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T. Rowe Price
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Annual Report
European Stock Fund
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October 31, 1998
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REPORT HIGHLIGHTS
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EUROPEAN STOCK FUND
* A midsummer crisis in Russia derailed a solid European rally, leading to
sharp corrections in many markets.
* Financials, multinationals, and cyclicals struggled most, while steady
growth companies tended to perform better.
* A focus on visible earnings growth helped the fund minimize its six-month
loss (-3.62%), preserve a strong full-year gain (20.12%), and stay well
ahead of its peer group.
* While we don't expect an immediate impact from the January 1 introduction
of the euro, we think the new currency will have long-term benefits.
* Although short-term prospects are weak, we remain encouraged by Europe's
superb longer-term fundamentals.
<PAGE>
FELLOW SHAREHOLDERS
The outstanding investing environment your fund enjoyed through most of the
past 12 months soured after July, when a Russian economic crisis depressed
emerging markets and weighed on Europe's economies. Like most global markets,
Europe's bourses trended down over the last three months of the period, leaving
your fund with a six-month loss. Fortunately, good stock selection and country
choices helped limit those losses and preserved a strong gain for the year.
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Performance Comparison
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Periods Ended 10/31/98 6 Months12 Months
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European Stock Fund -3.62% 20.12%
MSCI Europe Index -4.51 23.42
Lipper European Funds Average -9.0515.45
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The fund's -3.62% six-month and 20.12% full-year results put it well ahead
of the Lipper European Funds Average for both periods. Our core growth holdings
generally produced the steady returns and performance we expected of them and
proved to be a haven of safety during tumultuous market conditions. An
overweighting in France and an underweighting in the U.K., particularly earlier
in the year, also provided positive contributions. Our 12-month returns were
behind the MSCI Europe Index: significant holdings in the Netherlands, Norway,
Sweden, and Russia, as well as relatively light exposure to Germany, kept us
from a better comparative performance over that period.
The first half of the annual period was excellent for European investors.
Strong investment flows into the region and good news on corporate profits
contributed to generous gains in many European markets. The environment was then
disrupted in mid-July by a sequence of economic and financial crises in Russia,
Asia, and Latin America, during which the ruble collapsed and Russia defaulted
on its obligations. Investor confidence was shaken, as was Europe's economic
health. Slowing foreign demand and increased price competition contributed to
sharp corrections in European markets. Only Belgium posted a positive return in
the last six months: most other markets fell in local currencies. The declines
were exacerbated by the markets' relatively high valuations. Fortunately for
U.S. investors, however, dollar weakness offset the declines in some cases, as
shown in the Market Performance table on page 3.
<PAGE>
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Preparing For The Year 2000
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The Year 2000 draws closer every day, and it holds special meaning beyond
the arrival of a new millennium. The issue for investors is that many computer
programs throughout the world use two digits instead of four to identify the
year and may assume the next century starts with 1900. If these programs are not
modified, they will not be able to correctly handle the century change when the
year changes from "99" to "00" on January 1, 2000, and they will no longer be
able to perform necessary functions. The Year 2000 issue affects all companies
and organizations.
T. Rowe Price has been taking steps to assure that its computer systems and
processes are capable of functioning in the Year 2000. Detailed plans for
remediation efforts have been developed and are currently being executed.
OUR PLAN OF ACTION
We began to address these issues several years ago by requiring that all
new systems process and store four-digit years. We plan to complete all
reprogramming efforts for the major application systems, including business
applications required to service our customers and processing infrastructure
necessary to ensure the integrity of customer data and investments, by December
31, 1998, leaving a full 12 months for system testing. Because we exchange data
electronically with customers and vendors, we are working with them to assess
the adequacy of their own compliance efforts. Our goal is to ensure the
continuation of the same level of service to all our mutual fund shareholders
and clients after December 31, 1999.
We are asking all vendors and companies we do business with for a Year 2000
compliance status, with the expectation that some organizations will not be able
to modify their interface files prior to December 31, 1999. Our goal is to
identify any noncompliant files so that we can implement alternative solutions.
In addition, we are scheduling tests for critical vendors and companies that
claim Year 2000 compliance to ensure that time-related data and calculations
function properly as we move into the next century.
SMOOTH TRANSITION PLANNED
We believe our programs and initiatives will provide a smooth transition
into the next millennium. We are assessing all systems providing products or
services to our retail mutual fund shareholders, retirement plan sponsors, and
participants, and we are taking steps to modify them where necessary for the
Year 2000. Our plan provides time to develop solutions for all noncompliant
systems and data files from customers or vendors.
<PAGE>
The Securities Industry Association (SIA) is coordinating Year 2000 testing
to assure that securities markets, clearing corporations, depositories, and
third party service providers can send, receive, and process files and
transactions accurately. In late July 1998, the SIA completed a beta test of
Year 2000 readiness. The test was considered successful in terms of transactions
completed and will serve as the basis for the SIA's industry-wide approach.
During October 1998, T. Rowe Price completed its beta test of Year 2000
readiness with the SIA and is ready for the industry-wide test that is scheduled
for March and April 1999.
For a more detailed discussion of our Year 2000 effort, as well as
continuing updates on our progress, please check our Web site
(WWW.TROWEPRICE.COM).
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Market Performance
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Six Months Local Local Currency U.S.
Ended 10/31/98 Currency vs. U.S. Dollars Dollars
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Belgium 7.24% 8.41% 16.26%
France -8.17 8.29 -0.55
Germany -8.44 8.35 -0.80
Italy -11.13 8.16 -3.88
Netherlands -15.78 8.18 -8.89
Spain -11.47 8.00 -4.38
Sweden -15.08 -1.00 -15.93
Switzerland -10.68 10.76 -1.07
United Kingdom -7.76 0.16 -7.61
Source: FAME Information Services, Inc.; based on MSCI indices.
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Financial services companies exposed to emerging market debt (and to hedge
funds, such as Long Term Capital Management, that had been torn apart by
currency crises) suffered some of the worst declines, although many types of
multinational firms were adversely affected by waning foreign demand. The
cyclicals sector also suffered poor earnings as economic growth slipped and the
weak U.S. dollar made Europe's exports less competitive. Steady-growth
companies, such as pharmaceuticals and consumer goods firms, whose reliable
earnings become attractive in difficult markets, scored better performance.
October saw a rally across Europe, led by sectors that had fallen the farthest.
<PAGE>
Economic growth was uneven in the major economies of Europe. Domestic
demand drove France and Spain to the top of the chart, at 3% to 4% growth per
annum, while Germany and Italy grew 1% to 2%. In Germany, the election of
Gerhard Schroeder as Chancellor suggested that fiscal policy could be relaxed,
but domestic demand appeared to be cautious ahead of proposed changes to the tax
system. Inflation remained almost nonexistent, but it is unlikely the Bundesbank
(Germany's central bank, the most powerful in Europe) will cut rates. Other
future euro members are still lowering their interest rates to ensure
convergence by year-end, and significantly lower rates could overheat the
buoyant economies of Ireland, Portugal, and Spain. The European Central Bank
will be responsible for setting rates from January 1, 1999, and will need to set
conservative policies to establish its credentials.
UPDATE ON THE EURO
The European Union's new single currency, the euro, will replace the
national currencies of the 11 participating countries (Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and
Spain) on January 1, 1999. Prices will then be quoted in both the national
currency and the euro, using the fixed exchange rate set at the end of 1998, and
transactions will be settled in the euro. (Euro notes and coins will not replace
national notes and coins in circulation until after January 1, 2002.) Portfolio
holdings that originate in the participating countries will be priced, settled,
and valued in euros. This change will not affect the investment value of your
fund in U.S. dollar terms, as the euro will be converted into dollars in the
same way that deutschemarks, francs, lire, and other European currencies
currently are. The total amount of fund assets denominated in euros will vary
depending on our investment decisions; as of October 31, it would be over 50% of
the portfolio.
The move to a single currency is expected to bring benefits both
macroeconomic and microeconomic. An independent European Central Bank will
promote low inflation and stable currency relationships. The euro will eliminate
foreign exchange hedging and transaction costs (saving an estimated $40 billion
per year). Comparison of cross-border prices and wages will become easier and
should stimulate competition. The development of a liquid capital market
denominated entirely in euros will lower the cost of capital for companies and
improve capital allocation.
Although we think these benefits will materialize, the transition to a euro
system is not without risks. To the extent that member countries are affected
differently by external shocks, they may not be able to make adjustments
involving the free movement of capital and people. Also, a one-size-fits-all
interest rate policy may not be suitable for economies growing at different
speeds. However, the arrival of the euro will in itself create pressure for
affirmative change. For example, as prices become more easily comparable across
borders, disparities resulting from different national tax structures or
regulations will come under increasing scrutiny.
The introduction of the euro is not expected to have any short-term impact
on your fund. In time, however, we believe it will provide opportunities for
companies that can grow faster than the market in a low-inflation environment
because of a strong business franchise, technological or research leadership, or
the ability to cut costs and generate cash to finance investment.
<PAGE>
MARKET AND PORTFOLIO REVIEW
The U.K. continued to retain the largest share of fund assets at 25%. The
country was troubled during the past six months by the specter of recession. The
manufacturing and export sectors remained weak, the result of high interest
rates and a strong exchange rate. The service sector performed better, but there
were clear signs of lower consumer demand. Profit expectations for British
companies struggled. Correspondingly, consensus gross domestic product (GDP)
growth estimates have fallen tobetween 0.5% and 1.0% for 1999. Inflation,
however, was under the Bank of England's target of 2.5%, which allowed the bank
to cut interest rates twice recently from 7.5% to 6.75%.
The U.K. market fell -7.76% in local currency terms in the past six months,
a lighter decline than most other European countries. However, expectations of
lower interest rates weakened sterling against the other European currencies, so
our holdings there did not benefit much from a falling U.S. dollar.
Companies with a clear strategic vision used market weakness as an
opportunity to enhance their cross-border positions. Home products manufacturer
KINGFISHER revealed plans to swap its interests in U.K. do-it-yourself home
improvement stores for a 54.6% stake in Castorama, the number one such retailer
in France. The combined entity will be the largest retailer of its kind in
Europe. Kingfisher's goal is to lift Castorama's margins by increasing economies
of scale and improving customer service. Kingfisher has already successfully
done this in electric appliance retailing with Comet (in the U.K.) and Darty (in
France).
[Geographic Diversification pie chart showing: United Kingdom, 25%; France,
15%; Netherlands, 14%; Germany, 10%; Switzerland, 9%; Italy, 7%; Sweden, 5%;
Other and Reserves, 15%.]
Global oil concern BRITISH PETROLEUM (BP) surprised the market with its
$110 billion merger with Amoco. The newly merged company will be run from London
by John Browne, current CEO of BP, who wants toreduce costs by $2 billion a year
and improve returns on capital to be competitive with industry leader Exxon.
Since our last report we added to our holding in UNILEVER, the multinational
consumer goods manufacturer, which continued to focus on improving returns to
shareholders through restructuring, cutting costs, and spinning off peripheral
assets.
BELGIUM, at 2.4% of assets, was the only primary European country to show a
positive return (16.26% in dollar terms) over the six-month period. The gain
resulted largely from an unusual amount of merger and acquisition activity. Most
of this occurred in the financial services sector, as smaller businesses acted
to improve their competitive positions ahead of EMU. The three-way merger
between fund holding KREDIETBANK, Cera Bank, and ABB insurance to form KBC
Bancassurance Holding boosted returns. Following this, ABN Amro (the Dutch bank)
sparked a hotly contested bid for another of our bank holdings, GENERALE DE
BANQUE. The property was eventually won by FORTIS AMEV (a Belgian-Dutch
financial concern), which also benefited the fund.
<PAGE>
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Industry Diversification
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Percent of Net Assets
4/30/98 10/31/98
Services ................................. 27.5% 28.7%
Consumer Goods ........................... 19.6 23.7
Finance .................................. 21.3 21.1
Energy ................................... 12.1 10.6
Capital Equipment ........................ 8.6 6.9
Materials ................................ 3.5 2.9
Multi-industry ........................... 2.7 2.0
Reserves ................................. 4.7 4.1
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Total .................................... 100.0% 100.0%
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The NETHERLANDS, at 14.2% of assets, was the worst-performing country in
local currency terms in the last half-year as investors were disappointed by
poor profit results. We reduced our holding in ROYAL DUTCH PETROLEUM, the oil
company, as it warned of a deteriorating business environment and falling
profits from refining and chemicals. Insurer ING GROEP cautioned that its
emerging markets exposure would reduce banking profits, even though overall
profit growth will be positive due to its successful life insurance operations.
We increased the holding in PHILIPS ELECTRONICS after it dissolved a joint
mobile phone venture with U.S. telecommunications firm Lucent, as the losses
were deemed unacceptable. Philips continued to focus on shareholder value by
exiting businesses with poor returns, restructuring, and buying back its shares.
It was not all doom and gloom in the Netherlands, however. Our focus on
businesses with reliable growth characteristics led us to significant holdings
in the successful business publishers WOLTERS KLUWER and ELSEVIER. Wolters
produced excellent interim results and higher growth than expected, resulting in
spectacular outperformance. Also, Seagram agreed to terms with Philips for their
majority stake in POLYGRAM, the entertainment company, and launched an offer to
buy out minority shareholders. This transfer received full regulatory approval
and we received an attractive offer for our shares. We expect the deal to be
completed before year-end.
The markets were led lower in FRANCE (14.9% of assets) and GERMANY (9.6%)
in the last six months by the banking sector and cyclical sectors, such as
autos, building and construction, energy, and steel. Banks were heavily punished
for their exposures to Asia, Russia, Latin America, and high-risk hedge funds.
Our holdings in Germany's DEUTSCHE BANK and DRESDNER BANK fell 50% from their
peaks, while France's SOCIETE GENERALE fell 64%. Profits for these firms are not
likely to recover in 1998. Nevertheless, we maintained positions because
significant potential remains for cost-cutting and restructuring of their
interests. French insurer AXA also fell significantly during the period. We used
this as an opportunity to add to our holding, as its global life insurance
business remains an attractive, long-term investment.
<PAGE>
The fund escaped the worst performance in these two countries by owning
large positions in steady growers with defensive qualities. In France, SANOFI
(the drug company) announced better-than-expected interim results and good
progress with the launch of two new drugs: Aprovel, a new hypertension drug, and
Plavix, which treats heart attacks and strokes. PINAULT PRINTEMPS (French
retailer) reported excellent growth in sales (up 23%) and profits (up 35%) due
to strong consumer demand. Profits at TELEVISION FRANCAISE, which operates the
most popular television station, soared 52% as the expanding economy boosted
advertising revenue and the soccer World Cup in June attracted a record number
of viewers. In Germany, SAP continued to increase its global dominance as a
business software provider. We added to this position at the expense of our
holding in BAAN, a Dutch competitor, which we sold during the summer.
The two major banks in SWITZERLAND, CREDIT SUISSE and UNION BANK OF
SWITZERLAND, fell 60% from their peaks as investors were horrified to discover
the extent of the losses from their respective Russian and Long Term Capital
Management exposures. In contrast, our main holdings in consumer products maker
NESTLE, as well as pharmaceuticals NOVARTIS and ROCHE, produced steady results.
Nestle is focused on increasing shareholder value by improving the returns from
new capital expenditure; a management stock incentive scheme has also been
introduced. We held a 9.3% stake in Switzerland.
In SPAIN, where the fund kept 4.1% of assets, our bank holdings with Latin
American exposure (BANCO BILBAO VIZCAYA and BANCO SANTANDER) were savaged, with
share prices falling close to 60% from their highs. The electrical utilities,
such as ENDESA and IBERDROLA, performed relatively well because of their safe,
defensive qualities. SWEDEN was one of the worst-performing markets in Europe in
the six-month period because of its relatively high exposure to cyclical stocks
in the paper and steel industries. In addition, Ericsson suffered from poor new
product development and price pressures in its mobile handsets division and
further losses in fixed telecom equipment. On the other hand, H&M, the
pan-European clothes retailer, performed spectacularly. H&M was our largest
holding in this market and we've since trimmed it because its valuation became
stretched. We had a 4.9% position in Sweden.
RUSSIA'S economic collapse in August was nothing short of catastrophic to
its market. We had reduced our holdings to less than 0.5% of assets ahead of the
crisis, so the effect on the fund was modest. However, as mentioned earlier, the
consequences were clearly felt elsewhere in the portfolio.
OUTLOOK
European markets have suffered Asian recessions, a crisis in Russia, and a
severe slowdown in Latin America at a time when market valuations were at their
highest. Growth forecasts across Europe are being lowered, leaving more
cyclically influenced companies particularly vulnerable to earnings downgrades.
The impending euro is limiting European central banks' ability to help by
modifying monetary policy, although clearly there is a possibility of interest
rate cuts.
<PAGE>
Nevertheless, despite less buoyant short-term prospects, we remain
encouraged by the superb longer-term fundamentals Europe offers: low inflation,
continued corporate restructuring, and an improved focus on shareholder value.
In this environment, we believe that our emphasis on more sustainable and
visible earnings growth will continue to be rewarded.
Respectfully submitted,
/s/
Martin G. Wade
President
November 23, 1998
<PAGE>
T. Rowe Price European Stock Fund
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
10/31/98
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SmithKline Beecham, United Kingdom .............................. 3.0%
National Westminster Bank, United Kingdom ....................... 3.0
Wolters Kluwer, Netherlands ..................................... 2.9
Nestle, Switzerland ............................................. 2.8
Glaxo Wellcome, United Kingdom .................................. 2.4
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Diageo, United Kingdom .......................................... 2.2
Vivendi, France ................................................. 2.0
ING Groep, Netherlands .......................................... 2.0
Novartis, Switzerland ........................................... 1.8
Royal Dutch Petroleum, Netherlands .............................. 1.7
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Roche Holdings, Switzerland ..................................... 1.6
Shell Transport & Trading, United Kingdom ....................... 1.5
Telecom Italia, Italy ........................................... 1.5
Kingfisher, United Kingdom ...................................... 1.5
Total (Class B), France ......................................... 1.5
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Unilever, Netherlands ........................................... 1.4
Reed International, United Kingdom .............................. 1.3
UBS, Switzerland ................................................ 1.3
Gehe, Germany ................................................... 1.2
Hennes and Mauritz (Class B), Sweden ............................ 1.2
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Bayerische Vereinsbank, Germany ................................. 1.1
Pinault Printemps Redoute, France ............................... 1.1
Mannesmann, Germany ............................................. 1.1
Telefonica de Espana, Spain ..................................... 1.1
KBC Bancassurance Holding, Belgium .............................. 1.1
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Total ........................................................... 43.3%
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<PAGE>
T. Rowe Price European Stock Fund
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Performance Comparison
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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.
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Average Annual Compound Total Return
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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.
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Since Inception
Periods Ended 10/31/98 1 Year 3 Years 5 Years Inception Date
European Stock Fund 20.12% 20.73% 17.73% 12.11% 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.
================================================================================
<PAGE>
<TABLE>
T. Rowe Price European Stock Fund
- ------------------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year
Ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ......................... $ 19.84 $ 16.93 $ 14.35 $ 12.72 $ 11.37
Investment activities
Net investment income ............... 0.28 0.25 0.25 0.20 0.14
Net realized and
unrealized gain (loss) .............. 3.52 3.12 2.79 1.60 1.26
Total from
investment activities ............... 3.80 3.37 3.04 1.80 1.40
Distributions
Net investment income ............... (0.25) (0.26) (0.21) (0.12) (0.04)
Net realized gain ................... (1.01) (0.20) (0.25) (0.05) (0.01)
Total distributions ................. (1.26) (0.46) (0.46) (0.17) (0.05)
NET ASSET VALUE
End of period ............................... $ 22.38 $ 19.84 $ 16.93 $ 14.35 $ 12.72
Ratios/Supplemental Data
Total return^ ............................... 20.12% 20.30% 21.76% 14.41% 12.35%
Ratio of expenses to
average net assets .......................... 1.05% 1.06% 1.12% 1.20% 1.25%
Ratio of net investment
income to average
net assets .................................. 1.39% 1.41% 1.81% 1.75% 1.19%
Portfolio turnover rate ..................... 26.8% 17.5% 14.1% 17.2% 24.5%
Net assets, end of period
(in millions) ............................... $ 1,412 $ 984 $ 705 $ 491 $ 337
<FN>
^ Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming
reinvestment of all distributions.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price European Stock Fund
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October 31, 1998
================================================================================
Portfolio of Investments
Shares/Par Value
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In thousands
BELGIUM 2.4%
Common Stocks 2.4%
Dexia ................................................ 18,994 $ 3,083
Fortis ............................................... 28,931 8,309
KBC Bancassurance Holding ............................ 224,160 15,637
Societe Europeenne des Satellites .................... 8,000 1,334
UCB .................................................. 999 5,831
Total Belgium (Cost $17,182) ......................... 34,194
CZECH REPUBLIC 0.1%
Common Stocks 0.1%
SPT Telecom .......................................... 55,200 835
Total Czech Republic (Cost $589) ..................... 835
DENMARK 0.6%
Common Stocks 0.6%
Den Danske Bank ...................................... 29,130 3,955
Tele Danmark (Class B) ............................... 21,090 2,297
Unidanmark (Class A) ................................. 32,380 2,468
Total Denmark (Cost $4,971) .......................... 8,720
FINLAND 1.0%
Common Stocks 1.0%
Nokia (Class A) ...................................... 155,030 14,124
Total Finland (Cost $4,225) .......................... 14,124
<PAGE>
FRANCE 14.9%
Common Stocks 14.9%
AXA .................................................. 85,818 9,700
Accor ................................................ 10,580 2,222
Alcatel Alsthom ...................................... 58,078 6,471
Altran Technologies .................................. 16,632 3,254
Canal Plus ........................................... 4,160 1,009
Carbone Lorraine ..................................... 258,926 14,913
Carrefour ............................................ 8,320 5,523
Cie de St. Gobain .................................... 56,129 $ 8,304
Credit Commercial de France .......................... 59,714 4,194
Danone ............................................... 36,345 9,610
Dexia France ......................................... 12,910 1,903
Dexia France, Bearer ................................. 16,099 2,373
Dexia France, Registered 1999++ ...................... 10,510 1,549
Elf Aquitaine ........................................ 58,310 6,748
Europeenne des Casinos ............................... 14,753 1,458
GTM Entrepose ........................................ 22,460 2,434
Guilbert ............................................. 3,744 544
L'Oreal .............................................. 6,312 3,607
Lafarge .............................................. 22,776 2,328
Lapeyre .............................................. 34,680 3,059
Legrand .............................................. 13,100 3,339
Pathe ................................................ 16,723 3,194
Pinault Printemps Redoute ............................ 94,600 15,835
Primagaz ............................................. 21,248 1,912
Sanofi ............................................... 84,444 13,223
Schneider ............................................ 154,951 9,198
Societe Generale ..................................... 36,992 4,894
Sodexho Alliance ..................................... 58,888 11,437
Television Francaise ................................. 43,887 7,251
Total (Class B) ...................................... 179,938 20,760
Vivendi .............................................. 125,834 28,741
Total France (Cost $162,637) ......................... 210,987
<PAGE>
GERMANY 9.6%
Common Stocks 8.8%
Allianz .............................................. 29,870 10,242
Bayer ................................................ 174,462 7,088
Bayerische Vereinsbank ............................... 199,569 15,843
Buderus .............................................. 3,100 1,289
Commerzbank .......................................... 11,492 346
Deutsche Bank ........................................ 155,505 9,669
Deutsche Telekom ..................................... 198,363 5,403
Dresdner Bank ........................................ 183,664 7,151
Gehe ................................................. 225,413 16,942
Hoechst .............................................. 65,530 2,738
Hornbach Baumarkt .................................... 18,130 $ 788
Mannesmann ........................................... 160,350 15,778
Rhoen Klinikum ....................................... 31,261 3,114
SAP .................................................. 25,410 10,661
Siemens .............................................. 42,302 2,544
Sixt ................................................. 6,830 1,410
Veba ................................................. 180,253 10,065
Volkswagen ........................................... 42,110 3,165
124,236
Preferred Stocks 0.8%
Fielmann ............................................. 28,660 1,289
Fresenius ............................................ 13,210 2,265
Hornbach Holdings .................................... 25,120 1,893
SAP .................................................. 12,680 6,177
11,624
Total Germany (Cost $107,213) ........................ 135,860
GREECE 0.3%
Common Stocks 0.3%
Alpha Credit Bank .................................... 3,760 300
Ergo Bank ............................................ 8,305 737
Hellenic Telecommunication ........................... 93,808 2,131
Intracom ............................................. 10,804 450
Total Greece (Cost $2,811) ........................... 3,618
HUNGARY 0.1%
Common Stocks 0.1%
EGIS ................................................. 7,048 129
Matav ................................................ 185,805 962
Total Hungary (Cost $1,055) .......................... 1,091
IRELAND 0.1%
Common Stocks 0.1%
CBT Group ADR (USD) * ................................ 64,598 771
Irish Permanent ...................................... 23,668 337
Total Ireland (Cost $3,419) .......................... 1,108
<PAGE>
ITALY 6.8%
Common Stocks 6.8%
Assicurazioni Generali ............................... 217,880 $ 7,801
Banca Commerciale Italiana ........................... 506,000 3,126
Banca di Roma ........................................ 2,657,000 4,635
Credito Italiano ..................................... 2,055,231 11,031
ENI .................................................. 1,977,376 11,759
Gucci Group (USD) .................................... 70,044 2,671
IMI .................................................. 524,253 8,058
INA .................................................. 1,088,000 2,996
Industrie Natuzzi ADR (USD) .......................... 78,300 1,424
Italgas .............................................. 754,943 3,456
Mediolanum ........................................... 128,000 3,185
Rinascente ........................................... 190,000 1,831
Telecom Italia ....................................... 2,956,080 21,365
Telecom Italia Mobile ................................ 2,300,435 13,350
Total Italy (Cost $79,856) ........................... 96,688
NETHERLANDS 14.2%
Common Stocks 14.2%
ABN Amro ............................................. 399,912 7,491
ASM Lithography ...................................... 172,160 4,367
Aalberts Industries .................................. 43,150 1,032
Accell Group * ....................................... 2,391 33
Ahold ................................................ 325,123 10,806
Ahrend ............................................... 50,380 1,022
Akzo Nobel ........................................... 64,968 2,524
CSM .................................................. 157,183 7,740
Elsevier ............................................. 849,651 11,960
Equant ............................................... 60,000 2,601
Fortis Amev .......................................... 190,065 12,339
Getronics ............................................ 19,360 803
GTI .................................................. 2,752 74
ING Groep ............................................ 570,745 27,614
Koninklijke KPN ...................................... 78,257 3,041
Numico ............................................... 116,840 4,596
Philips Electronics .................................. 83,420 $ 4,438
Polygram ............................................. 137,356 8,094
Royal Dutch Petroleum ................................ 484,286 23,379
STMicroelectronics (FRF) * ........................... 44,660 2,733
TNT Post Groep ....................................... 78,257 2,094
Unilever ............................................. 270,850 20,091
Wolters Kluwer ....................................... 214,620 41,581
Total Netherlands (Cost $150,082) .................... 200,453
<PAGE>
NORWAY 1.8%
Common Stocks 1.8%
Bergesen (Class A) ................................... 38,320 531
Merkantildata ........................................ 64,000 643
Norsk Hydro .......................................... 242,296 10,530
Orkla (Class A) ...................................... 717,726 12,135
Saga Petroleum (Series A) ............................ 64,670 821
Tomra Systems ........................................ 19,800 557
Total Norway (Cost $25,261) .......................... 25,217
PORTUGAL 0.6%
Common Stocks 0.6%
Jeronimo Martins ..................................... 186,740 8,089
Total Portugal (Cost $4,201) ......................... 8,089
RUSSIA 0.1%
Common Stocks 0.1%
Lukoil (USD) ......................................... 13,576 55
Lukoil ADR (USD) ..................................... 21,497 349
Rao Gazprom ADS (USD) * .............................. 85,479 797
Total Russia (Cost $2,279) ........................... 1,201
SPAIN 4.1%
Common Stocks 4.1%
Argentaria Banca de Espana ........................... 223,204 4,857
Azkoyen .............................................. 2,750 369
Azucarera Ebro Agr ................................... 25,000 $ 546
Banco Bilbao Vizcaya ................................. 263,640 3,556
Banco Popular Espanol ................................ 21,445 1,325
Banco Santander ...................................... 520,362 9,531
Banco Santander, New ................................. 9,911 180
Empresa Nacional de Electricidad ..................... 262,136 6,606
Gas Natural .......................................... 48,581 4,184
Iberdrola ............................................ 417,295 6,740
Prosegur Seguridad ................................... 32,500 393
Repsol ............................................... 89,519 4,493
Telefonica de Espana ................................. 348,210 15,722
Total Spain (Cost $37,317) ........................... 58,502
<PAGE>
SWEDEN 4.9%
Common Stocks 4.9%
ABB (Class A) ........................................ 307,690 3,252
Assa-Abloy (Class B) ................................. 32,172 1,282
Astra (Class B) ...................................... 956,373 15,008
Atlas Copco (Class B) ................................ 198,790 4,622
Atle ................................................. 26,928 369
Electrolux (Class B) ................................. 524,500 7,895
Esselte (Class B) .................................... 36,976 540
Granges .............................................. 30,544 399
Hennes and Mauritz (Class B) ......................... 238,260 16,788
Nordbanken Holding ................................... 1,962,795 11,768
Sandvik (Class A) .................................... 36,480 750
Sandvik (Class B) .................................... 194,990 4,009
Scribona (Class B) ................................... 47,624 165
Securitas (Class B) .................................. 132,164 1,625
Sifo Group (Class B) * ............................... 47,624 183
Total Sweden (Cost $50,622) .......................... 68,655
SWITZERLAND 9.3%
Common Stocks 9.3%
ABB .................................................. 5,385 6,445
Adecco ............................................... 24,704 9,843
Credit Suisse Group .................................. 47,055 $ 7,230
Nestle ............................................... 18,275 38,834
Novartis ............................................. 14,098 25,381
Roche Holding ........................................ 1,988 23,176
Swatch Group ......................................... 325 179
Swisscom * ........................................... 6,812 2,307
Swisslog Holding ..................................... 3,991 364
UBS * ................................................ 64,474 17,673
Valora Holding ....................................... 1,070 288
Total Switzerland (Cost $105,439) .................... 131,720
<PAGE>
UNITED KINGDOM 25.0%
Common Stocks 25.0%
Abbey National ....................................... 587,080 11,379
Asda Group ........................................... 2,058,430 5,475
Ashtead Group ........................................ 142,999 469
BG ................................................... 541,176 3,551
Bodycote International ............................... 20,760 297
British Petroleum .................................... 497,000 7,378
CRT Group ............................................ 48,834 138
Cable & Wireless ..................................... 1,370,110 15,421
Cadbury Schweppes .................................... 985,753 15,096
Caradon .............................................. 1,103,223 2,308
Centrica * ........................................... 492,600 956
Chamberlain Phipps * ................................. 99,000 0
Compass Group ........................................ 1,239,000 12,575
Corporate Services Group ............................. 134,319 337
David S. Smith ....................................... 593,416 1,242
Diageo ............................................... 2,798,997 30,450
Electrocomponents .................................... 599,000 3,950
GKN .................................................. 244,000 2,939
Glaxo Wellcome ....................................... 1,070,540 33,183
John Laing (Class A) ................................. 302,152 1,517
Kingfisher ........................................... 2,377,462 21,002
Ladbroke Group ....................................... 820,250 2,979
Mayflower ............................................ 119,000 259
National Westminster Bank ............................ 2,499,410 42,000
Rank Group ........................................... 620,625 $ 2,597
Reed International ................................... 2,203,880 18,646
Rio Tinto ............................................ 524,848 6,369
Rolls Royce .......................................... 469,761 1,734
Safeway * ............................................ 1,071,000 5,378
Select Appointment ................................... 52,600 462
Serco Group .......................................... 117,500 2,065
Shell Transport & Trading ............................ 3,579,000 21,601
SmithKline Beecham ................................... 3,427,200 42,662
Tesco ................................................ 2,742,500 7,528
Tomkins .............................................. 3,201,770 14,817
Unilever ............................................. 186,000 1,868
United News & Media .................................. 1,140,390 12,616
Total United Kingdom (Cost $278,876) ................. 353,244
SHORT-TERM INVESTMENTS 3.0%
Money Market Funds 3.0%
Reserve Investment Fund, 5.41% * ..................... 41,986,223 41,986
Total Short-Term Investments (Cost $41,986) .......... 41,986
<PAGE>
Total Investments in Securities
98.9% of Net Assets (Cost $1,080,021) ................ $ 1,396,292
Other Assets Less Liabilities ........................ 15,716
NET ASSETS ........................................... $ 1,412,008
* Non-income producing
# Seven-day yield
++ Securities contain some restrictions as to public resale - total of such
securities at year-end amounts to 0.109% of net assets.
ADR American depository receipt
ADS American depository share
FRF French franc
USD U.S. dollar 12
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price European Stock Fund
- --------------------------------------------------------------------------------
October 31, 1998
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
In thousands
ASSETS
Investments in securities, at value (cost $1,080,021) ........... $1,396,292
Securities lending collateral pool .............................. 62,146
Other assets .................................................... 22,183
Total assets .................................................... 1,480,621
LIABILITIES
Securities lending collateral ................................... 62,146
Other liabilities ............................................... 6,467
Total liabilities ............................................... 68,613
NET ASSETS ...................................................... $1,412,008
Net Assets Consist of:
Accumulated net investment income - net of distributions ........ $ 17,705
Accumulated net realized gain/loss - net of distributions ....... 128,464
Net unrealized gain (loss) ...................................... 316,362
Paid-in-capital applicable to 63,079,540 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized .............. 949,477
NET ASSETS ...................................................... $1,412,008
NET ASSET VALUE PER SHARE ....................................... $ 22.38
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price European Stock Fund
- --------------------------------------------------------------------------------
================================================================================
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/98
INVESTMENT INCOME
Income
Dividend (net of foreign taxes of $4,186) ............. $ 27,167
Interest .............................................. 4,042
Total income .......................................... 31,209
Expenses
Investment management ................................. 10,502
Shareholder servicing ................................. 2,103
Custody and accounting ................................ 503
Prospectus and shareholder reports .................... 171
Registration .......................................... 148
Legal and audit ....................................... 20
Directors ............................................. 7
Miscellaneous ......................................... 11
Total expenses ........................................ 13,465
Net investment income ......................................... 17,744
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss)
Securities ............................................ 135,033
Foreign currency transactions ......................... (2,224)
Net realized gain (loss) .............................. 132,809
Change in net unrealized gain or loss
Securities ............................................ 33,260
Other assets and liabilities
denominated in foreign currencies ..................... 55
Change in net unrealized gain or loss ................. 33,315
Net realized and unrealized gain (loss) ....................... 166,124
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ........................................ $ 183,868
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
T. Rowe Price European Stock Fund
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
In thousands
<CAPTION>
Year
Ended
10/31/98 10/31/97
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income .................................................... $ 17,744 $ 12,470
Net realized gain (loss) ................................................. 132,809 47,603
Change in net unrealized gain or loss .................................... 33,315 96,093
Increase (decrease) in net assets from operations ........................ 183,868 156,166
Distributions to shareholders
Net investment income .................................................... (12,319) (10,997)
Net realized gain ........................................................ (49,758) (8,458)
Decrease in net assets from distributions ................................ (62,077) (19,455)
Capital share transactions *
Shares sold .............................................................. 852,885 538,663
Distributions reinvested ................................................. 59,319 18,533
Shares redeemed .......................................................... (606,070) (414,711)
Increase (decrease) in net assets from capital
share transactions ....................................................... 306,134 142,485
NET ASSETS
Increase (decrease) during period ................................................ 427,925 279,196
Beginning of period .............................................................. 984,083 704,887
END OF PERIOD .................................................................... $ 1,412,008 $ 984,083
*Share information
Shares sold .............................................................. 38,105 28,889
Distributions reinvested ................................................. 3,056 1,070
Shares redeemed .......................................................... (27,678) (21,997)
Increase (decrease) in shares outstanding ................................ 13,483 7,962
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price European Stock Fund
- --------------------------------------------------------------------------------
October 31, 1998
================================================================================
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company industry;
these principles may require the use of estimates by fund management.
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.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
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.
SECURITIES LENDING The fund lends its securities to approved brokers to
earn additional income and receives cash and U.S. Treasury securities as
collateral against the loans. Cash collateral received is invested in a money
market pooled account by the fund's lending agent. Collateral is maintained over
the life of the loan in an amount not less than 100% of the value of loaned
securities. Although 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. At October 31, 1998, the value of
loaned securities was $64,281,000; aggregate collateral consisted of $62,146,000
in the securities lending collateral pool and U.S. Treasury Securities valued at
$5,075,000.
OTHER Purchases and sales of portfolio securities, other than short-term
securities, aggregated $564,459,000 and $323,473,000, respectively, for the year
ended October 31, 1998.
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 October 31, 1998, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$1,080,021,000. Net unrealized gain aggregated $316,271,000 at period end, of
which $346,753,000 related to appreciated investments and $30,482,000 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 $914,000 was payable
at October 31, 1998. 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 October 31, 1998, and for the year ended then ended,
the effective annual group fee rate was 0.32%. The fund pays a pro-rata share of
the group fee based on the ratio of its net assets to those of the group.
<PAGE>
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. The fund incurred expenses
pursuant to these related party agreements totaling approximately $1,692,000 for
the year ended October 31, 1998, of which $190,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum)
may invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings to
it and in proportion to the average daily value of its shares owned by Spectrum,
pursuant to special servicing agreements between and among Spectrum, the
underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. Spectrum International Fund
held approximately 0.9% of the outstanding shares of the European Stock Fund at
October 31, 1998. For the year ended then ended, the fund was allocated $83,000
of Spectrum expenses, $10,000 of which was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve and
Government Reserve Funds are offered as cash management options only to mutual
funds and other accounts managed by T. Rowe Price and its affiliates and are not
available to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the year ended October 31,
1998, totaled $3,384,000 and are reflected as interest income in the
accompanying Statement of Operations.
During the year ended October 31, 1998, the fund, in the ordinary course of
business, placed security purchase and sale orders aggregating $53,422,000 with
certain affiliates of the manager and paid commissions of $105,000 related
thereto.
<PAGE>
================================================================================
Tax Information (Unaudited) for the Tax Year Ended 10/31/98
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included:
* $2,041,000 from short-term capital gains,
* $47,717,000 from long-term capital gains; of which $30,952,000 was subject
to the 20% rate gains category and $16,765,000 to the 28% rate gains
category.
The fund will pass through foreign source income of $21,869,000 and foreign
taxes paid of $3,926,000.
================================================================================
<PAGE>
T. Rowe Price European Stock Fund
- --------------------------------------------------------------------------------
================================================================================
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS OF T. ROWE PRICE INTERNATIONAL FUNDS, INC. AND
SHAREHOLDERS OF EUROPEAN STOCK FUND
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of European Stock Fund (one of the
portfolios constituting T. Rowe Price International Funds, Inc., hereafter
referred to as the "Fund") at October 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for each
of the fiscal periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1998 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 18, 1998
<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*Access [Registration Mark] and
the T. Rowe Price Web site on the Internet. Address: www.troweprice.com
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 all your accounts with T. Rowe Price.
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
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500*
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons**
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Total Equity Market Index
Value
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
<PAGE>
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 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 Intermediate Bond+
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
Emerging Markets Bond
Global 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
<PAGE>
BLENDED ASSET FUNDS
- --------------------------------------------------------------------------------
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
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
* Formerly named Equity Index.
** Closed to new investors.
*** Formerly named Florida Insured Intermediate Tax-Free.
+ Formerly named Tax-Free Insured Intermediate Bond.
++ Formerly named Global Government Bond.
+++ Neither the funds nor their share prices are insured or guaranteed by the
U.S. government.
Please call for a prospectus. Read it carefully before investing.
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.
<PAGE>
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
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. F79-050 10/31/98
