Annual Report
Global Stock Fund
October 31, 1996
T. Rowe Price
Report Highlights
o Several foreign stock markets were strong during the past 12 months,
although few were able to keep pace with the exuberant U.S. market.
o The fund performed well relative to its benchmarks, largely because of
its exposure to the U.S. and underweighting in Japan. Returns were 4.22%
and 13.50%, respectively, for the 6- and 10-month periods ended October
31, 1996.
o The fund maintained high weightings in Europe and the U.S. and was
diversified throughout the Far East and Latin America.
o The effect of currency translation was mixed, with U.S. investors
benefiting from the advancing British pound and losing ground because of
the flagging Japanese yen.
o There are signs that favorable interest rates and corporate earnings
progress, which have underpinned the U.S. market, may become positives
in Europe and Japan.
Fellow Shareholders
As your fund completes its first 10 months of operation, we would once again
like to welcome shareholders. Over the year, few overseas markets were able to
keep pace with an exuberant Wall Street where stock prices benefited from a
benign interest rate environment and strong corporate earnings. Overall,
foreign stock returns were lackluster for the past six months but respectable
for the year ended October 31.
Performance Comparison
Since
Inception
Periods Ended 10/31/96 6 Months (12/29/95)
__________________________________________________________________________
Global Stock Fund 4.22% 13.50%
MSCI World Index 2.82 9.67*
Lipper Global Funds Average 1.62 11.35*
* From 12/31/95
From inception through October 31, the T. Rowe Price Global Stock Fund
performed well against both its index and its peer group. Its return of 13.50%
was significantly ahead of the Morgan Stanley Capital International World
Index and its results were better than the Lipper Global Funds Average by a
smaller margin. During the six months ended October 31, the fund's return was
more moderate in absolute terms but was still ahead of both the index and peer
group.
Performance Review
Over the 12-month period, fund performance against the index and the Lipper
peer group was helped significantly by an underweighting in Japan and exposure
to European and U.S. stock markets. Results were hampered somewhat by our
underweighting in the U.S. but helped by stock selection there. Hong Kong
contributed positively, but small positions in markets such as Singapore and
Thailand were disappointing. In Europe, our stock selection added value. An
overweighting in the Netherlands was particularly helpful. Latin America
performed well over the 10 months with Brazil making a strong contribution
during the second half.
Market Performance
Six Months Local Local Currency U.S.
Ended 10/31/96 Currency vs. U.S. Dollars Dollars
__________________________________________________________________________
France 2.15% 1.35% 3.53%
Germany 6.65 1.35 8.09
Hong Kong 10.36 0.04 10.40
Italy - 10.35 3.18 - 7.50
Japan - 8.74 - 7.90 -15.95
Mexico 2.26 - 6.96 - 4.86
Netherlands 9.44 1.18 10.74
Norway 0.46 3.25 3.72
Switzerland 2.31 - 1.11 1.17
United Kingdom 5.20 8.52 14.16
United States 9.46 - 9.46
Source: FAME Information Services, Inc., using MSCI indices.
In Europe, the Continental economies have been weak, constrained by the tight
fiscal policies of governments trying to meet the economic criteria required
for Economic Monetary Union (EMU) membership in January 1999. Countering this
tight fiscal policy, most central banks kept the monetary reins relatively
loose, which in turn helped a number of markets produce double-digit returns.
Currency markets were much more subdued.
The U.S. dollar improved steadily against the yen for most of the year but
rose only a modest amount against leading European currencies such as the
franc and deutschemark. Perhaps surprisingly, the British pound and the
Italian lira were the strongest European currencies and each has strengthened
against the dollar over the last 10 months. On balance, the overseas currency
mix slightly hampered the fund.
Investment Review
United States
The U.S. stock market continued its strong advance, up 16.6% over the 10
months ended October 31, 1996, as measured by the Standard & Poor's 500 Stock
Index. Stocks benefited from an economy sound enough to permit solid earnings
growth, with tame inflation accompanied by relatively low interest rates.
Following stronger-than-expected growth in the first quarter, which pushed
long-term interest rates above 7%, growth moderated and rates fell back around
the 6.5% level. The market continued to favor companies that could generate
solid earnings growth in an atmosphere of slow economic growth. We focused on
companies with both strong cash flow characteristics and good earnings
potential, such as GE, AlliedSignal, Danaher, Columbia/HCA Healthcare, and
Freddie Mac, which were among our core U.S. holdings.
In addition to these core issues, fund performance was aided by technology
stocks such as Intel, Microsoft, and Oracle. Also within this sector, we
bought 3Com and Cisco Systems because of their dominant market positions and
eliminated BayNetworks and Sybase. Financial stocks were likewise positive
contributors to fund performance because of their solid earnings. In the
spring, we added Sallie Mae and Travelers Group, which appreciated later when
interest rates declined.
Chart 1 Geographic Diversification pie chart showing: Europe 35%, United
States 32%, Japan 14%, Far East 8%, Latin America 4%, Other and Reserves 7%
The most disappointing sector for the portfolio was health care; both United
Healthcare and Apria Healthcare were drags on performance. Nevertheless, we
believe this sector offers significant growth potential and have maintained an
overweighted position in it. We see moderate growth in the U.S. economy in
1997 and expect our core holdings to perform well. We will continue to
supplement those holdings with other stocks exhibiting good growth potential.
Europe
In Europe, the economic picture is one of contrasts. On the Continent, the
German locomotive is showing a moderate recovery but there are few signs that
this has spread to its neighbors. On the other hand, the U.K. continued a
steady growth phase and smaller economies such as Norway and Ireland are
performing very strongly.
Germany remains at the forefront of the move to Economic Monetary Union and,
along with the other founding members, its government must soon meet the
Maastricht criteria for debt and budget deficits as a percentage of GDP. The
budget for the old West Germany is in surplus but there is a significant
deficit in the old East Germany and, therefore, overall fiscal policy remains
tight for this point in the cycle. Recognizing this dilemma, the Bundesbank
maintained a moderately loose monetary policy and the economy is unlikely to
slip into recession. The picture from here should improve as unification tax
surcharges phase out and stimulate better consumer sentiment. Also, the weaker
deutschemark will help with the export sector. We continued to underweight
this market but our bias toward growth companies in the chemical and drug
sectors enabled us to add value.
The situation in the Netherlands is similar, but the domestic economy is of
limited relevance to the Dutch market which is dominated by a small number of
multinational companies. A number of our favorite multinationals are among our
largest holdings, and Royal Dutch Petroleum, together with media/publishing
stocks Wolters Kluwer and Elsevier, all performed strongly.
__________________________________________________________________________
IN THE U.K., THE ECONOMY IS CONTINUING A LONG PERIOD OF STEADY GROWTH. . .
In the U.K., the economy is continuing a long period of steady growth which
has enabled corporate earnings to advance, but inflation and the current
account are well under control. It is unlikely that the U.K. will be a
founding member of EMU and, therefore, it is less constrained by the
Maastricht criteria. Also, with general elections that must be held no later
than May 1997, the ruling Conservative Party will be anxious for the "feel
good" factor to reappear. Despite all the temptations, the Chancellor has
behaved prudently by raising interest rates a notch, and his forthcoming
budget will make few concessions on tax. The stock market made good progress
for most of the year and was one of Europe's better performers. In recent
weeks, it retreated from an all-time high, but, for the U.S. investor, this
was more than compensated for by sterling's sharp advance. Our bias toward
growth stocks in the service and pharmaceutical sector continued to be a
successful strategy in this market.
In France, the picture remained bleak with the economy hardly moving and
unemployment uncomfortably high. Already this has caused some social unrest,
but the government is unable to offer fiscal stimulus given the deficit
targets required by EMU. At least the current account was in surplus and the
link between the French franc and deutschemark seemed to be holding steady.
Despite the poor economic background, we can find many investments that meet
our preference for growth at a reasonable price. These have tended to be in
the service sector where retailers such as Carrefour and Pinault Printemps
performed well.
The stock market in Switzerland is another where the multinationals tend to
dominate the scene. Surprisingly, the Swiss franc has been a weak currency
over the year, but this has focused attention on the exporters where our
selections have been rewarding, even in U.S. dollars.
Turning to the smaller economies, the Nordic markets were strong, with Sweden
benefiting from a steady fall in interest rates as the government tried to
hold the strong kroner in line with other European currencies. Norway also did
well as the country's oil wealth provided healthy surpluses for both public
expenditure and external trade. Spain and Italy have indicated their ambitions
to be founding members of EMU but a cold look at the statistics suggests they
will be hard pressed to meet the required economic targets in time.
Nevertheless, the new Italian government under Mr. Prodi has shown remarkable
vigor in tackling deep-seated problems such as public sector wage discipline
and fiscal reform.
Far East
A year ago, the economy in Japan was in trouble as the combination of currency
strength and a banking crisis threatened to throw it into a deflationary
spiral. Helped by a stimulatory fiscal policy and a successful strategy of
currency depreciation, the economy pulled through this difficult period but
the recovery is patchy at best. Capital expenditure - traditionally the engine
of Japanese growth - picked up strongly and this in turn fed through to better
figures for production and shipments.
Industry Diversification
Percent of Percent of
Net Assets Net Assets
4/30/96 10/31/96
__________________________________________________________________________
Services 21.0% 22.7%
Consumer Goods 20.1 20.6
Finance 15.7 16.8
Capital Equipment 14.8 15.5
Energy 8.9 8.0
Materials 5.5 6.7
Multi-Industry 2.6 3.0
All Other - 0.1
Reserves 11.4 6.6
__________________________________________________________________________
Total 100.0% 100.0%
Significantly, there is evidence that an inventory overhang is now being
worked off, which bodes well for the future. Dimming this brighter picture is
consumer expenditure - by far the largest component of GDP - which remains
very sluggish. Despite this mixed picture, our assumption is that the economy
will continue its steady recovery. Monetary policy is supportive and the
recent weakness of the yen will be a big help to Japan's export industry.
The stock market also struggled to make progress. It still looks expensive
compared with other world markets but, against its own history, looks to be
better valued. Our strategy in the market avoids the financial sector where
bad loans continue to haunt the city banks and valuations remain unacceptably
high. We added to sectors such as retailing, pharmaceuticals, and consumer
nondurables where we can find growth at a reasonable valuation. Our holdings
also focused on a number of Japan's multinational corporations, many of which
are world leaders in their fields. These stocks performed well for us recently
and we have cut back in a number of them where prices moved ahead of realistic
expectations.
__________________________________________________________________________
. . . THE CHINESE ECONOMY HAS PROVIDED SUPPORT FOR HONG KONG WHERE . . . THE
STOCK MARKET WAS ONE OF THE BEST IN THE REGION.
The improved health of the Chinese economy has provided support for Hong Kong
where, over the last six months, the stock market was one of the best in the
region. With the Hong Kong dollar pegged to the U.S. dollar, a more benign
interest rate environment in the U.S. quickly spilled over into Hong Kong, and
the Bank of China reduced its interest rates twice in the last few months.
Improved business results from the financial sector and a recovery in
residential property prices all helped this stock market where we have a
moderate overweighting.
In contrast, the Singapore market performed poorly over the last six months as
a weak trend in exports put a brake on the broad economy. The government has
announced measures to dampen speculation in the residential property market,
and the recent trend in corporate earnings has been below expectations.
Singapore has one of the best managed economies in the world but the stock
market is unlikely to perform until the economy picks up again. In contrast,
the Malaysian market held up well during the summer months and smaller
companies continued to perform well. The worry here is that the economy has
been growing too fast, but recent statistics evidence a deceleration, which
will in turn moderate the high external deficit.
In Thailand, the stock market collapsed over the last six months. Corporate
profits came in below expectations, the quality of bank balance sheets was
called into question, and a downgrade in the rating of Thai obligations was a
blow to foreign confidence. Our portfolio had less than 1% of assets in
Thailand and the companies we have chosen should weather this uncomfortable
period for the economy.
In Australia, the economy is slowing but not sliding into recession. The new
Liberal Coalition government has a workable majority and its objectives of
labor reform and further integration with Southeast Asia bode well. The stock
market itself has been unexciting but, helped by a 7% appreciation of the
currency against the U.S. dollar, returns for the U.S. investor were quite
reasonable. In New Zealand, the economy is in better shape and the market has
shown solid dollar returns helped by a strong contribution from the New
Zealand dollar.
Latin America
The stock markets of Latin America made a strong contribution to the fund's
return. Our largest position was in Brazil where the economy regained momentum
after a difficult 1995. Industrial production and retail sales were both in
positive territory but the government will respond quickly to any signs of a
resurgence of inflation or deterioration in the trade position. Many analysts
think the currency is overvalued although, provided the government pursues the
right policies, international confidence can be maintained. The major stock
market theme this year was the privatization and restructuring of the
telecommunications and electricity sectors and our holding in blue chip
Telecomunicacoes Brasileiras outperformed strongly.
Mexico has come a long way since the peso crisis of two years ago although the
banking system remains fragile despite a restructuring program. After a savage
recession, the economy is now growing again with the export sector benefiting
from the weak peso. Reserves are still uncomfortably low and international
confidence will depend on further improvement of the trade position.
INVESTMENT POLICY AND OUTLOOK
Our strategy for the fund going forward is to maintain a relatively heavy
weighting in the stock markets of Europe. The United States remains the
largest individual country position, with Japan second. We maintain important
positions in the smaller markets of Southeast Asia and Latin America. The
portfolio remains well diversified in terms of its country distribution and
the number of stocks held. A common theme to our stock selection is to find
growth at a reasonable valuation, although we have been comfortable holding
more cyclical issues in markets such as Japan where we think economic recovery
will continue.
Stock markets tend to be driven by the direction of interest rates and how
corporate business results compare with expectations. For two years now, these
two forces have been simultaneously positive for the U.S. market but have been
less compelling overseas.
There are some signs that this may be about to change. Interest rates in the
U.S. are unlikely to fall much further and a long period of strong corporate
profit growth may be coming to an end. In contrast, interest rates can fall
further in a number of European markets, and the economic recoveries in Europe
and Japan may surprise on the upside. The smaller markets of Asia and Latin
America have great potential and have their part to play in a diversified
international portfolio.
The case for international diversification is as valid as ever, the fund
remains fully invested, and we are optimistic about its future.
Respectfully submitted,
Martin G. Wade
President
November 22, 1996
About Your Investment Manager
Since many of you are new investors in the T. Rowe Price international stock
funds, we want to tell you briefly about the management team behind them. The
funds are managed by Rowe Price-Fleming International, Inc., a joint venture
between T. Rowe Price and Robert Fleming Holdings Ltd. of London.
Rowe Price-Fleming brings a wealth of experience to international investing.
T. Rowe Price was founded in 1937, and Robert Fleming, a British merchant bank
and investment firm, was founded in 1873. Since its birth in 1979, Rowe
Price-Fleming has grown into the largest U.S. manager of international no-load
funds,* with more than $27 billion under its stewardship, including 11 stock
and bond mutual funds.
While Rowe Price-Fleming's investment team is based in London, portfolio
managers are also located in Tokyo, Hong Kong, Singapore, Baltimore, and soon
in South America. The company's equity managers are responsible for specific
stock selection, but they are supported by more than 100 analysts in 14
financial centers worldwide.
Rowe Price-Fleming's investment philosophy is straightforward and consistent:
Each equity fund seeks broad diversification among companies that offer
above-average growth prospects at reasonable valuations. While diversifying
among many different companies and industries, each fund adheres strictly to
its prospectus.
Portfolio managers combine a macroeconomic view of each market with extensive
research on individual companies. Therefore, your portfolios can potentially
benefit from positive economic trends as well as from the selection of
individual stocks that may perform well regardless of economic conditions.
Rowe Price-Fleming believes that its emphasis on faster-growing foreign
economies, broad diversification, and strong commitment to fundamental
research helps it identify the best opportunities in international stocks.
*Strategic Insight Simfund
T. Rowe Price Global Stock Fund
__________________________________________________________________________
Portfolio Highlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
10/31/96
__________________________________________________________________________
Elsevier, Netherlands 1.2%
Royal Dutch Petroleum, Netherlands 1.2
Wolters Kluwer, Netherlands 1.1
National Westminster Bank, United Kingdom 1.1
SmithKline Beecham, United Kingdom 1.0
__________________________________________________________________________
Reed International, United Kingdom 0.9
GE, United States 0.8
Columbia/HCA Healthcare, United States 0.8
Telecomunicacoes Brasileiras, Brazil 0.8
Roche Holdings, Switzerland 0.8
__________________________________________________________________________
Eaux Cie Generale, France 0.7
Danaher, United States 0.7
Astra (Class B), Sweden 0.7
Sallie Mae, United States 0.7
ACE Limited, United States 0.7
__________________________________________________________________________
Shell Transport & Trading, United Kingdom 0.7
AlliedSignal, United States 0.7
Gehe, Germany 0.6
Nestle, Switzerland 0.6
Chase Manhattan, United States 0.6
__________________________________________________________________________
Philip Morris, United States 0.6
Abbey National, United Kingdom 0.6
Denso, Japan 0.6
Wal-Mart, United States 0.6
Hubbell (Class B), United States 0.6
__________________________________________________________________________
Total 19.4%
T. Rowe Price Global Stock Fund
__________________________________________________________________________
Performance Comparison
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
Chart 2 - SEC Graph: a line chart showing the cumulative growth of $10,000
invested in the Global Stock Fund over the past 10 years (or "from inception"
for funds lacking 10-year histories) compared with $10,000 invested in a
broad-based index or average over the same period.
Average Annual Compound Total Return
Since Inception
Periods Ended 10/31/96 Inception* Date
__________________________________________________________________________
Global Stock Fund 13.50% 12/29/95
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
*Unannualized return; period is less than one year.
T. Rowe Price Global Stock Fund
__________________________________________________________________________
Financial Highlights
For a share outstanding throughout the period
12/29/95
to
10/31/96
NET ASSET VALUE
Beginning of period $ 10.00
Investment activities
Net investment income 0.05*
Net realized and
unrealized gain (loss) 1.30
Total from
investment activities 1.35
NET ASSET VALUE
End of period $ 11.35
Ratios/Supplemental Data
Total return 13.50%*
Ratio of expenses to
average net assets 1.30%*!
Ratio of net investment
income to average
net assets 0.88%*!
Portfolio turnover rate 50.0%!
Average commission rate paid $ 0.0026
Net assets, end of period
(in thousands) $ 14,916
* Excludes expenses in excess of a 1.30% voluntary expense limitation in
effect through 10/31/97.
! Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Stock Fund
__________________________________________________________________________
October 31, 1996
Statement of Net Assets
Shares/Par Value
__________________________________________________________________________
In thousands
ARGENTINA 0.4%
Common Stocks 0.4%
Banco de Galicia Buenos
Aires (Class B) ADR (USD) 409 $ 7
Banco Frances del Rio ADR (USD) 144 4
Naviera Perez (Class B) 1,810 11
Telefonica de Argentina
(Class B) ADR (USD) 760 18
YPF Sociedad Anonima (Class
D) ADR (USD) 620 14
Total Argentina (Cost $58) 54
AUSTRALIA 1.1%
Common Stocks 1.1%
Amcor Limited 1,000 6
Australia Gas & Light 3,052 17
Broken Hill Proprietary 1,900 25
Coca Cola Amatil 1,400 19
Howard Smith 2,000 16
Lend Lease 600 10
National Australia Bank 1,037 11
News Corporation 1,804 10
Publishing and Broadcasting 1,400 6
Tabcorp Holdings 2,500 12
TNT * 4,000 8
WMC 1,500 10
Westpac Banking 1,200 7
Woodside Petroleum 1,000 7
164
Preferred Stocks 0.0%
Sydney Harbour Casino Holdings * 3,000 4
4
Total Australia (Cost $149) 168
AUSTRIA 0.0%
Common Stocks 0.0%
EVN Energie Versorgung Nieder 20 3
Flughafen Wien 70 3
Total Austria (Cost $7) 6
BELGIUM 0.7%
Common Stocks 0.7%
Generale Banque 77 27
Generale Banque, VVPR Strip 7 0
Kredietbank 175 56
UCB 9 20
Total Belgium (Cost $88) 103
BRAZIL 1.6%
Common Stocks 0.2%
Eletrobras 46,910 15
Pao de Acucar GDR (USD) 190 4
Usiminas ADR (USD) 290 3
22
Preferred Stocks 1.4%
Banco Bradesco 2,950,029 25
Brasmotor 23,775 8
Cia Energetica Minas
Gerias ADR (144a) (USD) * 150 5
Cia Energetica Minas Gerais ADR,
sponsored, non voting (USD) * 392 12
Telecomunicacoes
Brasileiras ADR (USD) 1,555 116
Telecomunicacoes de Sao Paulo 108,545 20
Usiminas 13,434,238 14
Usiminas ADS (USD) 1,257 13
213
Total Brazil (Cost $203) 235
CANADA 0.2%
Common Stocks 0.2%
Alcan Aluminum 730 24
Royal Bank of Canada 290 10
Total Canada (Cost $31) 34
CHILE 0.3%
Common Stocks 0.3%
Chile Fund (USD) 230 5
Chilectra ADR (144a) (USD) 150 8
Compania Cervecerias Unidas ADS (USD) 200 4
Compania de Telecomunicaciones
de Chile ADR (USD) 85 8
Empresa Nacional de Electricidad
ADS (USD) 570 11
Enersis ADS (USD) 350 10
Total Chile (Cost $48) 46
CHINA 0.3%
Common Stocks 0.3%
Huaneng Power International
(Class N) ADR (USD) * 2,100 33
Yizheng Chemical Fibre
(Class H) (HKD) 40,000 9
Total China (Cost $45) 42
CZECH REPUBLIC 0.0%
Common Stocks 0.0%
SPT Telecom 40 4
Total Czech Republic (Cost $5) 4
DENMARK 0.2%
Common Stocks 0.2%
Den Danske Bank 180 13
Tele Danmark (Class B) 80 4
Unidanmark (Class A) 170 8
Total Denmark (Cost $24) 25
FINLAND 0.1%
Common Stocks 0.1%
Nokia (Class A) 340 16
Total Finland (Cost $13) 16
FRANCE 5.2%
Common Stocks 5.2%
Accor 136 17
Alcatel Alsthom 100 8
Canal Plus 120 30
Carrefour 144 80
Castorama Dubois 47 8
Chargeurs International 77 3
Cie de St. Gobain 322 43
Eaux Cie Generale 917 110
Elf Aquitaine 322 26
GTM Entrepose 130 6
Guilbert 110 17
L'Oreal 44 15
LVMH 271 62
Lapeyre 114 6
Legrand 50 9
Pathe 77 21
Pinault Printemps 212 80
Primagaz 130 13
Promodes 30 8
Rexel 60 18
Sanofi 140 13
Schneider 400 20
Sodexho 100 48
Television Francaise 523 56
Total (Class B) 653 51
Total France (Cost $689) 768
GERMANY 2.7%
Common Stocks 2.6%
Allianz Holdings 28 51
Altana 8 7
Bayer 1,460 55
Bilfinger and Berger 300 12
Deutsche Bank 470 22
Gehe 1,400 94
Mannesmann 55 21
Rhoen Klinikum 217 27
Schering 214 17
Siemens 390 20
Veba 908 49
Volkswagen 57 23
398
Preferred Stocks 0.1%
Fielmann 120 5
SAP 60 8
13
Total Germany (Cost $386) 411
HONG KONG 2.9%
Common Stocks 2.9%
Cathay Pacific Airways 12,000 19
Dao Heng Bank Group 4,000 18
First Pacific 28,231 39
Guangdong Investment 18,000 13
Guangzhou Investment 60,000 19
Guoco Group 8,000 42
Hong Kong Land Holdings (USD) 28,575 64
Hopewell Holdings 42,000 28
Hutchison Whampoa 8,000 56
New World Development 10,042 58
Swire Pacific (Class A) 3,000 26
Wharf Holdings 14,000 58
Total Hong Kong (Cost $413) 440
ITALY 1.3%
Common Stocks and Warrants 1.3%
Assicurazioni Generali 2,200 42
Banca Fideuram 10,000 21
ENI 2,000 9
IMI 2,000 16
Italgas 2,600 10
Rinascente 1,000 6
Rinascente, warrants, exp.
11/30/99 * 50 0
Stet 8,000 28
Stet, savings shares 4,000 11
Telecom Italia 8,000 18
Telecom Italia Mobile 14,000 29
Total Italy (Cost $180) 190
JAPAN 13.5%
Common Stocks 13.5%
Alps Electric 2,000 25
Amada 3,000 26
Canon 4,000 77
Citizen Watch 2,000 15
DDI 3 23
Daifuku 1,000 12
Daiichi Pharmaceutical 3,000 43
DaiNippon Screen Manufacturing 3,000 24
Daiwa House 4,000 55
Denso 4,000 83
East Japan Railway 10 46
Fanuc 1,000 32
Hitachi 5,000 44
Hitachi Zosen 4,000 20
Ito-Yokado 1,000 50
Kokuyo 2,000 50
Komatsu 3,000 25
Komori 1,000 22
Kumagai Gumi 3,000 9
Kuraray 4,000 39
Kyocera 1,000 66
Makita 2,000 27
Marui 3,000 56
Matsushita Electric
Industrial 4,000 64
Mitsubishi 1,000 11
Mitsubishi Heavy Industries 10,000 77
Mitsubishi Paper Mills 2,000 10
Mitsui Fudosan 5,000 62
Murata Manufacturing 1,000 32
NEC 6,000 65
National House Industrial 1,000 14
Nippon Hodo 1,000 14
Nippon Steel 18,000 52
Nippon Telephone & Telecom 4 28
Nomura Securities 3,000 50
Pioneer Electronic 2,000 39
Sankyo 3,000 74
Sega Enterprises 1,000 40
Sekisui Chemical 4,000 45
Sekisui House 3,000 32
Sharp 4,000 61
Shin-Etsu Chemical 2,000 34
Sony 800 48
Sumitomo 5,000 40
Sumitomo Electric 6,000 79
Sumitomo Forestry 2,000 28
TDK 1,000 59
Teijin 6,000 28
Tokio Marine & Fire Insurance 1,000 11
Tokyo Electronics 1,000 26
Toppan Printing 2,000 24
Total Japan (Cost $2,194) 2,016
MALAYSIA 1.8%
Common Stocks and Warrants 1.8%
Affin Holdings 22,200 57
Berjaya Sports Toto 5,000 19
Commerce Asset Holdings 3,000 20
MBF Capital 14,000 19
Multi-Purpose Holdings 18,000 31
Renong 12,000 19
Renong, warrants, exp. 11/21/00 * 375 0
Tanjong 7,000 27
Technology Resources Industries * 12,000 29
United Engineers 6,000 47
268
Preferred Stocks 0.0%
Renong, cv. loan stock,
4.00%, 5/21/01 600 0
0
Total Malaysia (Cost $264) 268
MEXICO 1.2%
Common Stocks and Rights 1.2%
Cemex ADS (USD) 4,000 28
Cifra ADR (USD) 12,090 15
Fomentos Economico Mexicano
(Class B) 3,230 10
Gruma (Class B) * 2,700 13
Gruma (Class B), rights * 71 0
Grupo Financiero Banamex
(Class B) 4,490 10
Grupo Industrial Maseca
(Class B) 8,000 10
Grupo Modelo (Class C) 2,000 10
Grupo Televisa GDR (USD) 323 8
Kimberly-Clark Mexico (Class A) 190 4
Panamerican Beverages (Class A)
ADR (USD) 335 15
Telefonos de Mexico (Class L)
ADS (USD) 1,680 51
Total Mexico (Cost $182) 174
NETHERLANDS 6.4%
Common Stocks 6.4%
ABN Amro Holdings 770 44
Ahold 608 35
Akzo Nobel 430 54
CSM 1,088 57
Elsevier 11,180 186
Fortis Amev 610 18
Gucci Group (USD) 400 28
ING Groep 2,350 73
Koninklijke PTT Nederland 158 6
Nutricia 100 14
Polygram 1,145 54
Royal Dutch Petroleum 1,060 175
Unilever 361 55
Wolters Kluwer 1,260 162
Total Netherlands (Cost $875) 961
NEW ZEALAND 0.4%
Common Stocks 0.4%
Carter Holt Harvey 3,300 7
Fernz 2,400 8
Fletcher Challenge Building 250 1
Fletcher Challenge Energy 250 1
Fletcher Challenge Forests Division 7,000 12
Fletcher Challenge Paper 500 1
Telecom Corporation of New Zealand 4,800 25
Total New Zealand (Cost $47) 55
NORWAY 0.9%
Common Stocks 0.9%
Norsk Hydro 1,540 71
Orkla (Class A) 983 63
Saga Petroleum (Class B) 400 6
Total Norway (Cost $119) 140
PHILIPPINES 0.1%
Common Stocks 0.1%
Philippine National Bank 1,000 12
Total Philippines (Cost $12) 12
PORTUGAL 0.3%
Common Stocks 0.3%
Jeronimo Martins 464 42
Total Portugal (Cost $30) 42
SINGAPORE 1.1%
Common Stocks 1.1%
DBS Land 4,500 14
Development Bank of Singapore 1,000 12
Far East Levingston Shipbuilding 2,000 10
Fraser & Neave 1,000 10
Keppel 1,000 7
Overseas Union Bank 5,000 34
Singapore Land 4,000 22
Singapore Press 600 10
United Industrial 8,000 7
United Overseas Bank 4,000 39
Total Singapore (Cost $184) 165
SOUTH KOREA 0.3%
Common Stocks 0.3%
Hanil Bank 1,000 9
Hanil Securities 400 4
Korea Electric Power 700 21
Seoul Bank 700 4
Total South Korea (Cost $47) 38
SPAIN 1.6%
Common Stocks 1.6%
Argentaria Banca de Espana 320 12
Banco Popular Espanol 167 32
Banco Santander 560 29
Centros Comerciales Pryca 460 11
Empresa Nacional de Electricidad 1,030 63
Fomento de Construcciones y Contra 60 5
Gas Natural 167 29
Iberdrola 2,352 25
Repsol 1,200 39
Total Spain (Cost $245) 245
SWEDEN 1.7%
Common Stocks 1.7%
ABB (Class A) 180 20
Astra (Class B) 2,280 104
Atlas Copco (Class B) 800 16
Electrolux (Class B) 700 39
Hennes & Mauritz (Class B) 290 38
Sandvik (Class B) 1,415 33
Stora Kopparbergs (Class B) 760 10
Total Sweden (Cost $217) 260
SWITZERLAND 3.1%
Common Stocks 3.1%
ABB 50 62
Adecco 156 44
CS Holding 190 19
Ciba-Geigy 39 48
Nestle 80 87
Roche Holdings 15 113
Sandoz 50 58
Schweizerischer Bankverein 160 31
Total Switzerland (Cost $433) 462
THAILAND 0.3%
Common Stocks and Warrants 0.3%
Advanced Information Service 300 4
Bangkok Bank 2,300 25
Bank of Ayudhya 1,500 4
Siam Cement 100 3
Siam Commercial Bank 800 7
Thai Farmers Bank 1,000 8
Thai Farmers Bank, warrants,
exp. 9/15/02 * 125 0
Total Thailand (Cost $75) 51
UNITED KINGDOM 11.2%
Common Stocks 11.2%
Abbey National 8,000 83
Argos 4,480 56
Asda Group 19,000 37
BAA 1,000 8
British Gas 4,000 12
British Petroleum 3,000 32
Cable & Wireless 7,000 56
Cadbury Schweppes 5,000 42
Caradon 10,000 39
Coats Viyella 3,000 7
Compass Group 3,000 30
David S. Smith 5,000 25
East Midlands Electricity 2,000 18
Electrocomponents 2,000 13
GKN 1,000 19
Glaxo Wellcome 5,000 78
Grand Metropolitan 8,000 60
Guinness 7,100 51
Heywood Williams Group 1,000 4
Hillsdown Holdings 3,000 9
John Laing (Class A) 3,000 13
Kingfisher 7,400 79
Ladbroke Group 5,000 16
London Electricity 2,650 26
National Grid Group 4,000 12
National Westminster Bank 14,000 160
RTZ 3,000 48
Rank Group 6,000 40
Reed International 7,000 130
Rolls Royce 3,000 12
Safeway 6,000 36
Sears 3,000 4
Shell Transport & Trading 6,000 98
SmithKline Beecham 12,000 148
T & N 6,000 12
Tesco 5,000 27
Tomkins 14,000 59
United Newspapers 6,400 70
Total United Kingdom (Cost $1,525) 1,669
UNITED STATES 32.5%
Common Stocks 32.5%
3Com * 900 61
ACE Limited 1,800 99
ADT * 2,100 41
Adobe Systems 600 21
Alco Standard 1,100 51
AlliedSignal 1,500 98
American Home Products 400 25
Apria Healthcare * 2,600 50
Atlantic Richfield 400 53
AutoZone * 900 23
BJ Services * 800 36
BMC Software * 500 41
Bank of Boston 700 45
BellSouth 1,900 77
Biogen * 200 15
Boston Scientific * 400 22
Brinker * 4,100 70
Bristol-Myers Squibb 400 42
CUC International * 1,850 45
Cellular Communications
International * 1,500 47
Ceridian * 1,500 74
Chase Manhattan 1,000 86
Cisco Systems * 800 49
Coltec Industries * 700 12
Columbia/HCA Healthcare 3,300 118
Cooper Cameron * 700 45
Corning 2,000 77
Danaher 2,600 106
Disney 1,100 72
Electronic Data Systems 800 36
First Data 700 56
Fleet Financial Group 800 40
Freddie Mac 800 81
Fruit of the Loom (Class A) * 600 22
GE 1,300 126
Gargoyles * 600 8
Gaylord Entertainment 1,575 31
General Nutrition * 1,300 24
Glenayre Technologies * 400 10
Great Lakes Chemical 900 47
H&R Block 1,400 35
Harleysville Group 1,700 48
Harrah's Entertainment * 600 10
Hewlett-Packard 900 40
Hubbell (Class B) 2,000 82
Informix * 2,000 44
Intel 600 66
Intuit * 1,600 43
Johnson & Johnson 1,100 54
Jones Apparel Group * 1,700 53
Kimberly-Clark 600 56
La Quinta Inns 2,100 42
Landstar Systems * 1,500 35
MCI 900 23
Maxim Integrated Products * 1,000 35
Medic Computer Systems * 1,200 34
Medtronic 700 45
Microsoft * 300 41
Mid Ocean Limited 700 33
Mobil 400 47
Nabisco 800 30
Newell 2,000 57
Nextel Communications * 500 8
Norwest 1,800 79
Nucor 700 33
Oracle * 1,200 51
PacifiCare Health Systems (Class B) *1,000 70
Partnerre * 1,500 43
Patriot American Hospitality 1,500 53
PepsiCo 1,600 47
Pfizer 600 50
Pharmacia & Upjohn 1,100 40
Philip Morris 900 83
Procter & Gamble 500 49
Quiksilver * 600 13
Quorum Health Group * 2,600 70
Revco * 1,900 57
Sallie Mae 1,200 99
Sara Lee 2,100 75
Starwood Lodging, REIT 500 23
Teleflex 900 43
Telephone and Data Systems 1,100 38
The Gap 700 20
Toys "R" Us * 1,000 34
Travelers Group 800 43
Travelers/Aetna Property
Casualty (Class A) 2,100 63
TriMas 700 16
Tupperware 1,400 72
Tyco International 1,300 65
UNUM 1,000 63
USX-Marathon 3,300 72
V. F. 400 26
Vencor * 2,100 62
Wal-Mart 3,100 83
Warnaco Group 2,300 57
Western Atlas * 700 49
WestPoint Stevens 2,100 56
Total United States (Cost $4,430) 4,840
SHORT-TERM INVESTMENTS 5.8%
Commercial Paper 5.8%
New Center Asset Trust, 5.37%,
11/05/96 $ 100,000 100
Investments in Commercial Paper
through a joint account,
5.56 - 5.63%, 11/01/96 760,225 760
Total Short-Term Investments
(Cost $860) 860
Total Investments in Securities
99.2% of Net Assets (Cost $14,078) $ 14,800
Other Assets Less Liabilities 116
NET ASSETS $ 14,916
Net Assets Consist of:
Accumulated net investment
income - net of distributions $ 76
Accumulated net realized
gain/loss - net of distributions 246
Net unrealized gain (loss) 722
Paid-in-capital applicable to
1,313,840 shares of $0.01 par
value capital stock outstanding;
2,000,000,000 shares of the
corporation authorized 13,872
NET ASSETS $ 14,916
NET ASSET VALUE PER SHARE $ 11.35
* Non-income producing
144a Security was purchased pursuant to Rule 144a under the
Securities Act of 1933 and may not be resold subject to
that rule except to qualified institutional buyers - total
of such securities at year-end amounts to 0.05% of net
assets.
REIT Real Estate Investment Trust
HKD Hong Kong dollar
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Stock Fund
__________________________________________________________________________
Statement of Operations
__________________________________________________________________________
In thousands
12/29/95
to
10/31/96
Investment Income
Income
Dividend (net of foreign
taxes of $ 17) $ 139
Interest 35
Total income 174
Expenses
Custody and accounting 104
Shareholder servicing 74
Legal and audit 12
Registration 8
Directors 5
Prospectus and shareholder reports 4
Miscellaneous 8
Reimbursed by Manager (111)
Total expenses 104
Net investment income 70
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on
Securities 269
Written options 5
Foreign currency transactions (28)
Net realized gain (loss) 246
Change in net unrealized gain or
loss on securities 722
Net realized and unrealized
gain (loss) 968
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 1,038
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Stock Fund
__________________________________________________________________________
Statement of Changes in Net Assets
In thousands
12/29/95
to
10/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income $ 70
Net realized gain (loss) 246
Change in net unrealized
gain or loss 722
Increase (decrease) in net
assets from operations 1,038
Capital share transactions*
Shares sold 16,948
Shares redeemed (3,070)
Increase (decrease) in net
assets from capital
share transactions 13,878
Net Assets
Increase (decrease) during period 14,916
Beginning of period -
End of period $ 14,916
*Share information
Shares sold 1,596
Shares redeemed (282)
Increase (decrease) in shares
outstanding 1,314
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Stock Fund
__________________________________________________________________________
October 31, 1996
Notes to Financial Statements
__________________________________________________________________________
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price International Funds, Inc. (the corporation) is registered under
the Investment Company Act of 1940. The Global Stock Fund (the fund), a
diversified, open-end management investment company, is one of the portfolios
established by the corporation and commenced operations on December 29, 1995.
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.
Short-term debt securities are valued at amortized cost which 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.
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.
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 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.
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. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $16,601,000 and $3,650,000, respectively, for the
period ended October 31, 1996.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends 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, the following
reclassifications were made during the period ended October 31, 1996. The
results of operations and net assets were not affected by the
reclassifications.
__________________________________________________________________________
Undistributed net investment income $ 6,000
Paid-in-capital (6,000)
At October 31, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $14,078,000, and net unrealized gain
aggregated $722,000, of which $1,183,000 related to appreciated investments
and $461,000 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. 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 0.305% for assets in excess of $50 billion. At October 31, 1996, and
for the period then ended, the effective annual group fee rate was 0.33%. The
fund pays a pro-rata share of the group fee based on the ratio of its net
assets to those of the group.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through October 31, 1997 which would cause the
fund's ratio of expenses to average net assets to exceed 1.30%. Thereafter,
through October 31, 1999, the fund is required to reimburse the manager for
these expenses, provided that average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing the fund's ratio
of expenses to average net assets to exceed 1.30%. Pursuant to this agreement,
$54,000 of management fees were not accrued by the fund for the period ended
October 31, 1996, and $111,000 of other expenses were borne by the manager.
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., 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. The fund incurred expenses
pursuant to these related party agreements totaling approximately $141,000 for
the period ended October 31, 1996, of which $19,000 was payable at period-end.
During the period ended October 31, 1996, the fund, in the ordinary course of
business, paid commissions of $1,000 to, and placed security purchase and sale
orders aggregating $512,000 with, certain affiliates of the manager in
connection with the execution of various portfolio transactions.
Report of Independent Accountants
__________________________________________________________________________
To the Board of Directors and Shareholders of
T. Rowe Price Global 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 Global Stock Fund (one of the portfolios constituting T. Rowe
Price International Funds, Inc., hereafter referred to as the "Fund") at
October 31, 1996, and the results of its operations, the changes in its net
assets and the financial highlights for the period December 29, 1995
(commencement of operations) through October 31, 1996, 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 audit. We conducted our
audit 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 audit, which included confirmation of securities at October 31, 1996 by
correspondence with custodians and brokers and, where appropriate, the
application of alternative auditing procedures for unsettled security
transactions, provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
November 19, 1996
For yield, price, last transaction,
current balance or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access(registered trademark):
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
http://www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price Global Stock Fund.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor RPRTGLS 10/31/96
APPENDIX
Chart 1 - Geographic Diversification pie chart showing: Europe 35%, United
States 32%, Japan 14%, Far East 8%, Latin America 4%, Other and Reserves 7%
Chart 2 - a line chart showing the cumulative growth of $10,000 invested in
the Global Stock Fund over the past 10 years (or from inception for funds
lacking 10-year histories) compared with $10,000 invested in a broad-based
index or average over the same period.
