The international investment position of the United States at yearend 2003.

Abaroa, Patricia E.

THE net international investment position of the United States was -$2,430.7 billion (preliminary) at yearend 2003, compared with -$2,233.0 billion (revised) at yearend 2002, with direct investment valued at current cost (table 1, chart 1). The change was the result of a larger rise in the value of foreign-owned assets in the United States than in the value of U.S.-owned assets abroad.

The -$197.7 billion change from yearend to yearend mainly resulted from large net foreign purchases of U.S. securities, which increased the value of foreign-owned assets in the United States; this increase was partly offset by a substantial rise in the dollar value of U.S.-owned assets abroad, especially of U.S.-held stocks, as a result of appreciation of most foreign currencies against the U.S. dollar.

On an alternative valuation basis with direct investment valued at market value, the net international position of the United States was -$2,651.0 billion (preliminary) at yearend 2003, compared with -$2,553.4 billion (revised) at yearend 2002. This article features estimates valued at the current cost of direct investment; however, estimates valued at the market value of direct investment are mentioned when the two valuations of direct investment differ substantially. The differences between the two methods are limited to the valuation of direct investment. All financial flows and all asset and liability positions except direct investment are identical under both of these valuation measures.

With direct investment valued at current cost, U.S.-owned assets abroad increased substantially, to $7,202.7 billion at yearend 2003 from $6,413.5 billion at yearend 2002 (table A).

* Net financial outflows increased the value of U.S. investments abroad $283.4 billion in 2003 (table B), up from $198.0 billion in 2002, but down from a record $569.8 billion in 2000. U.S. investors shifted back to net purchases of foreign securities after having been net sellers for the first time in 2002, and outflows for U.S. direct investment abroad increased to the highest level since the record in 1999.

* Positive valuation adjustments increased the value of U.S. investments abroad $505.7 billion (table B). Price appreciation increased the value of U.S. holdings of foreign stocks. Exchange-rate appreciation of foreign currencies increased the value of many U.S. investments abroad.

With direct investment valued at current cost, foreign-owned assets in the United States increased substantially, to $9,633.4 billion at yearend 2003 from $8,646.6 billion at yearend 2002 (table A).

* Net financial inflows increased the value of foreign investments in the United States $829.2 billion (table C), up from inflows of $768.2 billion in 2002, and were the second largest on record after $1,046.9 billion in 2000. Foreign official acquisitions of assets surged to the highest inflows on record, more than double the inflows in 2002. Net foreign purchases of U.S. Treasury securities by private foreigners also accelerated. In contrast, net foreign purchases of U.S. securities other than U.S. Treasury securities slowed for the third consecutive year.

* Positive valuation adjustments increased the value of foreign-owned assets in the United States $157.6 billion (table C). Price appreciation of U.S. stocks increased the value of foreign holdings of U.S. stocks.

This article presents the major changes in U.S.-owned assets abroad and in foreign-owned assets in the United States in 2003. Tables 1 and 2 at the end of this article present detailed estimates of the yearend positions. The amounts cited in the article may differ slightly from the amounts that may be calculated from the tables because of rounding.

Changes in U.S.-Owned Assets Abroad

Bank and nonbank claims

U.S. claims on foreigners reported by U.S. banks and securities brokers increased $201.6 billion, to $1,776.3 billion, in 2003 (table D); the increase was attributable to financial outflows of $10.4 billion (the smallest outflows since 1994), exchange-rate appreciation of $15.2 billion, and "other" changes of $175.9 billion. The "other" changes reflected a change in the statistical reporting system that shifted some assets from U.S. claims reported by nonbanking concerns to U.S. claims reported by U.S. banks in 2003.

U.S. banks' own claims payable in dollars increased $118.5 billion, to $1,303.9 billion, down from an increase of $130.3 billion in 2002. The increase was more than accounted for by "other" changes; financial outflows decreased to $7.9 billion. Demand for bank credit was weak in 2003 as improved corporate cash flows and rising earnings led foreign borrowers to tap securities markets instead of banks for credit.

U.S. banks' domestic customers' claims denominated in dollars increased $86.3 billion, to $368.0 billion. Financial outflows declined somewhat, to $14.1 billion, as demand for foreign commercial paper slowed; however, the decline was mitigated by a resurgence in deposits abroad. U.S. banks' claims denominated in foreign currencies decreased $3.2 billion, to $104.4 billion; the decrease was attributable to financial inflows and "other" changes. The decrease was partly offset by exchange-rate appreciation of foreign currencies.

Claims on unaffiliated foreigners reported by U.S. nonbanking concerns decreased $293.4 billion, to $614.7 billion (table D). Changes in the statistical reporting system and related changes in the methodology for calculating nonbank transactions and positions led to a substantial decline in the transactions and positions covered by the nonbank category, which are reflected in the estimate of "other" changes. "Other" changes more than offset financial outflows and exchange-rate appreciation of foreign currencies.

Foreign securities

U.S. holdings of foreign securities increased $627.5 billion, to $2,474.4 billion, in 2003, after decreasing for 3 consecutive years. Net U.S. transactions shifted to net purchases of $72.3 billion, reflecting a shift to net U.S. purchases of foreign stocks and a decrease in net U.S. sales of foreign bonds.

U.S. holdings of foreign stocks increased $627.1 billion, to $1,972.2 billion, in 2003. Stock price appreciation of $324.9 billion, exchange-rate appreciation of $201.8 billion, and net U.S. purchases of $100.4 billion all contributed to the increase in U.S. holdings. Foreign stock prices (based on broad market indexes) appreciated 20 percent in local currency, reaching double-digit growth rates for the first time since 1999. In U.S. dollars, foreign stock prices appreciated 37 percent, outperforming U.S. stock prices, which appreciated 27 percent. Net U.S. purchases of foreign stocks rebounded in 2003 after low net U.S. purchases in 2002. Foreign stock transactions related to mergers and acquisitions remained small relative to these transactions in 1998-2001, despite the increase in stock prices. Exchange-rate appreciation added substantially to the value of most holdings.

* U.S. holdings of European stocks increased $316.7 billion, to $1,101.7 billion (table E). The increase was attributable to a 17-percent increase in European stock prices (in local currency), to a 20-percent exchange-rate appreciation of the euro against the dollar, and to exchange-rate appreciation of other European currencies against the dollar. Net U.S. purchases of European stocks increased to $25.6 billion.

* U.S. holdings of Japanese stocks increased $92.3 billion, to $233.7 billion, as a result of a 22-percent increase in Japanese stock prices (in local currency) and an 11-percent appreciation of the Japanese yen against the dollar. Net U.S. purchases of Japanese stocks increased strongly to $37.5 billion, reflecting a pickup in Japanese economic growth.

* U.S. holdings of Canadian stocks increased $27.6 billion, to $97.3 billion, as a result of a 25-percent appreciation of Canadian stock prices (in local currency) and a 22-percent appreciation of the Canadian dollar against the U.S. dollar. In addition, transactions in Canadian stocks shifted to net U.S. purchases of $2.6 billion from net U.S. sales.

* U.S. holdings of stocks of emerging market countries in Asia (excluding Japan, Hong Kong, and Singapore), Latin America, Africa, and Eastern Europe increased $103.4 billion, to $239.4 billion, as a result of a 42-percent price appreciation. Within this group, stock prices in emerging Asian countries appreciated 43 percent, and stock prices in emerging Latin American countries appreciated 55 percent.

U.S. holdings of foreign bonds increased $0.4 billion, to $502.1 billion, in 2003 (table F). Net U.S. sales slowed to $28.1 billion, but were more than offset by exchange-rate appreciation of $25.3 billion and by price appreciation of $3.2 billion. U.S. investors were net sellers in foreign bonds for the third consecutive year. Global bond prices weakened in 2003 in contrast to the rally in global stock markets.

U.S. direct investment abroad

U.S. direct investment abroad at current cost increased $229.0 billion, to $2,069.0 billion, in 2003, as a result of an increase in net financial outflows, exchange-rate appreciation of foreign currencies, and price appreciation (table G). At market value, U.S. direct investment abroad increased $690.5 billion, to $2,730.3 billion, as a result of substantial price appreciation in owners' equity resulting from an increase in foreign stock prices, exchange-rate appreciation of foreign currencies, and net financial outflows (table H). Net outflows accelerated to $173.8 billion, but they remained below record outflows of $224.9 billion in 1999. The acceleration was mostly due to a strong increase in reinvested earnings to $141.1 billion from $94.5 billion, which was widespread across industries. Equity capital outflows were virtually unchanged at $24.6 billion, as merger and acquisition activity was sluggish in comparison with the levels of 1998-2001. Intercompany debt outflows slowed to $8.1 billion from $15.8 billion, mostly in the manufacturing and holding company industries.

U.S. official reserve assets and other U.S. Government assets

U.S. official reserve assets increased $25.0 billion, to $183.6 billion, in 2003, as a result of strong price appreciation in the market value of the U.S. gold stock and of exchange-rate appreciation of other reserve assets. U.S. gold reserves increased $18.1 billion because of a 22-percent increase in the price of gold. U.S. official holdings of foreign currencies increased $5.9 billion, reflecting exchange-rate appreciation of $5.3 billion and financial outflows of $0.6 billion. The U.S. reserve position in the International Monetary Fund increased $0.6 billion as exchange-rate appreciation more than offset financial inflows. U.S. official holdings of special drawing rights increased $0.5 billion as exchange-rate appreciation more than offset financial inflows.

U.S. Government assets other than official reserve assets decreased $0.5 billion, to $84.8 billion, in 2003. Inflows for repayments of loans totaled $8.0 billion, more than offsetting an increase in U.S. Government credits of $7.4 billion. Both repayments and new credits accelerated in 2003.

Changes in Foreign-Owned Assets in the United States

Bank and nonbank liabilities

U.S. liabilities to private foreigners and international financial institutions reported by U.S. banks and securities brokers increased $368.8 billion, to $1,887.2 billion, in 2003 (table I). Most of the increase was due to "other" changes, reflecting a change in the statistical reporting system that shifted some liabilities from U.S. liabilities reported by nonbanking concerns to U.S. liabilities reported by U.S. banks in 2003. Financial inflows slowed to $75.6 billion in 2003, reflecting weaker demand for bank loans, and exchange-rate appreciation totaled $11.1 billion.

U.S. banks' own liabilities denominated in dollars increased $234.3 billion, to $1,503.7 billion. Financial inflows increased to $118.9 billion, reflecting a strong increase in borrowings by U.S. securities brokers and dealers that more than offset a decrease in inflows to U.S.-owned banks in the United States and a shift to outflows by foreign-owned banks in the United States. U.S. banks' custody liabilities denominated in dollars increased $153.5 billion, to $322.0 billion. U.S. banks' foreign currency liabilities decreased $19.0 billion, to $61.5 billion, as a result of large financial outflows. The decrease was partly offset by exchange-rate appreciation of foreign currencies.

Liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns decreased $398.1 billion, to $466.5 billion (table I). Changes in the statistical reporting system and in the methodology for calculating nonbank transactions led to a substantial decline in the transactions covered by the nonbank category, which are reflected in the estimate of "other" changes. "Other" changes more than offset financial inflows and exchange-rate appreciation of foreign currencies.

U.S. Treasury securities

Foreign holdings of U.S. Treasury securities increased $84.9 billion, to $542.5 billion, in 2003. Strong net foreign purchases of $113.4 billion more than offset price depreciation of $11.6 billion. As of December 2003, Japan remained by far the largest holder of U.S. Treasury securities. (In table J, foreign private holdings and foreign official holdings are combined in order to avoid the disclosure of sensitive data on individual country holdings by foreign official agencies.)

Other U.S. securities

Foreign holdings of U.S. securities other than U.S. Treasury securities, excluding official holdings, increased $604.4 billion, to $3,391.1 billion, in 2003. The increase was attributable to price appreciation of $319.8 billion (largely in U.S. stocks), net foreign purchases of $251.0 billion, and exchange-rate appreciation of $48.4 billion in foreign-currency-denominated U.S. bonds.

Foreign holdings of U.S. corporate bonds and U.S. agency bonds increased $252.6 billion, to $1,853.0 billion, in 2003 (table K). The increase was attributable to strong net foreign purchases of corporate bonds, price appreciation, and exchange-rate appreciation of U.S. bonds denominated in foreign currencies. Net foreign purchases of corporate bonds were a record $227.1 billion, as rising corporate profits and improved balance sheets made corporate bonds less risky and as low levels of inflation relative to inflation in other countries and persistently low yields on U.S. Treasury securities led investors to seek higher returns in U.S. corporate bonds. In contrast, transactions in U.S. agency bonds shifted to net foreign sales of $13.4 billion, reflecting substantial prepayments on mortgage-backed agency issues. As of December 2003, the United Kingdom remained the largest holder of U.S. corporate bonds and agency bonds at $749.2 billion, or 40 percent of foreign holdings; the next largest holders were Other Western Hemisphere, at $260.0 billion, and Japan, at $169.3 billion.

Foreign holdings of U.S. stocks increased $351.8 billion, to $1,538.1 billion, in 2003, after 2 years of decline, as a result of substantial price appreciation and net foreign purchases (table L). Most of the increase was due to price appreciation, as both the Dow Jones Industrial Average Index and the S&P 500 Index gained more than 20 percent and as the NASDAQ Composite Index gained 50 percent. However, net foreign purchases of U.S. stocks decreased for the third consecutive year, to $37.3 billion. As of December 2003, the United Kingdom remained the largest holder of U.S. stocks at $269.3 billion, or 18 percent of foreign holdings, followed by Canada, at $192.5 billion, and Japan, at $136.4 billion.

U.S. currency

U.S. currency held by foreigners increased $16.6 billion, to $317.9 billion, in 2003. Currency shipments to foreigners slowed in 2003 as a result of weak dollar demand in the second and third quarters.

Foreign direct investment in the United States

Foreign direct investment in the United States at current cost increased $48.8 billion, to $1,554.0 billion, in 2003, as a result of net financial inflows, price appreciation, and exchange-rate appreciation of foreign currencies (table M).

At market value, foreign direct investment in the United States increased $410.2 billion, to $2,435.5 billion, as a result of net financial inflows and substantial price appreciation in owners' equity resulting from an increase in U.S. stock prices (table N). In 2003, net financial inflows decreased sharply to $39.9 billion, the smallest inflows since 1992. Net equity capital inflows declined for the third consecutive year, to $62.2 billion. Intercompany debt outflows increased to $34.4 billion. Reinvested earnings increased to $12.0 billion from $5.2 billion.

Foreign official assets

Foreign official assets in the United States surged $261.4 billion, to $1,474.2 biLlion, in 2003. The increase was the largest on record, and financial inflows of $248.6 billion were nearly double the previous record in 1996. Net foreign official purchases of U.S. Treasury securities were a record $169.7 billion, and net financial inflows from foreign official agencies reported by U.S. banks were a record $49.4 billion.

Tables 1 and 2 follow.

Table A. U.S. Net International Investment Position at Yearend

[Billions of dollars]

 2001 2002 2003
Net position:
 At current cost -1,889.7 -2,233.0 -2,430.7
 At market value -2,308.2 -2,553.4 -2,651.0
 US owned assets abroad:
 At current cost 6,270.4 6,413.5 7,202.7
 At market value 6,898.7 6,613.3 7,864.0
 Foreign-owned assets
 in the United States:
 At current cost 8,160.1 8,646.6 9,633.4
 At market value 9,206.9 9,166.7 10,515.0

Table B. Changes in U.S., Owned Assets Abroad, 2003

[Billions of dollars]

 At current cost At market value

Total change 789.2 1,250.6
 Financial outflows 283.4 283.4
 Valuation adjustments 505.7 967.2
 Price changes 355.7 676.7
 Exchange-rate changes 327.5 468.7
 Other valuation changes -177.4 -178.1

Table C. Changes in Foreign-Owned Assets
in the United States, 2003

[Billions of dollars]

 At current cost At market value

Total change 986.8 1,348.2
 Financial inflows 829.2 829.2
 Valuation adjustments 157.6 519.1
 Price changes 318.6 690.3
 Exchange-rate changes 72.1 70.8
 Other valuation changes -233.0 -242.1

Table D. U.S. Claims Reported by U.S. Banks
and U.S. Nonbanks at Yearend

[Billions of dollars]

 2001 2002 2003

Total bank-reported claims 1,414.1 1,574.7 1,776.3
 Banks' claims for own accounts,
 denominated in dollars 1,055.1 1,185.4 1,303.9
 On foreign banks 849.5 970.3 975.6
 On foreign nonbanks, excluding
 foreign official institutions 156.2 162.9 273.0
 On foreign official institutions 49.4 52.2 55.3
 Banks' claims for customers' accounts,
 denominated in dollars 265.2 281.7 368.0
 Banks' claims, denominated in foreign
 currencies 93.8 107.6 104.4
Total nonbank-reported claims 839.3 908.0 614.7

Table E. U.S. Holdings of Foreign Stocks
by Major Area and Country at Yearend

[Billions of dollars]

 2001 2002 2003

Total holdings 1,612.7 1,345.1 1,972.2
 Europe 942.2 785.0 1,101.7
 Of which: United Kingdom 354.6 303.3 450.5
 Finland 51.3 42.4 57.1
 France 112.2 94.1 128.0
 Germany 72.2 58.1 76.5
 Ireland 28.4 23.0 30.8
 Italy 33.7 27.5 36.9
 Netherlands 112.8 89.9 119.9
 Spain 32.5 26.8 35.0
 Sweden 24.3 19.3 27.6
 Switzerland 75.6 65.5 89.6
 Canada 89.6 69.7 97.3
 Japan 170.7 141.4 233.7
 Latin America 59.3 53.2 84.3
 Of which: Argentina 0.7 0.6 0.9
 Brazil 21.8 20.0 33.5
 Mexico 26.3 23.9 36.7
 Other Western Hemisphere 172.3 148.7 206.8
 Of which: Bermuda 118.9 98.3 133.3
 Netherlands Antilles 14.5 10.7 14.7
 Other countries 178.6 147.1 248.4
 Of which: Australia 37.1 30.4 44.8
 Hong Kong 30.2 21.8 33.8
 Singapore 21.4 17.0 21.7

Table F. U.S. Holdings of Foreign Bonds
by Major Area and Country at Yearend

(Billions of dollars]

 2001 2002 2003

Total holdings 502.1 501.8 502.1
 Europe 240.9 236.4 239.2
 Of which: United Kingdom 73.4 67.1 65.9
 France 24.3 28.7 32.4
 Germany 43.5 49.1 49.9
 Italy 12.5 12.6 18.3
 Netherlands 27.9 26.3 27.6
 Sweden 8.8 9.5 9.7
 Canada 104.6 111.0 106.9
 Japan 24.7 34.5 30.9
 Latin America 49.8 49.0 53.3
 Of which: Brazil 11.0 10.1 10.6
 Mexico 21.2 22.7 25.7
 Other Western Hemisphere 30.2 26.9 38.8
 Of which: Cayman Islands 21.9 19.1 32.1
 Other countries 41.0 33.6 21.5
 Of which: Australia 14.2 14.7 15.8
 Korea, Republic of 4.7 8.0 4.5
 International organizations 10.9 10.4 11.5

Table G. U.S. Direct Investment Abroad at Yearend

[Billions of dollars]

 2001 2002 2003

US direct investment abroad:
 At current cost 1,686.6 1,840.0 2,069.0
 At market value 2,314.9 2,039.8 2,730.3

Table H. U.S. Direct Investment Abroad, 2003

[Billions of dollars]

 At current cost At market value

Total position at yearend 2,069.0 2,730.3
Total change 229.0 690.5
 Financial outflows 173.8 173.8
 Equity capital 24.6 24.6
 Intercompany debt 8.1 8.1
 Reinvested earnings 141.1 141.1
 Price changes 9.5 330.5
 Exchange-rate changes 58.8 200.0
 Other valuation changes -13.0 -13.7

Table I. U.S. Liabilities Reported by U.S. Banks
and U.S. Nonbanks at Yearend

[Billions of dollars]

 2001 2002 2003

Total bank-reported liabilities 1,306.4 1,518.4 1,887.2
 Banks' liabilities for own accounts,
 denominated in dollars 1,097.3 1,269.4 1,503.7
 To foreign banks 914.5 1,055.9 1,114.0
 To foreign nonbanks, including
 international organizations 182.8 213.5 389.7
 Banks' liabilities for customers'
 accounts, denominated in dollars 128.4 168.5 322.0
 Banks' liabilities, denominated in
 foreign currencies 80.7 80.5 61.5
Total nonbank-reported liabilities 798.3 864.6 466.5

Table J. Foreign Official and Private Holdings of
U.S. Treasury Securities by Selected Countries at Yearend

[Billions of dollars]

 2001 2002 2003

Total holdings 1,063.1 1,254.1 1,499.2
 Japan 330.1 385.3 542.2
 China 89.7 124.3 168.1
 Korea, Republic of 29.1 48.0 61.9
 United Kingdom 28.6 67.0 58.3
 Taiwan 37.9 40.5 50.4
 Hong Kong 47.7 44.4 48.9
 Switzerland 28.6 37.7 45.3
 Germany 42.9 38.0 43.8
 Bermuda 11.6 12.6 39.3
 Mexico 22.1 27.5 31.9

Table K. Foreign Private Holdings of U.S. Corporate and
Agency Bonds by Major Area and Country at Yearend

[Billions of dollars]

 2001 2002 2003

Total holdings 1,343.1 1,600.4 1,853.0
 Europe 935.7 1,086.0 1,225.9
 Of which: United Kingdom 593.2 648.2 749.2
 France 14.3 17.5 22.6
 Germany 34.4 31.5 33.3
 Italy 4.0 5.2 7.6
 Netherlands 25.8 29.0 28.7
 Canada 30.6 37.1 49.4
 Japan 136.9 174.1 169.3
 Latin America 12.3 16.6 28.2
 Other Western Hemisphere 159.4 191.7 260.0
 Other countries 68.2 94.9 120.2

Table L. Foreign Private Holdings of U.S. Corporate Stocks
by Major Area and Country at Yearend

[Billions of dollars]

 2001 2002 2003

Total holdings 1,478.3 1,186.2 1,538.1
 Europe 915.9 714.5 929.7
 Of which: United Kingdom 289.2 213.4 269.3
 France 44.3 35.2 51.4
 Germany 84.1 58.3 72.5
 Italy 34.4 26.9 34.4
 Netherlands 111.3 93.8 118.7
 Canada 165.0 142.3 192.5
 Japan 126.9 109.9 136.4
 Latin America 30.2 23.3 29.2
 Other Western Hemisphere 148.0 109.2 134.9
 Other countries 92.3 87.0 115.4

Table M. Foreign Direct Investment in the
United States at Yearend

[Billions of dollars]

 2001 2002 2003

Foreign direct investment in the United
 States:
 At current cost 1,513.5 1,505.2 1,554.0
 At market value 2,560.3 2,025.3 2,435.5

Table N. Foreign Direct Investment in the United States, 2003

[Billions of dollars]

 At current cost At market value

Total position at yearend 1,554.0 2,435.5
Total change 48.8 410.2
 Financial inflows 39.9 39.9
 Equity capital 62.2 62.2
 Intercompany debt -34.4 -34.4
 Reinvested earnings 12.0 12.0
 Price changes 6.5 378.3
 Exchange-rate changes 1.3
 Other valuation changes 1.2 -7.9

Table 1. International Investment Position of the United States at
Yearend, 2002 and 2003

[Millions of dollars]

Line Type of Investment Position, 2002 (r)

 Net international investment position of
 the United States:
 1 With direct investment positions at
 current cost (line 3 less line 24) -2,233,018
 2 With direct investment positions at
 market value (line 4 less line 25) -2,553,407
 U.S.-owned assets abroad:
 3 With direct investment at current cost
 (lines 5+10+15) 6,413,535
 4 With direct investment at market value
 (lines 5+10+16) 6,613,320
 5 U.S. official reserve assets 158,602
 6 Gold 90,806
 7 Special drawing rights 12,166
 8 Reserve position in the
 International Monetary Fund 21,979
 9 Foreign currencies 33,651
 10 U.S. Government assets, other than
 official reserve assets 85,309
 11 U.S. credits and other long-term
 assets (5) 82,682
 12 Repayable in dollars 82,406
 13 Other (6) 276
 14 U.S. foreign currency holdings and
 U.S. short-term assets 2,627
 U.S. private assets:
 15 With direct investment at current
 cost (lines 17+19+22+23) 6,169,624
 16 With direct investment at market
 value (lines 18+19+22+23) 6,369,409
 Direct investment abroad:
 17 At current cost 1,839,995
 18 At market value 2,039,780
 19 Foreign securities 1,846,879
 20 Bonds 501,762
 21 Corporate stocks 1,345,117
 22 U.S. claims on unaffiliated
 foreigners reported by U.S.
 nonbanking concerns 908,024
 23 U.S. claims reported by U.S. banks,
 not included elsewhere 1,574,726
 Foreign-owned assets in the United
 States:
 24 With direct investment at current cost
 (lines 26+33) 8,646,553
 25 With direct investment at market vale
 (lines 26+34) 9,166,727
 26 Foreign official assets in the United
 States 1,212,723
 27 U.S. Government securities 954,896
 28 U.S. Treasury securities 796,449
 29 Other 158,447
 30 Other U.S. Government liabilities
 (7) 17,144
 31 U.S. liabilities reported by U.S.
 banks, not included elsewhere 144,646
 32 Other foreign official assets 96,037
 Other foreign assets:
 33 With direct investment at current
 cost (lines 35+37+38+41+42+43) 7,433,830
 34 With direct investment at market
 value (lines 36+37+38+41+42+43) 7,954,004
 Direct investment in the United
 States:
 35 At current cost 1,505,171
 36 At market value 2,025,345
 37 U.S. Treasury securities 457,670
 38 U.S. securities other than U.S.
 Treasury securites 2,786,647
 39 Corporate and other bonds 1,600,414
 40 Corporate stocks 1,186,233
 41 U.S. currency 301,268
 42 U.S. liabilities to unaffiliated
 foreigners reported by U.S.
 nonbanking concerns 864,632
 43 U.S. liabilities reported by U.S.
 banks, not included elsewhere 1,518,442

 Changes in position in 2003

 Attributable to

 Valuation adjustments

 Exchange-rate Other
Line Financial flows Price changes changes (1) changes (2)

 (a) (b) (c) (d)

 1 -545,759 37,112 255,457 55,526
 2 -545,759 -13,696 397,918 63,954
 3 283,414 355,668 327,520 -177,445
 4 283,414 676,650 468,722 -178,138
 5 -1,523 18,059 8,438 1
 6 (3) 18,059 (4) 1
 7 -601 1,073
 8 -1,494 2,050
 9 572 5,315
 10 -537
 11 -702
 12 -700
 13 -2
 14 165
 15 285,474 337,609 319,082 -177,446
 16 285,474 658,591 460,284 -178,139
 17 173,799 9,472 58,756 -13,009
 18 173,799 330,454 199,958 -13,702
 19 72,337 328,137 227,021
 20 -28,094 3,209 25,253
 21 100,431 324,928 201,768
 22 28,932 18,093 -340,377
 23 10,406 15,212 175,940
 24 829,173 318,556 72,063 -232,971
 25 829,173 690,346 70,804 -242,092
 26 248,573 3,920 8,945
 27 194,568 -16,845 12,410
 28 169,685 -13,947 4,476
 29 24,883 -2,898 7,934
 30 -564
 31 49,420 -3,465
 32 5,149 20,765
 33 580,600 314,636 72,063 -241,916
 34 580,600 686,426 70,804 -251,037
 35 39,890 6,460 1,259 1,175
 36 39,890 378,250 -7,946
 37 113,432 -11,612 -16,948
 38 250,981 319,788 48,437 -14,803
 39 213,718 5,205 48,437 -14,803
 40 37,263 314,583
 41 16,640
 42 84,014 11,269 -493,372
 43 75,643 11,098 282,032

 Changes
 in
 position
 in 2003

Line Total Position 2003 (p)

 (a+b+c+d)

 1 -197,664 -2,430,682
 2 -97,583 -2,650,990
 3 789,157 7,202,692
 4 1,250,648 7,863,968
 5 24,975 183,577
 6 18,060 108,866
 7 472 12,638
 8 556 22,535
 9 5,887 39,538
 10 -537 84,772
 11 -702 81,980
 12 -700 81,706
 13 -2 274
 14 165 2,792
 15 764,719 6,934,343
 16 1,226,210 7,595,619
 17 229,018 2,069,013
 18 690,509 2,730,289
 19 627,495 2,474,374
 20 368 502,130
 21 627,127 1,972,244
 22 -293,352 614,672
 23 201,558 1,776,284
 24 986,821 9,633,374
 25 1,348,231 10,514,958
 26 261,438 1,474,161
 27 190,133 1,145,029
 28 160,214 956,663
 29 29,919 188,366
 30 -564 16,580
 31 45,955 190,601
 32 25,914 121,951
 33 725,383 8,159,213
 34 1,086,793 9,040,797
 35 48,784 1,553,955
 36 410,194 2,435,539
 37 84,872 542,542
 38 604,403 3,391,050
 39 252,557 1,852,971
 40 351,846 1,538,079
 41 16,640 317,908
 42 -398,089 466,543
 43 368,773 1,887,215

(p) Preliminary.

(r) Revised.

(1.) Represents gains or losses on foreign-currency-denominated assets
due to their revaluation at current exchange rates.

(2.) Includes changes in coverage, capital gains and losses of direct
investment affiliates, and other statistical adjustments to the value
of assets.

(3.) Reflects changes in the value of the official gold stock due to
fluctuations in the market price of gold.

(4.) Reflects changes in gold stock from U.S. Treasury sales of gold
medallions and commemorative and bullion coins; also reflects
replenishment through open market purchases. These demonetizations/
monetizations are not included in international transactions financial
flows.

(5.) Also includes paid-in capital subscriptions to international
financial institutions and resources provided to foreigners under
foreign assistance programs requiring repayment over several years.
Excludes World War I debts that are not being serviced.

(6.) Includes indebtedness that the borrower may contractually, or at
its option, repay with its currency, with a third country's currency,
or by delivery of materials or transfer of services.

(7) Primarily U.S. Government liabilities associated with military
sales contracts and other transactions arranged with or through foreign
official agencies.

Table 2. International Investment Position of the United States at
Yearend, 1976-2003

[Millions of dollars]

Line Type of investment 1976

 Net international investment position of the United
 States:
 1 With direct investment positions at current cost
 (line 3 less line 24) 164,832
 2 With direct investment positions at market value
 (line 4 less line 25)
 U.S.-owned assets abroad:
 3 With direct investment at current cost (lines
 5+10+15) 456,964
 4 With direct investment at market value (lines
 5+10+16)
 5 U.S. official reserve assets 44,094
 6 Gold (1) 36,944
 7 Special drawing rights 2,395
 8 Reserve position in the International Monetary
 Fund 4,434
 9 Foreign currencies 321
 10 U.S. Government assets, other than official
 reserve assets 44,978
 11 U.S. credits and other long-term assets (5) 44,124
 12 Repayable in dollars 41,309
 13 Other (3) 2,815
 14 U.S. foreign currency holdings and U.S.
 short-term assets 854
 U.S. private assets:
 15 With direct investment at current cost (lines
 17+19+22+23) 367,892
 16 With direct investment at market value (lines
 18+19+22+23)
 Direct investment abroad:
 17 At current cost (4) 222,283
 18 At market value (4)
 19 Foreign securities (5) 44,157
 20 Bonds (5) 34,704
 21 Corporate stocks (5) 9,453
 22 U.S. claims on unaffiliated foreigners reported
 by U.S. nonbanking concerns (6) 20,317
 23 U.S. claims reported by U.S. banks, not included
 elsewhere (7) 81,135
 Foreign-owned assets in the United States:
 24 With direct investment at current cost (lines
 26+33) 292,132
 25 With direct investment at market vale (lines
 26+34)
 26 Foreign official assets in the United States 104,445
 27 U.S. Government securities 72,572
 28 U.S. Treasury securities (8) 70,555
 29 Other (8) 2,017
 30 Other U.S. Government liabilities (9) 8,860
 31 U.S. liabilities reported by U.S. banks, not
 included elsewhere 17,231
 32 Other foreign official assets (8) 5,782
 Other foreign assets:
 33 With direct investment at current cost (lines
 35+37+38+41+42+43) 187,687
 34 With direct investment at market value (lines
 36+37+38+41+42+43)
 Direct investment in the United States:
 35 At current cost (10) 47,528
 36 At market value (10)
 37 U.S. Treasury securities (8) 7,028
 38 U.S. securities other than U.S. Treasury
 securities (8) 54,913
 39 Corporate and other bonds (8) 11,964
 40 Corporate stocks (8) 42,949
 41 U.S. currency 11,792
 42 U.S. liabilities to unaffiliated foreigners
 reported by U.S. nonbanking concerns (11) 12,961
 43 U.S. liabilities reported by U.S. banks, not
 included elsewhere (12) 53,465

Line 1977 1978 1979 1980 1981 1982

 1 171,440 206,423 316,926 360,838 339,767 328,954
 2 235,947
 3 512,278 621,227 786,701 929,806 1,001,667 1,108,436
 4 961,015
 5 53,376 69,450 143,260 171,412 124,568 143,445
 6 45,781 62,471 135,476 155,816 105,644 120,635
 7 2,629 1,558 2,724 2,610 4,096 5,250
 8 4,946 1,047 1,253 2,852 5,054 7,348
 9 20 4,374 3,807 10,134 9,774 10,212
 10 48,567 53,187 58,851 65,573 70,893 76,903
 11 47,749 52,252 57,909 63,731 69,320 75,105
 12 45,154 49,817 54,616 60,731 66,591 72,635
 13 2,595 2,435 3,293 3,000 2,729 2,470
 14 818 935 942 1,842 1,573 1,798
 15 410,335 498,590 584,590 692,821 806,206 888,088
 16 740,667
 17 246,078 285,005 336,301 388,072 407,804 374,059
 18 226,638
 19 49,439 53,384 56,769 62,454 62,142 74,046
 20 39,329 42,148 41,966 43,524 45,675 56,604
 21 10,110 11,236 14,803 18,930 16,467 17,442
 22 22,256 29,385 34,491 38,429 42,752 35,405
 23 92,562 130,816 157,029 203,866 293,508 404,578
 24 340,838 414,804 469,775 568,968 661,900 779,482
 25 725,068
 26 140,867 173,057 159,852 176,062 180,425 189,109
 27 105,386 128,511 106,640 118,189 125,130 132,587
 28 101,092 123,991 101,748 111,336 117,004 124,929
 29 4,294 4,520 4,892 6,853 8,126 7,658
 30 10,260 12,749 12,749 13,367 13,029 13,639
 31 18,004 23,327 30,540 30,381 26,737 24,989
 32 7,217 8,470 9,923 14,125 15,529 17,894
 33 199,971 241,747 309,923 392,906 481,475 590,373
 34 535,959
 35 55,413 68,976 88,579 127,105 164,623 184,842
 36 130,428
 37 7,562 8,910 14,210 16,113 18,505 25,758
 38 51,235 53,554 58,587 74,114 75,085 92,988
 39 11,456 11,457 10,269 9,545 10,694 16,709
 40 39,779 42,097 48,318 64,569 64,391 76,279
 41 13,656 16,569 19,552 24,079 27,295 31,265
 42 11,921 16,019 18,669 30,426 30,606 27,532
 43 60,184 77,719 110,326 121,069 165,361 227,988

Line 1983 1984 1985 1986 1987

 1 298,304 160,695 54,343 -36,209 -80,007
 2 257,393 134,088 96,886 100,782 50,529
 3 1,210,974 1,204,900 1,287,396 1,469,396 1,646,527
 4 1,129,673 1,127,132 1,302,712 1,594,652 1,758,711
 5 123,110 105,040 117,930 139,875 162,370
 6 100,484 81,202 85,834 102,428 127,648
 7 5,025 5,641 7,293 8,395 10,283
 8 11,312 11,541 11,947 11,730 11,349
 9 6,289 6,656 12,856 17,322 13,090
 10 81,664 86,945 89,792 91,850 90,681
 11 79,852 84,857 87,854 90,923 89,900
 12 77,618 82,819 85,978 89,271 88,344
 13 2,234 2,038 1,876 1,652 1,556
 14 1,812 2,088 1,938 927 781
 15 1,006,200 1,012,915 1,079,674 1,237,671 1,393,476
 16 924,899 935,147 1,094,990 1,362,927 1,505,660
 17 355,643 348,342 371,036 404,818 478,062
 18 274,342 270,574 386,352 530,074 590,246
 19 84,723 88,804 119,403 158,123 188,589
 20 58,569 62,810 75,020 85,724 93,889
 21 26,154 25,994 44,383 72,399 94,700
 22 131,329 130,138 141,872 167,392 177,368
 23 434,505 445,631 447,363 507,338 549,457
 24 912,670 1,044,205 1,233,053 1,505,605 1,726,534
 25 872,280 993,044 1,205,826 1,493,870 1,708,182
 26 194,468 199,678 202,482 241,226 283,058
 27 136,987 144,665 145,063 178,916 220,548
 28 129,716 138,168 138,438 173,310 213,713
 29 7,271 6,497 6,625 5,606 6,835
 30 14,231 14,959 15,803 17,993 15,667
 31 25,534 26,090 26,734 27,920 31,838
 32 17,716 13,964 14,882 16,397 15,005
 33 718,202 844,527 1,030,571 1,264,379 1,443,476
 34 677,812 793,366 1,003,344 1,252,644 1,425,124
 35 193,708 223,538 247,223 284,701 334,552
 36 153,318 172,377 219,996 272,966 316,200
 37 33,846 62,121 87,954 96,078 82,588
 38 113,811 128,477 207,868 309,803 341,732
 39 17,454 32,421 82,290 140,863 166,089
 40 96,357 96,056 125,578 168,940 175,643
 41 36,776 40,797 46,036 50,122 55,584
 42 61,731 77,415 86,993 90,703 110,187
 43 278,330 312,179 354,497 432,972 518,833

Line 1988 1989 1990 1991 1992

 1 -178,470 -259,506 -245,347 -309,259 -431,198
 2 10,466 -46,987 -164,495 -260,819 -452,305
 3 1,829,665 2,070,868 2,178,978 2,286,456 2,331,696
 4 2,008,365 2,350,235 2,294,085 2,470,629 2,466,496
 5 144,179 168,714 174,664 159,223 147,435
 6 107,434 105,164 102,406 92,561 87,168
 7 9,637 9,951 10,989 11,240 8,503
 8 9,745 9,048 9,076 9,488 11,759
 9 17,363 44,551 52,193 45,934 40,005
 10 87,892 86,643 84,344 81,422 83,022
 11 87,163 86,057 83,716 79,776 81,352
 12 85,768 84,734 82,602 78,814 80,498
 13 1,395 1,323 1,114 962 854
 14 729 586 628 1,646 1,670
 15 1,597,594 1,815,511 1,919,970 2,045,811 2,101,239
 16 1,776,294 2,094,878 2,035,077 2,229,984 2,236,039
 17 513,761 553,093 616,655 643,364 663,830
 18 692,461 832,460 731,762 827,537 798,630
 19 232,849 314,294 342,313 455,750 515,083
 20 104,187 116,949 144,717 176,774 200,817
 21 128,662 197,345 197,596 278,976 314,266
 22 197,757 234,307 265,315 256,295 254,303
 23 653,227 713,817 695,687 690,402 668,023
 24 2,008,135 2,330,374 2,424,325 2,595,715 2,762,894
 25 1,997,899 2,397,222 2,458,580 2,731,448 2,918,801
 26 322,036 341,746 373,293 398,538 437,263
 27 260,934 263,612 291,228 311,199 329,317
 28 252,962 257,201 285,911 305,994 322,600
 29 7,972 6,411 5,317 5,205 6,717
 30 15,200 15,374 17,243 18,610 20,801
 31 31,520 36,495 39,880 38,396 54,967
 32 14,382 26,265 24,942 30,333 32,178
 33 1,686,099 1,988,628 2,051,032 2,197,177 2,325,631
 34 1,675,863 2,055,476 2,085,287 2,332,910 2,481,538
 35 401,766 467,886 505,346 533,404 540,270
 36 391,530 534,734 539,601 669,137 696,177
 37 100,877 166,541 152,452 170,295 197,739
 38 392,292 482,864 460,644 546,008 599,447
 39 191,314 231,673 238,903 274,136 299,287
 40 200,978 251,191 221,741 271,872 300,160
 41 61,261 67,118 85,933 101,317 114,804
 42 144,548 167,093 213,406 208,908 220,666
 43 585,355 637,126 633,251 637,245 652,705

Line 1993 1994 (r) 1995 (r) 1996 (r) 1997 (r)

 1 -306,956 -323,397 -458,462 -495,055 -820,682
 2 -144,268 -135,251 -305,836 -360,024 -822,732
 3 2,753,648 2,987,118 3,486,272 4,032,307 4,567,906
 4 3,091,421 3,315,135 3,964,558 4,650,837 5,379,128
 5 164,945 163,394 176,061 160,739 134,836
 6 102,556 100,110 101,279 96,698 75,929
 7 9,039 10,039 11,037 10,312 10,027
 8 11,818 12,030 14,649 15,435 18,071
 9 41,532 41,215 49,096 38,294 30,809
 10 83,382 83,908 85,064 86,123 86,198
 11 81,435 81,884 82,802 83,999 84,130
 12 80,660 81,389 82,358 83,606 83,780
 13 775 495 444 393 350
 14 1,947 2,024 2,262 2,124 2,068
 15 2,505,321 2,739,816 3,225,147 3,785,445 4,346,872
 16 2,843,094 3,067,833 3,703,433 4,403,975 5,158,094
 17 723,526 786,565 885,506 989,810 1,068,063
 18 1,061,299 1,114,582 1,363,792 1,608,340 1,879,285
 19 853,528 937,153 1,203,925 1,487,546 1,751,183
 20 309,666 310,391 413,310 481,411 543,396
 21 543,862 626,762 790,615 1,006,135 1,207,787
 22 242,022 322,980 367,567 450,578 545,524
 23 686,245 693,118 768,149 857,511 982,102
 24 3,060,604 3,310,515 3,944,734 4,527,362 5,388,588
 25 3,235,689 3,450,386 4,270,394 5,010,861 6,201,860
 26 509,422 535,227 682,873 820,823 873,716
 27 381,687 407,152 507,460 631,088 648,188
 28 373,050 396,887 489,952 606,427 615,076
 29 8,637 10,265 17,508 24,661 33,112
 30 22,113 23,678 23,573 22,592 21,712
 31 69,721 73,386 107,394 113,098 135,384
 32 35,901 31,011 44,446 54,045 68,432
 33 2,551,182 2,775,288 3,261,861 3,706,539 4,514,872
 34 2,726,267 2,915,159 3,587,521 4,190,038 5,328,144
 35 593,313 617,982 680,066 745,619 824,136
 36 768,398 757,853 1,005,726 1,229,118 1,637,408
 37 221,501 235,684 326,995 433,903 538,137
 38 696,449 739,695 969,849 1,165,113 1,512,725
 39 355,822 368,077 459,080 539,308 618,837
 40 340,627 371,618 510,769 625,805 893,888
 41 133,734 157,185 169,484 186,846 211,628
 42 229,038 239,817 300,424 346,810 459,407
 43 677,147 784,925 815,043 828,248 968,839

Line 1998 (r) 1999 (r) 2000 (r) 2001 (r) 2002 (r)

 1 -899,966 -775,488 -1,388,745 -1,889,680 -2,233,018
 2 -1,075,377 -1,046,688 -1,588,556 -2,308,161 -2,553,407
 3 5,090,938 5,965,143 6,231,236 6,270,408 6,413,535
 4 6,174,518 7,390,427 7,393,643 6,898,707 6,613,320
 5 146,006 136,418 128,400 129,961 158,602
 6 75,291 75,950 71,799 72,328 90,806
 7 10,603 10,336 10,539 10,783 12,166
 8 24,111 17,950 14,824 17,869 21,979
 9 36,001 32,182 31,238 28,981 33,651
 10 86,768 84,227 85,168 85,654 85,309
 11 84,850 81,657 82,574 83,132 82,682
 12 84,528 81,367 82,293 82,854 82,406
 13 322 290 281 278 276
 14 1,918 2,570 2,594 2,522 2,627
 15 4,858,164 5,744,498 6,017,668 6,054,793 6,169,624
 16 5,941,744 7,169,782 7,180,075 6,683,092 6,369,409
 17 1,196,021 1,414,355 1,531,607 1,686,635 1,839,995
 18 2,279,601 2,839,639 2,694,014 2,314,934 2,039,780
 19 2,052,995 2,525,341 2,385,353 2,114,734 1,846,879
 20 578,012 521,625 532,511 502,061 501,762
 21 1,474,983 2,003,716 1,852,842 1,612,673 1,345,117
 22 588,322 704,517 836,559 839,303 908,024
 23 1,020,826 1,100,285 1,264,149 1,414,121 1,574,726
 24 5,990,904 6,740,631 7,619,981 8,160,088 8,646,553
 25 7,249,895 8,437,115 8,982,199 9,206,868 9,166,727
 26 896,174 951,088 1,030,708 1,082,296 1,212,723
 27 669,768 693,781 756,155 831,459 954,896
 28 622,921 617,680 639,796 704,603 796,449
 29 46,847 76,101 116,359 126,856 158,447
 30 18,386 21,141 19,316 17,007 17,144
 31 125,883 138,847 153,403 123,425 144,646
 32 82,137 97,319 101,834 110,405 96,037
 33 5,094,730 5,789,543 6,589,273 7,077,792 7,433,830
 34 6,353,721 7,486,027 7,951,491 8,124,572 7,954,004
 35 920,044 1,101,709 1,421,017 1,513,514 1,505,171
 36 2,179,035 2,798,193 2,783,235 2,560,294 2,025,345
 37 543,323 440,685 381,630 358,483 457,670
 38 1,903,443 2,351,291 2,623,014 2,821,372 2,786,647
 39 724,619 825,175 1,068,566 1,343,071 1,600,414
 40 1,178,824 1,526,116 1,554,448 1,478,301 1,186,233
 41 228,250 250,657 255,972 279,755 301,268
 42 485,675 578,046 738,904 798,314 864,632
 43 1,013,995 1,067,155 1,168,736 1,306,354 1,518,442

Line 2003 (p) Line

 1 -2,430,682 1
 2 -2,650,990 2
 3 7,202,692 3
 4 7,863,968 4
 5 183,577 5
 6 108,866 6
 7 12,638 7
 8 22,535 8
 9 39,538 9
 10 84,772 10
 11 81,980 11
 12 81,706 12
 13 274 13
 14 2,792 14
 15 6,934,343 15
 16 7,595,619 16
 17 2,069,013 17
 18 2,730,289 18
 19 2,474,374 19
 20 502,130 20
 21 1,972,244 21
 22 614,672 22
 23 1,776,284 23
 24 9,633,374 24
 25 10,514,958 25
 26 1,474,161 26
 27 1,145,029 27
 28 956,663 28
 29 188,366 29
 30 16,580 30
 31 190,601 31
 32 121,951 32
 33 8,159,213 33
 34 9,040,797 34
 35 1,553,955 35
 36 2,435,539 36
 37 542,542 37
 38 3,391,050 38
 39 1,852,971 39
 40 1,538,079 40
 41 317,908 41
 42 466,543 42
 43 1,887,215 43

(p) Preliminary.

(r) Revised.

(1.) U.S. official gold stock is valued at market price.

(2.) Also includes paid-in capital subscriptions to international
financial institutions and resources provided to foreigners under
foreign assistance programs requiring repayment over several years.
Excludes World War I debts that are not being serviced.

(3.) Includes indebtedness that the borrower may contractually, or at
its option, repay with its currency, with a third country's currency,
or by delivery of materials or transfer of services.

(4.) A break in series in 1994 reflects the reclassification of
intercompany debt positions between parent companies and affiliates
that are not depository institutions and that are primarily engaged in
financial intermediation from the direct investment accounts to the
nonbank investment accounts. Estimates for 1976 forward are linked to
the 1977, 1982, 1989, 1994, and 1999 benchmark surveys of U.S. direct
investment abroad.

(5.) Estimates include results of the 1994, 1997, and 2001 Benchmark
Surveys of U.S. Ownership of Foreign Long-Term Securities conducted by
the U.S. Department of the Treasury.

(6.) A break in series in 1983 reflects the introduction of
counterparty data from the United Kingdom and from the Bank for
International Settlements (BIS) for several European countries,
Caribbean banking centers, and Asian banking centers. Additional
coverage for BIS data was introduced in 1986, 1989, 1993, and 1994. In
1994, intercompany debt positions between parent companies and
affiliates that are not depository institutions and that are primarily
engaged in financial intermediation are reclassified from the direct
investment accounts to the nonbank investment accounts. A break in
series in 2003 reflects the reclassification of assets reported by U.S.
securities brokers from nonbank-reported assets to bank-reported
assets, and a reduction in counterparty balances to eliminate
double-counting.

(7.) A break in series in 1988 reflects the introduction of data on
holdings of foreign commercial paper. A break in series in 2003
reflects the reclassification of assets reported by U.S. securities
brokers from nonbank-reported assets to bank-reported assets.

(8.) Estimates include results of 1978, 1984, 1989, 1994, and 2000
Benchmark Surveys of Foreign Portfolio Investment in the Unites States,
and the results of the 2002 and 2003 Annual Surveys of Foreign Holdings
of U.S. Securities, conducted by the U.S. Department of the Treasury.

(9.) Primarily U.S. Government liabilities associated with military
sales contracts and other transactions arranged with or through foreign
official agencies.

(10.) Estimates for 1976 forward are linked to the 1980, 1987, 1992,
and 1997 benchmark surveys of foreign direct investment in the United
States.

(11.) A break in series in 1983 reflects the introduction of
counterparty, data from the United Kingdom. A break in series in 1994
reflects the reclassification of intercompany debt positions between
parent companies and affiliates that are not depository institutions
and that are primarily engaged in financial intermediation from the
direct investment accounts to the nonbank investment accounts. A break
in series in 1996 reflects the introduction of counterparty data from
the Bank of International Settlements (BIS) for several European
countries. A break in series in 2003 reflects the reclassification of
liabilities reported by U.S. securities brokers from nonbank-reported
liabilities to bank-reported liabilities, and a reducton in
counterparty balances to eliminate double-counting.

(12.) A break in series in 2003 reflects the reclassification of
liabilities reported by U.S. securities brokers from nonbank-reported
liabilities to bank-reported liabilities.

Current-Cost and Market-Value Methods of Valuing Direct Investment

Since 1991, in the series of annual articles on the international investment position of the United States, two measures of valuing direct investment positions--the current--cost method and the market-value method--have been discussed and presented as alternatives to the historical-cost valuation. The current-cost method values the U.S. and foreign parents' shares of their affiliates' investment in plant and equipment, using the current cost of capital equipment; in land, using general price indexes; and in inventories, using estimates of their replacement cost. The market-value method values the owners' equity share of direct investment, using indexes of stock market prices. (For additional information, see J. Steven Landefeld and Ann M. Lawson, "Valuation of the U.S. Net International Investment Position" SURVEY OF CURRENT BUSINESS 71 (May 1991): 40-49.)

In this article, BEA emphasizes the current-cost method, because the estimates prepared using the current-cost method are comparable with BEA's current-cost estimates of the net stock of U.S. fixed assets and consumer durable goods and with the Federal Reserve Board's estimates of domestic net worth (the sum of tangible assets located in the United States, including plant and equipment, inventories, and land). Furthermore, BEA's calculation of direct investment income includes a current-cost adjustment to depredation; this adjustment converts depreciation as reported on company financial statements to the preferred economic accounts measure, which is based on the current cost, rather than on the historical cost, of assets.

The estimates of direct investment in the international investment position continue to be presented on both current-cost and market-value bases in order to highlight that different methods of valuing direct investment may be appropriate for different circumstances and that depending on the valuation method used, the resulting estimates may differ substantially. Virtually all of the categories in the international investment position accounts except direct investment positions can be directly estimated with reference to readily observable market prices. For example, the value of positions in portfolio investment securities, gold, loans, currencies, and bank deposits can be directly estimated based on face values or market prices of recent transactions. In contrast, direct investment positions typically involve illiquid ownership interests in companies that may possess many unique attributes--such as customer base, management, and ownership of intangible assets--whose values in the current period are difficult to determine, because there is no widely accepted standard for revaluing company financial statements at historical cost into prices of the current period.

Improvements to the Estimates

As is customary each July, the estimates of the U.S. international investment position incorporate newly available source data and methodological improvements that relate to the improvements incorporated in the annual revision of the U.S. international transactions accounts.

This year, the estimates of foreign portfolio holdings of U.S. securities for 2000-2002 were revised to incorporate results from the U.S. Treasury Department's annual surveys of securities liabilities for June 2002 and June 2003. In addition, the estimates of U.S. portfolio holdings of foreign securities for 1994-96 were revised to extend to these years the major methodological changes made in June 2003 at the time of incorporation of the U.S. Treasury Department's Benchmark Survey of U.S. Portfolio Investment Abroad as of December 31, 2001.

Classification and methodology changes have been made to the bank and nonbank accounts. Positions of securities brokers and dealers have been reclassified to the bank accounts from the nonbank accounts. Methodology changes have identified a source of double-counting in counterparty country source data that are used to prepare the estimates; the duplicate coverage has now been removed from the accounts. Both of these changes are reflected in the "other" changes column of table 1.

In addition to these improvements, all estimates have been revised as a result of the incorporation of newly available or revised quarterly and annum survey results and other data. Revisions attributable to updated source data are for 1994-2002. The net result of revisions from all sources is to raise the value of U.S.-owned assets abroad relative to the value of foreign-owned assets in the United States for recent years. The net international investment position at yearend 2002 was revised to -$2,233.0 billion from -$2,387.2 billion with direct investment at current cost and to -$2,553.4 billion from -$2,605.2 billion with direct investment at market value.

For additional information, see "Annual Revision of the U.S. International Accounts, 1989-2003" in this issue.