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T. ROWE PRICE
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International Series, Inc.
T. Rowe Price International Stock Portfolio
Supplement to prospectus dated May 1, 1998
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Effective September 11, 1998, the following section entitled 1999: The Year of
the Euro Currency will be inserted after the Foreign Currency Transactions
section on page 14 of the prospectus:
1999: The Year of the Euro Currency
On the first business day of 1999, several major European countries will
officially inaugurate the European Economic and Monetary Union (EMU) and
adopt the euro as a single European currency backed by the European Central
Bank. The event could be one of the most significant financial developments
of the century, creating a vast economic and currency bloc equal to the U.S.
in size and power. Since the EMU has far-reaching implications for investors
and funds with exposure to European securities, it is important for you to
understand what is taking place.
The currencies of the original participating countries will become fixed rate
units of the euro, much the same as the nickel, dime, quarter, and half
dollar are denominations of the U.S. dollar. The exchange rates versus the
euro were set in May and will officially be determined by the end of 1998.
<TABLE>
<CAPTION>
Country Currency Euro Rate
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<S> <S> <C>
Austria Schilling 13.91
Belgium Franc 40.78
Finland Mark 6.01
France Franc 6.63
Germany Mark 1.98
Ireland Punt 0.80
Italy Lira 1958.00
Luxembourg Franc 40.78
Netherlands Guilder 2.23
Portugal Escudo 202.70
Spain Peseta 168.20
</TABLE>
Source: The Wall Street Journal, May 4, 1998
Beginning in January 1999, some European holdings will be redenominated in
euros, particularly government securities. The face value of other
investments might remain in the existing national currencies for a time, but
they will be priced, settled, and valued in euros by stock exchanges and
other agencies. Thus, some of the European holdings in your funds will be
valued in euros.
This will not affect the investment value of your funds in U.S. dollar terms,
since the euro will be converted into the dollar in the same way
deutschemarks, francs, lire, and other European currencies are currently
converted at the prevailing exchange rates.
During the transition period, which lasts from January 1, 1999, until June
30, 2002, other countries that have moved to adopt the economic terms of the
Maastricht Treaty of 1993 will be able to participate in the EMU. The primary
criteria for joining are:
. a sustainable budget deficit less than 3% of GDP;
. public debt less than 60% of GDP;
. low inflation and interest rates; and
. no currency devaluations within two years of application.
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Some of the original participants are not totally compliant with these terms
but are expected to embrace them by 2002. Countries joining later may have to
be in strict accord before entering the EMU, or at least be well along the
path to achieving them. So far, the transition seems to be progressing
smoothly, but there has been resistance to some of the more stringent terms.
French Socialists, in particular, would prefer to maintain heavy government
subsidies for social programs. Therefore, the jury is still out on whether
complete economic and monetary convergence will be attained as planned.
Assuming all goes well, the national currencies of participating countries
will cease to exist and all accounting will be in euros following the
transition period. However, regardless of whether or not full convergence is
realized on the date specified, we do not expect pricing in euros to have any
special impact on the value of your investment. Of course, problems could
develop that might be unfavorable for the fund, but we do not anticipate them
at this time.
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The date of the above supplement is September 11, 1998.
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C15-041
09/11/98
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