- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
SemiAnnual Report
European Stock Fund
- --------------------------------------------------------------------------------
April 30, 1997
- --------------------------------------------------------------------------------
Report Highlights
================================================================================
o Despite a strengthening dollar, European markets continued to provide
strong returns to U.S. investors over the last six months.
o The best-performing markets were Spain, Finland, the Netherlands, and the
U.K.
o The European Stock Fund returned 8.96% for the six months ended April 30,
lagging both its benchmarks due to some disappointing holdings.
o We expect European economies to remain stable as the region moves ever
closer to monetary union, creating good investment opportunities in coming
months.
Fellow Shareholders
Over the last six months, European stock markets overcame a significant
strengthening in the dollar to provide strong returns to U.S. investors. The
markets continued to be buoyed by stable economies with benign inflation as
European nations moved steadily toward monetary union. Spain, Finland, the
Netherlands, and the U.K. were among the best-performing markets.
<PAGE>
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 4/30/97 6 Months 12 Months
European Stock Fund 8.96% 18.10%
MSCI Europe Index 11.96 21.42
Lipper European Funds Average 9.62 17.13
================================================================================
Your fund posted a solid return in the half, although it underperformed
both its benchmarks primarily because of negative stock selection in most
markets. For the 12 months ended April 30, the fund performed well on an
absolute basis and held a slight edge over the Lipper peer group of similar
funds, but lagged the unmanaged MSCI Europe Index for the reas on mentioned.
MARKET REVIEW
There is no doubt that the stable, if unexciting, economic environment
throughout Europe is continuing to provide an excellent backdrop for stock
markets. Although consumer spending is still subdued as governments implement
measures to meet the Maastricht criteria for monetary union, the region is
clearly in the midst of recovery. In addition to the favorable economic picture,
a new factor is increasingly drawing investors to these markets: the growing
focus of European companies on improving profitability and shareholder value.
With the help of a strong pound, one of the few European currencies to keep
pace with the dollar, the U.K. market was among the top performers in the
region. The prospect of a change in government with the May 1 general election,
which came to pass as the Labour Party toppled the 18-year reign of the ruling
Conservatives, had little effect on the market since the economic policies of
both parties are now quite similar. We trimmed your fund's exposure to the U.K.
by selling some shares in ABBEY NATIONAL, whose valuation was boosted by the
demutualization trend in the mortgage banking industry. Our two remaining
electric utilities, EAST MIDLANDS ELECTRICITY and LONDON ELECTRICITY, were
eliminated after being taken over at a healthy premium by U.S. companies. In a
notable addition, we increased our stake in ELECTROCOMPONENTS, a high-margin,
service-oriented distribution company with bright prospects. The U.K. remains
our largest weighting, representing one-quarter of fund assets.
================================================================================
Market Performance
- --------------------------------------------------------------------------------
Six Months Local Local Currency U.S.
Ended 4/30/97 Currency vs. U.S. Dollars Dollars
- --------------------------------------------------------------------------------
Belgium 26.72% -12.68% 10.65%
Finland 36.90 -12.92 19.22
France 23.74 -12.48 8.30
Germany 28.30 -12.62 12.11
Italy 25.88 -11.42 11.50
Netherlands 31.15 -12.95 14.17
Norway 25.56 -10.47 12.42
Spain 43.43 -12.73 25.16
Sweden 26.05 -16.33 5.47
Switzerland 31.05 -14.57 11.95
United Kingdom 13.06 -0.36 12.66
- --------------------------------------------------------------------------------
Source: FAMEInformation Services, Inc.; using MSCI indices.
<PAGE>
GERMANY also edged ahead of the MSCI Europe Index despite weakness in the
deutschemark that significantly curtailed the return to U.S. investors.
Conversely, the deutschemark's weakness helped German exporters by making their
goods more affordable to foreigners. However, the primary fuel for the local
market's strong performance was the increasing shift in attitude of German
companies toward improving shareholder value. The fund has been underweighted in
this market for some time, but recent purchases have started to narrow this gap.
Our focus is on a number of banks, including DEUTSCHE BANK, BAYERISCHE
HYPOTHEKEN UND WECHSEL BANK, and COMMERZBANK. We also bought shares in the
recently privatized DEUTSCHE TELEKOM where there is also significant scope to
improve profitability.
Our holdings in SWITZERLAND tracked the European Index but the same could
not be said for our positions in the NETHERLANDS. While the Dutch market
outperformed the index, our core holdings, publishers WOLTERS KLUWER and
ELSEVIER, showed only modest gains while we continued to reduce our stakes. The
Netherlands remains your fund's second-largest weighting, representing 16% of
assets.
The early call for an election in FRANCE was one of the big surprises of
the last six months. President Chirac's aim is to get the center-right
government reelected for a fresh five-year term, clearing the way to implement
the necessary measures to meet the Maastricht criteria for European monetary
union. The fund's position in the market changed very little during the half
year, remaining our third-largest weighting at 14% of assets.
[A pie chart showing geographic diversification as of 4/30/97. United
Kingdom - 25%, Netherlansa - 16%, France - 14%, Switzerland - 9%, Germany - 7%,
Spain - 5%, Sweden - 5%, Other and Reserves - 19%]
There were more changes to the portfolio in ITALY, where the historically
turbulent political environment has been relatively stable for over a year.
Although the nation has a long way to go to meet the criteria for monetary
union, the recent mini-budget was an encouraging sign of its new fiscal
austerity. However, the decline in government spending continued to slow
economic growth. We bought more shares in existing holdings with especially good
growth prospects, including mobile phone company TELECOM ITALIA MOBILE, and we
initiated a position in the bank CREDITO ITALIANO.
The best-performing market was Spain, where the quest to qualify for
monetary union is also driving widespread reforms. In contrast to Italy, Spain
started its reforms in better fiscal condition and has addressed some of its
problems more quickly. These advantages were reflected in the robust bond and
stock markets. We capitalized on the rise in stock prices by taking profits in a
number of our holdings, including oil company REPSOL and BANCO POPULAR ESPANOL.
In Scandinavia, FINLAND was the winner mostly because the largest stock in
the market, mobile phone manufacturer NOKIA, returned to better profitability
and continued growth. SWEDEN, on the other hand, languished at the bottom of the
performance tables as politics took precedence over the nation's recent fiscal
discipline. To regain some popularity with an election looming in 1998, the
government allocated money in the recent budget to stem the sharply rising
unemployment caused by its tight fiscal policies. As a result, bond yields rose,
putting pressure on stock valuations. We reduced our holding in engineering
concern ATLAS COPCO and eliminated forestry group STORA KOPPARBERGS.
<PAGE>
================================================================================
Industry Diversification
- --------------------------------------------------------------------------------
Percent of Percent of
Net Assets Net Assets
10/31/96 4/30/97
Services 32.6% 29.4%
Consumer Goods 20.3 19.6
Finance 13.5 15.0
Energy 13.8 12.9
Materials 6.2 7.3
Capital Equipment 6.0 5.9
Multi-Industry 2.3 2.3
Reserves 5.3 7.6
- --------------------------------------------------------------------------------
Total 100.0% 100.0%
================================================================================
The fund's investments in the emerging markets of Eastern Europe produced
mixed results. While RUSSIA'S prospects remain positive over the long term, the
market's inherent risks were demonstrated by uncertainty over the ability of
foreigners to purchase shares of RAO GAZPROM, the world's largest gas company,
on the local market. The stock declined as a result. However, the HUNGARIAN
pharmaceutical company RICHTER GEDEON continued to perform well.
Our smaller companies contributed positively to performance during most of
the last six months, but as their valuation discount versus larger companies
narrowed, we reduced our overall position, particularly in the U.K. and Germany.
OUTLOOK
We expect the combination of stable economic conditions and improving
company fundamentals to provide good prospects for investment in Europe in the
second half of 1997. In particular, economic reforms are expanding our
opportunities in Eastern Europe. Thank you for your continued confidence.
Respectfully submitted,
[Signature]
Martin G. Wade
President
May 20, 1997
<PAGE>
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
- --------------------------------------------------------------------------------
Percent of
Net Assets
4/30/97
- --------------------------------------------------------------------------------
Royal Dutch Petroleum, Netherlands 3.0%
Wolters Kluwer, Netherlands 2.7
Elsevier, Netherlands 2.6
Novartis, Switzerland 2.6
SmithKline Beecham, United Kingdom 2.4
Eaux Cie Generale, France 2.2
National Westminster Bank, United Kingdom 2.0
Roche Holdings, Switzerland 1.9
Reed International, United Kingdom 1.6
INGGroep, Netherlands 1.5
Carrefour, France 1.5
ABB, Sweden/Switzerland 1.5
Shell Transport & Trading, United Kingdom 1.4
Glaxo Wellcome, United Kingdom 1.4
Astra, Sweden 1.4
Gehe, Germany 1.3
Nestle, Switzerland 1.2
Unilever, Netherlands 1.2
Telecom Italia Mobile, Italy 1.1
Tomkins, United Kingdom 1.1
Total, France 1.1
Pinault Printemps, France 1.0
Grand Metropolitan, United Kingdom 1.0
LVMH, France 1.0
Orkla, Norway 1.0
- --------------------------------------------------------------------------------
Total 40.7%
================================================================================
================================================================================
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.
[SEC Chart for European Stock Fund]
<PAGE>
================================================================================
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Since Inception
Periods Ended 4/30/97 1 Year 3 Years 5 Years Inception Date
Eurpean Stock Fund 18.10% 16.25% 13.56% 10.40% 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.
<TABLE>
Unaudited
- ------------------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
<CAPTION>
6 Months Year 10 Months# Year
Ended Ended Ended Ended
4/30/97 10/31/96 10/31/95 10/31/94 10/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ............ $ 16.93 $ 14.35 $ 12.72 $ 11.37 $ 9.36 $ 10.09 $ 9.48
Investment activities
Net investment income .... 0.08 0.25 0.20 0.14 0.12 0.14 0.10
Net realized and
unrealized gain (loss) ... 1.42 2.79 1.60 1.26 1.89 (0.70) 0.59
Total from
investment activities .... 1.50 3.04 1.80 1.40 2.01 (0.56) 0.69
Distributions
Net investment income .... (0.26) (0.21) (0.12) (0.04) -- (0.17) (0.08)
Net realized gain ........ (0.20) (0.25) (0.05) (0.01) -- -- --
Total distributions ...... (0.46) (0.46) (0.17) (0.05) -- (0.17) (0.08)
NET ASSET VALUE
End of period .................. $ 17.97 $ 16.93 $ 14.35 $ 12.72 $ 11.37 $ 9.36 $ 10.09
Ratios/Supplemental Data
Total return ................... 8.96% 21.76% 14.41% 12.35% 21.47% (5.56)% 7.31%
Ratio of expenses to
average net assets ............. 1.06%+ 1.12% 1.20% 1.25% 1.35%+ 1.48% 1.71%
Ratio of net investment
income to average
net assets ..................... 1.08%+ 1.81% 1.75% 1.19% 1.79%+ 1.23% 1.04%
Portfolio turnover rate ........ 17.0%+ 14.1% 17.2% 24.5% 21.3%+ 52.0% 57.7%
Average commission
rate paid ...................... $ 0.0361 $ 0.0248 $- $- $- $- $-
Net assets, end of period
(in thousands) ................. $ 871,548 $ 704,887 $ 490,573 $ 337,498 $ 265,784 $ 173,798 $ 103,977
====================================================================================================================================
<FN>
+ Annualized.
# The fund's fiscal year-end was changed to 10/31.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited April 30, 1997
================================================================================
Statement of Net Assets
- --------------------------------------------------------------------------------
Shares/Par Value
In thousands
AUSTRIA 0.0%
Preferred Stocks 0.0%
Creditanstalt Bankverein ........................ 2,050 $ 77
Total Austria (Cost $215) ....................... 77
BELGIUM 1.9%
Common Stocks 1.9%
Barco ........................................... 3,500 596
CLF-Dexia * ..................................... 8,408 835
Generale de Banque .............................. 10,983 4,554
Generale de Banque, VVPR Strip .................. 723 -
Kredietbank ..................................... 19,970 7,779
UCB ............................................. 899 2,467
16,231
Convertible Bonds 0.0%
Kredietbank, 5.75%, 11/30/03 .................... BEF 4,522,500 231
231
Total Belgium (Cost $10,002) .................... 16,462
CZECH REPUBLIC 0.1%
Common Stocks 0.1%
IPS Praha * ..................................... 52,470 398
SPT Telecom * ................................... 3,800 402
Total Czech Republic (Cost $712) ................ 800
DENMARK 0.7%
Common Stocks 0.7%
Bang & Olufsen (Class B) ........................ 13,956 805
Den Danske Bank ................................. 23,570 2,039
ISS International (Class B) * ................... 21,000 621
Oticon Holdings * ............................... 4,413 716
Tele Danmark (Class B) .......................... 15,830 761
Unidanmark (Class A) ............................ 28,760 1,423
Total Denmark (Cost $5,292) 6,365
FINLAND 0.6%
Common Stocks 0.6%
Cultor .......................................... 22,241 $ 1,232
Huhtamaki ....................................... 8,000 349
Konecranes International ........................ 9,000 346
Nokia (Class A) ................................. 53,930 3,364
Total Finland (Cost $3,135) 5,291
<PAGE>
FRANCE 14.3%
Common Stocks 14.3%
AXA ....................................................... 24,881 1,531
Accor ..................................................... 10,430 1,496
Alcatel Alsthom ........................................... 44,540 4,953
Altran Technologies ....................................... 4,158 1,446
Assurances Generales de France ............................ 22,210 723
BIC ....................................................... 7,442 1,179
But ....................................................... 9,825 522
CET ....................................................... 8,700 745
CLF-Dexia, Registered 1998 ................................ 12,910 1,194
CLF-Dexia, Registered 1999 ................................ 10,510 972
Canal Plus ................................................ 12,700 2,293
Carrefour ................................................. 20,375 12,721
Castorama Dubois .......................................... 6,266 927
Chargeurs International * ................................. 10,933 646
Cie de St. Gobain ......................................... 46,079 6,174
Cipe France ............................................... 10,000 1,405
Eaux Cie Generale ......................................... 138,694 19,319
Elf Aquitaine ............................................. 59,920 5,811
Guilbert .................................................. 24,831 3,872
Havas ..................................................... 15,760 1,180
L'Oreal ................................................... 5,572 1,977
LVMH ...................................................... 35,333 8,627
Pathe * ................................................... 11,683 2,728
Pinault Printemps ......................................... 20,770 8,736
Primagaz .................................................. 1,485 146
Rexel ..................................................... 2,000 533
Sanofi .................................................... 48,242 4,505
Schneider ................................................. 87,380 4,926
Societe Generale .......................................... 11,190 $ 1,254
Sodexho ................................................... 15,180 6,970
Spir Communication ........................................ 3,437 299
Television Francaise ...................................... 58,979 5,689
Total (Class B) ........................................... 110,618 9,173
Total France (Cost $98,070) 124,672
GERMANY 7.1%
Common Stocks and Warrants 6.6%
Allianz * ................................................. 25,950 5,035
Altana .................................................... 1,100 851
Bayer * ................................................... 215,459 8,366
Bayerische Hypotheken und Wechsel Bank .................... 104,184 3,249
Buderus ................................................... 720 338
Commerzbank ............................................... 57,460 1,541
Deutsche Bank ............................................. 94,663 4,990
Deutsche Telekom .......................................... 76,555 1,661
Eurobike .................................................. 35,500 943
Gehe ...................................................... 166,573 11,080
Hoechst ................................................... 57,800 2,270
<PAGE>
Mannesmann ................................................ 7,570 2,977
Rhoen Klinikum ............................................ 7,776 1,001
SAP ....................................................... 10,810 1,968
Schering .................................................. 15,343 1,466
Sixt ...................................................... 1,600 1,076
VBH Holdings .............................................. 10,000 156
Veba ...................................................... 124,963 6,436
Volkswagen ................................................ 3,421 2,165
57,569
Preferred Stocks 0.5%
Berentzen Gruppe .......................................... 14,500 410
Marschollek Lautenshaeger ................................. 4,950 1,001
SAP ....................................................... 10,930 2,013
Signalbau Huber ........................................... 1,650 200
Sixt ...................................................... 1,000 635
Sixt, Cv. Equity Certificates, 10.00%, 5/17/00 (Each
certificate is convertible into nonvoting preferred shares) 100 70
4,329
Total Germany (Cost $46,708) .............................. 61,898
HUNGARY 0.3%
Common Stocks 0.3%
Graboplast Textile ........................................ 27,000 $ 1,238
Richter Gedeon ............................................ 12,200 922
Total Hungary (Cost $824) ................................. 2,160
IRELAND 0.2%
Common Stocks 0.2%
Kingspan Group ................................. 140,900 1,491
Total Ireland (Cost $294) ...................... 1,491
ISRAEL 0.4%
Common Stocks 0.4%
Blue Square * .................................. 176,600 1,770
Elco Holdings .................................. 19,340 129
Elite Industries ............................... 30,000 767
Teva Pharmaceutical ADR (USD) .................. 15,000 761
Total Israel (Cost $2,447) ..................... 3,427
ITALY 4.1%
Common Stocks 4.1%
Credito Italiano ............................... 1,150,317 1,612
ENI ............................................ 769,743 3,918
Fila Holdings ADS (USD) * ...................... 12,246 530
Gewiss ......................................... 67,900 912
Gucci Group (USD) .............................. 37,042 2,570
IMI ............................................ 232,253 1,974
Industria Macchine Automatiche ................. 130,000 550
Italgas ........................................ 536,943 1,845
La Doria ....................................... 202,959 538
<PAGE>
Safilo ......................................... 31,589 601
Seat * ......................................... 1,027,300 314
Seat, Savings Shares * ......................... 544,935 108
Stet ........................................... 1,192,300 5,659
Stet, Savings Shares ........................... 634,935 2,351
Telecom Italia ................................. 1,084,615 2,872
Telecom Italia Mobile .......................... 2,676,435 $ 8,396
Telecom Italia Mobile, Savings Shares .......... 620,611 1,146
Total Italy (Cost $26,102) ..................... 35,896
NETHERLANDS 15.8%
Common Stocks 15.8%
ABN Amro Holdings .............................. 115,978 7,971
Aalberts Industries ............................ 43,150 990
Ahold .......................................... 26,581 1,815
Ahrend Groep ................................... 25,190 1,526
Akzo Nobel ..................................... 14,322 1,845
Atag ........................................... 12,216 616
Baan Company (USD) ............................. 32,510 1,747
Content Beheer ................................. 13,400 484
CSM ............................................ 127,103 7,300
Elsevier ....................................... 1,404,652 22,494
Fortis Amev .................................... 147,885 5,579
Getronics ...................................... 31,496 954
ING Groep ...................................... 333,085 13,079
Koninklijke PTT Nederland ...................... 55,007 1,954
Otra ........................................... 73,500 1,169
Polygram ....................................... 139,666 6,846
Randstad Holdings * ............................ 14,000 1,257
Royal Dutch Petroleum .......................... 143,939 25,725
Unilever ....................................... 51,740 10,062
Wolters Kluwer ................................. 200,957 23,816
137,229
Preferred Stocks 0.0%
ING Groep ...................................... 33,857 173
173
Total Netherlands (Cost $85,854) ............... 137,402
NORWAY 2.3%
Common Stocks 2.3%
Bergesen (Class A) ............................. 38,700 799
Merkantildata .................................. 64,000 1,168
Norsk Hydro .................................... 148,215 7,222
Orkla (Class A) ................................ 100,834 8,453
Schibsted ...................................... 33,400 $ 577
Tomra Systems .................................. 99,000 1,919
Total Norway (Cost $11,739) 20,138
<PAGE>
POLAND 0.2%
Common Stocks 0.2%
Bank Rozwoju Eksportu * ........................ 25,200 602
Bank Slaski .................................... 6,540 555
Elektrim ....................................... 40,000 359
Gorazdze ....................................... 18,500 620
International UNP Holdings (CAD) * ............. 186,843 22
Total Poland (Cost $1,908) ..................... 2,158
PORTUGAL 0.4%
Common Stocks and Warrants 0.4%
Jeronimo Martins * ............................. 47,904 2,866
Jeronimo Martins, Warrants, 9/15/03 * .......... 3,992 72
Sempa .......................................... 26,250 562
Sumolis Industria de Frutas Bebidas * .......... 14,000 105
3,605
Preferred Stocks 0.0%
Lusomundo ...................................... 28,470 211
211
Total Portugal (Cost $1,547) ................... 3,816
RUSSIA 0.3%
Common Stocks 0.3%
Lukoil ADR (USD) ................................ 28,000 1,568
PLD Telekom (USD) * ............................. 52,200 277
Rao Gazprom ADS (USD) * ......................... 40,500 632
Star Mining (AUD) ............................... 1,540,000 60
Total Russia (Cost $2,069) ...................... 2,537
SPAIN 5.0%
Common Stocks 5.0%
Aguas de Barcelona .............................. 509 20
Argentaria Banca de Espana ...................... 48,281 2,153
Azkoyen ......................................... 11,000 $ 1,648
Banco Bilbao Vizcaya ............................ 28,770 1,936
Banco Popular Espanol ........................... 19,519 4,139
Banco Santander ................................. 89,289 6,718
Centros Comerciales Pryca ....................... 66,268 1,151
Empresa Nacional de Electricidad ................ 90,545 6,329
Gas Natural ..................................... 24,851 5,278
Iberdrola ....................................... 366,735 4,139
Prosegur Seguridad .............................. 162,500 1,762
Repsol .......................................... 109,679 4,598
Telefonica de Espana ............................ 149,418 3,827
Total Spain (Cost $31,915) ...................... 43,698
<PAGE>
SWEDEN 4.8%
Common Stocks and Warrants 4.8%
ABB (Class A) ................................... 253,700 3,089
Assa-Abloy (Class B) ............................ 63,179 1,236
Astra (Class B) ................................. 305,120 12,116
Atlas Copco (Class B) ........................... 199,950 4,958
BPA (Class A) * ................................. 320,000 836
BPA (Class B), Warrants, 12/15/00 * ............. 152,000 165
Electrolux (Class B) ............................ 72,110 4,136
Esselte (Class B) ............................... 61,920 1,413
Finnveden (Class B) ............................. 52,900 937
Hennes & Mauritz (Class B) ...................... 37,750 5,462
Hoganas (Class B) ............................... 16,000 479
Mandator (Class B) * ............................ 35,470 434
Medical Invest Svenska (Class B) * .............. 21,160 688
Sandvik (Class B) ............................... 142,220 3,499
Scribona (Class B) .............................. 59,530 740
Securitas (Class B) ............................. 57,000 1,373
Total Sweden (Cost $28,367) 41,561
SWITZERLAND 9.0%
Common Stocks 9.0%
ABB ............................................. 7,935 9,608
Adecco .......................................... 11,764 3,926
Belimo Automation * ............................. 3,000 $ 696
Bucher Holding .................................. 600 556
Ciba Specialty Chemicals * ...................... 15,608 1,345
Credit Suisse Group ............................. 24,195 2,725
Disetronic Holdings * ........................... 480 1,053
Generale d'Affichage ............................ 2,200 791
Gurit Heberlien ................................. 365 935
Liechtenstein Global Trust ...................... 1,235 679
Nestle .......................................... 8,645 10,498
Novartis ........................................ 16,978 22,367
Roche Holdings .................................. 1,918 16,199
SMH Neuenburg ................................... 1,623 919
Schweizerischer Bankverein ...................... 20,770 4,537
Swisslog * ...................................... 3,991 1,470
Total Switzerland (Cost $55,883) ................ 78,304
UNITED KINGDOM 24.9%
Common Stocks 24.8%
Abbey National .................................. 541,080 7,498
Argos ........................................... 391,266 4,084
Asda Group ...................................... 2,476,430 4,616
Ashtead Group ................................... 357,497 1,611
BBA Group ....................................... 189,045 1,026
BG * ............................................ 463,250 1,351
Bodycote International .......................... 103,800 1,228
British Petroleum ............................... 260,000 2,979
Britton Group * ................................. 315,703 522
<PAGE>
CRT Group * ..................................... 266,777 994
Cable & Wireless ................................ 759,110 5,844
Cadbury Schweppes ............................... 681,753 5,668
Caradon ......................................... 1,074,810 4,303
Carpetright ..................................... 86,000 659
Centrica * ...................................... 463,250 424
Chamberlain Phipps * ............................ 99,000 -
Coats Viyella ................................... 475,000 1,016
Compass Group ................................... 231,000 2,531
Cordiant * ...................................... 195,000 408
Corporate Services Group ........................ 645,471 $ 1,946
David S. Smith .................................. 518,020 1,881
Devro International ............................. 251,250 1,275
Druck Holdings .................................. 185,000 780
Electrocomponents ............................... 223,000 1,431
First Technology ................................ 77,000 860
Freepages Group * ............................... 1,127,600 731
GKN ............................................. 100,000 1,541
Glaxo Wellcome .................................. 619,540 12,180
Grand Metropolitan .............................. 1,038,420 8,701
Greggs .......................................... 42,000 1,171
Guinness ........................................ 819,040 6,743
HTV Group ....................................... 205,000 1,023
Harvey Nichols Group ............................ 157,500 791
Henderson ....................................... 23,000 479
Hozelock Group .................................. 99,461 701
JBA Holdings .................................... 200,000 2,642
John Laing (Class A) ............................ 377,690 2,247
Kingfisher ...................................... 519,731 5,627
Knox D'Arcy Trust * ............................. 562,222 305
Ladbroke Group .................................. 689,250 2,592
Mayflower ....................................... 595,000 1,437
N Brown Group ................................... 81,420 545
National Westminster Bank ....................... 1,458,410 17,231
Northern Leisure ................................ 261,566 1,043
Pentos * ........................................ 358,333 -
Peter Black Holdings ............................ 57,000 331
Pizza Express ................................... 75,000 840
Powerscreen International ....................... 147,000 1,449
RTZ ............................................. 280,060 4,439
Rage Software * ................................. 1,350,000 170
Rank Group ...................................... 1,014,625 6,989
Reed International .............................. 779,940 14,360
Regal Hotel Group ............................... 761,389 691
Rolls Royce ..................................... 518,201 2,041
Safeway ......................................... 639,000 3,511
Sage Group ...................................... 138,000 1,440
Select Appointment .............................. 159,000 $ 933
Serco Group ..................................... 117,500 1,276
Shell Transport & Trading ....................... 709,000 12,560
SmithKline Beecham .............................. 1,298,100 20,786
Stoves .......................................... 66,000 299
<PAGE>
T & N ........................................... 864,000 1,876
Tesco ........................................... 498,500 2,876
Tomkins ......................................... 2,157,770 9,303
United News & Media ............................. 507,390 6,225
WPP Group ....................................... 245,000 997
216,057
Preferred Stocks 0.1%
Knox D'Arcy Trust, Cv. Loan Stock, Zero Coupon, 9/30/07 472,222 260
Regal Hotel Group, Cv. Loan Stock, 8.00%, 6/30/01 131,587 263
523
Total United Kingdom (Cost $156,981) ............ 216,580
SHORT-TERM INVESTMENTS 6.2%
Commercial Paper 6.2%
American Home Products 4(2), 5.60%, 6/16/97 $ ............ 5,000,000 4,964
Asset Securitization Cooperative 4(2), 5.53%, 5/15/97 .... 5,000,000 4,989
Becton Dickinson, 5.50%, 6/19/97 ......................... 1,000,000 992
Bex America Finance, 5.54%, 5/27/97 ...................... 5,000,000 4,980
Delaware Funding 4(2), 5.53-5.55%, 5/15/97-6/2/97 ........ 10,000,000 9965
Falcon Asset Securitization 4(2), 5.55%, 6/3/97 .......... 5,000,000 4,975
Finova Capital, 5.61%, 6/3/97 ............................ 1,400,000 1,393
Golden Peanut, 5.50%, 6/4/97 ............................. 1,000,000 995
Preferred Receivables Funding, 5.52%, 5/22/97 ............ 5,000,000 4,984
St. Paul Companies 4(2), 5.53%, 5/2/97 ................... 1,000,000 1,000
Tasmanian Public Finance, 5.40%, 6/20/97 ................. 3,000,000 2,977
Teco Finance 4(2), 5.52%, 5/12/97 ........................ 5,000,000 4,992
Investments in Commercial Paper through a Joint Account,
5.60%, 5/1/97 ................................... 7,020,104 7,020
Total Short-Term Investments (Cost $54,226) 54,226
Total Investments in Securities
98.6% of Net Assets (Cost $624,290) $ .................... 858,959
Other Assets Less Liabilities ............................ 12,589
NET ASSETS ............................................... $ 871,548
Net Assets Consist of:
Accumulated net investment income - net of distributions . $ 4,027
Accumulated net realized gain/loss - net of distributions 11,548
Net unrealized gain (loss) ............................... 234,561
Paid-in-capital applicable to 48,488,662 shares of
$ 0.01 par value capital stock outstanding; 2,000,000,000
shares of the Corporation authorized ..................... 621,412
NET ASSETS ............................................... $ 871,548
NET ASSET VALUE PER SHARE ................................ $17.97
* Non-income producing
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."
AUD Australian dollar
BEF Belgian franc
CAD Canadian dollar
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
4/30/97
Investment Income
Income
Dividend (net of foreign taxes of $ 1,221) ................ $ 6,947
Interest .................................................. 1,424
Total income .............................................. 8,371
Expenses
Investment management ..................................... 3,231
Shareholder servicing ..................................... 667
Custody and accounting .................................... 180
Prospectus and shareholder reports ........................ 35
Registration .............................................. 30
Directors ................................................. 5
Legal and audit ........................................... 4
Miscellaneous ............................................. 2
Total expenses ............................................ 4,154
Net investment income ......................................... 4,217
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ................................................ 14,062
Foreign currency transactions ............................. (324)
Net realized gain (loss) .................................. 13,738
Change in net unrealized gain or loss
Securities ................................................ 47,739
Other assets and liabilities
denominated in foreign currencies ......................... (132)
Change in net unrealized gain or loss ..................... 47,607
Net realized and unrealized gain (loss) ....................... 61,345
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ........................................ $ 65,562
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
4/30/97 10/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income ........................... $ 4,217 $ 10,895
Net realized gain (loss) ........................ 13,738 7,431
Change in net unrealized gain or loss ........... 47,607 99,374
Increase (decrease) in net assets from operations 65,562 117,700
Distributions to shareholders
Net investment income ........................... (10,997) (7,528)
Net realized gain ............................... (8,458) (8,941)
Decrease in net assets from distributions ....... (19,455) (16,469)
Capital share transactions *
Shares sold ..................................... 261,990 254,494
Distributions reinvested ........................ 18,532 15,698
Shares redeemed ................................. (159,968) (157,109)
Increase (decrease) in net assets from capital
share transactions .............................. 120,554 113,083
Net Assets
Increase (decrease) during period ................... 166,661 214,314
Beginning of period ................................. 704,887 490,573
End of period ....................................... $871,548 $704,887
*Share information
Shares sold ..................................... 14,890 16,561
Distributions reinvested ........................ 1,070 1,094
Shares redeemed ................................. (9,106) (10,195)
Increase (decrease) in shares outstanding ....... 6,854 7,460
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited April 30, 1997
================================================================================
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 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.
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 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.
<PAGE>
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 The fund lends its securities to approved brokers to
earn additional income and takes cash and U.S. Treasury securities as collateral
to secure the loans. Collateral is maintained at not less than 100% of the value
of loaned securities. At April 30, 1997, the value of securities on loan was
$135,436,000. 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 $139,261,000 and $63,572,000, respectively, for the six
months ended April 30, 1997.
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, 1997, the aggregate cost of investments for federal income tax
and financial reporting purposes was $624,290,000, and net unrealized gain
aggregated $234,669,000, of which $241,716,000 related to appreciated
investments and $7,047,000 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.
<PAGE>
The investment management agreement between the fund and the manager
provides for an annual investment management fee, of which $571,000 was payable
at April 30, 1997. 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 0.30% for assets in
excess of $80 billion. At April 30, 1997, 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.
(TRPS) is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price Retirement
Plan Services, Inc., provides subaccounting and recordkeeping services for
certain retirement accounts invested in the fund. Additionally, the fund is one
of several T. Rowe Price mutual funds (the underlying funds) in which the T.
Rowe Price Spectrum International Fund (Spectrum) invests. In accordance with an
agreement among Spectrum, the underlying funds, Price Associates, and TRPS,
expenses from the operation of Spectrum are borne by the underlying funds based
on each underlying fund's proportionate share of assets owned by Spectrum. The
fund incurred expenses pursuant to these related party agreements totaling
approximately $568,000 for the six months ended April 30, 1997, of which
$109,000 was payable at period-end.
During the six months ended April 30, 1997, the fund, in the ordinary
course of business, placed security purchase and sale orders aggregating
$14,275,000 with certain affiliates of the manager and paid commissions of
$31,000 related thereto.
<PAGE>
================================================================================
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
IN PERSON Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
CHECKING Available on most fixed income funds ($500 minimum).
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*AccessRegistration Mark and T.
Rowe Price OnLine.
DISCOUNT BROKERAGE*
INDIVIDUAL INVESTMENTS Stocks, bonds, options, precious metals, and other
securities at a savings over regular commission rates.
INVESTMENT INFORMATION
COMBINED STATEMENT Overview of your T. Rowe Price accounts.
SHAREHOLDER REPORTS Fund managers' reviews of their strategies and results.
T. ROWE PRICE REPORT 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, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
<PAGE>
================================================================================
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
STOCK FUNDS
- --------------------------------------------------------------------------------
DOMESTIC
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
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
<PAGE>
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
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
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 FUNDS
- --------------------------------------------------------------------------------
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
<PAGE>
* Closed to new investors.
** Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
FOR YIELD, PRICE, LAST TRANSACTION,
CURRENT BALANCE, OR TO CONDUCT
TRANSACTIONS, 24 HOURS, 7 DAYS
A WEEK, CALL TELE*ACCESS [REGISTRATION MARK]:
1-800-638-2587 toll free
FOR ASSISTANCE
WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
TO OPEN A DISCOUNT BROKERAGE
ACCOUNT OR OBTAIN INFORMATION,
CALL: 1-800-638-5660 toll free
INTERNET ADDRESS:
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 European Stock Fund.
INVESTOR CENTERS:
101 East Lombard St.
Baltimore, MD 21202
<PAGE>
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.
F79-051 4/30/97
