<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
The year ended October 31 was disappointing for foreign stocks, and the
International Stock Fund's slight positive return fell well short of the torrid
pace of U.S. stocks. Over the final three months of the fiscal year, the
fund's -2.34% return was somewhat better than the -4.57% return of the Morgan
Stanley Capital International Europe, Australia and Far East (MSCI EAFE) Index.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 10/31/95
3 Months 12 Months
-------- ---------
<S> <C> <C>
International Stock Fund -2.34% 0.38%
MSCI EAFE* -4.57 -0.37
</TABLE>
- --------------------------------------------------------------------------------
*Net of withholding taxes.
Over the 12-month period, the fund's performance against the index was
helped by an underweighting in Japan, which fared poorly in U.S. dollars.
However, our small position in Mexico adversely affected results, largely due to
the peso's collapse last winter. During the past three months, the picture was
somewhat similar, with low exposure to Japan helping relative returns. But stock
selection was a plus during a period when growth stocks performed better than
cyclicals in several markets. During both periods, the fund was moderately
overweighted in Europe, which provided the best dollar returns outside the U.S.
Few overseas markets matched Wall Street. The exuberant U.S. stock market
was driven by generally strong corporate earnings and by a realization that
inflation was under control, thereby reducing fears of rising interest rates.
Overseas, the picture was not as rosy. Japan was mired in recession and,
although monetary policy has been extremely loose, corporate earnings have been
disappointing. The recovery in Europe was patchy, with the German locomotive
restrained by strength in the deutschemark, and consumer spending inhibited by
the cost of reunification. In France, the economy made little progress under
the strong franc policy. Among European economies, only the U.K. maintained
momentum.
By contrast, Southeast Asia barreled ahead under the influence of China's
economic renaissance and rising levels of intraregional trade and investment.
Disappointingly, this vibrant economic performance did not translate into
superior stock returns. In Latin America, Mexico steered its economy through a
difficult period following the peso crisis. The Brazilian economy maintained
its stride without the reappearance of trade and inflation problems, which have
troubled the country in the past.
- --------------------------------------------------------------------------------
Market Performance
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3 Months Ended 10/31/95
--------------------------------
Local Currency
In Local vs. U.S. In U.S.
Currency Dollars Dollars
-------- -------- -------
<S> <C> <C> <C>
Australia -3.8% 2.9% -1.0%
France -4.0 -2.4 -6.3
Germany -3.1 -2.0 -5.0
Hong Kong 2.6 0.1 2.7
Italy -7.3 -0.5 -7.8
Japan 6.2 -13.9 -8.6
Mexico -2.6 -14.4 -16.2
Netherlands -0.7 -2.0 -2.7
Norway -5.4 -1.8 -7.0
Singapore -4.1 -1.5 -5.6
Sweden 0.1 6.1 6.2
Switzerland 9.7 0.9 10.6
United Kingdom 2.1 -1.4 0.7
</TABLE>
- --------------------------------------------------------------------------------
Source: NWSL Quantitative Products Group, using MSCI Indices.
<PAGE>
Currency markets had another turbulent year. Early in 1995, the dollar was
weak against European currencies and fell to an all-time low versus the yen. In
recent months, these markets have been more settled and the dollar appears to be
at levels more acceptable to the U.S. and its major trading partners.
Investment Environment
Far East
A year ago, the economy in Japan showed tentative signs of recovery, but faded
in the spring when the yen hit new highs against the dollar and the full extent
of the banking crisis became apparent. With consumer spending still slow, there
was a serious possibility that the economy might enter a deflationary cycle.
Business was unwilling to invest and consumers were reluctant to spend.
The wholesale price index showed a moderate annual decline, and the Bank of
Japan adopted a stimulative monetary policy. There are a number of reasons to
believe the economy has passed the worst point in this cycle. First, the yen has
weakened significantly from its spring highs versus the dollar, and this should
help the hard-pressed export sector. Second, the government recently announced
another supplementary budget with new expenditures of about $80 billion, a
strong fiscal stimulus at a time when monetary policy is already supportive.
Finally, the authorities appear to have grasped the need to address the banking
crisis and related problems of real estate loans.
Given the poor economic conditions, it is not surprising that the stock
market was dull over the year, although its volatility was moderated by currency
translation. The fund was underweighted here, largely because we avoided the
troubled financial sector, which forms a large part of the index. Rather, our
focus was on economically sensitive areas including technology stocks, which
performed well as the yen weakened.
Elsewhere in Asia, economic growth was surprisingly strong considering that
China's rapid growth moderated substantially and Japan provided little stimulus.
This growth was partly due to an increase in intraregional Asian trade as
prosperous countries in the area invested in the less developed markets. If
anything, it was the strength of the U.S. economy that drove growth rates here,
since it is the region's largest export market.
An important development in the region was growing optimism that China will
be able to achieve an economic "soft landing" with decelerating growth, slowing
inflation, and rising exports that should produce a trade account surplus.
In Hong Kong, inflation and growth also slowed, but low interest rates
supported the stock market. In Singapore, stocks fell about 4% in the quarter
and the market was lower than a year ago. This was surprising, since this model
economy has maintained high savings rates and high levels of corporate
investment with low inflation and a healthy current account surplus. Stock
valuations are at the low end of historical ranges, and we added modestly to
holdings here.
The Malaysian economy also showed high growth rates. However, unlike in
Singapore, there were signs of overheating with labor shortages, rising
inflation, and pressure on the current account. The picture was similar in
Thailand, where accelerating capital imports produced a current account deficit
and inflation rose steadily all year. Not surprisingly,
- --------------------------------------------------------------------------------
Geographic Diversification
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Europe 52%
Japan 23%
Far East 15%
Latin America 6%
Other and Reserves 4%
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
these two markets were the weakest in the region.
Australia and New Zealand are much further along in their economic cycles,
which accounted for better stock performance. Problems continued in Australia,
with the current account deficit uncomfortably high as a percentage of GDP. New
Zealand's prospects appear brighter, since the economy enjoyed both a fiscal and
current account surplus.
Europe
In Europe, the broad picture is of slow economic recovery with inflation
under control, helped by currency strength versus the U.S. dollar. In Germany,
exports and capital investment remained strong, and higher than expected wage
settlements should help consumer spending recover from depressed levels. A
continuing recovery in the former East Germany should help underpin growth,
which we expect to be steady and prolonged rather than spectacular. With a
somewhat disappointing rate of economic growth, stocks performed poorly for
most of the year, although returns for U.S. investors were boosted by the
strong mark.
The situation was similar in the Netherlands, but the domestic economy is
of limited relevance to the Dutch stock market, which is dominated by a small
number of multinational companies. The fund's largest European positions were in
this market, where we found well-managed firms that maintained earnings growth,
despite the dull European economic environment.
The United Kingdom has by far the largest stock market in Europe, and it
was well represented in the fund. Our holdings featured well-managed
multinationals that are leaders in their fields. Examples include Glaxo and
SmithKline Beecham, both of which performed well as investor sentiment favored
the pharmaceutical sector. The overall economy demonstrated steady growth as
exports and capital spending led the way while consumer spending was subdued.
Recent signs suggest that the U.K. recovery is running out of steam, which
should give the government an opportunity to reduce interest rates.
When France elected Jacques Chirac as its president, the electorate seemed
to believe his claim that he could continue a strong franc policy while reducing
the stubbornly high level of unemployment. The financial markets were less
convinced that these policy aims were compatible, and the franc came under
pressure following the resignation of the finance minister. The latest
indications from this administration suggested that fiscal prudence will be the
cornerstone of its policy, but much rests on the hope that the German locomotive
will begin pulling Continental Europe toward higher growth.
Although the Nordic economies were troubled by stagnation and political
uncertainty, their stock markets were among the best in Europe. Leading the way
was Sweden, which was one of the few overseas markets to outperform the U.S.
Attention focused mostly on a couple of multinational companies that dominate
the index, but the fund's position in pharmaceutical manufacturer Astra also did
well. In Finland, for most of the year the market rise was led by our key
holding Nokia Oy `A,' the mobile telephone manufacturer.
Latin America
The markets of Latin America experienced a roller coaster ride during the
past 12 months. The fund's largest position was in Brazil, where the economy
progressed at a pace steady enough to forestall a resurgence of the inflation
and trade problems that besieged the country in the past. This gave President
Cardoso breathing room to introduce reforms in state spending, budget
priorities, and social security. With the real (local currency) holding up well
against the U.S. dollar, we are optimistic that Brazil is as close as ever to
realizing some of its great potential.
In Mexico, the economy suffered the inevitable traumas following the heavy
devaluation of the peso at the beginning of the year. The short-term medicine
of high real interest rates and savage cuts in public spending sent the economy
into a recession. Confidence is now returning, underpinned by NAFTA and the
reappearance of a small trade surplus.
3
<PAGE>
Investment Policy and Outlook
Although fund performance was reasonable versus the benchmark, many
shareholders are no doubt disappointed that returns were well behind those of
U.S. stocks. Most of you realize that there will be periods when your fund lags
Wall Street. However, to those who remain concerned, I would like to offer some
comments.
First, a program of international diversification should be based only on a
long-term perspective. Over the past 10 years, the fund has matched the return
of the unmanaged Standard & Poor's 500 Stock Index with an annualized total
return of 15.5% through October 31. However, inevitably there have been and
will be periods when the fund and international stocks in general get left
behind. The past fiscal year was one of those periods.
Regarding the fundamentals that drive stock markets, the two greatest
influences are the anticipated direction of interest rates and comparisons
between corporate earnings and investor expectations. Both of these factors
were positive in the U.S. this year. Low inflation generated optimism that
interest rates might fall further, while market observers were constantly
surprised by just how profitable and lean corporate America has become.
Finally, there was a renewed interest in technology, where many U.S. companies
lead the world.
Overseas it was much different. The economies of Japan and Europe were well
behind the U.S. Japan is suffering the longest recession in many years, and the
recovery in Europe was slower and more halting than expected. Adding to these
difficulties, several major central banks were slow to reverse a tight monetary
policy, resulting in interest rates that were too high for this point in the
cycle.
Looking to the future, we believe the factors that drive stock markets will
turn more positive overseas, while they may have already peaked in the U.S. If
inflation in Europe remains below expectations, as we believe it will, interest
rates should fall further. Consistent with this view, several central banks are
now able to loosen monetary policy to spur faltering economies. The next phase
should be stronger growth in corporate earnings. A weaker Japanese yen combined
with a strong fiscal stimulus should finally get this economy moving again.
The smaller economies of Asia have performed well for a few years, but
their stock markets have suffered a long hangover following the rampant 1993
bull market in this region. Valuations here are now attractive by historical
standards, and we are comfortable being overweighted in this part of the world.
Latin American stocks gave investors an uncomfortable ride, but we see no reason
to abandon them. Over long periods, these markets have contributed positively to
your fund's returns, and we are confident they will again as fundamentals in the
region improve.
Patience has always been the hallmark of successful investment programs.
The case for international diversification remains intact, and we believe the
long-term investor will again reap the rewards of international investing that
they enjoyed in the past.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
November 17, 1995
4
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
Periods Ended October 31, 1995
<TABLE>
<CAPTION>
Change in Price Per Share
- -------------------------------
<S> <C>
3 Months (From $12.38 to $12.09) $-0.29
12 Months (From $12.84 to $12.09) -0.75
- --------------------------------------------------------------------------------
Total Net Assets $6,385.9 Million
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Twenty-Five Largest Holdings
- --------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
Percent of
Net Assets
--------------
<S> <C>
Wolters Kluwer, Netherlands 2.5%
Elsevier, Netherlands 1.8
Royal Dutch Petroleum, Netherlands 1.5
National Westminster Bank,
United Kingdom 1.3
SmithKline Beecham, United Kingdom 1.3
Reed International, United Kingdom 1.2
BBC Brown Boveri & Cie, Switzerland 1.0
Kyocera, Japan 1.0
Eaux Cie Generale, France 1.0
Roche Holdings, Switzerland 0.9
Nestle, Switzerland 0.9
Astra, Sweden 0.8
United Engineers, Malaysia 0.8
Telecomunicacoes Brasilias, Brazil 0.8
Hutchison Whampoa, Hong Kong 0.8
Mitsubishi Heavy Industries, Japan 0.8
Carrefour, France 0.8
Shell Transport & Trading,
United Kingdom 0.8
Nippon Denso, Japan 0.7
Wharf Holdings, Hong Kong 0.7
Canon, Japan 0.7
Norsk Hydro, Norway 0.7
Gehe, Germany 0.7
Polygram, Netherlands 0.7
NEC, Japan 0.7
- --------------------------------------------------------------------------------
Total 24.9%
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Industry Diversification
- --------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
Percent of
Net Assets
--------------
<S> <C>
Services 23.4%
Finance 16.9
Capital Equipment 16.7
Consumer Goods 15.7
Energy 11.4
Materials 9.4
Multi-Industry 3.2
Miscellaneous 0.1
Reserves 3.2
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Security Classification
- --------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
Percent Market
of Net Cost Value
Assets (000) (000)
---------- ---------- ----------
<S> <C> <C> <C>
Common Stocks,
Rights, and
Warrants 94.1% $5,333,937 $6,015,811
Preferred Stocks,
Rights, and
Warrants 2.6 155,595 165,017
Bonds 0.1 1,441 1,610
Short-Term
Investments 2.9 182,942 182,942
----- ---------- ----------
Total Investments 99.7 5,673,915 6,365,380
Other Assets Less
Liabilities 0.3 20,492 20,525
- --------------------------------------------------------------------------------
Total Net Assets 100.0% $5,694,407 $6,385,905
- --------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
COMPARISON OF TEN YEAR CUMULATIVE RETURN
AMONG INTERNATIONAL STOCK FUND AND MSCI EAFE* INDEX
<TABLE>
<CAPTION>
Measurement period International MSCI EAFE*
(Fiscal Year Covered) Stock Fund Index
--------------------- ------------- ---------
<S> <C> <C>
Measurement PT -
10/31/85 $ 10,000 $ 10,000
FYE 10/31/86 $ 15,962 $ 16,588
FYE 10/31/87 $ 17,852 $ 22,142
FYE 10/31/88 $ 22,035 $ 27,719
FYE 10/31/89 $ 25,313 $ 29,977
FYE 10/31/90 $ 26,405 $ 26,134
FYE 10/31/91 $ 28,944 $ 27,950
FYE 10/31/92 $ 28,066 $ 24,255
FYE 10/31/93 $ 36,170 $ 33,341
FYE 10/31/94 $ 40,522 $ 36,707
FYE 10/31/95 $ 40,676 $ 36,570
</TABLE>
Note: The index return does not reflect expenses, which have been deducted from
the fund's return.
* Net of withholding taxes.
- --------------------------------------------------------------------------------
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
Periods Ended October 31, 1995
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
------- ------- --------
<S> <C> <C>
0.38% 9.87% 15.51%
- --------------------------------------------------------------------------------
</TABLE>
Note: For the above periods ended 9/30/95, the fund's returns were 3.90%,
12.49%, and 16.54%, respectively.
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
6
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
T. Rowe Price International Stock Fund / October 31, 1995
- --------------------------------------------------------------------------------
(values in thousands)
<TABLE>
<CAPTION>
Value
---------
- --------------------------------------------------------------------------------
ARGENTINA - 0.7%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
251,663 shs Banco de Galicia Buenos
Aires `B' ADR (USD)......................... $ 4,813
128,860 Banco Frances del Rio
de la Plata ADR (USD)....................... 2,819
68,512 Buenos Aires
Embotelladora `B'
ADR (USD)................................... 1,567
79,819 Enron Global Power
& Pipeline (USD)............................ 1,886
1,267,954 Naviera Perez `B'............................. 5,591
855,300 *Sociedad Comercial
del Plata................................... 1,728
79,613 *Sociedad Comercial
del Plata ADR (USD)......................... 1,612
56,339 Telecom Argentina
ADS (USD)................................... 2,162
496,000 Telecom Argentina
Stet `B'.................................... 1,909
419,150 Telefonica de Argentina `B'
ADR (USD)................................... 8,697
117,840 Telefonica de Argentina `B'
ADS (USD)................................... 2,445
185,858 Transportadora de Gas
del Sur (USD)............................... 1,905
521,863 YPF Sociedad Anonima `D'
ADR (USD)................................... 8,937
Total Argentina 46,071
<CAPTION>
- --------------------------------------------------------------------------------
AUSTRALIA - 2.0%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
825,000 Amcor......................................... 6,184
3,990,804 Australia Gas & Light......................... 13,831
1,173,726 Broken Hill Proprietary....................... 15,896
3,013,489 Burns Philp & Company......................... 6,749
961,104 Coca Cola Amatil.............................. 7,438
712,122 Lend Lease Corporation........................ 9,905
1,362,056 Mayne Nickless................................ 6,163
2,024,606 News Corporation.............................. 10,209
1,681,850 Publishing & Broadcasting..................... 5,355
3,015,000 Tabcorp Holdings.............................. 8,383
2,182,742 *TNT........................................... 3,076
1,240,057 Western Mining................................ 7,953
2,579,000 Westpac Banking............................... 10,589
2,330,000 Woodside Petroleum............................ 11,164
122,895
PREFERRED STOCK
3,610,800 shs *Sydney Harbour
Casino Holdings............................. 4,456
Total Australia 127,351
<CAPTION>
- --------------------------------------------------------------------------------
AUSTRIA - 0.1%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
57,126 Flughafen Wien................................ 3,670
59,660 Oesterreichische
Elektrizitats............................... 3,645
7,315
PREFERRED STOCK
43,844 Creditanstalt - Bankverein.................... 2,187
Total Austria 9,502
<CAPTION>
- --------------------------------------------------------------------------------
BELGIUM - 1.1%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
9,212 Fortis.......................................... 988
48,291 Generale Banque................................. 15,736
122,562 Kredietbank..................................... 30,873
19,853 UCB............................................. 22,793
70,390
CONVERTIBLE BOND
38,115,000 BEL Kredietbank, 5.75%,
11/30/03...................................... 1,306
Total Belgium 71,696
<CAPTION>
- --------------------------------------------------------------------------------
BRAZIL - 2.6%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
254,600 shs Brazil Fund (USD)............................... 5,951
171,890,000 Companhia Siderurgica
Nacional...................................... 3,680
37,089,553 Eletrobras...................................... 10,528
86,277 *Eletrobras ADR (USD)............................ 1,230
166,493,000 Telecomunicacoes
Brasilias..................................... 5,529
26,918
PREFERRED STOCKS, RIGHTS AND WARRANTS
1,522,419,938 Banco Bradesco.................................. 13,929
11,295,000 Banco Itau...................................... 3,347
21,453,171 Brahma.......................................... 8,186
1,827,222 wts *Brahma, 9/30/96................................. 337
19,947,000 shs Brasmotor....................................... 4,666
17,859,000 Cia Cimento Portland
Itau.......................................... 4,713
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
---------
<C> <S> <C>
156,300 shs Cia Energetica de Sao
Paulo ADS (USD)............................. $ 1,602
250,937,500 Cia Energetica Minas
Gerais...................................... 5,375
11,982,192 rts *Cia Energetica Minas
Gerais...................................... 0
237,262 shs Cia Energetica Minas
Gerais, Non-Voting
ADR (USD)................................... 5,131
13,940,000 Cia Tecidos Norte
de Minas.................................... 4,348
196,273,000 Lojas Americanas.............................. 4,694
40,258,000 Petrol Brasileiros............................ 3,474
236,993,267 Telecomunicacoes
Brasilias................................... 9,607
1,044,622 Telecomunicacoes
Brasilias ADR (USD)......................... 42,438
49,729,458 Telecomunicacoes
de Sao Paulo................................ 7,136
106,292,000 Unibanco Uniao Banco.......................... 3,724
10,623,600,000 Usiminas...................................... 9,941
303,689 Usiminas ADS (USD)............................ 2,809
135,457
Total Brazil 162,375
<CAPTION>
- --------------------------------------------------------------------------------
CANADA - 0.4%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
516,400 Alcan Aluminum................................ 16,429
318,420 MacMillan Bloedel............................. 4,219
227,590 Royal Bank of Canada.......................... 5,117
Total Canada 25,765
<CAPTION>
- --------------------------------------------------------------------------------
CHILE - 0.7%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
54,044 AFP Providia ADR (USD)........................ 1,324
404,098 Chile Fund (USD).............................. 9,193
122,656 Chilectra ADS (USD)........................... 5,152
186,659 Chilgener ADS (USD)........................... 4,480
160,311 Compania Cervecerias
Unidas ADS (USD)............................ 3,707
82,590 Compania
Telecomunicaciones
ADR (USD)................................... 5,946
347,018 Empresa Nacional
de Electric ADS (USD)....................... 7,461
203,563 Enersis ADS (USD)............................. 5,115
Total Chile 42,378
<CAPTION>
- --------------------------------------------------------------------------------
CHINA - 0.7%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
1,335,000 shs *Huaneng Power
International `N'
ADR (USD)................................... 21,527
25,224,000 Maanshan Iron & Steel `H'
(HKD)....................................... 4,600
38,458,000 Shanghai Petrochemical `H'
(HKD)....................................... 11,067
31,441,000 Yizheng Chemical Fibre `H'
(HKD)....................................... 9,150
Total China 46,344
<CAPTION>
- --------------------------------------------------------------------------------
DENMARK - 0.3%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
138,670 Den Danske Bank............................... 9,187
60,017 Tele Danmark `B'.............................. 3,131
146,749 Unidanmark `A'................................ 6,741
Total Denmark 19,059
<CAPTION>
- --------------------------------------------------------------------------------
FINLAND - 0.2%
- --------------------------------------------------------------------------------
COMMON STOCK
<C> <S> <C>
268,112 *Nokia Oy `A'.................................. 15,338
<CAPTION>
- --------------------------------------------------------------------------------
FRANCE - 7.9%
- --------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS
<C> <S> <C>
188,718 Accor......................................... 22,422
239,884 Assurances Generales
de France................................... 6,917
86,110 Carrefour..................................... 50,573
70,643 Castorama Dubois.............................. 11,456
89,453 Chargeurs..................................... 18,402
299,868 Cie de St. Gobain............................. 35,750
76,168 Credit Local De France........................ 6,029
652,762 Eaux Cie Generale............................. 60,670
149,442 Ecco.......................................... 23,165
1,212 Ecco Travail Temporaire....................... 85
297,425 Elf Aquitaine................................. 20,254
108,850 GTM Entrepose................................. 7,056
30,380 Guilbert...................................... 3,647
10,196 Hermes International.......................... 1,793
31,771 L'Oreal....................................... 7,764
160,762 LVMH.......................................... 31,987
254,317 Lafarge-Coppee................................ 16,855
212,150 Lapeyre....................................... 10,655
87,300 Legrand....................................... 14,603
49,010 Peugeot....................................... 6,384
112,178 Pinault Printemps............................. 24,316
190,110 Poliet........................................ 14,929
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Value
---------
<C> <S> <C>
100,189 shs Primagaz...................................... $ 7,781
7,294 wts *Primagaz, 7/1/98.............................. 58
48,950 shs Rexel......................................... 7,908
113,935 Sanofi........................................ 7,267
53,330 Societe Generale de France.................... 6,096
37,610 Sodexho....................................... 9,745
371,766 Television Francaise.......................... 38,392
339,780 Total `B'..................................... 20,998
272,324 Valeo......................................... 12,302
Total France 506,259
<CAPTION>
- --------------------------------------------------------------------------------
GERMANY - 4.9%
- --------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS AND WARRANTS
<C> <S> <C>
21,157 Allianz Holdings.............................. 38,989
3,000 wts *Allianz Holdings, 3/29/96..................... 2,931
13,708 shs Altana........................................ 7,971
104,723 Bayer......................................... 27,713
25,925 Bilfinger & Berger............................ 9,540
16,705 Buderus....................................... 7,168
370,500 Deutsche Bank................................. 16,783
72,038 Gehe.......................................... 35,364
18,009 *Gehe, new..................................... 8,559
26,901 Hoechst....................................... 7,033
63,890 Hornbach Baumarkt............................. 3,223
86,568 Mannesmann.................................... 28,493
137,751 *Praktiker..................................... 4,355
182,120 Rhon Klinikum................................. 17,467
182,120 rts *Rhon Klinikum................................. 3,881
332,210 shs Schering...................................... 23,153
656,310 Veba.......................................... 26,945
58,698 wts *Veba, 4/6/98.................................. 8,361
39,756 shs Volkswagen.................................... 12,526
290,455
PREFERRED STOCKS
57,576 Fielmann...................................... 3,170
12,163 Hornbach...................................... 12,227
19,980 Krones........................................ 7,154
22,551
Total Germany 313,006
<CAPTION>
- --------------------------------------------------------------------------------
HONG KONG - 3.7%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
19,176,000 First Pacific................................. 22,074
17,549,000 Guangdong Investment.......................... 10,327
69,850,000 Guangzhou Investment.......................... 14,365
5,460,000 Guoco Group................................... 25,281
21,250,796 Hong Kong Land
Holdings (USD)............................... 38,251
9,429,000 Hutchison Whampoa............................. 51,952
3,341,500 Swire Pacific `A'............................. 25,067
13,916,000 shs Wharf Holdings................................ 46,976
Total Hong Kong 234,293
<CAPTION>
- --------------------------------------------------------------------------------
ITALY - 1.9%
- --------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS
<C> <S> <C>
3,797 Alleanza Assicurazioni........................ 26
524,940 Arnoldo Mondadori Editore..................... 3,886
1,078,739 Assicurazioni Generali........................ 25,141
4,962,457 Banca Fideuram................................ 5,293
655,800 Danieli & Company,
savings shares.............................. 1,810
101,700 wts *Danieli & Company,
11/30/99.................................... 53
406,527 shs Imi........................................... 2,221
2,564,000 Istituto Naz Delle
Assicurazioni............................... 3,370
2,340,093 Italgas....................................... 6,225
170,230 RAS........................................... 1,709
745,400 Rinascente.................................... 4,419
1,183,047 SME........................................... 2,602
637,803 Sasib......................................... 2,825
1,764,605 Sasib, savings shares......................... 4,373
5,970,680 Stet.......................................... 16,912
3,030,805 Stet, savings shares.......................... 6,607
9,757,145 Telecom Italia................................ 14,813
4,090,286 Telecom Italia,
savings shares.............................. 4,824
7,634,501 *Telecom Italia Mobile......................... 12,812
387,997 Unicem........................................ 2,434
122,355
CORPORATE BOND
610,200,000 ITL Danieli & Company,
7.25%, 1/1/00............................... 304
Total Italy 122,659
<CAPTION>
- --------------------------------------------------------------------------------
JAPAN - 22.6%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
132,000 shs Advantest..................................... 7,484
1,212,000 Alps Electric................................. 12,441
2,354,000 Amada......................................... 23,472
50,000 Aoyama Trading................................ 1,349
2,620,000 Canon......................................... 44,821
1,295,000 Citizen Watch................................. 8,874
1,623 DDI........................................... 13,153
2,071,000 *Dai Nippon Screen
Manufacturing............................... 18,504
512,000 Daifuku....................................... 6,106
2,157,000 Daiichi Pharmaceutical........................ 30,153
2,498,000 Daiwa House................................... 37,362
6,892 East Japan Railway............................ 32,542
</TABLE>
9
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
---------
<C> <S> <C>
581,000 shs Fanuc......................................... $ 25,161
3,626,000 Hitachi....................................... 37,219
3,501,000 Hitachi Zosen................................. 17,215
883,000 Honda Motor................................... 15,365
1,209,000 Inax.......................................... 10,897
1,347,000 *Ishihara Sangyo Kaisha........................ 4,003
766,000 Ito-Yokado.................................... 41,859
400,000 Kawada Industries............................. 3,324
903,000 Kokuyo........................................ 19,420
2,958,000 Komatsu....................................... 23,133
837,000 Komori........................................ 19,801
2,315,000 Kumagai Gumi.................................. 8,871
2,260,000 Kuraray....................................... 22,314
807,000 Kyocera....................................... 66,109
1,566,000 Makita........................................ 24,341
1,779,000 Marui......................................... 30,782
2,353,000 Matsushita Electric
Industrial.................................. 33,353
1,530,000 Mitsubishi.................................... 16,901
6,652,000 Mitsubishi Heavy
Industries.................................. 51,307
1,676,000 Mitsubishi Paper Mills........................ 10,191
3,432,000 Mitsui Fudosan................................ 39,254
1,123,000 Mitsui Petrochemical
Industries.................................. 8,903
647,000 Murata Manufacturing.......................... 22,706
691,000 National House................................ 11,754
3,274,000 NEC........................................... 43,207
2,580,000 Nippon Denso.................................. 47,164
642,000 Nippon Hodo................................... 9,979
12,720,000 Nippon Steel.................................. 42,153
2,301 Nippon Telephone
& Telcom.................................... 18,872
2,074,000 Nomura Securities............................. 37,914
1,275,000 Pioneer Electronic............................ 19,568
272,000 Sangetsu...................................... 6,169
1,499,000 Sankyo........................................ 32,971
229,250 Sega Enterprises.............................. 12,147
2,692,000 Sekisui Chemical.............................. 35,000
1,909,000 Sekisui House................................. 22,021
117,000 Seven-Eleven Japan............................ 7,800
2,546,000 Sharp......................................... 35,342
880,000 Shinetsu Chemical............................. 17,979
667,300 Sony.......................................... 30,007
3,920,000 Sumitomo...................................... 35,638
3,709,000 Sumitomo Electric............................. 42,784
1,372,000 Sumitomo Forestry............................. 19,314
50,000 Taisho Pharmaceutical......................... 904
627,000 TDK........................................... 32,302
4,030,000 Teijin........................................ 18,477
1,246,000 Tokio Marine
& Fire Insurance............................ 12,789
454,000 shs Tokyo Electronics............................. 19,705
1,064,000 Tokyo Steel
Manufacturing............................... 19,762
832,000 Toppan Printing............................... 10,980
542,850 Yurtec........................................ 9,871
Total Japan 1,441,263
<CAPTION>
- --------------------------------------------------------------------------------
MALAYSIA - 3.1%
- --------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS
<C> <S> <C>
16,825,000 Affin Holdings................................ 31,783
3,530,200 wts *Affin Holdings, 11/15/99...................... 2,237
4,434,400 shs Aokam Perdana................................. 7,434
5,899,000 Berjaya Sports Toto........................... 12,304
2,822,332 wts *Commerce Asset
Holdings, 6/27/98........................... 7,664
9,632,000 shs MBF Capital................................... 9,098
14,623,000 Multi-Purpose Holding......................... 19,566
12,606,000 Renong........................................ 19,249
14,801,000 *Technology Resources
Industries.................................. 37,570
8,392,000 United Engineers.............................. 52,182
Total Malaysia 199,087
<CAPTION>
- --------------------------------------------------------------------------------
MEXICO - 1.8%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
1,534,044 Cemex `B'..................................... 4,737
16,527,829 Cifra `B' ADR (USD)........................... 17,602
2,559,694 Fomentos Economico
Mexicano `B'................................ 5,303
1,129,160 *Gruma `B'..................................... 3,328
4,001,041 Grupo Embotellador
de Mexico PC................................ 7,244
3,536,595 Grupo Financiero
Banamex `B'................................. 6,056
37,762 Grupo Financiero
Banamex `L'................................. 62
72,250 Grupo Financiero
Bancomer `B'
GDS (USD)................................... 388
53,515 Grupo Financiero
Bancomer `L'................................ 12
6,373,007 Grupo Industrial
Maseca `B'.................................. 3,971
541,116 Grupo Modelo `C'.............................. 2,058
1,987,979 *Grupo Sidek `B'............................... 943
533,181 Grupo Televisa
GDR (USD)................................... 9,131
480,092 Kimberly-Clark
Mexico `A'.................................. 6,267
269,871 Panamerican Beverages
ADR (USD)................................... 7,388
</TABLE>
10
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
---------
<C> <S> <C>
997,902 shs Telefonos de Mexico `L'
ADS (USD)................................... $ 27,442
2,815,388 Tolmex `B'.................................... 10,570
Total Mexico 112,502
<CAPTION>
- --------------------------------------------------------------------------------
NETHERLANDS -- 9.6%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
455,451 ABN Amro Holdings............................. 19,138
357,952 Ahold......................................... 13,567
74,504 Akzo Nobel.................................... 8,486
701,246 CSM........................................... 29,245
9,117,813 Elsevier...................................... 117,888
302,985 Fortis AMEV................................... 19,030
153,700 Hagemeyer..................................... 7,657
673,314 Internationale
Nederlanden Groep........................... 40,156
478,127 Koninklijke PTT
Nederland................................... 16,818
133,248 Nutricia...................................... 10,345
698,054 Polygram...................................... 43,579
757,023 Royal Dutch Petroleum......................... 93,992
259,854 Unilever...................................... 34,042
1,735,008 Wolters Kluwer................................ 157,908
611,851
PREFERRED STOCK
70,540 Internationale
Nederlanden Groep........................... 366
Total Netherlands 612,217
<CAPTION>
- --------------------------------------------------------------------------------
NEW ZEALAND -- 0.9%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
3,293,864 Air New Zealand `B'........................... 11,350
3,216,149 Carter Holt Harvey............................ 7,685
1,418,577 Fernz......................................... 4,195
2,095,921 Fletcher Challenge............................ 5,548
4,798,702 Fletcher Challenge,
Forests Division............................ 6,620
1,035,375 Independent
Newspapers.................................. 3,158
4,546,628 Telecom Corporation
of New Zealand.............................. 18,878
Total New Zealand 57,434
<CAPTION>
- --------------------------------------------------------------------------------
NORWAY -- 1.5%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
198,750 Bergesen `A'.................................. 4,117
231,631 Kvaerner `A'.................................. 9,746
1,103,436 Norsk Hydro................................... 43,946
706,796 shs Orkla `A'..................................... 36,549
314,380 Saga Petroleum `B'............................ 3,786
Total Norway 98,144
<CAPTION>
- --------------------------------------------------------------------------------
PERU -- 0.1%
- --------------------------------------------------------------------------------
COMMON STOCK
<C> <S> <C>
1,033,003 Telefonica de Peru `B'........................ 1,845
<CAPTION>
- --------------------------------------------------------------------------------
PORTUGAL -- 0.3%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
381,678 Jeronimo Martins.............................. 20,320
25,000 *Portugal Fund IDR (USD)....................... 115
Total Portugal 20,435
<CAPTION>
- --------------------------------------------------------------------------------
SINGAPORE -- 2.5%
- --------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS
<C> <S> <C>
3,932,000 DBS Land...................................... 11,632
788,000 Development Bank
of Singapore................................ 9,034
1,355,000 Far East Levingston
Shipbuilding................................ 5,850
1,546,000 Jurong Shipyard............................... 10,285
803,000 Keppel........................................ 6,592
3,831,000 Neptune Orient Lines.......................... 4,202
2,043,000 Overseas Union Bank........................... 12,724
1,800,000 Overseas Union
Enterprises................................. 9,554
1,823,000 Sembawang..................................... 8,838
1,511,000 Singapore Airlines............................ 14,009
3,832,000 Singapore Land................................ 21,424
818,640 Singapore Press............................... 12,804
6,777,000 United Industrial............................. 6,043
2,832,154 United Overseas Bank.......................... 24,854
862,750 wts *United Overseas Bank,
6/17/97..................................... 3,297
Total Singapore 161,142
<CAPTION>
- --------------------------------------------------------------------------------
SOUTH KOREA -- 1.5%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
7,460 shs Cho Hung Bank................................. 107
379,060 Hanil Bank.................................... 4,900
414,804 Hanil Securities.............................. 6,343
340,500 *Kook Min Bank................................. 7,098
93,616 *Kook Min Bank, new............................ 1,799
480,400 Korea Electric Power.......................... 21,557
165,130 Pohang Iron & Steel........................... 16,529
11,857 Samsung Electronics........................... 2,694
1,357 *Samsung Electronics, new...................... 299
101 *Samsung Electronics,
new `3'..................................... 22
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
---------
<C> <S> <C>
236,759 shs Samsung Electronics,
1/2 Non-Voting,
GDS (USD)................................... $ 15,330
65,061 *Samsung Electronics,
1/2 Non-Voting,
GDS, new (USD).............................. 4,213
6,671 Samsung Electronics,
1/2 Voting, GDR (USD)....................... 732
1,320 *Samsung Electronics,
1/2 Voting,
GDR, new (USD).............................. 145
4,980 *Samsung Electronics,
1/2 Common,
GDS, new (USD).............................. 538
617,000 Seoul Bank.................................... 5,935
218,135 Yukong........................................ 8,211
9,092 Yukong, new................................... 330
Total South Korea 96,782
<CAPTION>
- --------------------------------------------------------------------------------
SPAIN -- 2.4%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
64,333 Banco Popular Espanol......................... 10,220
365,960 Banco Santander............................... 15,951
1,000,253 Centros Comerciales
Pryca....................................... 21,307
677,972 Empresa Nacional
de Electricidad............................. 33,717
104,785 Fomento de
Construcciones
y Contra.................................... 7,400
156,662 Gas Natural................................... 21,486
1,685,809 Iberdrola..................................... 12,707
653,057 Repsol........................................ 19,503
38,000 Repsol ADR (USD).............................. 1,131
1,033,975 Sevillana de Electricidad..................... 6,828
Total Spain 150,250
<CAPTION>
- --------------------------------------------------------------------------------
SWEDEN -- 2.3%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
145,220 Asea `A'...................................... 14,543
1,463,428 Astra `B'..................................... 52,890
831,988 Atlas Copco `B'............................... 12,591
499,693 Electrolux `B'................................ 21,371
173,520 Esselte `B'................................... 2,548
186,399 Hennes & Mauritz `B'.......................... 12,182
175,000 Sandvik `A'................................... 3,281
851,190 Sandvik `B'................................... 16,022
233,080 Scribona `B'.................................. 2,299
600,800 *Stora Kopparbergs `B'......................... 7,283
Total Sweden 145,010
<CAPTION>
- --------------------------------------------------------------------------------
SWITZERLAND -- 4.5%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
57,694 shs BBC Brown Boveri & Cie........................ 66,928
21,782 Ciba Geigy.................................... 18,860
147,785 CS Holding.................................... 15,100
53,546 Nestle........................................ 56,126
7,835 Roche Holdings................................ 56,935
36,085 Sandoz........................................ 29,782
19,053 Schweizerische
Bankgesellschaft............................ 20,642
59,713 Schweizerischer
Bankverein.................................. 24,510
Total Switzerland 288,883
<CAPTION>
- --------------------------------------------------------------------------------
THAILAND -- 1.0%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
658,576 Advanced Information
Service Public.............................. 10,468
1,212,203 Bangkok Bank Public........................... 12,524
1,476,073 Bank of Ayudhya............................... 8,505
224,000 Land & House.................................. 3,614
139,485 Siam Cement................................... 7,605
912,833 Siam Commercial Bank.......................... 10,665
789,094 Thai Farmers Bank............................. 6,522
486,000 *Total Access
Communications (USD)........................ 2,940
258,496 United Communications......................... 3,246
Total Thailand 66,089
<CAPTION>
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 15.5%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
5,010,700 Abbey National................................ 42,383
3,258,980 Argos......................................... 26,278
4,639,920 Argyll Group.................................. 23,475
13,727,000 Asda Group.................................... 22,245
823,180 BAA........................................... 6,410
3,295,040 British Gas................................... 12,503
1,954,500 British Petroleum............................. 14,400
5,027,050 Cable & Wireless.............................. 32,944
4,260,793 Cadbury Schweppes............................. 35,164
6,952,821 Caradon....................................... 21,875
2,707,210 Coats Viyella................................. 7,961
2,123,000 Compass Group................................. 14,467
1,861,560 David S. Smith................................ 17,012
1,980,864 East Midlands Electricity..................... 27,090
504,000 GKN........................................... 6,423
3,091,710 Glaxo......................................... 41,671
5,632,780 Grand Metropolitan............................ 38,828
4,543,000 Guinness...................................... 36,272
</TABLE>
12
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
---------
<C> <S> <C>
658,000 shs Heath......................................... $ 1,664
1,034,875 Heywood Williams
Group....................................... 3,387
2,471,000 Hillsdown Holdings............................ 6,514
2,112,000 John Laing `A'................................ 7,513
4,635,733 Kingfisher.................................... 34,741
3,929,940 Ladbroke Group................................ 10,314
2,787,640 London Electricity............................ 39,886
8,299,780 National Westminster
Bank........................................ 82,670
2,097,000 *Polly Peck International...................... 0
4,095,825 Rank Organisation............................. 27,198
4,976,430 Reed International............................ 75,532
2,043,925 Rolls Royce................................... 4,944
2,216,900 RTZ........................................... 30,634
2,390,000 Sears......................................... 3,824
4,200,000 Shell Transport & Trading..................... 49,138
7,987,740 SmithKline Beecham,
equity units................................ 81,424
817,666 Spring Ram.................................... 349
5,116,000 T & N......................................... 11,567
3,693,395 Tesco......................................... 17,576
10,275,430 Tomkins....................................... 40,533
3,958,430 United Newspapers............................. 32,450
Total United Kingdom 989,259
<CAPTION>
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 2.9%
- --------------------------------------------------------------------------------
COMMERCIAL PAPER
<C> <S> <C>
$ 7,000,000 A. H. Robins, 5.74%,
11/9/95..................................... 6,936
13,408,000 Barnett Banks, 5.77%,
11/15/95.................................... 13,350
12,000,000 BMW U.S. Capital, 5.70%,
11/21/95 - 11/22/95......................... 11,868
10,000,000 Ciesco L.P., 5.73%,
11/10/95.................................... 9,941
8,643,000 Daimler-Benz North
America, 5.70%, 12/20/95.................... 8,560
15,002,000 Delaware Funding,
5.73%, 11/17/95............................. 14,902
9,207,000 Fleet Mortgage Group,
5.77%, 11/17/95............................. 9,164
11,850,000 General Electric,
5.73%, 11/16/95............................. 11,769
20,000,000 NationsBank, 5.625%,
1/12/96..................................... 19,512
2,000,000 Queensland Treasury,
5.73%, 11/9/95.............................. 1,989
10,000,000 Wool International,
5.65%, 2/16/96.............................. 9,818
130,629 Investments in Commercial
Paper through a joint
account, 5.87 - 5.88%,
11/1/95..................................... 131
117,940
OTHER
25,000,000 Avco Financial Services,
Floating Rate
Medium-Term Note,
5.827%, 12/21/95............................ 25,000
20,000,000 Deutsche Bank AG,
Certificate of Deposit,
5.78%, 1/18/96.............................. 20,001
15,000,000 Federal National Mortgage
Assn., Floating Rate
Medium-Term Note,
5.813%, 9/27/96............................. 15,000
5,000,000 Morgan Stanley Group,
Floating Rate
Medium-Term Note,
6.063%, 1/31/97............................. 5,001
65,002
Total Short-Term Investments 182,942
- --------------------------------------------------------------------------------
Total Investments in Securities -- 99.7%
of Net Assets (Cost $5,673,915) $6,365,380
- --------------------------------------------------------------------------------
Other Assets Less Liabilities....................................... 20,525
----------
<CAPTION>
Net Assets Consist of: Value
---------
<S> <C>
Accumulated net investment
income - net of distributions................. $ 91,242
Accumulated net realized
gain/loss - net of
distributions................................. 35,091
Net unrealized gain (loss)...................... 691,498
Paid-in-capital applicable to
528,178,845 shares of $0.01
par value capital stock
outstanding; 2,000,000,000
shares of the Corporation
authorized.................................... 5,568,074
----------
NET ASSETS...................................... $6,385,905
==========
NET ASSET VALUE PER SHARE....................... $12.09
======
- --------------------------------------------------------------------------------
</TABLE>
* Non-income producing ITL Italian lira
BEL Belgian franc USD U.S. dollar
HKD Hong Kong dollar
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price International Stock Fund / Year Ended October 31, 1995
(in thousands)
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income
Dividend (net of foreign taxes of $19,132)...................... $ 124,565
Interest........................................................ 24,673
Other........................................................... 349
----------
Total income.................................................... 149,587
----------
Expenses
Investment management........................................... 41,829
Shareholder servicing........................................... 9,098
Custody and accounting.......................................... 2,699
Prospectus and shareholder reports.............................. 755
Registration.................................................... 300
Proxy and annual meeting........................................ 234
Legal and audit................................................. 54
Directors....................................................... 46
Miscellaneous................................................... 75
----------
Total expenses.................................................. 55,090
Expenses paid indirectly........................................ (7)
----------
Net expenses.................................................... 55,083
----------
Net investment income............................................. 94,504
----------
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS)
<S> <C>
Net realized gain (loss) on:
Securities...................................................... 52,875
Foreign currency transactions................................... (5,316)
----------
Net realized gain (loss)........................................ 47,559
----------
Change in net unrealized gain or loss on:
Securities...................................................... (118,838)
Other assets and liabilities denominated in foreign currencies.. 3,719
----------
Change in net unrealized gain or loss........................... (115,119)
----------
Net realized and unrealized gain (loss)........................... (67,560)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS................. $ 26,944
==========
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price International Stock Fund
(in thousands)
<TABLE>
<CAPTION>
Years Ended October 31,
1995 1994
------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income........................ $ 94,504 $ 56,402
Net realized gain (loss)..................... 47,559 302,445
Change in net unrealized gain or loss........ (115,119) 180,097
----------- -----------
Increase (decrease) in net assets
from operations............................ 26,944 538,944
----------- -----------
Distributions to shareholders
Net investment income........................ (57,811) (31,352)
Net realized gain............................ (298,432) (67,269)
----------- -----------
Decrease in net assets from distributions.... (356,243) (98,621)
----------- -----------
Capital share transactions*
Shares sold.................................. 1,729,049 2,767,911
Distributions reinvested..................... 331,094 90,880
Shares redeemed.............................. (1,550,652) (839,456)
----------- -----------
Increase (decrease) in net assets from
capital share transactions................. 509,491 2,019,335
----------- -----------
Increase (decrease) in net assets.............. 180,192 2,459,658
NET ASSETS
Beginning of period............................ 6,205,713 3,746,055
----------- -----------
End of period.................................. $ 6,385,905 $ 6,205,713
=========== ===========
- --------------------------------------------------------------------------------
*Share information
Shares sold.................................. 147,854 225,584
Distributions reinvested..................... 29,562 7,630
Shares redeemed.............................. (132,547) (68,902)
----------- -----------
Increase (decrease) in shares outstanding.... 44,869 164,312
=========== ===========
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price International Stock Fund / October 31, 1995
Note 1 - Significant Accounting Policies
T. Rowe Price International Funds, Inc. (the Corporation) is registered
under the Investment Company Act of 1940. The International 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 - Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such transactions.
The effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and losses.
C) Other - Income and expenses are recorded on the accrual basis. Expenses paid
indirectly are custody fees paid by float credits earned on daily residual cash
balances at the custodian. Investment transactions are accounted for on the
trade date. Realized gains and losses are reported on the identified cost basis.
Dividend income and distributions to shareholders are recorded by the fund on
the ex-dividend date. Income and capital gain distributions are determined in
accordance with federal income tax regulations and may differ from those
determined in accordance with generally accepted accounting principles.
Note 2 - Investment Transactions
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
A) Emerging Markets - At October 31, 1995, the fund held investments in
securities of companies located in emerging markets. Future economic or
political developments could adversely affect the liquidity or value, or both,
of such securities.
B) Commercial Paper Joint Account - The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper.
16
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All securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
C) Securities Lending - To earn additional income, the fund lends its securities
to approved brokers. At October 31, 1995, the market value of securities on loan
was $239,905,000, which was fully collateralized with cash. Although the risk is
mitigated by the collateral, the fund could experience a delay in recovering its
securities and a possible loss of income or value if the borrower fails to
return them.
D) Other - Purchases and sales of portfolio securities, other than short-term
securities, aggregated $1,445,057,000 and $1,008,642,000, respectively, for the
year ended October 31, 1995.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
In order for the fund's capital accounts and distributions to shareholders
to reflect the tax character of certain transactions, $1,000 of undistributed
net investment income and $11,294,000 of undistributed net realized gains were
reclassified as an increase to paid-in-capital during the year ended October 31,
1995. The results of operations and net assets were not affected by the
reclassifications.
At October 31, 1995, the aggregate cost of investments for federal income
tax and financial reporting purposes was $5,673,915,000 and net unrealized gain
aggregated $691,465,000, of which $1,081,081,000 related to appreciated
investments and $389,616,000 to depreciated investments.
Note 4 - Related Party Transactions
The fund is managed by Rowe Price-Fleming International, Inc. (the Manager),
which is owned by T. Rowe Price Associates, Inc. (Price Associates), Robert
Fleming Holdings Limited, and Jardine Fleming Holdings Limited under a joint
venture agreement.
The investment management agreement between the fund and the Manager
provides for an annual investment management fee, of which $3,770,000 was
payable at October 31, 1995. The fee is computed daily and paid monthly, and
consists of an Individual Fund Fee equal to 0.35% of average daily net assets
and a Group Fee. The Group Fee is based on the combined assets of certain mutual
funds sponsored by the Manager or Price Associates (the Group). The Group Fee
rate ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in
excess of $34 billion. At October 31, 1995, and for the year then ended, the
effective annual Group Fee rate was 0.34%. The fund pays a pro rata share of the
Group Fee based on the ratio of its net assets to those of the Group.
In addition, the fund has entered into agreements with Price Associates and
two wholly owned subsidiaries of Price Associates, pursuant to which the fund
receives certain other services. Price Associates computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services, Inc.
(TRPS), is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price Retirement
Plan Services, Inc., provides subaccounting and recordkeeping services for
certain retirement accounts invested in the fund. Additionally, the fund is one
of several T. Rowe Price mutual funds (the Underlying Funds) in which the
T. Rowe Price Spectrum Growth Fund (Spectrum) invests. In accordance with an
Agreement among Spectrum, the Underlying Funds, Price Associates, and TRPS,
expenses from the operation of Spectrum are borne by the Underlying Funds based
on each Underlying Fund's proportionate share of assets owned by
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Spectrum. The fund incurred expenses pursuant to these related party
agreements totaling approximately $7,617,000 for the year ended October 31,
1995, of which $793,000 was payable at period-end.
During the year ended October 31, 1995, the fund, in the ordinary course of
business, paid commissions of $933,000 to, and placed security purchase and sale
orders aggregating $313,000,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions.
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Financial Highlights
- -------------------------------------------------------------------------------
T. Rowe Price International Stock Fund
<TABLE>
<CAPTION>
For a share outstanding throughout each period
---------------------------------------------------------------------
Year Ended Ten Months Year Ended
October 31, Ended December 31,
------------------- October 31, -------------------------------
1995 1994 1993* 1992 1991 1990
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................... $12.84 $11.74 $ 8.89 $ 9.54 $ 8.81 $10.24
------ ------ ------ ------ ------ ------
Investment activities
Net investment income................... 0.18 0.09 0.10 0.14 0.15 0.22
Net realized and unrealized
gain (loss)........................... (0.19) 1.30 2.75 (0.47) 1.22 (1.13)
------ ------ ------ ------ ------ ------
Total from investment activities........ (0.01) 1.39 2.85 (0.33) 1.37 (0.91)
------ ------ ------ ------ ------ ------
Distributions
Net investment income................... (0.12) (0.09) -- (0.16) (0.15) (0.16)
Net realized gain....................... (0.62) (0.20) -- (0.16) (0.49) (0.36)
------ ------ ------ ------ ------ ------
Total distributions..................... (0.74) (0.29) -- (0.32) (0.64) (0.52)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD............ $12.09 $12.84 $11.74 $ 8.89 $ 9.54 $ 8.81
====== ====== ====== ====== ====== ======
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total return.............................. 0.4% 12.0% 32.1% (3.5)% 15.9% (8.9)%
Ratio of expenses to average net assets... 0.91%** 0.96% 1.01%+ 1.05% 1.10% 1.09%
Ratio of net investment income to
average net assets...................... 1.56% 1.11% 1.52%+ 1.49% 1.51% 2.16%
Portfolio turnover rate................... 17.8% 22.9% 29.8%+ 37.8% 45.0% 47.1%
Net assets, end of period
(in thousands).......................... $6,385,905 $6,205,713 $3,746,055 $1,949,631 $1,476,309 $1,030,848
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized
* The fund's fiscal year-end was changed to October 31.
** Beginning in fiscal 1995, includes expenses paid indirectly.
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Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
T. Rowe Price International 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 financial
highlights present fairly, in all material respects, the financial position of
T. Rowe Price International Stock Fund (one of the portfolios constituting
T. Rowe Price International Funds, Inc.) at October 31, 1995, and the
results of its operations, the changes in its net assets and the financial
highlights for each of the fiscal periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at October 31, 1995 by
correspondence with custodians and brokers and, where appropriate, the
application of alternative auditing procedures for unsettled security
transactions, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
November 17, 1995
19
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Annual Report
- --------------------------------------------------------------------------------
For yield, price, last transaction, T. Rowe Price
and current balance, 24 hours, -------------
7 days a week, call:
1-800-638-2587 toll free International Stock
625-7676 Baltimore area Fund
For assistance with your existing
fund account, call:
Shareholder Service Center October 31, 1995
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
International Stock Fund(R).
[LOGO OF T. ROWE PRICE APPEARS HERE]
ISF
