments in Securities -- 99.2% of Net Assets (Cost $336,655) $322,881 - ------------------------------------------------------------------------------ Other Assets Less Liabilities..................................... $ 2,493 -------- Value ----- Net Assets Consist of: Accumulated net investment income - net of distributions.................. $ 2,048 Accumulated net realized gain/loss - net of distributions.................. (8,883) Net unrealized gain (loss).............. (13,775) Paid-in-capital applicable to 22,544,526 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized................ 345,984 -------- NET ASSETS.............................. $325,374 ======== NET ASSET VALUE PER SHARE............... $14.43 ====== - ------------------------------------------------------------------------------
* Non-income producing AUD Australian dollar CAD Canadian dollar CHF Swiss franc DEM German deutschemark DKK Danish krone ESP Spanish peseta FRF French franc GBP British sterling HKD Hong Kong dollar IDR Indonesian rupia ITL Italian lira SEK Swedish krona USD U.S. dollar The accompanying notes are an integral part of these financial statements. 16 - ------------------------------------------------------------------------------- Statement of Operations - ------------------------------------------------------------------------------- T. Rowe Price International Discovery Fund / Year Ended October 31, 1995 (in thousands) INVESTMENT INCOME Income Dividend (net of foreign taxes of $944).......................... $ 6,839 Interest......................................................... 1,060 Other............................................................ 52 -------- Total income..................................................... 7,951 -------- Expenses Investment management............................................ 4,381 Shareholder servicing............................................ 846 Custody and accounting........................................... 322 Prospectus and shareholder reports............................... 99 Registration..................................................... 61 Legal and audit.................................................. 52 Proxy and annual meeting......................................... 18 Directors........................................................ 14 Miscellaneous.................................................... 17 -------- Total expenses................................................... 5,810 Expenses paid indirectly......................................... (1) -------- Net expenses..................................................... 5,809 -------- Net investment income.............................................. 2,142 -------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Securities....................................................... (7,141) Foreign currency transactions.................................... (360) -------- Net realized gain (loss)......................................... (7,501) -------- Change in net unrealized gain or loss on: Securities....................................................... (59,605) Other assets and liabilities denominated in foreign currencies... (32) -------- Change in net unrealized gain or loss............................ (59,637) -------- Net realized and unrealized gain (loss)............................ (67,138) -------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS.................. $(64,996) ========
The accompanying notes are an integral part of these financial statements. 17 - ------------------------------------------------------------------------------- Statement of Changes in Net Assets - ------------------------------------------------------------------------------- T. Rowe Price International Discovery Fund (in thousands)
Year Ended October 31, 1995 1994 -------- -------- INCREASE (DECREASE) IN NET ASSETS FROM Operations Net investment income................................................ $ 2,142 $ 1,710 Net realized gain (loss)............................................. (7,501) 33,944 Change in net unrealized gain or loss................................ (59,637) (3,800) --------- --------- Increase (decrease) in net assets from operations.................... (64,996) 31,854 --------- --------- Distributions to shareholders Net investment income................................................ (1,593) (1,527) Net realized gain.................................................... (23,937) (437) --------- --------- Decrease in net assets from distributions............................ (25,530) (1,964) --------- --------- Capital share transactions* Shares sold.......................................................... 55,318 283,987 Distributions reinvested............................................. 23,502 1,746 Shares redeemed...................................................... (166,714) (141,266) Redemption fees received............................................. 352 84 --------- --------- Increase (decrease) in net assets from capital share transactions.... (87,542) 144,551 --------- --------- Increase (decrease) in net assets...................................... (178,068) 174,441 NET ASSETS Beginning of period.................................................... 503,442 329,001 --------- --------- End of period.......................................................... $ 325,374 $ 503,442 ========= ========= - --------------------------------------------------------------------------------------------------------- *Share information Shares sold.......................................................... 3,750 16,233 Distributions reinvested............................................. 1,573 102 Shares redeemed...................................................... (11,326) (8,143) --------- --------- Increase (decrease) in shares outstanding............................ (6,003) 8,192 ========= ========= - ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 18 - ------------------------------------------------------------------------------- Notes to Financial Statements - ------------------------------------------------------------------------------- T. Rowe Price International Discovery Fund / October 31, 1995 Note 1 - Significant Accounting Policies T. Rowe Price International Funds, Inc., (the Corporation) is registered under the Investment Company Act of 1940. The International Discovery Fund (the fund), a diversified, open-end management investment company, is one of the portfolios established by the Corporation. A) Valuation - Equity securities listed or regularly traded on a securities exchange (including Nasdaq) are valued at the last quoted sales price at the time the valuations are made. A security which is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Other equity securities and those listed securities that are not traded on a particular day are valued at a price within the limits of the latest bid and asked prices deemed by the Board of Directors, or by persons delegated by the Board, best to reflect fair value. Debt securities are generally traded in the over-the-counter market and are valued at a price deemed best to reflect fair value as quoted by dealers who make markets in these securities or by an independent pricing service. Short-term debt securities are valued at their cost which, when combined with accrued interest, approximates fair value. For purposes of determining the fund's net asset value per share, the U.S. dollar value of all assets and liabilities initially expressed in foreign currencies is determined by using the mean of the bid and offer prices of such currencies against U.S. dollars quoted by a major bank. Assets and liabilities for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by or under the supervision of the officers of the fund, as authorized by the Board of Directors. B) 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. C) Other - Income and expenses are recorded on the accrual basis. Expenses paid indirectly are custody fees paid by float credits earned on daily residual cash balances at the custodian. 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. A) Emerging Markets - At October 31, 1995, 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. B) Commercial Paper Joint Account - The fund, and other affiliated funds, may transfer uninvested cash into a commercial paper joint 19 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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. C) Securities Lending - To earn additional income, the fund lends its securities to approved brokers. At October 31, 1995, the market value of securities on loan was $9,315,000, which was fully collateralized with cash. Although the risk is mitigated by the collateral, the fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return them. D) Other - Purchases and sales of portfolio securities, other than short-term securities, aggregated $162,814,000 and $267,093,000, respectively, for the year ended October 31, 1995. 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. The fund has unused realized capital loss carryforwards for federal income tax purposes of $8,323,000 which expire in 2003. The fund intends to retain gains realized in future periods that may be offset by available capital loss carryforwards. In order for the fund's capital accounts and distributions to shareholders to reflect the tax character of certain transactions, $38,000 of undistributed net investment income was reclassified as an increase to undistributed net realized gains during the year ended October 31, 1995. The results of operations and net assets were not affected by the reclassifications. At October 31, 1995, the aggregate cost of investments for federal income tax and financial reporting purposes was $336,655,000 and net unrealized loss aggregated $13,774,000, of which $45,639,000 related to appreciated investments and $59,413,000 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 $309,000 was payable at October 31, 1995. The fee is computed daily and paid monthly, and consists of an Individual Fund Fee equal to 0.75% of average daily net assets and a Group Fee. The Group Fee is based on the combined assets of certain mutual funds sponsored by the Manager or Price Associates (the Group). The Group Fee rate ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in excess of $34 billion. At October 31, 1995, and for the year then ended, the effective annual Group Fee rate was 0.34%. The fund pays a pro rata share of the Group Fee based on the ratio of its net assets to those of the Group. Under the terms of the investment management agreement, the Manager was required to bear any expenses through December 31, 1993 which would have caused the fund's ratio of expenses to average net assets to exceed 1.50%. Thereafter through December 31, 1995, the fund is required to reimburse the Manager for these expenses, provided that average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing the fund's ratio of expenses to average net assets to exceed 1.50%. Pursuant to this and a previous agreement, $146,000 of unaccrued fees were repaid during the year ended 20 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- October 31, 1995. Pursuant to a previous agreement, $325,000 of unaccrued fees from 1991-1992 were permanently waived at December 31, 1994. In addition, the fund has entered into agreements with Price Associates and two wholly owned subsidiaries of Price Associates, pursuant to which the fund receives certain other services. Price Associates computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc. (TRPS), is the fund's transfer and dividend disbursing agent and provides shareholder and administrative services to the fund. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. The fund incurred expenses pursuant to these related party agreements totaling approximately $819,000 for the year ended October 31, 1995, of which $103,000 was payable at period-end. During the year ended October 31, 1995, the fund, in the ordinary course of business, paid commissions of $417,000 to, and placed security purchase and sale orders aggregating $80,769,000 with, certain affiliates of the Manager in connection with the execution of various portfolio transactions. 21 - ------------------------------------------------------------------------------- Financial Highlights - ------------------------------------------------------------------------------- T. Rowe Price International Discovery Fund
For a share outstanding throughout each period --------------------------------------------------------------------- Ten Months Year Ended Ended Year Ended October 31, October 31, December 31, ---------------------- --------------------------------- 1995 1994 1993++ 1992 1991 1990 --------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD................................... $17.63 $16.16 $11.68 $12.99 $11.75 $13.94 ------ ------ ------ ------ ------ ------ Investment Activities Net investment income....................... 0.10 0.04 0.07* 0.13* 0.13* 0.14* Net realized and unrealized gain (loss)............................... (2.38) 1.52 4.41 (1.31) 1.24 (1.91) ------ ------ ------ ------ ------ ------ Total from investment activities............ (2.28) 1.56 4.48 (1.18) 1.37 (1.77) ------ ------ ------ ------ ------ ------ Distributions Net investment income....................... (0.06) (0.07) -- (0.13) (0.13) (0.15) Net realized gain........................... (0.87) (0.02) -- -- -- (0.27) ------ ------ ------ ------ ------ ------ Total distributions......................... (0.93) (0.09) -- (0.13) (0.13) (0.42) ------ ------ ------ ------ ------ ------ Redemption fees added to paid-in-capital.......................... 0.01 -- -- -- -- -- ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD................ $14.43 $17.63 $16.16 $11.68 $12.99 $11.75 ====== ====== ====== ====== ====== ====== - --------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Total return.................................. (13.1)% 9.7% 38.4%* (9.1)%* 11.7%* (12.8)%* Ratio of expenses to average net assets.................................. 1.50%** 1.50% 1.50%+* 1.50%* 1.50%* 1.50%* Ratio of net investment income to average net assets....................... 0.55% 0.38% 0.81%+* 1.07%* 1.03%* 1.10%* Portfolio turnover rate....................... 43.5% 57.4% 71.8%+ 38.0% 56.3% 44.0% Net assets, end of period (in thousands).............................. $325,374 $503,442 $329,001 $166,362 $166,819 $136,660 - ---------------------------------------------------------------------------------------------------------------------
+ Annualized ++ The fund's fiscal year-end was changed to October 31. * Excludes expenses in excess of a 1.50% voluntary expense limitation in effect through December 31, 1993. ** Beginning in fiscal 1995, includes expenses paid indirectly. 22 - ------------------------------------------------------------------------------- Report of Independent Accountants - ------------------------------------------------------------------------------- To the Board of Directors and Shareholders of T. Rowe Price International Discovery Fund In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of T. Rowe Price International Discovery Fund (one of the portfolios constituting T. Rowe Price International Funds, Inc.) at October 31, 1995, and the results of its operations, the changes in its net assets and the financial highlights for each of the fiscal periods presented, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 1995 by correspondence with custodians and brokers and, where appropriate, the application of alternative auditing procedures for unsettled security transactions, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Baltimore, Maryland November 17, 1995 23 - -------------------------------------------------------------------------------- Annual Report - -------------------------------------------------------------------------------- For yield, price, last transaction, and current balance, 24 hours, 7 days a week, call: 1-800-638-2587 toll free 625-7676 Baltimore area For assistance with your existing fund account, call: Shareholder Service Center 1-800-225-5132 toll free 625-6500 Baltimore area T. Rowe Price 100 East Pratt Street Baltimore, Maryland 21202 This report is authorized for distribution only to shareholders and to others who have received a copy of the prospectus of the T. Rowe Price International Discovery Fund. [LOGO OF T. ROWE PRICE APPEARS HERE] IDF T. ROWE PRICE - ------------- International Discovery Fund October 31, 1995 -----END PRIVACY-ENHANCED MESSAGE-----