Semiannual Report
European Stock Fund
April 30, 1996
T. Rowe Price
REPORT HIGHLIGHTS
o European stocks performed well over the last six months, despite a
weakening of currencies against the U.S. dollar.
o The European Stock Fund, benefiting from good performance from both big
and small growth companies, outpaced its benchmark for both the 6- and
12-month periods ended April 30.
o In U.S. dollar terms, among the best performing markets over the last
six months were Spain (24.6%), Italy (17.4%), the Netherlands (14.9%),
and France (14.8%). Finland was among the worst, declining 19.4%. The
Netherlands remained your fund's largest overweighting, representing 18%
of net assets.
o Moderate economic growth and stable interest rates could provide a
favorable environment for European equities into 1997, especially for
small-cap companies.
Fellow Shareholders
European markets started off well again this year, providing double-digit
returns in local currency terms through April 30. Unlike last year, however,
returns to U.S. investors were not boosted by favorable exchange rates because
European currencies weakened against the dollar, although overall results were
still good.
Performance Comparison
Periods Ended 4/30/96 6 Months 12 Months
_____________________________________________________________________________
European Stock Fund 12.34% 21.94%
MSCI Europe Index 8.76 16.43
Over the last six months, your fund outpaced the MSCI Europe Index on the
strength of both favorable country weightings and good stock selection. During
the final months of 1995, fund performance was led by our core holdings in
growth companies. At the turn of the year, investor sentiment shifted toward
long-neglected smaller companies, a market sector in which the fund is well
represented. The fund also produced strong absolute and relative performance
for the 12 months ended April 30, as shown in the table.
MARKET REVIEW
While the economic backdrop in Europe seemed gloomy at times, conditions were
not as bad as they appeared. The U.K. was no exception. The pace of growth
slowed during 1995 but stabilized at a moderate level with the help of several
interest rate cuts from the Bank of England. We reduced our position in one of
the fund's largest holdings, publisher Reed International, after some nice
gains. With the prospect of a general election in the next 12 months, we also
lowered our exposure to the politically sensitive regional electricity
companies, London Electricity and East Midlands Electricity. While the fund
benefited from being underweighted in the U.K., relative to the MSCI Europe
Index, it experienced good gains from smaller-capitalization British stocks
such as engineering company Mayflower and British Biotechnology.
The fund was also helped by an underweighting in Germany. Although the market
was an average performer in local currency terms, the weakening of the
deutschemark significantly dampened U.S. dollar returns. On a positive note,
the deutschemark's slide may give the economy a boost by improving Germany's
exports and helping to counteract high wage costs. The Bundesbank lowered
interest rates in an attempt to spur tepid growth. We trimmed our holdings in
telecommunications and engineering conglomerate Mannesmann in favor of
additional purchases in our old favorite Gehe, a pharmaceutical wholesaler.
Market Performance
Six Months Local Local Currency U.S.
Ended 4/30/96 Currency vs. U.S. Dollars Dollars
_____________________________________________________________________________
Belgium 18.8% - 8.1% 9.2%
Finland -7.9 - 12.5 -19.4
France 21.4 - 5.5 14.8
Germany 13.9 - 8.2 4.6
Italy 15.2 1.9 17.4
Netherlands 24.8 - 7.9 14.9
Norway 18.2 - 5.4 11.8
Spain 29.8 - 4.0 24.6
Sweden 12.4 - 2.3 9.9
Switzerland 18.5 - 8.7 8.2
United Kingdom 10.8 - 4.9 5.4
Source: Randall Helms Database; gross dividends reinvested.
The monetary easing in Germany was good news for France, where efforts to deal
with the budget deficit undermined consumer confidence. After the public
sector strikes at the end of 1995, which marked the low point for the market,
French equities recovered to outpace the MSCI Europe Index for the six-month
period, producing a 14.8% return in U.S. dollar terms. We held to our neutral
weighting in France, but added to our holding in the catering company Sodexho.
The fund again achieved good results from its largest overweighting, the
Netherlands, which represented 18% of net assets. Our preference for this
nation is driven less by country fundamentals than by the attraction of
individual companies, several of which are our largest holdings. After such
strong performance, we reduced our investments in publishers Wolters Kluwer
and Elsevier. However, we continued to hold our position in oil conglomerate
Royal Dutch Petroleum amid signs that the company's focus on improving
earnings is beginning to take effect.
In Italy, both the market and currency performed well, reversing the trend of
last year. In fact, the lira was the only European currency to appreciate
against the dollar, drawing strength from increasing confidence about the
country's fiscal condition. The market returned 17.4% in dollar terms over the
last six months. Nevertheless, in light of Italy's history of political
instability, we maintained our neutral weighting. The fund benefited from
holdings in Telecom Italia Mobile, Europe's most attractive mobile
telecommunications concern in our view, and two smaller firms, apparel company
Fila Holdings and furniture manufacturer Industrie Natuzzi.
Chart 1 - Geographic Diversification
Among the smaller markets, Finland was again hurt by the poor performance of
Nokia, the largest company on the Finnish stock market. The mobile phone
manufacturer suffered from slowing sales of mobile handsets, and its resulting
stock price decline was a major factor in the 19.4% loss shown by the Finnish
market. At the other end of the scale, Spain rebounded from depressed levels
on the hope that the newly elected government would implement the reforms
needed for economic recovery. Spain was among the top markets during the
six-month period with a return of 24.6%. The best-performing markets of all
were in Eastern Europe, particularly Hungary and Poland, where economic growth
is accelerating. The potential of these markets has caught investors'
imagination after decades of neglect. Stocks remain very cheap, and our
holding in Hungarian pharmaceutical company Richter Gedeon did well.
Industry Diversification
Percent of Percent of
Net Assets Net Assets
10/31/95 4/30/96
_____________________________________________________________________________
Services 25.4% 28.2%
Consumer Goods 21.4 20.7
Energy 16.9 16.1
Finance 15.4 14.1
Capital Equipment 7.3 6.9
Materials 5.9 6.2
Multi-Industry 3.0 1.8
Reserves 4.7 6.0
_____________________________________________________________________________
Total 100.0% 100.0%
Finally, from the standpoint of industry diversification, the fund maintained
its largest concentration in service industries, which represent 28% of net
assets. We believe this sector continues to provide the most opportunities for
steady growth at attractive valuations.
OUTLOOK
The combination of moderate economic growth and stable bond markets could
provide favorable conditions for European equity markets into 1997. In our
view, earnings should improve steadily. As we mentioned in our last report, we
are particularly sanguine on small companies. They have already started to
assume market leadership this year, and we expect this to continue.
Respectfully submitted,
Martin G. Wade
President
May 20, 1996
Revisiting the Case for International Equity Investing
Chart 2 - Correlation of Returns
Over the past 15 years, a growing number of U.S. investors have added
international stocks to their portfolios, mixing domestic and foreign stocks
in the pursuit of higher overall returns with lower volatility. In recent
months, however, some naysayers have questioned the benefits of international
diversification. Some claim that the era of higher international returns is
over, citing the recent superior performance of U.S. stocks. Others point to
short periods when U.S. and international markets moved in tandem, so-called
"high correlation," as proof that foreign stocks no longer offer adequate
diversification.
On the contrary, performance and correlation, when viewed over the long term,
reinforce the case for international diversification. For instance, although
U.S. stocks have recently outperformed, foreign stocks have outpaced them in
seven of the last 12 years. (We used the MSCI Europe, Australia, and Far East
Index - EAFE - to measure foreign stocks and the Standard & Poor's 500 Stock
Index for domestic equities.)
Furthermore, correlations have remained low over the long term. The chart
shows the correlation of various foreign markets to the U.S. over two 10-year
periods. A measurement of 100% would indicate that foreign stocks moved in the
same direction as U.S. stocks all of the time. The overall correlation of
foreign stocks has actually declined: from 1981 through 1990, the EAFE and the
S&P 500 moved in the same direction 41% of the time, but from 1986 through
1995, the correlation dropped to 34%. Correlations declined in the
Netherlands, Germany, and Japan and rose only modestly in the U.K. and Hong
Kong.
Inevitably, there are short periods when foreign markets move with the U.S.
market, usually when the latter is experiencing significant volatility. In
general, however, foreign markets follow their own path depending mostly on
the unique fundamentals of each country. In our opinion, the case for
international diversification remains solid. Foreign stocks may be poised to
regain leadership because many international economies are at earlier stages
of expansion than the U.S. economy. If correlations remain low over the long
term, as we expect, diversifying into foreign stocks could continue to be an
effective way to limit risk and enhance returns.
T. Rowe Price European Stock Fund
Portfolio Highlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/96
_____________________________________________________________________________
Wolters Kluwer, Netherlands 4.0%
Elsevier, Netherlands 3.5
Royal Dutch Petroleum, Netherlands 2.8
Reed International, United Kingdom 1.9
Smithkline Beecham, United Kingdom 1.7
_____________________________________________________________________________
National Westminster Bank, United Kingdom 1.7
Astra, Sweden 1.7
Eaux Cie Generale, France 1.7
Roche Holdings, Switzerland 1.5
LVMH, France 1.5
_____________________________________________________________________________
BBC Brown Boveri, Switzerland 1.4
Carrefour, France 1.4
Gehe, Germany 1.3
Internationale Nederlanden Groep, Netherlands 1.3
Bayer, Germany 1.2
_____________________________________________________________________________
Nestle, Switzerland 1.2
Shell Transport & Trading, United Kingdom 1.2
Tomkins, United Kingdom 1.1
Television Francaise, France 1.1
Empresa Nacional de Electricidad, Spain 1.1
_____________________________________________________________________________
Polygram, Netherlands 1.1
Sandoz, Switzerland 1.0
Rank Organisation, United Kingdom 1.0
Repsol, Spain 1.0
Ciba-Geigy, Switzerland 1.0
_____________________________________________________________________________
Total 39.4%
T. Rowe Price European 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 3 - SEC Graph - European Stock Fund
Average Annual Compound Total Return
1 3 5 Since Inception
Periods Ended 4/30/96 Year Years Years Inception Date
_____________________________________________________________________________
European Stock Fund 21.94% 17.81% 11.84% 9.20% 2/28/90
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
T. Rowe Price European Stock Fund
Unaudited
Financial Highlights For a share outstanding throughout each period
6 Months Year 10 Months# Year 2/28/90
Ended Ended Ended Ended to
4/30/96 10/31/95 10/31/94 10/31/93 12/31/92 12/31/91 12/31/90
_____________________________________________________________________________
NET ASSET VALUE
Beginning
of period $ 14.35 $ 12.72 $ 11.37 $ 9.36 $ 10.09 $ 9.48 $10.00
Investment activities
Net
investment
income 0.11 0.20 0.14 0.12 0.14 0.10 0.24*
Net realized
and unreal-
ized gain
(loss) 1.62 1.60 1.26 1.89 (0.70) 0.59 (0.56)
Total from
investment
activities 1.73 1.80 1.40 2.01 (0.56) 0.69 (0.32)
Distributions
Net
investment
income (0.21) (0.12) (0.04) - (0.17) (0.08) (0.20)
Net real-
ized gain (0.25) (0.05) (0.01) - - - -
Total
distri-
butions (0.46) (0.17) (0.05) - (0.17) (0.08) (0.20)
NET ASSET VALUE
End of
period $ 15.62 $ 14.35 $ 12.72 $ 11.37 $ 9.36 $ 10.09 $9.48
Ratios/Supplemental Data
Total
return 12.3% 14.4% 12.4% 21.5% (5.6)% 7.3% (3.2)%*
Ratio of
expenses to
average
net assets 1.13%! 1.20% 1.25% 1.35%! 1.48% 1.71% 1.75%!*
Ratio of net
investment
income to
average
net assets 1.74%! 1.75% 1.19% 1.79%! 1.23% 1.04% 2.30%!*
Portfolio
turnover
rate 16.1%! 17.2% 24.5% 21.3%! 52.0% 57.7% 34.9%!
Average
commission
rate paid $0.0211 - - - - - -
Net assets,
end of period
(in thou-
sands) $ 614,730 $490,573 $ 337,498 $ 265,784 $173,798 $ 103,977 $99,447
* Excludes expenses in excess of a 1.75% voluntary expense limitation in
effect through 12/31/91.
! Annualized.
# The fund's fiscal year-end was changed to 10/31.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price European Stock Fund
Unaudited April 30, 1996
Statement of Net Assets Shares/Par Value
In thousands
AUSTRIA 0.0%
Preferred Stocks 0.0%
Creditanstalt Bankverein 2,050 $ 114
_____________________________________________________________________________
Total Austria (Cost $215) 114
BELGIUM 1.7%
Common Stocks and Warrants 1.7%
Barco 4,500 710
Generale Banque 7,230 2,549
Kredietbank 15,090 4,314
National Portefeuille, warrants,
exp. 6/15/99 * 11,000 23
UCB 1,595 2,686
_____________________________________________________________________________
10,282
Convertible Bonds 0.0%
Kredietbank, 5.75%, 11/30/03 BEL 4,522,500 166
_____________________________________________________________________________
166
_____________________________________________________________________________
Total Belgium (Cost $6,749) 10,448
CZECH REPUBLIC 0.2%
Common Stocks 0.2%
IPS Praha 4,770 538
SPT Telecom * 3,800 465
_____________________________________________________________________________
Total Czech Republic (Cost $712) 1,003
DENMARK 0.8%
Common Stocks 0.8%
Bang & Olufsen 13,500 430
Crisplant Industries * 7,700 541
Den Danske Bank 19,780 1,290
ISS International (Class B) 32,000 906
Tele Danmark (Class B) 13,450 677
Unidanmark (Class A) 21,420 955
_____________________________________________________________________________
4,799
Convertible Bonds 0.0%
Danske Traelastkompagni, 5.25%, 1/1/02 DKK 900,000 $ 188
_____________________________________________________________________________
188
_____________________________________________________________________________
Total Denmark (Cost $4,585) 4,987
FINLAND 0.4%
Common Stocks 0.4%
Huhtamaki 8,000 265
Nokia (Class A) 38,800 1,386
Nokian Tyres 35,050 420
Orion (Class B) 6,000 165
_____________________________________________________________________________
Total Finland (Cost $1,547) 2,236
FRANCE 13.5%
Common Stocks and Warrants 13.5%
Accor 18,310 2,544
Alcatel Alsthom 14,570 1,370
Assurances Generales de France 17,710 484
Assystem * 8,000 968
But 9,825 656
Canal Plus 5,600 1,372
Cardif 5,261 943
Carrefour 11,010 8,603
Castorama Dubois 7,561 1,447
Chargeurs 10,933 2,909
Cie de St. Gobain 43,239 5,179
Cipe France 10,000 871
Concorde * 997 160
Credit Local de France 23,420 1,850
Eaux Cie Generale 93,754 10,196
Ecco Travail Temporaire 6,411 534
Elf Aquitaine 46,570 3,463
Guilbert 4,611 758
Havas 15,760 1,309
L'Oreal 4,702 1,453
LVMH 35,238 9,015
NRJ 4,000 $ 502
Pinault Printemps 18,860 5,726
Poliet 20,330 2,085
Primagaz 1,485 159
Primagaz, warrants, exp. 6/30/98 * 135 3
Promodes 4,450 1,279
Rexel 2,000 479
Rochefortaise Communication 8,600 346
Sanofi 16,057 1,296
Schneider * 28,740 1,339
Societe des Immeubles de France 4,415 303
Societe Generale de France 8,310 965
Sodexho 3,660 1,451
Spir Communication 3,437 383
Television Francaise 62,938 6,821
Total (Class B) 52,660 3,574
_____________________________________________________________________________
Total France (Cost $66,671) 82,795
GERMANY 6.7%
Common Stocks and Warrants 6.2%
Allianz Holdings 1,925 3,289
Altana 1,100 678
Balcke Durr 525 105
Bayer 23,460 7,531
Buderus 720 263
Deutsche Bank 52,220 2,485
Duerr Beteiligungs 600 205
Gehe 11,854 6,845
Gehe, new * 2,496 1,422
Hoechst 4,447 1,441
Kampa Haus 4,571 157
Lehnkering Montan Transport 575 77
Mannesmann 7,190 2,456
Pfleiderer Bau und Verkehrssysteme 325 90
Pittler Maschinenfabrik * 4,800 157
Rhoen Klinikum 7,776 940
Schering 29,999 2,171
Siemens 4,376 $ 2,396
Sixt 1,600 434
Sixt, warrants, exp. 5/17/00 * 100 76
Veba 70,320 3,496
Vereinigte Baubeschlag Handel 1,200 277
Volkswagen 3,421 1,173
_____________________________________________________________________________
38,164
Preferred Stocks 0.5%
Berentzen Gruppe 14,500 516
Edding 540 176
Hach 600 211
Leffers 875 86
Marschollek Lautenschlaeger 450 454
Signalbau Huber 1,650 160
Sixt 1,000 263
Spar Handells 2,100 422
Sto 721 304
Villeroy & Boch 2,200 296
Westag & Getalit 1,828 334
_____________________________________________________________________________
3,222
_____________________________________________________________________________
Total Germany (Cost $33,247) 41,386
HUNGARY 0.1%
Common Stocks 0.1%
Richter Gedeon 12,200 426
_____________________________________________________________________________
Total Hungary (Cost $199) 426
IRELAND 0.2%
Common Stocks 0.2%
Barlo Group 350,000 172
Kenmare Resources (GBP) 492,000 235
Kingspan Group 147,900 702
_____________________________________________________________________________
Total Ireland (Cost $793) 1,109
ISRAEL 0.3%
Common Stocks 0.3%
Bank Hapoalim 188,000 $ 281
Blue Square * 129,640 941
Elco Holdings 4,835 202
Teva Pharmaceutical ADR (USD) 10,000 457
_____________________________________________________________________________
Total Israel (Cost $1,634) 1,881
ITALY 4.2%
Common Stocks and Warrants 4.2%
Alleanza Assicurazioni, savings shares 525 4
Assicurazioni Generali 154,155 3,844
Cementeria di Augusta * 84,000 129
Danieli & Company, savings shares 180,000 648
Danieli & Company, warrants, exp. 11/30/99 * 22,750 20
ENI * 311,000 1,344
Fila Holdings ADR (USD) 9,300 629
IMI 97,273 772
Industria Macchine Automatiche * 130,000 915
Industrie Natuzzi ADR (USD) 20,000 1,040
Italgas 415,943 1,438
La Doria 120,000 519
Merloni Elettrodomestici, savings shares 342,624 330
Pagnossin * 62,100 378
Saes Getters 23,800 602
Safilo 46,000 932
Stet 866,300 2,928
Stet, savings shares 419,935 1,101
Tecnost 309,000 536
Telecocavi, savings shares 20,000 43
Telecom Italia 1,084,615 2,212
Telecom Italia Mobile * 1,931,435 4,266
Telecom Italia Mobile, savings shares * 620,611 870
Vianini Lavori 120,000 207
_____________________________________________________________________________
25,707
Corporate Bonds 0.0%
Danieli & Company, 7.25%, 1/1/00 ITL 136,500,000 $ 79
_____________________________________________________________________________
79
_____________________________________________________________________________
Total Italy (Cost $18,990) 25,786
NETHERLANDS 17.7%
Common Stocks 17.7%
Aalberts Industries 8,630 693
ABN Amro Holdings 108,498 5,617
Ahrend Groep 16,525 720
Akzo Nobel 12,652 1,469
Atag 12,216 941
Content Beheer 13,400 426
CSM 104,288 5,027
Elsevier 1,422,270 21,415
Fortis AMEV 59,154 4,226
Getronics 7,874 547
Hagemeyer 9,000 616
Internationale Nederlanden Groep 103,430 7,986
Koninklijke PTT Nederland 55,007 2,064
Otra 73,500 1,823
Polygram 113,156 6,736
Randstad Holdings 21,000 1,346
Royal Dutch Petroleum 122,189 17,407
Unilever 40,120 5,474
Wolters Kluwer 223,930 24,477
_____________________________________________________________________________
109,010
Preferred Stocks 0.0%
Internationale Nederlanden Groep 10,947 58
_____________________________________________________________________________
58
_____________________________________________________________________________
Total Netherlands (Cost $68,252) 109,068
NORWAY 2.5%
Common Stocks 2.5%
Bergesen (Class A) 31,150 559
Computer Advances * 9,600 131
Kvaerner (Class A) 20,570 845
Kverneland Gruppen 14,560 $ 324
Merkantildata * 64,000 628
Multisoft 7,500 285
Nera 8,000 291
Netcom * 10,500 152
Norsk Hydro 110,185 5,032
Norske Skogsindustrier 11,000 337
Orkla (Class A) 78,274 3,825
Provida * 4,250 34
Ringcom 30,200 152
Schibsted 33,400 488
Sensonor * 53,100 445
Smedvig 11,000 270
Sysdeco Group * 25,000 301
Tomra Systems 99,000 919
Transocean * 19,875 557
_____________________________________________________________________________
Total Norway (Cost $11,187) 15,575
POLAND 0.3%
Common Stocks 0.3%
Bank Rozwoju Eksportu 9,500 227
Bank Slaski 6,540 489
Elektrim 40,000 255
Gorazdze * 6,500 209
International UNP Holdings (CAD) * 186,843 55
Mostostal Export * 124,500 365
_____________________________________________________________________________
Total Poland (Cost $1,477) 1,600
PORTUGAL 0.4%
Common Stocks 0.4%
Jeronimo Martins 23,952 1,925
Sempa * 26,250 283
Sumolis Industria de Frutas Bebidas 14,000 110
_____________________________________________________________________________
2,318
Preferred Stocks 0.0%
Filmes Lusomundo * 28,470 245
_____________________________________________________________________________
245
_____________________________________________________________________________
Total Portugal (Cost $1,420) 2,563
RUSSIA 0.1%
Common Stocks 0.1%
Lukoil ADR (USD) 22,500 $ 534
Petersburg Long Distance (USD) * 52,200 261
Star Mining (AUD) * 1,540,000 176
_____________________________________________________________________________
Total Russia (Cost $1,200) 971
SPAIN 5.3%
Common Stocks 5.3%
Algodonera de St. Antonia * 41,000 290
Amper * 15,000 169
Argentaria Banca de Espana 48,281 1,955
Azkoyen 9,000 629
Banco Popular Espanol 21,859 3,622
Banco Santander 73,529 3,416
Centros Comerciales Pryca 66,268 1,529
Corporacion Financiaera Reunida 118,000 416
Cristaleria Espanola * 6,400 404
Empresa Nacional de Electricidad 107,804 6,772
Filo 52,500 255
Gas Natural 19,531 3,550
Grupo Anaya 16,000 329
Iberdrola 272,815 2,670
Marco Iberica 33,120 224
Marco Iberica, new 2,382 16
Prosegur Compania Securidad 17,500 638
Repsol 162,829 5,972
_____________________________________________________________________________
32,856
Convertible Bonds 0.0%
Grupo Anaya, 7.00%, 3/18/98 ESP 4,500,000 32
_____________________________________________________________________________
32
_____________________________________________________________________________
Total Spain (Cost $27,805) 32,888
SWEDEN 5.3%
Common Stocks and Warrants 5.3%
Angpanne Foreningen (Class B) 27,000 486
Asea (Class A) 18,840 $ 1,928
Astra (Class B) 236,650 10,451
Atlas Copco (Class B) 205,390 3,907
BPA (Class A) * 380,000 773
BPA, warrants, exp. 12/15/00 * 152,000 92
Catena (Class A) 46,000 353
Electrolux (Class B) 51,800 2,612
Esselte (Class B) 45,690 916
Finnveden (Class B) 52,900 562
Getinge Industrier (Class B) 13,550 713
Hennes & Mauritz (Class B) 29,280 2,020
Hoganas (Class B) 26,000 863
ICB Shipping (Class B) 46,700 441
Kalmar Industries 34,000 617
Linjebuss (Class A) 21,000 192
Sandvik (Class B) 105,590 2,328
Scribona (Class B) 46,260 443
Securitas (Class B) 19,000 1,093
Stora Kopparbergs (Class B) 101,450 1,361
TV 4 (Class A) 24,000 444
_____________________________________________________________________________
32,595
Convertible Bonds 0.0%
Stena Line, 7.00%, 4/30/01 SEK 281,250 39
_____________________________________________________________________________
39
_____________________________________________________________________________
Total Sweden (Cost $22,214) 32,634
SWITZERLAND 8.0%
Common Stocks 8.0%
BBC Brown Boveri 7,365 8,874
Belimo Automation 1,500 312
Bossard Holdings 200 435
Bucher Holding 1,200 899
Ciba-Geigy 5,079 5,895
CS Holding 20,015 1,817
Edipresse 2,600 704
Generale d'Affichage 2,000 910
Gurit Heberlien 165 364
Hilti 650 $ 503
Lem Holdings 1,250 388
Liechtenstein Global Trust 1,235 631
Nestle 6,715 7,469
Roche Holdings 1,181 9,288
Sandoz 5,909 6,453
Schweizerische Bankgesellschaft 1,179 1,172
Schweizerischer Bankverein 7,730 2,895
Stratec Holding * 80 77
Von Moos * 1,000 64
_____________________________________________________________________________
Total Switzerland (Cost $34,991) 49,150
UNITED KINGDOM 26.3%
Common Stocks, Rights, and Warrants 26.2%
Abbey National 666,080 5,695
Abtrust Lloyds Insurance, warrants * 27,000 12
Acorn Computer Group * 164,000 637
Argos 326,000 3,160
Argyll Group 510,000 2,545
Asda Group 1,806,430 3,086
Ashtead Group 357,497 1,023
BAA 112,000 922
BCE Holdings 1,850,000 543
Berisford International 94,000 300
British Biotechnology * 28,664 1,273
British Gas 563,250 1,993
British Petroleum 205,000 1,847
Britton Group 380,630 940
Cable & Wireless 564,110 4,433
Cadbury Schweppes 506,753 3,944
Caradon 796,810 2,759
Carpetright 86,000 753
Chamberlain Phipps 165,000 169
Chiroscience Group * 65,000 435
Coats Viyella 361,000 1,035
Compass Group 231,000 1,895
Cordiant * 195,000 390
Corporate Services Group 645,471 $ 1,331
CRT Group 197,777 430
David S. Smith 419,020 1,886
Devro International 176,250 618
Druck Holdings 18,500 923
East Midlands Electricity 106,128 998
Enviromed * 171,042 59
FII Group 80,000 566
First Technology 47,000 321
Frost Group 136,000 260
GKN 77,000 1,142
Glaxo Wellcome 480,540 5,823
Grand Metropolitan 806,420 5,281
Graystone 3,758,683 849
Guinness 619,040 4,464
Harvey Nichols * 12,500 62
Helical Bar 55,000 311
Henderson Administration Group 23,000 386
HTV Group 205,000 1,139
Iceland Group 150,000 343
Inn Business Group * 515,665 415
JBA Holdings 200,000 1,529
JKX Oil & Gas * 110,000 293
John Laing (Class A) 202,690 940
Kenwood Appliances 61,250 220
Kewill Systems 90,000 642
Kingfisher 386,731 3,464
Knox D'Arcy Trust 562,222 305
Knox D'Arcy Trust, rights * 90,000 2
Ladbroke Group 455,250 1,336
London & Overseas Freighters 123,000 157
London Electricity 250,208 3,107
Mackie International Group 44,000 235
Matthew Clark 92,000 1,072
Mayflower 595,000 1,021
Mirror Group 313,000 1,074
National Grid Group 324,609 1,007
National Westminster Bank 1,131,410 $ 10,457
Northern Leisure 247,035 424
Oliver Group 205,000 157
Pentos * 358,333 -
Peter Black Holdings 57,000 243
Pizza Express 75,000 394
Powerscreen International 72,000 495
Princedale Group 674,225 345
Prowting 119,701 249
Quadramatic 104,561 382
Quality Software 43,000 177
Ramco Energy 50,000 444
Rank Organisation 787,625 6,343
Reed International 683,940 11,716
Regal Hotel Group 1,151,389 763
RJB Mining 64,000 593
Rolls Royce 399,201 1,418
Roxspur * 3,496,716 250
RTZ 217,060 3,409
Select Appointment 1,100,000 315
Serco Group 82,500 652
Shell Transport & Trading 550,000 7,253
Shire Pharmaceuticals Group * 143,500 443
Smithkline Beecham 1,008,100 10,653
Stakis 400,750 658
Stordata Solutions * 500,000 124
Stoves 66,000 251
T & N 698,000 1,881
Taylor Nelson 687,380 440
Tesco 388,500 1,643
Tomkins 1,673,770 6,891
Tomorrow's Leisure * 830,000 94
Transtec 458,500 752
Ugland International Holdings * 270,889 245
United Newspapers 376,390 3,927
Verity Group 1,733,892 405
Videologic Group * 580,000 664
Visual Action Holdings * 69,050 $ 262
Wickes 151,111 297
Wiggins Group * 215,000 23
WPP Group 245,000 743
_____________________________________________________________________________
160,675
Preferred Stocks 0.1%
Berisford International,
5.00% cv. loan stock, 2015 206,800 286
Iceland Group, cum. cv. 35,000 63
Knox D'Arcy Trust, cv. loan stock, 9/30/07 472,222 256
Regal Hotel Group 131,587 198
_____________________________________________________________________________
803
_____________________________________________________________________________
Total United Kingdom (Cost $130,379) 161,478
SHORT-TERM INVESTMENTS 4.8%
Commercial Paper 3.2%
Barnett Banks, 5.32%, 5/15/96 $ 5,000,000 4,985
Den Danske, 5.305%, 5/28/96 5,000,000 4,976
Mobil Australia Finance, 4(2),
5.32%, 5/16/96 5,000,000 4,978
Investments in Commercial Paper
through a joint account,
5.36 - 5.37%, 5/01/96 4,502,910 4,502
_____________________________________________________________________________
19,441
Other 1.6%
Bank One, Certificate of Deposit,
5.32%, 6/07/96 5,000,000 5,000
Comerica Bank, Bank Note, 6.20%, 5/28/96 5,000,000 5,004
_____________________________________________________________________________
10,004
Total Short-Term Investments (Cost $29,445) 29,445
Total Investments in Securities
98.8% of Net Assets (Cost $463,712) $ 607,543
Other Assets Less Liabilities 7,187
NET ASSETS $ 614,730
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 4,728
Accumulated net realized gain/loss - net of distributions 2,972
Net unrealized gain (loss) 143,756
Paid-in-capital applicable to 39,348,188 shares
of $0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 463,274
NET ASSETS $ 614,730
NET ASSET VALUE PER SHARE $ 15.62
* Non-income producing
AUD Australian dollar
BEL Belgian franc
CAD Canadian dollar
DKK Danish krone
ESP Spanish peseta
GBP British sterling
ITL Italian lira
SEK Swedish krona
USD U.S. dollar
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors."
The accompanying notes are an integral part of these financial statements.
T. Rowe Price European Stock Fund
Unaudited
Statement of Operations
In thousands
6 Months
Ended
4/30/96
Investment Income
Income
Dividend (net of foreign taxes of $ 979) $ 7,044
Interest 900
Total income 7,944
Expenses
Investment management 2,301
Shareholder servicing 524
Custody and accounting 190
Prospectus and shareholder reports 46
Registration 44
Legal and audit 19
Directors 4
Total expenses 3,128
Net investment income 4,816
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 4,416
Foreign currency transactions (234)
Net realized gain (loss) 4,182
Change in net unrealized gain or loss
Securities 56,263
Other assets and liabilities
denominated in foreign currencies (87)
Change in net unrealized gain or loss 56,176
Net realized and unrealized gain (loss) 60,358
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 65,174
The accompanying notes are an integral part of these financial statements.
T. Rowe Price European Stock Fund
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/96 10/31/95
Increase (Decrease) in Net Assets
Operations
Net investment income $ 4,816 $ 7,412
Net realized gain (loss) 4,182 8,570
Change in net unrealized gain or loss 56,176 44,753
Increase (decrease) in net assets
from operations 65,174 60,735
Distributions to shareholders
Net investment income (7,528) (3,553)
Net realized gain (8,941) (1,481)
Decrease in net assets from distributions (16,469) (5,034)
Capital share transactions*
Shares sold 135,043 242,056
Distributions reinvested 15,698 4,733
Shares redeemed (75,289) (149,415)
Increase (decrease) in net assets from
capital share transactions 75,452 97,374
Net Assets
Increase (decrease) during period 124,157 153,075
Beginning of period 490,573 337,498
End of period $ 614,730 $ 490,573
*Share information
Shares sold 9,213 18,546
Distributions reinvested 1,094 393
Shares redeemed (5,134) (11,297)
Increase (decrease) in shares outstanding 5,173 7,642
The accompanying notes are an integral part of these financial statements.
T. Rowe Price European Stock Fund
Unaudited April 30, 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 European Stock Fund (the fund), a
diversified, open-end management investment company, is one of the portfolios
established by the Corporation and commenced operations on February 28, 1990.
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.
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.
Securities Lending
To earn additional income, the fund lends its securities to approved brokers.
At April 30, 1996, the market value of securities on loan was $125,176,000,
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.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $92,581,000 and $42,285,000, respectively, for the six months ended
April 30, 1996.
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.
At April 30, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $463,712,000 and net unrealized gain
aggregated $143,831,000, of which $153,891,000 related to appreciated
investments and $10,060,000 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 $414,000 was payable at
April 30, 1996. The fee is computed daily and paid monthly, and consists of an
Individual Fund Fee equal to 0.50% of average daily net assets and a Group
Fee. The Group Fee is based on the combined assets of certain mutual funds
sponsored by the Manager or Price Associates (the Group). The Group Fee rate
ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in
excess of $34 billion. At April 30, 1996, and for the six months 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.
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 $465,000 for
the six months ended April 30, 1996, of which $100,000 was payable at
period-end.
During the six months ended April 30, 1996, the fund, in the ordinary course
of business, paid commissions of $19,000 to, and placed security purchase and
sale orders aggregating $9,272,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions.
T. Rowe Price Shareholder Services
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety
of information and services - at no extra cost.
Knowledgeable Service Representatives
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. and weekends from 8:30 a.m. to 5 p.m.
In Person Available in T. Rowe Price Investor Centers.
Account Services
Checking Available on most fixed income funds.
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(registered trademark) and
PC*Access(registered trademark).
Discount Brokerage
Individual Investments Stocks, bonds, options, precious metals, and other
securities; potentially large savings on commissions.
Investment Information
Combined Statement An overview of your T. Rowe Price accounts.
Shareholder Reports Fund managers' reviews of their strategies and results.
The T. Rowe Price Report A quarterly investment newsletter discussing markets
and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning Kit.
T. Rowe Price Mutual Funds
Stock Funds
Domestic
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
New America Growth
New Era
New Horizons
OTC
Science & Technology
Small-Cap Value
Spectrum Growth
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Bond Funds
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Global Government Bond
Emerging Markets Bond
International Bond
Short-Term Global Income
Money Market
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
Blended Asset
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
T. Rowe Price No-Load Variable Annuity
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
For yield, price, last transaction, and current balance, 24 hours, 7 days a
week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price European Stock
Fund.
Invest With Confidence(registered trademark)
T. Rowe Price Investment Services, Inc., Distributor REPTESF 4/30/96
Chart 1 - Geographic Diversification - A pie chart showing geographic
diversification by various countries: U.K. 26%; Netherlands 18%; France 14%;
Switzerland 8%; Germany 7%; Spain 5%; Sweden 5%; Other and Reserves 17%.
Based on net assets as of 4/30/96.
Chart 2 - Correlation of Returns - A bar chart showing the correlation of
total returns of various international countries with the US stock market from
1981-1990 and from 1986-1995.
Footnote: Percentage of time that foreign markets moved in the same direction
as the U.S. market. Sources: Morgan Stanley Capital International indexes,
Standard & Poor's 500 Stock Index, and Frank Russell Company.
Chart 3 - SEC Graph - European Stock Fund - a two-line graph showing
performance of a $10,000 investment in the European Stock Fund and the MSCI
Europe Index from 2/28/90 through 4/30/96.
