Fellow Shareholders
European markets remained sluggish during the Fund's final fiscal quarter,
with many losing ground. Although European economies continued to improve and
companies reported rebounding earnings, weak bond markets and poor liquidity
held stocks back in general. Strong European currencies against the U.S.
dollar contributed to a good dollar-denominated return for the Fund and its
benchmark Morgan Stanley Capital International Europe Index.
For the 12 months, local market returns were also generally flat, with
only two showing significant gains. Again, the declining U.S. currency helped
the Fund generate a double-figure total return exceeding our benchmark index.
Performance Comparison
Periods Ended 10/31/94
3 Months 12 Months
_____________________
European Stock Fund 3.6% 12.4%
MSCI Europe Index 3.5 11.7
Market Review
The economic recovery in Germany had little impact on the stock market over
the course of the year. Although the initial surge in company earnings looked
spectacular, it was already discounted in stock valuations; the ability to
sustain earnings growth should determine market performance over the next few
years. Most European economies should continue to grow into 1997, but we
anticipate Germany's will be restrained by tax increases in 1995. This
expectation, coupled with high stock valuations, led us to underweight your
Fund in Germany. Our exposure remains biased toward a mixture of growth
stocks, such as the pharmaceutical wholesaling company Gehe, and economically
sensitive companies, such as the chemical group Bayer.
The Fund's largest overweighting remains in the Netherlands, where
valuations look more attractive and some large, international companies appear
well positioned to benefit from pan-European recovery. Our core exposure here
in the large publishing companies Elsevier and Wolters Kluwer should continue
to exhibit steady growth, enhanced through acquisitions including the former's
recent purchase of the legal publishing arm of U.S. company Mead. We continued
to reduce our weighting in Switzerland, mainly by paring holdings in bank and
pharmaceutical companies.
The economy in France looks promising, and the recovery there should
broaden out ahead of the 1995 presidential election. Because the market has
been among the worst performers over the last 12 months, stock valuations
appear more attractive. Performance has been affected by insurance companies
selling equity holdings to cover losses in the bond markets. Depressed stock
prices created opportunities to add economically sensitive companies such as
hotel and service sector company Accor and industrial group Cie de St. Gobain.
Market Performance
Three Months Ended 10/31/94
_________________________________
Local Currency
In Local vs. US In U.S.
Currency Dollars Dollars
________ ____________ _______
Austria -9.5% 5.3% -4.7%
Belgium -5.7 5.4 -0.6
Denmark -10.2 5.8 -4.9
Finland 10.7 13.1 25.3
France -7.7 5.1 -2.9
Germany -2.3 5.4 3.0
Italy -9.9 3.0 -7.1
Netherlands 1.9 5.4 7.4
Norway -6.0 5.7 -0.7
Spain -5.0 4.0 -1.2
Sweden 1.6 7.7 9.4
Switzerland -2.4 7.0 4.4
United Kingdom 0.6 6.1 6.7
In Italy, uncertainty over social security reforms as well as a
substantial debt burden continued to depress the market during the last three
months, but for the Fund's fiscal year it remained one of the better European
performers. Your Fund's exposure to insurance and telecommunications stocks
should benefit from the expected reforms and deregulation.
The best performing market for the three and 12 months was in Finland,
driven by the outstanding gains of mobile phone manufacturer Nokia, which now
represents over a quarter of the local market capitalisation. Over the last
year, your Fund benefited from its investment in the company.
We increased the Fund's exposure in Sweden throughout the year, adding
large- and small-capitalisation companies. The larger companies, such as tools
manufacturer Sandvik, rely more on overseas markets than on the lagging
domestic economy. Initially benefiting from a devalued krona in 1992, large
companies are now experiencing increased demand for their products. Smaller
companies should profit from an improving domestic economy in 1995. One of our
small-company holdings, TV 4, should also gain from the increasing use of
television advertising by businesses.
Our allocation to smaller companies increased in other markets as well.
Having performed poorly during the recession, they should now outpace their
larger rivals as the European recovery gathers momentum. One exception is the
UK market, where superior performance already reflects the strong recovery in
small-company earnings, and where we are reducing holdings. The UK economy is
farthest along in the European recovery cycle, having advanced for nine
consecutive quarters. With signs of accelerating inflation, the move to raise
interest rates for the first time in several years seems sensible. We expect
the recovery elsewhere in Europe to be stronger and longer lasting, and with
valuations reflecting most of the recovery, we underweighted your Fund in UK
stocks.
Chart 1 - Geographic Diversification
Investment Policy and Outlook
The European economic recovery should continue for some time. Barring an
increase in inflation, equity markets should benefit over the next few years,
and the region appears to be an attractive opportunity for long-term
appreciation.
We would like to take this opportunity to welcome new shareholders to the
Fund, and thank you for the confidence placed in us.
Respectfully submitted,
Martin G. Wade
President
November 18, 1994
Reviewing Your International Investing Strategy
Not so very long ago, we probably would not have addressed this issue, because
relatively few U.S. investors had an international investing strategy to
review. In recent years, however, investor focus has broadened appreciably,
and now global investing seems finally to be catching up with "global
consuming."
The merits of placing a portion of your financial assets in overseas
investments have become widely recognized, as evidenced by the dramatic growth
of international mutual fund assets. Amid all the investment uncertainties
generated by rising interest rates this year - both in the U.S. and
a number of other countries - our international equity funds continued to
expand impressively.
The historic evidence is clear that a prudent equity diversification
strategy that includes foreign stocks can reduce the year-to-year volatility
of an equity portfolio and, over time, enhance overall returns. Volatility
may be reduced because foreign stocks often move in divergent directions from
the U.S. market. With over half of all stocks in the world originating and
trading outside the U.S. - many in countries growing faster than the U.S. - it
can be argued that the investor who restricts his or her portfolio entirely to
U.S. securities is less prudent than the one who diversifies more widely.
Since you are an international investor, we do not want to preach to the
converted. Rather, we want to suggest you take a minute to review your T.
Rowe Price international investments to ensure they are in line with your
financial strategy and your overall portfolio.
An International Allocation
Except in unusual circumstances, we believe a majority of an investor's
international equity exposure should be in a core fund that has a broadly
diversified portfolio of well-established companies around the world. Our
International Stock Fund is designed to be such a core holding. If you have a
particular interest in a certain region, you may want to put some assets in a
more specialized fund. The New Asia, Europe, Latin America, and Japan Funds
have narrow geographic focuses, while our International Discovery Fund
emphasizes rapidly growing smaller companies in all of those areas. Without
the conviction to stick through potentially tough periods, you should be
cautious about investing in regional funds, which may have greater price
volatility.
Don't base your allocation decisions solely on the past performance of
any stock market, and keep in mind the risks of foreign investing, including
the possibility of unfavorable currency exchange rates. You may want to
consider shifting a portion of your investment dollars into a particular
international asset over a period of time, instead of all at once. By focusing
on your particular financial objectives, the length of time in which you hope
to achieve them, and your willingness to accept risks represented by various
investments, you should be in a good position to structure your international
investment portfolio.
This report has been preceded or is accompanied by a prospectus.
Industry Diversification
October 31, 1994
Percent of
Net Assets
__________
Consumer Goods 41.4%
Financial/Insurance 14.1
Basic Industry 11.8
Capital Goods 10.9
Utilities 9.6
Energy 7.7
Transport/Storage 1.8
Miscellaneous 1.2
Reserves 1.5
_____________________________________________________________________________
Net Assets 100.0%
Security Classification
October 31, 1994
Cost Market Value
Percent of Net Assets (000) (000)
__________________________ _________ ___________
Common Stocks, Rights
& Warrants, 96.4% $284,710 $325,537
Preferred Stocks, 1.9% 4,440 6,266
Corporate Bonds, 0.2% 466 551
Short-Term Investments, 1.7% 5,749 5,749
________ ________
Total Investments, 100.2% 295,365 338,103
Other Assets Less
Liabilities, -0.2% -694 -605
Net Assets, 100.0% $294,671 $337,498
Twenty-Five Largest Holdings
October 31, 1994
Percent of
Net Assets
__________
Wolters Kluwer, Netherlands 3.4%
Elsevier, Netherlands 3.3
Royal Dutch Petroleum, Netherlands 2.6
National Westminster Bank, United Kingdom 2.6
Eaux Cie Generale, France 1.6
Nestle, Switzerland 1.6
Valeo, France 1.5
Guinness, United Kingdom 1.4
Astras 'B', Sweden 1.3
Reed International, United Kingdom 1.3
Shell Transport & Trading, United Kingdom 1.3
BBC Brown Boveri, Switzerland 1.2
Television Francaise, France 1.2
Tomkins, United Kingdom 1.2
SmithKline Beecham, equity units,
United Kingdom 1.2
CSM, Netherlands 1.2
Grand Metropolitan, United Kingdom 1.1
Norsk Hydro, Norway 1.1
Cable & Wireless, United Kingdom 1.1
London Electricity, United Kingdom 1.1
Mannesmann, Germany 1.0
Polygram, Netherlands 1.0
Caradon, United Kingdom 1.0
Cie de St. Gobain, France 1.0
Glaxo Holdings, United Kingdom 0.9
_____________________________________________________________________________
Total 37.2%
Chart 2 - Performance Comparison
Fiscal-Year Performance
Periods Ended October 31, 1994
Since Inception
1 Year 2/28/90*
________ _____________
12.4% 6.5%
*Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Statement of Net Assets (Value in thousands)
T. Rowe Price European Stock Fund / October 31, 1994
AUSTRIA - 0.2%
Value
______
COMMON STOCKS & WARRANTS
2,000 wts. * Creditanstalt Bankverein
Hungarian Equity Basket,
12/31/95 . . . . . . . . . . . . . . . . $ 1
2,600 shs. Virginia Technologie . . . . . . . . . . . 267
268
PREFERRED STOCKS
2,050 Creditanstalt Bankverein . . . . . . . . . 122
2,600 Maculan Holding . . . . . . . . . . . . . 265
387
Total Austria 655
BELGIUM - 2.2%
COMMON STOCKS & WARRANTS
5,189 AG Finanz. . . . . . . . . . . . . . . . . 417
233 Audiofina. . . . . . . . . . . . . . . . . 124
4,000 CMB Shipping . . . . . . . . . . . . . . . 335
1,600 D'Ieteren Trading. . . . . . . . . . . . . 121
11,348 Delhaize Freres. . . . . . . . . . . . . . 455
4,890 Generale Banque. . . . . . . . . . . . . . 1,186
9,910 Kredietbank. . . . . . . . . . . . . . . . 1,959
11,000 wts. * National Portefeuille, 6/15/99 . . . . . . 57
3,550 shs. UCB. . . . . . . . . . . . . . . . . . . . 2,740
3,500 wts. * Union Miniere, 12/15/94. . . . . . . . . . 32
7,426
CORPORATE BONDS
357,000 LUF Audiofina, Cv., 5.00%, 12/31/96. . . . . . 12
4,522,500BEL Kredietbank, Cv., 5.75%,
11/30/03 . . . . . . . . . . . . . . . . 132
144
Total Belgium 7,570
DENMARK - 0.7%
COMMON STOCKS
12,150 shs. Den Danske Bank. . . . . . . . . . . . . . 653
4,000 Incentive. . . . . . . . . . . . . . . . . 218
6,500 * Olicom (USD) . . . . . . . . . . . . . . . 76
3,800 Silcon . . . . . . . . . . . . . . . . . . 184
6,100 Teledanmark. . . . . . . . . . . . . . . . 351
14,600 Unidanmark . . . . . . . . . . . . . . . . 586
2,068
CORPORATE BOND
900,000 DKK Danske Traelastkompagni,
Cv., 5.25%, 1/1/02 . . . . . . . . . . . 188
Total Denmark 2,256
FINLAND - 0.8%
COMMON STOCKS
7,000 shs. Huhtamaki Oy . . . . . . . . . . . . . . . $ 223
12,000 Kymmene Corporation. . . . . . . . . . . . 328
551
PREFERRED STOCK
14,490 Nokia. . . . . . . . . . . . . . . . . . . 2,185
Total Finland 2,736
FRANCE - 13.8%
COMMON STOCKS & WARRANTS
20,750 Accor. . . . . . . . . . . . . . . . . . . 2,463
600 Bail-Investissement. . . . . . . . . . . . 101
4,050 wts. * Barclays de Zoete Wedd,
9/15/95. . . . . . . . . . . . . . . . . 57
3,558 shs. Brioche Pasquier . . . . . . . . . . . . . 406
5,000 Burelle. . . . . . . . . . . . . . . . . . 389
1,165 But. . . . . . . . . . . . . . . . . . . . 206
1,100 C.E.E. . . . . . . . . . . . . . . . . . . 108
18,620 CMB Packaging. . . . . . . . . . . . . . . 664
1,261 Cardif . . . . . . . . . . . . . . . . . . 180
6,740 Carrefour. . . . . . . . . . . . . . . . . 2,972
3,100 Centrale pour L'Industrie. . . . . . . . . 199
5,095 Chargeurs. . . . . . . . . . . . . . . . . 1,272
26,379 Cie de St. Gobain. . . . . . . . . . . . . 3,346
4,000 Cipe France. . . . . . . . . . . . . . . . 558
3,600 * Club Mediterranee. . . . . . . . . . . . . 308
1,527 * Concorde . . . . . . . . . . . . . . . . . 237
2,700 Dauphin. . . . . . . . . . . . . . . . . . 173
1,000 De Dietrich & Cie. . . . . . . . . . . . . 503
60,064 Eaux Cie Generale. . . . . . . . . . . . . 5,501
6,343 Ecco Travail Temporaire. . . . . . . . . . 394
350 Galeries Lafayette . . . . . . . . . . . . 155
700 * Grandoptical Photoservice. . . . . . . . . 46
3,111 Guilbert . . . . . . . . . . . . . . . . . 247
1,000 Idia . . . . . . . . . . . . . . . . . . . 31
18,115 Idianova . . . . . . . . . . . . . . . . . 216
2,300 Immeubles de France. . . . . . . . . . . . 192
13,978 LVMH . . . . . . . . . . . . . . . . . . . 2,253
1,732 L'Oreal. . . . . . . . . . . . . . . . . . 376
20,135 Lafarge Coppee . . . . . . . . . . . . . . 1,597
5,000 * Legris . . . . . . . . . . . . . . . . . . 355
3,600 Manutan. . . . . . . . . . . . . . . . . . 287
12,000 * Moulinex . . . . . . . . . . . . . . . . . 274
20,960 * Peugeot. . . . . . . . . . . . . . . . . . 3,139
10,060 Poliet . . . . . . . . . . . . . . . . . . 772
450 Primagaz . . . . . . . . . . . . . . . . . 77
2,830 Promodes . . . . . . . . . . . . . . . . . 551
8,600 Rochefortaise Communication. . . . . . . . 326
2,450 shs. SITA . . . . . . . . . . . . . . . . . . . $ 318
5,500 Societe Generale de France . . . . . . . . 621
29,920 Societe Nationale Elf Aquitaine. . . . . . 2,211
3,733 Spir Communication . . . . . . . . . . . . 471
39,598 Television Francaise . . . . . . . . . . . 4,107
23,450 Total. . . . . . . . . . . . . . . . . . . 1,521
95,850 Valeo. . . . . . . . . . . . . . . . . . . 5,203
7,000 * Vallourec. . . . . . . . . . . . . . . . . 380
1,400 Virbac . . . . . . . . . . . . . . . . . . 210
3,965 * Vulcanic . . . . . . . . . . . . . . . . . 128
7,880 Z Groupe Zannier . . . . . . . . . . . . . 289
46,390
CORPORATE BOND
174,410 FRF Virbac, Cv., 5.00%, 1/1/01 . . . . . . . . 35
Total France 46,425
GERMANY - 8.6%
COMMON STOCKS & WARRANTS
1,120 shs. Allianz Holdings . . . . . . . . . . . . . 1,713
8,520 Bayer. . . . . . . . . . . . . . . . . . . 1,980
1,521 Bayerische Motoren Werke . . . . . . . . . 784
1,300 Balcke Durr. . . . . . . . . . . . . . . . 372
5,300 Bremer Vulkan Verbund. . . . . . . . . . . 363
1,050 DLW. . . . . . . . . . . . . . . . . . . . 292
5,103 Deutsche Bank. . . . . . . . . . . . . . . 2,483
2,000 * Dorries Scharmann. . . . . . . . . . . . . 255
750 FA Gunther & Sohn. . . . . . . . . . . . . 229
7,912 Gehe . . . . . . . . . . . . . . . . . . . 2,704
5,590 Hoechst. . . . . . . . . . . . . . . . . . 1,214
400 Jean Pascale . . . . . . . . . . . . . . . 109
500 Kampa Hause. . . . . . . . . . . . . . . . 324
1,132 Kaufhof Holdings . . . . . . . . . . . . . 383
500 Klein, Schanzlin & Becker. . . . . . . . . 130
687 Leffers. . . . . . . . . . . . . . . . . . 158
13,085 Mannesmann . . . . . . . . . . . . . . . . 3,498
325 Pfleiderer Bau und
Verkehrssysteme. . . . . . . . . . . . . 122
4,800 * Pittler. . . . . . . . . . . . . . . . . . 319
1,111 Plettac. . . . . . . . . . . . . . . . . . 553
648 Rhon Klinikum. . . . . . . . . . . . . . . 577
2,472 Schering . . . . . . . . . . . . . . . . . 1,644
600 Sixt . . . . . . . . . . . . . . . . . . . 184
100 Sixt, profit sharing units . . . . . . . . 68
1,340 Vereinigte Baubeschlag Handel. . . . . . . 407
6,064 Veba . . . . . . . . . . . . . . . . . . . 2,032
216 Victoria Holding . . . . . . . . . . . . . 164
6,863 Volkswagen . . . . . . . . . . . . . . . . 1,994
2,200 wts. * Volkswagen International
Finance, 10/27/98. . . . . . . . . . . . 219
400 shs. Vossloh. . . . . . . . . . . . . . . . . . 141
660 Weru . . . . . . . . . . . . . . . . . . . 373
25,788
PREFERRED STOCKS
540 shs. Edding . . . . . . . . . . . . . . . . . . $ 155
930 Einhell Hans . . . . . . . . . . . . . . . 195
155 Einhell Hans, new. . . . . . . . . . . . . 30
600 Hach . . . . . . . . . . . . . . . . . . . 307
650 Klein, Schanzlin & Becker. . . . . . . . . 153
875 Leffers. . . . . . . . . . . . . . . . . . 180
450 Marschollek Lautenschlaeger. . . . . . . . 254
1,650 Signalbau Huber. . . . . . . . . . . . . . 332
1,000 Sixt . . . . . . . . . . . . . . . . . . . 269
1,400 Spar Handells. . . . . . . . . . . . . . . 303
601 Sto. . . . . . . . . . . . . . . . . . . . 367
1,100 Villeroy & Boch. . . . . . . . . . . . . . 237
1,828 Westag & Getalit . . . . . . . . . . . . . 438
3,220
Total Germany 29,008
HUNGARY - 0.1%
COMMON STOCKS
310 Chinoin. . . . . . . . . . . . . . . . . . 150
28,000 Fotex (ATS). . . . . . . . . . . . . . . . 98
Total Hungary 248
IRELAND - 0.4%
COMMON STOCKS
96,000 Abbey. . . . . . . . . . . . . . . . . . . 216
350,000 Barlo Group. . . . . . . . . . . . . . . . 383
24,000 Grafton Group. . . . . . . . . . . . . . . 145
600,000 * Kenmare Resources (GBP). . . . . . . . . . 101
126,900 Kingspan Group . . . . . . . . . . . . . . 286
360,000 Ryan Hotels. . . . . . . . . . . . . . . . 162
Total Ireland 1,293
ISRAEL - 0.2%
COMMON STOCKS
4,000 Discount Investment. . . . . . . . . . . . 304
10,000 Teva Pharmaceutical
ADR (USD). . . . . . . . . . . . . . . . 273
Total Israel 577
ITALY - 5.3%
COMMON STOCKS, RIGHTS & WARRANTS
525 Alleanza Assicurazioni, savings
shares . . . . . . . . . . . . . . . . . 5
114,155 Assicurazioni Generali . . . . . . . . . . 2,849
84,000 Cementeria di Augusta. . . . . . . . . . . 134
120,000 Danieli & Company, savings
shares . . . . . . . . . . . . . . . . . 390
22,750 wts. * Danieli & Company, 11/30/99. . . . . . . . 20
ITALY (cont'd)
300,000 shs. Editoriale la Republica. . . . . . . . . . $ 552
37,000 Fila Holdings ADR (USD). . . . . . . . . . 610
59,273 Imi. . . . . . . . . . . . . . . . . . . . 389
11,000 Industrie Natuzzi ADS (USD). . . . . . . . 352
276,120 Italgas. . . . . . . . . . . . . . . . . . 843
27,624 Merloni Elettrodomestici . . . . . . . . . 98
212,624 Merloni Elettrodomestici,
savings shares . . . . . . . . . . . . . 336
1,732,152 * Montedison . . . . . . . . . . . . . . . . 1,424
20,000 * Saes Getters . . . . . . . . . . . . . . . 182
66,000 rts. * Saes Getters . . . . . . . . . . . . . . . 4
49,000 shs. Safilo . . . . . . . . . . . . . . . . . . 303
27,000 Standa, savings shares . . . . . . . . . . 163
599,300 Stet . . . . . . . . . . . . . . . . . . . 1,810
319,935 Stet, savings shares . . . . . . . . . . . 791
309,000 Tecnost. . . . . . . . . . . . . . . . . . 599
20,000 Telecocavi, savings shares . . . . . . . . 57
1,134,205 Telecom Italia . . . . . . . . . . . . . . 3,099
1,084,230 Telecom Italia, savings shares . . . . . . 2,407
120,000 Vianini Lavori . . . . . . . . . . . . . . 234
17,651
PREFERRED STOCK
46,000 Saes Getters . . . . . . . . . . . . . . . 234
CORPORATE BOND
136,500,000 ITL Danieli & Company,
7.25%, 1/1/00. . . . . . . . . . . . . . 69
Total Italy 17,954
NETHERLANDS - 16.1%
COMMON STOCKS & WARRANTS
45,258 shs. ABN Amro . . . . . . . . . . . . . . . . . 1,608
21,404 AMEV . . . . . . . . . . . . . . . . . . . 890
3,500 Aalberts Industries. . . . . . . . . . . . 168
24,383 Akzo . . . . . . . . . . . . . . . . . . . 3,079
3,500 Atag . . . . . . . . . . . . . . . . . . . 234
14,368 Boskalis Westminster . . . . . . . . . . . 326
94,798 CSM. . . . . . . . . . . . . . . . . . . . 3,908
26,891 Ehco KLM . . . . . . . . . . . . . . . . . 568
1,084,420 Elsevier . . . . . . . . . . . . . . . . . 11,063
7,000 Frans Maas Kon . . . . . . . . . . . . . . 223
4,500 Hagemeyer. . . . . . . . . . . . . . . . . 359
1,200 Hollandsche Beton Groep. . . . . . . . . . 202
7,750 International Mueller. . . . . . . . . . . 427
65,710 International Nederlanden
Groep. . . . . . . . . . . . . . . . . . 3,075
19,682 Koninklijke PTT Nederland. . . . . . . . . 627
2,400 Nedcon Groep . . . . . . . . . . . . . . . 50
77,913 Polygram . . . . . . . . . . . . . . . . . 3,466
3,200 shs. Polynorm . . . . . . . . . . . . . . . . . $ 345
6,500 Randstad Holdings. . . . . . . . . . . . . 337
20,000 wts. * Randstad Holdings, 4/21/97 . . . . . . . . 81
76,830 shs. Royal Dutch Petroleum. . . . . . . . . . . 8,941
25,800 Unilever . . . . . . . . . . . . . . . . . 3,071
157,704 Wolters Kluwer . . . . . . . . . . . . . . 11,403
54,451
PREFERRED STOCK
10,947 International Nederlanden
Groep. . . . . . . . . . . . . . . . . . 47
Total Netherlands 54,498
NORWAY - 2.7%
COMMON STOCKS
14,000 Aker . . . . . . . . . . . . . . . . . . . 161
12,000 Awilco Shipping. . . . . . . . . . . . . . 141
22,980 Bergesen 'A' . . . . . . . . . . . . . . . 499
7,480 * Det Norske Luftfartselskap . . . . . . . . 233
24,910 Kvaerner Industier 'A' . . . . . . . . . . 1,029
12,100 Kverneland Gruppen . . . . . . . . . . . . 159
15,175 Liva Bil . . . . . . . . . . . . . . . . . 285
92,975 Norsk Hydro. . . . . . . . . . . . . . . . 3,747
55,944 Orkla 'A'. . . . . . . . . . . . . . . . . 1,643
20,000 Schibsted. . . . . . . . . . . . . . . . . 236
23,000 * Smedvig Tankships. . . . . . . . . . . . . 183
35,000 Sysdeco Group. . . . . . . . . . . . . . . 246
5,882 Unitor . . . . . . . . . . . . . . . . . . 106
11,000 Veidekke . . . . . . . . . . . . . . . . . 188
30,000 Western Bulk Shipping. . . . . . . . . . . 177
Total Norway 9,033
POLAND - 0.1%
COMMON STOCKS
2,500 Elektrim . . . . . . . . . . . . . . . . . 94
186,843 * International UNP Holdings
(CAD). . . . . . . . . . . . . . . . . . 124
18,750 * Mostostal. . . . . . . . . . . . . . . . . 114
Total Poland 332
PORTUGAL - 0.3%
COMMON STOCKS
6,016 Jeronimo Martins . . . . . . . . . . . . . 270
6,016 * Jeronimo Martins, new. . . . . . . . . . . 269
12,000 * Jornalgeste. . . . . . . . . . . . . . . . 226
6,000 * Lusotur Sociedad Financeira. . . . . . . . 111
4,000 Salvador Caetano . . . . . . . . . . . . . 98
14,000 Sumolis Industria de Frutas
Bebidas. . . . . . . . . . . . . . . . . 150
Total Portugal 1,124
RUSSIA - 0.1%
COMMON STOCK
44,000 shs. * Petersburg Long Distance
(USD). . . . . . . . . . . . . . . . . . $ 363
SPAIN - 4.3%
COMMON STOCKS
7,000 Azkoyen. . . . . . . . . . . . . . . . . . 497
5,704 Banco Popular Espanol. . . . . . . . . . . 716
21,520 Banco Santander. . . . . . . . . . . . . . 876
78,570 Centros Commerciales Pryca . . . . . . . . 1,294
75,000 Corporacion Financiaera
Reunida. . . . . . . . . . . . . . . . . 240
62,124 ENDESA . . . . . . . . . . . . . . . . . . 2,850
8,000 Espanol de Carburos Metalicos. . . . . . . 279
4,166 Europistas, new. . . . . . . . . . . . . . 36
13,410 FOSCA. . . . . . . . . . . . . . . . . . . 1,351
35,000 Filo . . . . . . . . . . . . . . . . . . . 333
10,721 Gas Natural. . . . . . . . . . . . . . . . 908
11,500 * Grupo Anaya. . . . . . . . . . . . . . . . 356
9,750 Hidroelectrica del Cantabrico. . . . . . . 296
5,500 Inmobiliaria Metropolitana
Vasco. . . . . . . . . . . . . . . . . . 180
26,200 Marco Iberica Distribucion . . . . . . . . 357
12,500 Prosegur Compania Securidad. . . . . . . . 247
70,120 Repsol . . . . . . . . . . . . . . . . . . 2,245
50,000 * Sotogrande . . . . . . . . . . . . . . . . 149
87,278 Telefonica de Espana . . . . . . . . . . . 1,182
14,392
CORPORATE BOND
4,500,000ESP Grupo Anaya, Cv., 7.00%,
3/18/98. . . . . . . . . . . . . . . . . 38
Total Spain 14,430
SWEDEN - 5.0%
COMMON STOCKS
17,000 shs. Angpanne Foreningen 'B'. . . . . . . . . . 262
6,000 * Arjo . . . . . . . . . . . . . . . . . . . 108
10,140 Asea 'A' . . . . . . . . . . . . . . . . . 737
166,780 Astra 'B'. . . . . . . . . . . . . . . . . 4,452
84,250 Atlas Copco 'B'. . . . . . . . . . . . . . 1,148
130,000 * BPA. . . . . . . . . . . . . . . . . . . . 231
100,000 * Bilspedition 'B' . . . . . . . . . . . . . 348
30,600 * Catena . . . . . . . . . . . . . . . . . . 281
32,700 Electrolux 'B' . . . . . . . . . . . . . . 1,698
23,810 Esselte 'B'. . . . . . . . . . . . . . . . 328
21,000 Euroc . . . . . . . . . . . . . . . . . . 359
359,000 * Finnveden Investments 'B'. . . . . . . . . 349
177,000 * Frontline. . . . . . . . . . . . . . . . . 517
12,104 shs. Gambro 'B' . . . . . . . . . . . . . . . . $ 142
18,550 Getinge Industrial 'B' . . . . . . . . . . 511
18,270 Hennes & Mauritz 'B' . . . . . . . . . . . 1,011
23,000 * Hoganas 'B'. . . . . . . . . . . . . . . . 382
46,700 ICB Shipping 'B' . . . . . . . . . . . . . 351
28,000 * Kalmar Industries. . . . . . . . . . . . . 339
21,000 Linjebuss. . . . . . . . . . . . . . . . . 379
32,880 Sandvik 'B'. . . . . . . . . . . . . . . . 558
52,470 Scribona 'B' . . . . . . . . . . . . . . . 376
6,000 Securitas AB 'B' . . . . . . . . . . . . . 170
55,250 Stena Line 'B' . . . . . . . . . . . . . . 303
12,940 Stora Kopparberg 'B' . . . . . . . . . . . 806
27,000 * TV 4 . . . . . . . . . . . . . . . . . . . 687
16,833
CORPORATE BOND
281,250 SEK Stena Line, Cv., 7.00%, 4/30/01. . . . . . 41
Total Sweden 16,874
SWITZERLAND - 7.1%
COMMON STOCKS & WARRANTS
1,100 shs. Affichage. . . . . . . . . . . . . . . . . 311
4,830 BBC Brown Boveri . . . . . . . . . . . . . 4,146
135 Bil. . . . . . . . . . . . . . . . . . . . 69
220 Bobst. . . . . . . . . . . . . . . . . . . 284
450 Bossard Holdings . . . . . . . . . . . . . 609
200 Bucher Holdings. . . . . . . . . . . . . . 115
800 wts. * Bucher Holdings, 7/21/95 . . . . . . . . . 35
200 * Bucher Holdings, 10/27/95. . . . . . . . . 1
2,765 shs. CS Holdings. . . . . . . . . . . . . . . . 1,209
2,765 wts. * CS Holdings, 12/16/94. . . . . . . . . . . 23
2,166 shs. Ciba Geigy . . . . . . . . . . . . . . . . 1,263
165 Gurit Heberlien. . . . . . . . . . . . . . 285
500 Hilti. . . . . . . . . . . . . . . . . . . 382
620 Intershop Holdings . . . . . . . . . . . . 273
1,200 Kardex . . . . . . . . . . . . . . . . . . 315
170 wts. * Landis & Gyr, 2/15/95. . . . . . . . . . . 1
1,000 shs. * Mikron Holding . . . . . . . . . . . . . . 69
5,606 Nestle . . . . . . . . . . . . . . . . . . 5,241
1,400 Porst Holdings . . . . . . . . . . . . . . 284
549 Roche Holdings . . . . . . . . . . . . . . 2,442
4,279 Sandoz . . . . . . . . . . . . . . . . . . 2,133
475 Saurer . . . . . . . . . . . . . . . . . . 155
150 Sig Schweiz Industrie. . . . . . . . . . . 291
1,261 Sika Finanz. . . . . . . . . . . . . . . . 361
1,800 * Suter & Suter. . . . . . . . . . . . . . . 301
5,540 Swiss Bank . . . . . . . . . . . . . . . . 1,597
1,659 Union Bank of Switzerland. . . . . . . . . 1,555
3,100 * Von Moos Holdings. . . . . . . . . . . . . 333
Total Switzerland 24,083
TURKEY - 0.1%
COMMON STOCK
29,000 shs. Guney Biracilik. . . . . . . . . . . . . . $ 11
UNITED KINGDOM - 30.4%
COMMON STOCKS, RIGHTS & WARRANTS
436,080 Abbey National . . . . . . . . . . . . . . 2,959
27,000 wts. * Abtrust Lloyds Insurance, 2008 . . . . . . 15
55,000 shs. Applied Distribution Group . . . . . . . . 150
209,000 Argos. . . . . . . . . . . . . . . . . . . 1,104
351,000 Argyll Group . . . . . . . . . . . . . . . 1,507
1,283,430 Asda Group . . . . . . . . . . . . . . . . 1,259
76,666 Ashtead Group. . . . . . . . . . . . . . . 567
28,250 Avon Rubber. . . . . . . . . . . . . . . . 248
66,000 BAA. . . . . . . . . . . . . . . . . . . . 555
75,000 Baggeridge Brick . . . . . . . . . . . . . 153
94,000 * Berisford International. . . . . . . . . . 291
467,616 * Birkdale Group . . . . . . . . . . . . . . 52
46,664 wts. * British Biotechnology, 1/31/96 . . . . . . 462
359,250 shs. British Gas. . . . . . . . . . . . . . . . 1,710
141,000 British Petroleum. . . . . . . . . . . . . 1,005
315,630 Britton Group. . . . . . . . . . . . . . . 666
950,000 * Brown & Jackson. . . . . . . . . . . . . . 39
511,750 Bruntcliffe Aggregates . . . . . . . . . . 268
155,600 CALA . . . . . . . . . . . . . . . . . . . 300
532,110 Cable & Wireless . . . . . . . . . . . . . 3,672
332,816 Cadbury Schweppes. . . . . . . . . . . . . 2,377
770,810 Caradon. . . . . . . . . . . . . . . . . . 3,365
125,000 Carpetright. . . . . . . . . . . . . . . . 476
427,829 Casket . . . . . . . . . . . . . . . . . . 205
115,000 * Chamberlain Phipps . . . . . . . . . . . . 329
64,723 Claremont Garments . . . . . . . . . . . . 334
245,000 Coats Viyella. . . . . . . . . . . . . . . 783
50,000 Control Techniques . . . . . . . . . . . . 298
110,000 Corporate Services Group . . . . . . . . . 106
62,748 Cowie Group. . . . . . . . . . . . . . . . 219
307,578 Crestacare . . . . . . . . . . . . . . . . 158
207,777 CRT Group. . . . . . . . . . . . . . . . . 302
199,510 David S. Smith . . . . . . . . . . . . . . 1,672
62,500 Devro International. . . . . . . . . . . . 214
13,500 Druck. . . . . . . . . . . . . . . . . . . 322
86,510 East Midlands Electricity. . . . . . . . . 970
69,730 Eastern Electricity. . . . . . . . . . . . 905
171,042 Enviromed. . . . . . . . . . . . . . . . . 338
90,000 * Eurodollar Holdings. . . . . . . . . . . . 300
75,000 Ferraris Group . . . . . . . . . . . . . . 108
155,000 First Choice Holidays. . . . . . . . . . . 289
182,570 First National Finance . . . . . . . . . . 200
86,000 Frost Group. . . . . . . . . . . . . . . . 319
321,540 Glaxo Holdings . . . . . . . . . . . . . . 3,139
61,000 Graham Group . . . . . . . . . . . . . . . 161
564,420 shs. Grand Metropolitan . . . . . . . . . . . . $ 3,849
2,062,500 Graystone. . . . . . . . . . . . . . . . . 464
619,040 Guinness . . . . . . . . . . . . . . . . . 4,717
230,000 HTV Group. . . . . . . . . . . . . . . . . 557
160,000 * Halkin Holdings. . . . . . . . . . . . . . 170
140,580 Heath. . . . . . . . . . . . . . . . . . . 536
55,000 Helical Bar. . . . . . . . . . . . . . . . 305
13,000 Henderson Administration
Group. . . . . . . . . . . . . . . . . . 203
625 Heywood Williams Group . . . . . . . . . . 3
100,000 Hi-Tech Sports . . . . . . . . . . . . . . 68
675,000 Hobson . . . . . . . . . . . . . . . . . . 265
92,500 Holliday Chemical Holding. . . . . . . . . 327
110,000 Ibstock . . . . . . . . . . . . . . . . . 139
60,000 Iceland Group. . . . . . . . . . . . . . . 159
90,000 Ingham . . . . . . . . . . . . . . . . . . 119
130,000 JBA Holdings . . . . . . . . . . . . . . . 285
202,690 John Laing . . . . . . . . . . . . . . . . 784
60,000 Keller Group . . . . . . . . . . . . . . . 106
57,000 Kenwood Appliances . . . . . . . . . . . . 352
90,000 Kewill Systems . . . . . . . . . . . . . . 372
395,731 Kingfisher . . . . . . . . . . . . . . . . 3,048
312,250 Ladbroke Group . . . . . . . . . . . . . . 766
167,000 London & Overseas Freighters . . . . . . . 238
299,910 London Electricity . . . . . . . . . . . . 3,546
57,500 Matthew Clark. . . . . . . . . . . . . . . 506
34,500 rts. * Matthew Clark. . . . . . . . . . . . . . . 22
595,000 shs. Mayflower. . . . . . . . . . . . . . . . . 535
150,000 Millgate . . . . . . . . . . . . . . . . . 47
155,000 Mirror Group Newspapers. . . . . . . . . . 357
171,000 Monument Oil & Gas . . . . . . . . . . . . 194
1,137,500 * My Kinda Town. . . . . . . . . . . . . . . 256
1,066,410 National Westminster Bank. . . . . . . . . 8,754
100,000 Northern Leisure . . . . . . . . . . . . . 96
358,333 * Pentos . . . . . . . . . . . . . . . . . . 97
57,000 Peter Black Holdings . . . . . . . . . . . 238
70,000 * Pillar Property Investments. . . . . . . . 167
115,000 Pizza Express. . . . . . . . . . . . . . . 212
260,000 * Polly Peck International . . . . . . . . . 13
57,000 Powerscreen International. . . . . . . . . 277
260,000 Princedale Group . . . . . . . . . . . . . 121
119,701 Prowting . . . . . . . . . . . . . . . . . 256
104,561 Quadramatic. . . . . . . . . . . . . . . . 270
80,000 Ramco Oil Services . . . . . . . . . . . . 283
375,625 Rank Organisation. . . . . . . . . . . . . 2,463
355,940 Reed International . . . . . . . . . . . . 4,360
8,645,760 * Regal Hotel Group. . . . . . . . . . . . . 212
224,420 Rolls Royce. . . . . . . . . . . . . . . . 639
50,000 Rosebys. . . . . . . . . . . . . . . . . . 114
156,060 RTZ. . . . . . . . . . . . . . . . . . . . 2,184
82,500 Serco Group. . . . . . . . . . . . . . . . 390
255,000 Shandwick. . . . . . . . . . . . . . . . . 190
352,310 rts. Shell Transport & Trading. . . . . . . . . 4,223
657,100 shs. SmithKline Beecham, equity
units. . . . . . . . . . . . . . . . . . $ 4,008
127,500 South Western Electricity. . . . . . . . . 1,655
269,388 Spring Ram . . . . . . . . . . . . . . . . 196
35,000 Stagecoach Holdings. . . . . . . . . . . . 124
188,750 Stakis . . . . . . . . . . . . . . . . . . 241
110,000 Sterling Publishing. . . . . . . . . . . . 247
315,000 Stirling Group . . . . . . . . . . . . . . 309
1,917,396 Sunleigh . . . . . . . . . . . . . . . . . 180
473,000 T & N. . . . . . . . . . . . . . . . . . . 1,663
70,000 TLG. . . . . . . . . . . . . . . . . . . . 132
243,500 Tesco. . . . . . . . . . . . . . . . . . . 934
4,350,000 Ticketing Group. . . . . . . . . . . . . . 89
1,180,770 Tomkins. . . . . . . . . . . . . . . . . . 4,093
318,500 Transtec . . . . . . . . . . . . . . . . . 281
44,000 Trifast. . . . . . . . . . . . . . . . . . 153
197,774 UK Estates . . . . . . . . . . . . . . . . 71
165,000 Ugland International . . . . . . . . . . . 356
274,390 United Newspapers. . . . . . . . . . . . . 2,279
70,000 * VCI. . . . . . . . . . . . . . . . . . . . 171
974,806 * Verity Group . . . . . . . . . . . . . . . 143
120,000 Vibroplant . . . . . . . . . . . . . . . . 226
225,000 * Videologic Group . . . . . . . . . . . . . 70
220,000 WPP Group. . . . . . . . . . . . . . . . . 403
520,547 Wellman. . . . . . . . . . . . . . . . . . 328
201,111 Wickes . . . . . . . . . . . . . . . . . . 291
2,600,000 * Wiggins Group. . . . . . . . . . . . . . . 287
102,655
PREFERRED STOCKS
56,714 First National Finance,
Cum. Cv., 7.00%. . . . . . . . . . . . . 117
35,000 Iceland Group. . . . . . . . . . . . . . . 76
193
CORPORATE BOND
16,666 GBP Northern Leisure, Floating Rate
Note, Cv., 3.55%, 5/31/01. . . . . . . . 36
Total United Kingdom 102,884
SHORT-TERM INVESTMENTS - 1.7%
COMMERCIAL PAPER
$4,700,000 Ciesco L.P., 4.80%, 11/1/94. . . . . . . . 4,699
50,000 Harvard University,
4.75%, 11/1/94 . . . . . . . . . . . . . 50
4,749
OTHER
$1,000,000 Corporate Asset Funding,
Floating Rate Medium-Term
Note, 4.98%, 12/12/94. . . . . . . . . . $ 1,000
Total Short-Term Investments 5,749
Total Investments in Securities -
100.2% (Cost - $295,365) 338,103
Other Assets Less Liabilities - (0.2)% . . . . . . . . . . . . (605)
Net Assets Consisting of:
Accumulated net investment
income - net of distributions. . . . . . . . . . . . . . . . $ 3,579
Accumulated realized gains/
losses - net of distributions. . . . . . . . . . . . . . . . 642
Net unrealized appreciation of
investments. . . . . . . . . . . . . . . . . . . . . . . . . 42,827
Paid-in-capital applicable to
26,533,176 shares of $0.01 par
value capital stock outstanding;
2,000,000,000 shares of the
Corporation authorized . . . . . . . . . . . . . . . . . . . 290,450
Net Assets - 100.0%. . . . . . . . . . . . . . . . . . . . . . $337,498
_________
_________
Net Asset Value Per Share. . . . . . . . . . . . . . . . . . . $12.72
______
______
* Non-income producing
(ATS) Austrian schilling denominated
(BEL) Belgian franc denominated
(CAD) Canadian dollar denominated
(DKK) Danish krone denominated
(ESP) Spanish peseta denominated
(FRF) French franc denominated
(GBP) British sterling denominated
(ITL) Italian lira denominated
(LUF) Luxembourg franc denominated
(SEK) Swedish krona denominated
(USD) U.S. dollar denominated
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price European Stock Fund / Year Ended October 31, 1994
Amounts in Thousands
______________________
INVESTMENT INCOME
Income
Dividends (net of foreign taxes of $1,133). . . . $ 6,917
Interest. . . . . . . . . . . . . . . . . . . . . 919
________
Total income. . . . . . . . . . . . . . . . . . . $ 7,836
Expenses
Investment management fees. . . . . . . . . . . . 2,710
Shareholder servicing fees & expenses . . . . . . 746
Custodian and accounting fees & expenses. . . . . 320
Registration fees & expenses. . . . . . . . . . . 73
Prospectus & shareholder reports. . . . . . . . . 72
Legal & auditing fees . . . . . . . . . . . . . . 43
Proxy & annual meeting expenses . . . . . . . . . 31
Directors' fees & expenses. . . . . . . . . . . . 12
Miscellaneous expenses. . . . . . . . . . . . . . 14
________
Total expenses. . . . . . . . . . . . . . . . . . 4,021
_______
Net investment income. . . . . . . . . . . . . . . . 3,815
_______
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
Securities. . . . . . . . . . . . . . . . . . . . 13,877
Foreign currency transactions . . . . . . . . . . (393)
________
Net realized gain . . . . . . . . . . . . . . . . . 13,484
Change in net unrealized appreciation or depreciation
Securities. . . . . . . . . . . . . . . . . . . . 16,547
Other assets and liabilities denominated in
foreign currencies. . . . . . . . . . . . . . . (96)
________
Change in net unrealized
appreciation or depreciation. . . . . . . . . . . 16,451
_______
Net gain on investments. . . . . . . . . . . . . . . 29,935
_______
INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . $33,750
_______
_______
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price European Stock Fund
Year Ended Ten Months Ended Year Ended
Oct. 31, 1994 Oct. 31, 1993* Dec. 31, 1992
_____________ _______________ _____________
Amounts in Thousands
_____________________________________________
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income . . . . . . $ 3,815 $ 3,010 $ 1,722
Net realized gain (loss)
on investments. . . . . . . . . 13,484 (1,857) (4,771)
Change in net unrealized
appreciation or
depreciation of
investments . . . . . . . . . . 16,451 39,328 (9,966)
________ ________ ________
Increase (decrease) in net
assets from operations. . . . . . 33,750 40,481 (13,015)
________ ________ ________
Distributions to shareholders
Net investment income . . . . . . (936) - (3,145)
Net realized gain
on investments. . . . . . . . . (234) --
________ ________ ________
Decrease in net assets from
distributions to
shareholders. . . . . . . . . . (1,170) - (3,145)
________ ________ ________
Capital share transactions
Sold 17,242, 12,987
and 14,862 shares . . . . . . . 207,976 134,071 149,322
Distributions reinvested of
88, 0,and 266 shares. . . . . . 1,043 - 2,496
Redeemed 14,183, 8,161, and
6,868 shares. . . . . . . . . . (169,885) (82,566) (67,230)
________ ________ ________
Increase in net assets
from capital share
transactions. . . . . . . . . . 39,134 51,505 84,588
________ ________ ________
Net equalization . . . . . . . . . - - 1,393
________ ________ ________
Total increase . . . . . . . . . . 71,714 91,986 69,821
NET ASSETS
Beginning of period . . . . . . . 265,784 173,798 103,977
________ ________ ________
End of period . . . . . . . . . . $337,498 $265,784 $173,798
________ ________ ________
________ ________ ________
* The Fund's fiscal year-end was changed to October 31.
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price European Stock Fund / October 31, 1994
Note 1 - Significant Accounting Policies
T. Rowe Price International Funds, Inc. (the Corporation) is registered under
the Investment Company Act of 1940. The European Stock 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 - Foreign currency amounts are translated into U.S.
dollars at prevailing exchange rates as follows: assets and liabilities at the
rate of exchange at the end of the respective period, purchases and sales of
securities and income and expenses at the rate of exchange prevailing on the
dates of such transactions. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a component
of such gains or losses.
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an 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 which may differ from generally accepted accounting
principles. Effective January 1, 1993, the Fund discontinued its practice of
equalization. The results of operations and net assets were not affected by
this change.
Note 2 - Investment Transactions
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $124,742,000 and $73,000,000, respectively,
for the year ended October 31, 1994.
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. Capital loss carry-forwards utilized in the year ended
October 31, 1994 amounted to $12,282,000.
In order for the Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, $292,000 of
undistributed net investment income and $263,000 of undistributed net realized
gains were reclassified as a $29,000 increase to paid-in-capital during the
year ended October 31, 1994. The results of operations and net assets were not
affected by the reclassifications.
At October 31, 1994, the aggregate cost of investments for federal
income tax and financial reporting purposes was $295,365,000 and net
unrealized appreciation aggregated $42,738,000, of which $54,030,000 related
to appreciated investments and $11,292,000 to depreciated investments.
Note 4 - Related Party Transactions
The Fund is managed by Rowe Price-Fleming International, Inc. (Price-Fleming),
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 Price-Fleming
(the Manager) provides for an annual investment management fee, computed daily
and paid monthly, consisting of an Individual Fund Fee equal to 0.50% 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. The effective
annual Group Fee rate at October 31, 1994, and for the year then ended was
0.34%. The Fund pays a pro rata portion of the Group Fee based on the ratio of
the Fund's net assets to those of the Group.
During the year ended October 31, 1994, the Fund, in the ordinary course
of business, paid commissions of $5,000 to, and placed security purchase and
sale orders aggregating $1,934,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions at the
direction of Price-Fleming.
T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc.
(RPS) are wholly owned subsidiaries of Price Associates. TRPS provides
transfer and dividend disbursing agent functions and shareholder services for
all accounts. RPS provides subaccounting and recordkeeping services for
certain retirement accounts invested in the Fund. Price Associates, under a
separate agreement, calculates the daily share price and maintains the
financial records of the Fund. For the year ended October 31, 1994, the Fund
incurred fees totalling approximately $648,000 for these services provided by
related parties. At October 31, 1994, these investment management and service
fees payable were $304,000.
<TABLE>
Financial Highlights
T. Rowe Price European Stock Fund
<CAPTION>
For a share outstanding throughout each period
_________________________________________________________________
From
Ten Months Year Ended February 28, 1990
Year Ended Ended December 31, (Commencement of
October 31, October 31, ______________ Operations) to
1994 1993# 1992 1991 December 31, 1990
_________________________________________________________________
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . .$11.37 $9.36 $10.09 $9.48 $10.00
Investment Activities
Net investment income . . . . . . . . . 0.14 0.12 0.14 0.10 0.24*
Net realized and unrealized
gain (loss) . . . . . . . . . . . . . 1.26 1.89 (0.70) 0.59 (0.56)
______ ______ ______ ______ ______
Total from Investment
Activities. . . . . . . . . . . . . . . 1.40 2.01 (0.56) 0.69 (0.32)
______ ______ ______ ______ ______
Distributions
Net investment income . . . . . . . . . (0.04) - (0.17) (0.08) (0.20)
Net realized gain . . . . . . . . . . . (0.01) - - - -
______ ______ ______ ______ ______
Total Distributions. . . . . . . . . . . (0.05) - (0.17) (0.08) (0.20)
______ ______ ______ ______ ______
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . . . .$12.72 $11.37 $9.36 $10.09 $9.48
______ ______ ______ ______ ______
______ ______ ______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . . . . . . . 12.4% 21.5% (5.6)% 7.3% (3.2)%
Ratio of Expenses to Average
Net Assets. . . . . . . . . . . . . . . 1.25% 1.35%! 1.48% 1.71% 1.75%!*
Ratio of Net Investment Income to
Average Net Assets. . . . . . . . . . . 1.19% 1.79%! 1.23% 1.04% 2.30%!
Portfolio Turnover Rate. . . . . . . . . 24.5% 21.3%! 52.0% 57.7% 34.9%!
Net Assets, End of Period
(in thousands). . . . . . . . . . . . .$337,498 $265,784 $173,798 $103,977 $99,447
<FN>
# The Fund's fiscal year-end was changed to October 31.
* Excludes expenses in excess of a 1.75% voluntary expense limitation in effect through December 31, 1991.
! Annualized
</FN>
</TABLE>
Report of Independent Accountants
To the Shareholders and Board of Directors of
T. Rowe Price European Stock Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the selected per
share data and information (which appears under the heading "Financial
Highlights") present fairly, in all material respects, the financial position
of T. Rowe Price European Stock Fund (one of the portfolios constituting T.
Rowe Price International Funds, Inc.) at October 31, 1994, the results of its
operations, the changes in its net assets and the selected per share data and
information for each of the fiscal periods presented in conformity with
generally accepted accounting principles. These financial statements and
selected per share data and information (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, 1994 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, 1994
Shareholder Services
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety
of information and services-at no extra cost.
Knowledgeable Service Representatives
By Phone-Shareholder Service Representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m E.T. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
In Person-Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While there,
you can drop off applications or obtain prospectuses and other literature.
Automated 24-Hour Services
Tele*Access(registered trademark) (1-800-638-2587) provides information
such as account balance, date and amount of your last transaction, latest
dividend payment, and fund prices and yields. Additionally, you have the
ability to request prospectuses, statements, account and tax forms, reorder
checks, and initiate purchase, redemption, and exchange orders for identically
registered accounts.
PC*Access(registered trademark) provides the same information as
Tele*Access, but on a personal computer via dial-up modem.
Account Services
Checking-Write checks for $500 or more on any money market and most bond
fund accounts.
Automatic Investing-Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A low, $50
minimum makes it easy to get started.
Automatic Withdrawal-If you need money from your fund account on a
regular basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options-Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
Investment Information
Combined Statement-A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides total
portfolio value, and lists your investments by type-stock, bond, and money
market. Detail pages itemize account transactions by fund.
Quarterly Shareholder Reports-Portfolio managers review the performance
of the funds in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report-A quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Insights-A library of information that includes reports on mutual fund
tax issues, investment strategies, and financial markets.
Detailed Investment Guides-Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also
available on disk for PC use), and Guide to Risk-Adjusted Performance can help
you determine and reach your investment goals.
Discount Brokerage
You can trade stocks, bonds, options, precious metals, and other securities at
a substantial savings over regular commission rates. Call a shareholder
service representative for more information.
T. Rowe Price No-Load Mutual Funds
STABILITY
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
CONSERVATIVE INCOME
Adjustable Rate
U.S. Government
Short-Term Bond
Short-Term Global Income
Summit Limited-Term Bond
U.S. Treasury Intermediate
Florida Insured Intermediate
Tax-Free
Maryland Short-Term
Tax-Free Bond
Summit Municipal
Intermediate
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
INCOME
Global Government Bond
GNMA
New Income
Spectrum Income
Summit GNMA
U.S. Treasury Long-Term
California Tax-Free Bond
Georgia Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Tax-Free Income
Virginia Tax-Free Bond
AGGRESSIVE INCOME
High Yield
International Bond
Tax-Free High Yield
CONSERVATIVE
GROWTH
Balanced
Capital Appreciation
Dividend Growth
Equity Income
Equity Index
Growth & Income
Spectrum Growth
GROWTH
Blue Chip Growth
European Stock
Growth Stock
International Stock
Japan
Mid-Cap Growth
New Era
Small-Cap Value
AGGRESSIVE GROWTH
International Discovery
Latin America
New America Growth
New Asia
New Horizons
OTC
Science & Technology
PERSONAL STRATEGY FUNDS
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Call if you want to know about any T. Rowe Price fund. We'll send you a
prospectus with more complete information, including management fees and other
expenses. Read it carefully before you invest or send money.
Chart 1 - Geographic Diversification
A pie chart breaks out the percentages of European Stock Fund holdings held in
individual countries throughout Europe.
Chart 2 - Performance Comparison
A line graph compares a hypothetical $10,000 investment made in the European
Stock Fund at its inception (2/28/90) with an identical investment made
concurrently in the Morgan Stanley (MSCI) Europe Index. At 10/31/94, the Fund
investment would have been worth $13,391 and the MSCI Index investment would
have been worth $14,864.
