<PAGE>
FELLOW SHAREHOLDERS
Compared with the strong equity markets of last year, European stocks
experienced a subdued but relatively resilient start in 1994. The positive
effects in Europe of continued short-term interest rate declines and signs of
economic recovery were counterbalanced by weaker bonds and global nervousness as
U.S. interest rates increased. Firmer European currencies helped bolster
returns.
<TABLE>
<CAPTION>
PERFORMANCE COMPARISON
- --------------------------------------------------------
Periods Ended 4/30/94
3 Months 6 Months
---------------------
<S> <C> <C>
European Stock Fund -2.5% 8.6%
MSCI European Index -2.3 8.1
- --------------------------------------------------------
</TABLE>
MARKET REVIEW
After a weak January, the GERMAN market rebounded strongly as economically
sensitive stocks continued their 1993 rally. The economy is showing clear signs
of bottoming. Export orders began to pick up in the second half of 1993, but
were outweighed by weak domestic demand, which is now stabilising. Your Fund's
emphasis remains on more economically sensitive stocks as well as a core of
growth stocks, and financials continue to be underweighted.
Our old friend GEHE, the pharmaceutical wholesaler and generics producer,
had a good quarter as its strong strategic position is increasingly being
recognised during this time of upheaval in the pharmaceutical industry. One of
many interesting developments is the recent deal whereby Bristol Myers gave
Gehe's generics arm the right to produce high-profile drugs when patents expire
and took an equity stake in the Gehe's generics subsidiary as well.
The rest of the Germanic bloc has also been somewhat mixed. Your Fund's
overweighting in the NETHERLANDS has been dull after a strong 1993. A recent
meeting with niche publisher WOLTERS KLUWER confirmed its strong long-term
growth potential. Wolters continues to grow both internally, from increased
productivity and profit margins, and through acquisition, primarily in legal,
tax, and educational publishing. Intermediate-term growth of 20% per annum
remains a realistic target, making the stock's prospective price/earnings ratio
of 15 highly attractive.
<TABLE>
<CAPTION>
MARKET PERFORMANCE
- ------------------------------------------------------------------------------
3 Months Ended 4/30/94
-------------------------------------------
Local Currency
Local vs. U.S. In U.S.
Currency Dollar Dollars
-------------------------------------------
<S> <C> <C> <C>
Austria -11.3% 5.6% -6.4%
Belgium -1.4 5.2 3.6
Denmark -3.3 4.1 0.7
France -6.2 4.2 -2.2
Germany 2.2 5.3 7.6
Italy 19.0 6.9 27.2
Netherlands -4.7 5.1 0.1
Norway -7.9 4.2 -4.1
Spain -10.7 4.3 -6.9
Sweden -6.7 3.6 -3.3
Switzerland -12.0 4.2 -8.3
United Kingdom -9.1 1.2 -8.1
- ------------------------------------------------------------------------------
</TABLE>
In SWITZERLAND, the poor performance of large bank and pharmaceutical
stocks weighed on the market. We continued paring down the exposure to both
sectors while building on our position in BBC BROWN BOVERI, the international
industrial, transport, and power group. Continuing improvements to efficiency
combined with strong market positions leave BBC well placed to meet its
aggressive profit targets. Recovering demand for capital goods as well as
sustained infrastructure-related demand should provide the company with a
fertile area in which to operate in the years ahead.
<PAGE>
Within the Latin bloc, the star performer has been ITALY. The spectacular
political success of new, pro-business Prime Minister Silvio Berlusconi caught
investor imagination both domestically and internationally. Italian economic
performance has been hamstrung for so long by corruption and bureaucracy that
the new environment could produce significant benefits. The first evidence of
increased confidence has been the repatriation of capital, which helped the lira
recover and propelled the equity market higher. Prime Minister Berlusconi will
not have an easy task governing with his separatist and neo-fascist allies, but
there seems to be a national desire for change. The export sector continues to
recover, helped by previous lira weakness, and the domestic sector is beginning
to look more stable. We remain somewhat overweighted in the telecommunications
sector, taking advantage of the extraordinary performance there over the last
two years.
The French and Spanish markets have been dull compared with Italy. In
FRANCE, the economy is also beginning to recover, but a combination of increased
supply from government-owned businesses going public and rights issues, as well
as a mixed valuation picture, have held back stock prices. With relative
valuations looking more attractive, we edged up the Fund's French exposure by
adding the well-managed industrial group CIE DE ST. GOBAIN. In SPAIN, the
widening corruption scandal in the ruling Socialist Party highlighted the
contrasts between the Spanish political situation and the positive changes
occurring in Italy. We reduced exposure to utility ENDESA after its good
performance of the last few years and added to the construction and
environmental group FOSCA.
In the Scandinavian economies, the export-led recovery may be further
augmented by recoveries in other European economies and by revived domestic
demand this year. The Scandinavian markets have all benefited from these
encouraging developments. Your Fund remains overweighted in NORWAY, and we added
to its exposure in SWEDEN, buying more stock in ELECTROLUX.
The UK market was another dull performer. The economy, as in the U.S., has
been recovering for some time, and stock prices already reflect much of the
likely earnings rebound. With bond yields moving higher and short-term rates
having bottomed, we expect UK stock prices to continue to lag the rest of
Europe, so we will remain underweighted. Prime Minister Major's political woes
do nothing to increase the market's attractiveness. Good values do exist in the
market, however, particularly among sustainable growth stocks such as GRAND
METROPOLITAN and REED INTERNATIONAL.
INVESTMENT POLICY AND OUTLOOK
With economies beginning to recover and interest rates likely to fall further,
many European markets are still in the "sweet spot" of the economic cycle.
Valuations are still acceptable and Europe should remain an attractive home for
long-term investment.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
May 25,1994
2
<PAGE>
<TABLE>
<CAPTION>
TWENTY-FIVE LARGEST HOLDINGS
April 30, 1994
Percent of
Net Assets
----------
<S> <C>
Elsevier, Netherlands 2.9%
Wolters Kluwer, Netherlands 2.6
Royal Dutch Petroleum, Netherlands 2.4
SIP, Italy 2.1
Generale des Eaux, France 1.9
Roche Holdings, Switzerland 1.7
Sandoz, Switzerland 1.5
Cable & Wireless, United Kingdom 1.5
Reed International, United Kingdom 1.4
Guinness, United Kingdom 1.3
Valeo, France 1.3
Tomkins, United Kingdom 1.3
National Westminster, United Kingdom 1.3
Caradon, United Kingdom 1.1
Grand Metropolitan, United Kingdom 1.1
Nestle, Switzerland 1.1
Shell Transport & Trading, United Kingdom 1.1
SmithKline Beecham, United Kingdom 1.1
BBC Brown Boveri, Switzerland 1.0
CSM, Netherlands 1.0
Television Francaise, France 1.0
Peugeot, France 1.0
Kingfisher, United Kingdom 1.0
Norsk Hydro, Norway 0.9
Astra B, Sweden 0.9
- --------------------------------------------------------------
Total 35.5%
==============================================================
</TABLE>
<TABLE>
<CAPTION>
INDUSTRY DIVERSIFICATION
April 30, 1994
Percent of
Net Assets
----------
<S> <C>
Media 9.8%
Health & Personal Care 7.8
Telecommunications 7.5
Banking 7.2
Energy Sources 7.1
Merchandising 5.5
Chemicals 5.2
Food & Household Products 5.0
Business & Public Services 4.4
Building Materials & Construction 4.2
Multi-Industry 2.9
Entertainment/Leisure 2.9
Machinery & Engineering 2.7
Automobiles 2.7
Beverage/Tobacco Manufacturing 2.7
Electrical & Electronics 2.4
Financial Services 1.6
Real Estate 0.6
Other Industries 9.1
Short-Term Investments 7.8
Other Assets Less Liabilities 0.9
- --------------------------------------------------------------
Net Assets 100.0%
==============================================================
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
GEOGRAPHICAL DIVERSIFICATION
April 30, 1994
Percent of
Country Net Assets
- ------------------------------------------------------- ----------
<S> <C>
Austria 0.1%
Belgium 3.0
Denmark 0.5
Finland 0.7
France 12.2
Germany 7.7
Hungary 0.1
Ireland 0.1
Italy 6.8
Netherlands 13.7
Norway 2.9
Poland 0.1
Portugal 0.3
Russia 0.1
Spain 3.7
Sweden 3.2
Switzerland 8.3
Turkey 0.0
United Kingdom 27.8
All other countries 8.7
- --------------------------------------------------------------------
Total Net Assets 100.0%
====================================================================
</TABLE>
<TABLE>
<CAPTION>
SECURITY CLASSIFICATION
April 30, 1994
Cost Market Value
Percent of Net Assets (000) (000)
- -------------------------------------------------- ---------- ------------
<S> <C> <C>
Common Stocks, Rights & Warrants, 89.9% $258,909 $299,008
Preferred Stocks, 1.3% 2,844 4,411
Bonds, 0.1% 221 230
Short-Term Investments, 7.8% 26,123 26,123
---------- ------------
Total Investments, 99.1% 288,097 329,772
Other Assets Less Liabilities, 0.9% 3,550 3,082
- ------------------------------------------------------------------------------
Net Assets, 100.0% $291,647 $332,854
==============================================================================
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS (VALUE IN THOUSANDS)
T. ROWE PRICE EUROPEAN STOCK FUND / APRIL 30, 1994 (UNAUDITED)
==============================================================================================================
<C> <S> <C>
AUSTRIA -- 0.1%
Value
--------
WARRANTS
2,000 wts. *Kreditbank Bankverein Hungarian Equity Basket, 12/31/95............ $ 2
PREFERRED STOCKS
2,050 shs. Creditanstalt Bankverein........................................... 121
1,300 Maculan............................................................ 125
246
Total Austria 248
BELGIUM -- 2.9%
COMMON STOCKS & RIGHTS
14,340 AG Finanz.......................................................... 1,112
233 Audiofina.......................................................... 117
233 rts. *Audiofina.......................................................... 1
1,000 shs. CMB Shipping....................................................... 73
45,000 Cockerill Sambre................................................... 251
1,000 Decevninck......................................................... 124
11,348 Delhaize Freres.................................................... 453
2,100 Desimpel........................................................... 87
4,890 Generale Banque.................................................... 1,239
9,910 Kredietbank........................................................ 2,029
6,070 Societe Generale de Belgique....................................... 479
2,190 Solvay............................................................. 1,063
1,100 Tessenderlo Chemie................................................. 327
3,550 UCB................................................................ 2,435
9,790
CORPORATE BOND
4,522,500 BEL Kredietbank, Cv., 5.75%, 11/30/03.................................. 128
Total Belgium 9,918
DENMARK -- 0.5%
COMMON STOCKS
12,150 shs. Den Danske Bank.................................................... 670
6,500 *Olicom (USD)....................................................... 54
2,800 Silcon............................................................. 179
6,100 Teledanmark........................................................ 311
14,600 *Unidanmark......................................................... 513
Total Denmark 1,727
FINLAND -- 0.7%
COMMON STOCKS
7,000 Huhtamaki Oy....................................................... 277
42,000 shs. Kansallis Osake Park............................................... $ 95
12,000 Kymmene Corporation................................................ 245
10,000 Okobank............................................................ 99
716
PREFERRED STOCK
18,350 Nokia.............................................................. 1,556
Total Finland 2,272
FRANCE -- 12.2%
COMMON STOCKS
16,930 Accor.............................................................. 2,193
600 Bail-Investissement................................................ 102
3,558 Brioche Pasquier................................................... 461
3,200 Burelle............................................................ 255
1,165 But................................................................ 176
18,620 CMB Packaging...................................................... 600
1,051 Cardif............................................................. 203
3,370 Carrefour.......................................................... 2,442
2,750 Centrale pour L'Industrie.......................................... 177
7,375 Chargeurs.......................................................... 1,908
1,100 Cie Cont. d'Equipment Electricite.................................. 141
14,099 Cie de St. Gobain.................................................. 1,725
3,600 Cipe France........................................................ 406
27 Concorde........................................................... 5
5,300 Dauphin............................................................ 299
700 De Dietrich & Cie.................................................. 345
8,343 Ecco Travail Temporaire............................................ 520
440 France............................................................. 178
350 Galeries Lafayette................................................. 164
14,036 Generale des Eaux.................................................. 6,384
1,800 Guilbert........................................................... 180
400 Guyenne & Gascogne................................................. 113
1,000 Idia............................................................... 39
18,115 Idianova........................................................... 211
2,300 Immeubles de France................................................ 229
353 International Metal Service........................................ 23
1,732 L'Oreal............................................................ 377
26,455 Lafarge Coppee..................................................... 2,137
2,000 Legris............................................................. 95
1,500 Manutan............................................................ 261
20,960 Peugeot............................................................ 3,302
6,900 Poliet............................................................. 532
450 Primagaz........................................................... 79
6,180 Promodes........................................................... 1,185
1,150 Redoute............................................................ 186
2,200 Rochefortaise Communication........................................ 70
1,350 SITA............................................................... 193
4,340 Societe Generale de France......................................... 487
</TABLE>
5
<PAGE>
T.ROWE PRICE EUROPEAN STOCK FUND / STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
<C> <S> <C>
FRANCE (Cont'd)
29,920 shs. Societe Nationale Elf Aquitaine.................................... $ 2,184
1,100 Spir Communication................................................. 167
39,598 Television Francaise............................................... 3,304
23,450 Total.............................................................. 1,358
18,300 Valeo.............................................................. 4,478
1,500 Vallourec.......................................................... 87
1,400 Virbac............................................................. 215
3,965 Vulcanic........................................................... 120
1,100 Z Groupe Zannier................................................... 236
217 *Z Groupe Zannier, new.............................................. 45
40,577
CORPORATE BOND
174,410 FRF Virbac, Cv., 5.00%, 1/1/01......................................... 32
Total France 40,609
GERMANY -- 7.7%
COMMON STOCKS & WARRANTS
1,050 shs. Allianz Holdings................................................... 1,650
700 Balcke Duerr....................................................... 220
8,180 Bayer.............................................................. 1,941
1,395 Bayerische Motoren Werke........................................... 762
3,300 Bremer Vulkan Verbund.............................................. 199
850 DLW................................................................ 305
4,473 Deutsche Bank...................................................... 2,113
650 FA Gunther & Sohn.................................................. 243
7,537 Gehe............................................................... 2,661
1,405 *Gehe, new.......................................................... 483
5,590 Hoechst............................................................ 1,229
400 Jean Pascale....................................................... 117
410 Kampa Hause........................................................ 235
2,400 Kaufhof Holdings................................................... 793
250 Klein, Schanzlin & Becker.......................................... 82
550 Leffers............................................................ 166
10,270 Mannesmann......................................................... 2,924
1,315 *Mannesmann, new.................................................... 369
325 Pfleiderer Bau und Verkehrssysteme................................. 119
1,200 Pittler............................................................ 116
680 Plettac............................................................ 286
448 Rhon Klinikum...................................................... 281
2,472 Schering........................................................... 1,653
100 Sixt, profit sharing units......................................... 64
520 VBH Vereinigte Baubeschlag Handel.................................. 256
4,520 Veba............................................................... 1,400
180 Victoria Holdings.................................................. 154
36 *Victoria Holding, new.............................................. 30
6,863 Volkswagon......................................................... 2,171
2,200 wts. *Volkswagen International Finance, 10/27/98......................... 275
400 shs. Vossloh............................................................ 148
23,445
PREFERRED STOCKS
540 shs. Edding............................................................. $ 176
200 Hach............................................................... 82
630 Hans Einhell....................................................... 122
650 Klein, Schanzlin & Becker.......................................... 169
450 Leffers............................................................ 107
450 Marschollek Lautenschlaeger........................................ 271
260 SAP................................................................ 495
300 Signal Bau Huber................................................... 61
200 Sixt............................................................... 59
439 Sto................................................................ 258
1,600 Westag & Getaut.................................................... 429
2,229
Total Germany 25,674
HUNGARY -- 0.1%
COMMON STOCKS
75 *Chinion (USD)...................................................... 35
28,000 Fotex (ATS)........................................................ 137
Total Hungary 172
IRELAND -- 0.1%
COMMON STOCKS
96,000 Abbey.............................................................. 247
300,000 Kenmare Resources (GBP)............................................ 59
64,000 Kingspan Group..................................................... 132
Total Ireland 438
ITALY -- 6.8%
COMMON STOCKS & WARRANTS
525 Alleanza Assicurazioni, savings shares............................. 5
103,778 Assicurazioni Generali............................................. 3,018
34,000 Danieli & Company, savings shares.................................. 150
200,000 Editoriale la Republica............................................ 566
31,500 *Fila Holdings ADS (USD)............................................ 437
46,273 *Imi................................................................ 381
9,000 *Industrie Natuzzi ADS (USD)........................................ 243
90,650 Italcable.......................................................... 649
278,352 Italcable, savings shares.......................................... 1,660
276,120 Italgas............................................................ 1,053
23,000 Lloyd Adriatico.................................................... 238
27,624 Merloni Elettrodomestici........................................... 119
132,624 Merloni Elettrodomestici, savings shares........................... 267
1,469,352 Montedison......................................................... 1,451
611,176 wts. *Montedison, 12/31/95............................................... 83
611,176 *Montedison, 1/19/97................................................ 168
54,400 shs. RAS, savings shares................................................ 612
1,993,327 SIP................................................................ 5,965
416,190 SIP, savings shares................................................ 1,032
36,000 Standa, savings shares............................................. 365
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
599,300 Stet............................................................... $ 2,319
319,935 Stet, savings shares............................................... 1,048
155,000 Tecnost............................................................ 391
20,000 Telecocavi, savings shares......................................... 76
22,296
PREFERRED STOCK
23,000 Saes Getters....................................................... 207
Total Italy 22,503
NETHERLANDS -- 13.7%
COMMON STOCKS
45,258 ABN Amro........................................................... 1,496
11,660 AMEV............................................................... 453
32,282 Ahold.............................................................. 823
23,543 Akzo............................................................... 2,826
1,000 Atag............................................................... 83
14,000 Boskalis Westminster............................................... 331
94,798 CSM................................................................ 3,307
26,891 Ehco KLM........................................................... 508
107,462 Elsevier........................................................... 9,642
4,500 Hagemeyer.......................................................... 350
700 Hollandsche Beton Groep............................................ 126
5,750 International Mueller.............................................. 269
65,710 International Nederlanden Groep.................................... 2,736
2,400 Nedcon Groep....................................................... 49
70,473 Polygram........................................................... 2,901
4,000 Randstad Holdings.................................................. 164
74,280 Royal Dutch Petroleum.............................................. 8,144
25,800 Unilever........................................................... 2,867
147,576 Wolters Kluwer..................................................... 8,593
45,668
PREFERRED STOCK
10,947 International Nederlanden Groep.................................... 48
Total Netherlands 45,716
NORWAY -- 2.9%
COMMON STOCKS
14,000 Aker............................................................... 181
12,000 *Awilco Shipping.................................................... 126
22,980 Bergesen `A'....................................................... 508
11,100 *Bona Ship Holdings................................................. 111
7,000 Bonheur............................................................ 137
6,500 *Braathens Safe..................................................... 215
15,000 Helikopter Service................................................. 192
24,910 Kvaerner Industier `A'............................................. 1,253
10,175 *Liva Bil........................................................... 172
92,975 Norsk Hydro........................................................ 3,139
55,944 Orkla `A'.......................................................... 1,826
24,260 shs. Saga Petroleum `B'................................................. 266
4,000 Schibsted.......................................................... $ 258
13,000 Sensonor........................................................... 70
23,000 Smedvig Tankships.................................................. 214
35,000 Sysdeco Group...................................................... 195
40,000 Uni Storebrand..................................................... 95
4,500 Unitor............................................................. 89
11,000 Veidekke........................................................... 290
30,000 *Western Bulk Shipping.............................................. 167
Total Norway 9,504
POLAND -- 0.1%
COMMON STOCKS
1,000 Elektrim........................................................... 61
186,843 *International UNP Holdings (CAD)................................... 169
1,500 *Mostostal.......................................................... 90
Total Poland 320
PORTUGAL -- 0.3%
COMMON STOCKS & RIGHTS
5,700 Banco Totta e Acores............................................... 121
1,070 *Banco Totta e Acores, new.......................................... 21
7,200 Companhia de Seguros Imperio....................................... 55
6,016 Jeronimo Martins................................................... 487
12,000 *Jornalgeste........................................................ 204
12,000 rts. *Jornalgeste........................................................ 1
Total Portugal 889
RUSSIA -- 0.1%
COMMON STOCK
29,000 shs. *Petersburg Long Distance (USD)..................................... 257
Total Russia 257
SPAIN -- 3.7%
COMMON STOCKS
6,800 Argentaria Corporation Bancaria de Espana.......................... 294
5,000 Azkoyen............................................................ 290
4,715 Banco Popular Espanol.............................................. 546
16,900 Banco Santander.................................................... 740
55,520 Centros Commerciales Pryca......................................... 793
75,000 Corporation Financiaera Reunida.................................... 255
56,426 ENDESA............................................................. 2,789
7,000 Espanol de Carburos Metalicos...................................... 207
10,000 Europistas......................................................... 121
2,500 Europistas, new.................................................... 30
10,800 FOSCA.............................................................. 1,195
25,000 shs. Filo............................................................... 263
</TABLE>
7
<PAGE>
T. ROWE PRICE EUROPEAN STOCK FUND/STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SPAIN (Cont'd)
10,721 Gas Natural........................................................ $ 888
9,000 Grupo Anaya........................................................ 205
9,750 Hidroelectrica del Cantabrico...................................... 302
5,500 Inmobiliaria Metropolitana Vasco................................... 216
9,500 Prosegur Compania Securidad........................................ 204
64,190 Repsol............................................................. 2,132
68,378 Telefonica de Espana............................................... 926
12,396
CORPORATE BOND
4,500,000 ESP Grupo Anaya, Cv., 7.00%, 3/18/98................................... 33
Total Spain 12,429
SWEDEN -- 3.2%
COMMON STOCKS
6,550 shs. Asea `A'........................................................... 544
155,140 Astra `B'.......................................................... 3,099
16,850 Atlas Copco `B'.................................................... 1,166
50,000 Bilspedition `B'................................................... 202
21,650 Electrolux `B'..................................................... 1,147
23,810 Esselte `B'........................................................ 373
100,000 Frontline.......................................................... 268
3,026 Gambro `B'......................................................... 145
7,000 Getinge Industrial................................................. 196
18,270 Hennes & Mauritz `B'............................................... 902
12,000 *Hoganas............................................................ 161
31,700 ICB Shipping `B'................................................... 381
32,880 Sandvik `B'........................................................ 528
17,470 Scribona `B'....................................................... 114
6,000 Securitas.......................................................... 204
25,000 Stena Line `B'..................................................... 184
6,250 *Stena Line `B', new................................................ 45
12,940 Stora Kopparberg `B'............................................... 696
12,000 *TV 4............................................................... 238
10,593
CORPORATE BOND
281,250 SEK Stena Line, Cv., 7.00%, 4/30/01.................................... 37
Total Sweden 10,630
SWITZERLAND -- 8.3%
COMMON STOCKS & WARRANTS
680 shs. Affichage.......................................................... 180
3,790 BBC Brown Boveri................................................... 3,467
1,000 wts. *Baloise Holdings, 11/14/95......................................... 129
170 shs. Bobst.............................................................. 221
300 Bossard Holdings................................................... 362
40 Bucherer........................................................... 135
800 wts. *Bucherer, 7/21/95.................................................. $ 102
2,765 shs. CS Holdings........................................................ 1,184
1,736 Ciba Geigy......................................................... 1,030
125 Gurit Heberlien.................................................... 230
300 Intershop Holdings................................................. 134
400 wts. *Intershop Holdings, 6/20/94........................................ 2
625 shs. Kardex............................................................. 179
170 Landis & Gyr....................................................... 107
170 wts. *Landis & Gyr, 2/15/95.............................................. 1
4,486 shs. Nestle............................................................. 3,732
800 Porst Holdings..................................................... 244
2,000 wts. *Porst Holdings, 6/15/94............................................ 11
700 shs. Prodega............................................................ 204
1,208 Roche Holdings..................................................... 5,757
1,918 Sandoz............................................................. 5,047
6,000 wts. *Sandoz Overseas Finance, 1/11/95................................... 247
110 shs. Saurer GH/GI....................................................... 230
100 Sig Schweiz Industries............................................. 209
861 Sika Finanz........................................................ 226
1,330 Suter & Suter...................................................... 255
5,540 *Swiss Bank......................................................... 1,540
2,787 Union Bank of Switzerland.......................................... 2,324
1,400 *Von Moos Holdings.................................................. 164
Total Switzerland 27,653
TURKEY -- 0.1%
COMMON STOCKS
10,000 Guney Biracilik.................................................... 7
31,500 *Turkiye Garanti Bankasi ADR (USD).................................. 43
Total Turkey 50
UNITED KINGDOM -- 27.8%
COMMON STOCKS, RIGHTS & WARRANTS
274,000 Abbey National..................................................... 1,808
27,000 wts. *Abtrust Lloyds Insurance, 2008..................................... 17
25,000 shs. Anglian Group...................................................... 97
40,000 *Applied Distribution Group......................................... 80
209,000 Argos.............................................................. 1,155
351,000 Argyll Group....................................................... 1,217
1,283,430 Asda Group......................................................... 1,068
66,666 Ashtead Group...................................................... 400
28,250 Avon Rubber........................................................ 257
85,000 BAA................................................................ 1,258
50,000 Baggeridge Brick................................................... 95
69,000 Berisford International............................................ 243
467,616 Birkdale Group..................................................... 74
65,000 Bradford Property Trust............................................ 243
50,000 British Biotechnology Group........................................ 316
4,166 British Biotechnology Group, new................................... 13
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
359,250 shs. British Gas........................................................ $ 1,555
141,000 British Petroleum.................................................. 826
190,000 Britton Group...................................................... 469
1,126,614 Brown & Jackson.................................................... 94
311,750 Bruntcliffe Aggregates............................................. 165
75,600 CALA............................................................... 149
170,000 CRT Group.......................................................... 280
712,530 Cable & Wireless................................................... 4,874
299,116 Cadbury Schweppes.................................................. 2,173
711,300 Caradon............................................................ 3,822
95,000 Carpetright........................................................ 391
182,829 Casket............................................................. 154
49,723 Claremont Garments................................................. 268
245,000 Coats Viyella...................................................... 886
40,000 Control Techniques................................................. 299
307,578 Crestacare......................................................... 172
110,000 Cupid.............................................................. 29
35,000 *DFS Furniture...................................................... 159
180,000 David S. Smith..................................................... 1,498
62,500 Devro International................................................ 246
10,000 Druck.............................................................. 219
86,510 East Midlands Electricity.......................................... 721
119,730 Eastern Electricity................................................ 1,051
171,042 *Enviromed.......................................................... 347
262,570 First National Finance............................................. 294
37,000 First Technology................................................... 172
66,000 Frost Group........................................................ 245
3,947 GWR Group.......................................................... 60
321,540 Glaxo Holdings..................................................... 2,808
11,000 *Graham Group....................................................... 35
533,940 Grand Metropolitan................................................. 3,814
2,062,500 Graystone.......................................................... 421
5,000 Greenalls.......................................................... 35
380,000 Greycoat........................................................... 105
619,040 Guinness........................................................... 4,478
180,000 HTV Group.......................................................... 362
125,000 *Halkin Holdings.................................................... 115
48,000 Hall Engineering................................................... 177
74,000 Heath.............................................................. 429
40,000 Helical Bar........................................................ 223
13,000 Henderson Administration Group..................................... 181
625 Heywood Williams Group............................................. 4
100,000 Hi-Tech Sports..................................................... 135
47,000 Highland Distilleries.............................................. 291
200,810 Hillsdown Holdings................................................. 514
90,000 Holliday Chemical Holding.......................................... 301
22,500 Holliday Chemical Holding, new..................................... 14
55,000 Hunterprint Group.................................................. 22
60,000 Ibstock Johnsen.................................................... 72
90,000 Ingham............................................................. 159
31,250 JD Wetherspoon..................................................... 175
202,690 John Laing......................................................... 1,052
28,000 shs. Jupiter Tyndall Group.............................................. $ 120
42,000 Kenwood Appliances................................................. 231
90,000 Kewill Systems..................................................... 368
373,921 Kingfisher......................................................... 3,265
312,250 Ladbroke Group..................................................... 874
110,000 Laura Ashley Holdings.............................................. 147
92,000 London & Overseas Freighters....................................... 131
273,950 London Electricity................................................. 2,338
445,000 Mayflower.......................................................... 377
138,125 Medeva............................................................. 295
120,000 Mirror Group Newspapers............................................ 309
131,000 Monument Oil & Gas................................................. 138
625,900 National Westminster Bank.......................................... 4,272
46,000 Nestor............................................................. 49
100,000 *Northern Leisure................................................... 65
100,000 Owners Abroad...................................................... 187
25,000 Pentos............................................................. 10
33,333 Pentos, new........................................................ 1
42,000 Peter Black Holdings............................................... 158
48,000 Pict Petroleum..................................................... 118
125,000 Pizza Express...................................................... 235
260,000 *Polly Peck International........................................... 12
61,250 Porvair............................................................ 323
57,000 Powerscreen International.......................................... 207
260,000 Princedale Group................................................... 85
76,701 Prowting........................................................... 196
49,561 Quadramatic........................................................ 137
125,060 RTZ................................................................ 1,592
135,000 Raine Industries................................................... 178
375,625 Rank Organisation.................................................. 2,446
355,940 Reed International................................................. 4,549
5,000,000 Regal Hotel Group.................................................. 151
224,420 Rolls Royce........................................................ 686
50,000 Rosebys............................................................ 143
20,000 Sage Group......................................................... 180
82,500 Serco Group........................................................ 355
170,000 Shandwick.......................................................... 129
85,000 rts. *Shandwick.......................................................... 6
335,790 shs. Shell Transport & Trading.......................................... 3,674
657,100 SmithKline Beecham, equity units................................... 3,511
171,500 South Western Electricity.......................................... 1,507
269,388 Spring Ram......................................................... 247
35,000 Stagecoach Holdings................................................ 101
111,000 Stakis............................................................. 151
27,750 Stakis, new........................................................ 38
85,000 Sterling Publshing................................................. 234
240,000 Stirling Group..................................................... 203
473,000 T & N.............................................................. 1,743
47,748 T. Cowie........................................................... 238
243,500 Tesco.............................................................. 770
30,000 The Telegraph...................................................... 277
4,350,000 Ticketing Group.................................................... 132
</TABLE>
9
<PAGE>
T. ROWE PRICE EUROPEAN STOCK FUND/STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
UNITED KINGDOM (Cont'd)
1,112,580 shs. Tomkins............................................................ $ 4,294
243,500 Transfer Technology Group.......................................... 306
17,000 *Trifast............................................................ 54
58,000 Trinity Holdings................................................... 272
197,774 *UK Estates......................................................... 78
125,000 *Ugland International............................................... 235
254,420 United Newspapers.................................................. 2,411
874,806 Verity Group....................................................... 154
85,000 Vibroplant......................................................... 125
170,000 WPP Group.......................................................... 314
151,111 Wickes............................................................. 246
2,600,000 Wiggins Group...................................................... 256
92,515
PREFERRED STOCK
56,714 First National Finance, Cum. Cv., 7.00%............................ 125
Total United Kingdom 92,640
SHORT-TERM INVESTMENTS -- 7.8%
COMMERCIAL PAPER
$2,000,000 Abbey National, 3.42%, 5/9/94...................................... 1,999
300,000 Air Products & Chemicals, 3.65%, 5/9/94............................ 299
2,100,000 Asset Securitization Cooperative, 3.95%, 6/14/94................... 2,089
1,000,000 Bell South Telecommunication, 3.75%, 5/24/94....................... 997
5,000,000 Caisse des Depots et Consignations, 3.63%, 5/12/94................. 4,985
3,000,000 Ciba-Geigy, 3.12%, 5/13/94......................................... 2,969
6,840,000 Federal Home Loan Bank, 3.55%, 5/2/94.............................. 6,838
5,000,000 New South Wales Treasury, 3.18%, 5/9/94............................ 4,947
25,123
OTHER
1,000,000 Corporate Asset Funding, Floating Rate Medium-Term
Note, 3.71%, 12/12/94............................................ 1,000
Total Short-Term Investments 26,123
==============================================================================================================
Total Investments in Securities -- 99.1%
(Cost--$288,097) 329,772
==============================================================================================================
Other Assets Less Liabilities -- 0.9% 3,082
Net Assets Consisting of:
Accumulated net investment income -- net of distributions $ 217
Accumulated realized gains/losses -- net of distributions (5,667)
Unrealized appreciation of investments 41,207
Paid-in-capital applicable to 27,092,784 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares of the Corporation authorized 297,097
-------
Net Assets -- 100.0% $332,854
========
Net Asset Value Per Share $12.29
======
==============================================================================================================
</TABLE>
* Non-income producing
(ATS) - Austrian schilling denominated
(BEL) - Belgian franc denominated
(CAD) - Canadian dollar denominated
(DEM) - German deutschemark denominated
(ESP) - Spanish peseta denominated
(FRF) - French franc denominated
(GBP) - British sterling denominated
(SEK) - Swedish krona denominated
(USD) - U.S. dollar denominated
10
<PAGE>
STATEMENT OF OPERATIONS
T. Rowe Price European Stock Fund / Six Months Ended April 30, 1994 (Unaudited)
<TABLE>
<CAPTION>
Amounts in Thousands
--------------------
<S> <C> <C>
INVESTMENT INCOME
Income
Dividends (net of foreign taxes of $316)........................................... $ 1,993
Interest........................................................................... 397
-------
Total income....................................................................... $ 2,390
Expenses
Investment management fees......................................................... 1,272
Shareholder servicing fees & expenses.............................................. 412
Custodian and accounting fees & expenses........................................... 171
Registration fees & expenses....................................................... 41
Prospectus & shareholder reports................................................... 36
Legal & auditing fees.............................................................. 21
Directors' fees & expenses......................................................... 5
Miscellaneous expenses............................................................. 5
Proxy & annual meeting expenses.................................................... 3
-------
Total expenses..................................................................... 1,966
-------
Net investment income................................................................. 424
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain
Securities......................................................................... 7,024
Foreign currency transactions...................................................... 151
-------
Net realized gain..................................................................... 7,175
Change in unrealized appreciation or depreciation
Securities......................................................................... 15,484
Other assets and liabilities denominated in foreign currencies..................... (653)
-------
Change in unrealized appreciation or depreciation..................................... 14,831
-------
Net gain on investments............................................................... 22,006
-------
INCREASE IN NET ASSETS FROM OPERATIONS................................................ $22,430
=======
===============================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
T. Rowe Price European Stock Fund (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Ten Months Ended Year Ended
April 30, 1994 October 31, 1993* December 31, 1992
---------------- ----------------- -----------------
Amounts in Thousands
------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income...................................................... $ 424 $ 3,010 $ 1,722
Net realized gain (loss) on investments.................................... 7,175 (1,857) (4,771)
Change in unrealized appreciation or depreciation of investments........... 14,831 39,328 (9,966)
-------- -------- --------
Increase (decrease) in net assets from operations.......................... 22,430 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 11,348, 12,987 and 14,862 shares...................................... 135,393 134,071 149,322
Distributions reinvested of 88, 0 and 266 shares........................... 1,043 -- 2,496
Redeemed 7,729, 8,161 and 6,868 shares..................................... (90,626) (82,566) (67,230)
-------- -------- --------
Increase in net assets from capital share transactions..................... 45,810 51,505 84,588
-------- -------- --------
Net equalization.............................................................. -- -- 1,393
-------- -------- --------
Total increase................................................................ 67,070 91,986 69,821
NET ASSETS
Beginning of period........................................................ 265,784 173,798 103,977
-------- -------- --------
End of period.............................................................. $332,854 $265,784 $173,798
======== ======== ========
===========================================================================================================================
</TABLE>
*The Fund's fiscal year-end was changed to October 31.
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
T. Rowe Price European Stock Fund / April 30, 1994 (Unaudited)
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, all
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at 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.
NOTE 2 - FINANCIAL INSTRUMENTS
As a part of its investment program, the Fund engages in the following
activities, the nature and risk of which are set forth more fully in the Fund's
Prospectus and Statement of Additional Information.
A) Emerging Markets - The Fund has investments in securities of companies
located in emerging markets. Future economic or political developments could
adversely affect the liquidity or value, or both, of such securities.
B) Forward Currency Exchange Contracts - At April 30, 1994, the Fund was a
party to various forward currency exchange contracts under which it is obligated
to exchange currencies at specified future dates. Risks arise from the possible
inability of counterparties to meet the terms of their contracts and from
movements in currency values. Outstanding contracts at April 30, 1994, are as
follows:
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONT'D)
<TABLE>
<CAPTION>
Unrealized
Contract to Apprec.
Value ------------------------------ (Deprec.)
Date Receive Deliver in USD Counterparty
- ----- ------- ------- ---------- ------------
Amounts in Thousands
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6/94 USD 2,524 FRF 15,000 (110) Chase Manhattan Bank
6/94 USD 3,971 DEM 6,900 (181) Chase Manhattan Bank
6/94 USD 5,827 GBP 3,961 (160) Chase Manhattan Bank
</TABLE>
Net unrealized depreciation of $451,000 on these contracts at April 30, 1994, is
included in the accompanying financial statements, all of which relates to
depreciated contracts.
C) Other - Purchases and sales of portfolio securities, other than short-term
and U.S. Government securities, aggregated $70,486,000 and $39,376,000.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the Fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income. The Fund has unused realized capital loss carryforwards for
federal income tax purposes of $12,282,000 at October 31, 1993, which expire in
1998 through 2001.
At April 30, 1994, the aggregate cost of investments for federal income tax
and financial reporting purposes was $288,097,000 and net unrealized
appreciation aggregated $41,675,000, of which $50,580,000 related to appreciated
investments and $8,905,000 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 April 30, 1994, and for the six months 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 six months ended April 30, 1994, the Fund, in the ordinary
course of business, paid commissions of $3,000 to, and placed security purchase
and sale orders aggregating $1,057,000 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 six months ended April 30, 1994, the Fund incurred fees
totalling approximately $355,000 for these services provided by related parties.
At April 30, 1994, these investment management and service fees payable were
$305,000.
14
<PAGE>
FINANCIAL HIGHLIGHTS
T. Rowe Price European Stock Fund (Unaudited)
<TABLE>
<CAPTION>
For a share outstanding throughout each period
----------------------------------------------------------------------
From
February 28,
1990
Six Months Ten Months Year Ended (Commencement
Ended Ended December 31, of Operations) to
April 30, October 31, -------------------------- December 31,
1994 1993++ 1992 1991 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................................ (.02) 0.12 0.14 0.10 0.24*
Net realized and unrealized gain (loss).............. .95 1.89 (0.70) 0.59 (0.56)
-------- -------- -------- -------- --------
Total from Investment Activities....................... 0.97 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......................... $ 12.29 $ 11.37 $ 9.36 $ 10.09 $ 9.48
======== ======== ======== ======== ========
==================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Total Return........................................... 8.6% 21.5% (5.6)% 7.3% (3.2)%
Ratio of Expenses to Average Net Assets................ 1.30%+ 1.35%+ 1.48% 1.71% 1.75%+*
Ratio of Net Investment Income to Average Net
Assets................................................ 0.28%+ 1.79%+ 1.23% 1.04% 2.30%+
Portfolio Turnover Rate................................ 27.9%+ 21.3%+ 52.0% 57.7% 34.9%+
Net Assets, End of Period (in thousands)............... $332,854 $265,784 $173,798 $103,977 $ 99,447
Number of Shareholder Accounts, End of Period.......... 32,000 27,000 24,000 15,000 16,000
==================================================================================================================================
</TABLE>
++ 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.
15
<PAGE>
SemiAnnual Report
- ------------------------------------------------------------------------------
For yield, price, last transaction,
and current balance, 24 hours,
7 days a week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distri-
bution only to shareholders and to
others who have received a copy of
the prospectus of the T. Rowe Price
European Stock Fund.
T. ROWE PRICE
Invest With Confidence(R)
ESF
T.Rowe Price
- ------------
European Stock Fund
April 30, 1994
(ART APPEARS HERE)
