At http://lyricstranslate.com/en/daleko-mi-je-biser-jadrana-its-far-away-pearl-adriatic.html I found what I think must be the original that Grace Williams collected. Here's the translation:
it's far away the pearl of adriatic
it's far away the pearl of adriatic it's so far my home town and it's more far my darling, who i faithfully love
i sail the see,i count the stars i think about home all the time i live in hope,i'm full of joy to see you again
sail,sail a little boat let a silver wave carries you i'm crying ,i can't stop and i think about home all the time
"Pearl OF the Adriatic" makes more sense, as that's Dubrovnik. Williams maybe changed it because Dubrovnik isn't on an island.