<PAGE>
Annual Report
INTERNATIONAL
STOCK FUND
----------------
OCTOBER 31, 1998
----------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. ROWE PRICE
<PAGE>
REPORT HIGHLIGHTS
International Stock Fund
. International stocks were strong through July, but problems in Russia led to
a sharp downturn in most markets before they rallied near the end of the
period.
. The fund's return was a negative 6.38% for the six months ended October 31
but a positive 7.48% for the 12-month period, ahead of the Lipper peer group
average but behind the MSCI EAFE index.
. The fund's superior returns against the Lipper average during the past six
months were due to positions in quality growth stocks that held up relatively
well during the correction.
. More than 70% of fund assets were invested in Europe, 16% in Japan, and the
balance in Latin America, other Asian markets, and cash reserves.
. We believe the fund's geographical allocation and emphasis on reasonably
priced growth stocks will provide attractive returns over time.
<PAGE>
FELLOW SHAREHOLDERS
The fiscal year ended October 31, 1998, comprised two quite separate parts. In
the first, world stock markets recovered well from the Asian crisis of late
1997, and by July many of them had reached new highs. From this point on,
investor confidence was again challenged by problems in emerging markets, but
this time the culprit was Russia. The collapse of the ruble, together with
Russia's de facto default on its government bonds, precipitated a severe
correction in both established and less developed global markets. Despite these
traumas, investor confidence did not disappear entirely, and recent months
witnessed a good recovery as your fund appreciated more than 9% in October
alone.
Fund results for the fiscal year were significantly better than the Lipper
International Funds Average. During the past 12 months, the fund's return was
behind that of the Morgan Stanley Capital International Europe Australasia Far
East (MSCI EAFE) Index. This shortfall was mainly due to the weakness of Latin
America where the fund held moderate positions that are not part of the index.
Stock selection, which was biased toward growth companies rather than cyclical
stocks, was also adverse. For the six-month period, the fund posted a decline
moderately greater than the index itself but significantly better than the
Lipper average, and our bias toward quality growth shares helped us versus
Lipper as these stocks held up relatively well during last summer's steep
correction.
- ----------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------
Periods Ended 10/31/98 6 Months 12 Months
- --------------------------------------------------------------
International Stock Fund -6.38% 7.48%
..............................................................
MSCI EAFE Index -4.88 9.95
..............................................................
Lipper International
Funds Average -10.44 4.07
For most of the year, Europe provided the safest markets for
the international investor as its economies made steady
progress and its currencies strengthened against the U.S.
dollar. Although these markets went
1
<PAGE>
- --------------------------------------------------------------------------------
PREPARING FOR THE YEAR 2000
- --------------------------------------------------------------------------------
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.
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).
2
<PAGE>
through an uncomfortable period in late summer, the advent of Economic and
Monetary Union (EMU) in January 1999 is an important milestone in the history of
European integration and presents opportunities for both corporations and
investors. In contrast, Japan's economy continued to be disappointing and a
recession seems to have widened its grip. Concern focused on the inability of
the authorities to confront the country's banking crisis, and a stream of
disappointing corporate earnings also damaged sentiment. Elsewhere in Asia, the
erstwhile tiger economies turned down following the financial collapse a year
ago, but authorities in Hong Kong were at least able to fight off the
speculators and maintain the currency peg to the U.S. dollar.
In Latin America, there was optimism during the summer that these economies
would avoid the contagion that started in the Pacific and reemerged with
Russia's financial collapse in July. After all, Latin America had courageously
pursued a path of reform and it appeared as though stock markets there deserved
more sympathetic treatment. However, sympathy is a sentiment in short supply
when fear is in the saddle, and Latin American markets were eventually dragged
into the turmoil. Brazil, the key economy in the region, has so far survived the
worst of the crisis, and the recently announced $41 billion support package
sponsored by the International Monetary Fund (IMF) will at least buy the country
more time.
INVESTMENT REVIEW
Europe
In May 1998, a significant event occurred along the road to EMU. This was the
point at which the European Monetary Institute (EMI) would decide which
candidate countries had attained the economic convergence criteria of the
Maastricht Treaty and would adopt the euro as their currency on January 1, 1999.
At the time it was negotiated, the Maastricht Treaty laid down tough benchmarks
for public finance, inflation, and interest rates. Skeptics doubted whether many
countries would achieve these benchmarks, and it was a remarkable accomplishment
that 11 of the 15 members of the European Union made the grade. Only Greece
failed to meet the Maastricht criteria while the U.K., Sweden, and Denmark
decided for different reasons not to join EMU in the first round. The EMI has
now converted itself into the European Central Bank (ECB), which beginning in
January 1999 will have sole responsibility for monetary policy over the 11
countries joining EMU -- the so-called Euro Zone. Until the euro appears as a
3
<PAGE>
physical currency in 2002, the new ECB will ensure that all member currencies
trade at fixed exchange rates with one another and with the euro. National notes
and coins will be steadily withdrawn after the euro begins to circulate, and by
mid-2002 it will be the only currency of the Euro Zone.
The advent of a single currency will bring greater transparency to the single
market and real cost savings for business. For some time now there has been much
merger and acquisition activity as corporations positioned themselves for this
change. This was one factor fueling strong markets in Europe, but pension fund
reform and the prospect of converting savers into investors have also helped
sentiment. The arrival of the euro will not by itself have any impact on your
fund's portfolio, but the longer-term benefits of EMU remain compelling and
support a strategy where 63% of the fund's assets are in EU member states (72%
in Europe overall) and 40.4% are in countries going for full monetary union.
The U.K. has the largest economy of the four EU member states not adopting the
euro in January 1999. At the time of the original Maastricht negotiations, the
U.K. secured an opt-out clause. With the U.K. not joining the rest of Europe,
Prime Minister Tony Blair and his government are happy to continue with this
wait-and-see policy. Hampered by strong sterling and relatively high interest
rates, the U.K. manufacturing sector has been under pressure for some time, and
signs of a slowdown recently appeared in the service sector too. Not
surprisingly, the Bank of England loosened monetary policy with several interest
rate cuts, but because most of
- ------------------
MARKET PERFORMANCE
- --------------------------------------------------------------------------------
Six Months Local Local Currency U.S.
Ended 10/31/98 Currency vs. U.S. Dollars Dollars
- --------------------------------------------------------------------------------
France -8.17% 8.29% -0.55%
................................................................................
Germany -8.44 8.35 -0.80
................................................................................
Hong Kong 9.60 - 9.60
................................................................................
Italy -11.13 8.16 -3.88
................................................................................
Japan -15.99 13.39 -4.74
................................................................................
Mexico -17.98 -15.70 -30.85
................................................................................
Netherlands -15.78 8.18 -8.89
................................................................................
Norway -27.55 1.16 -26.70
................................................................................
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.; using MSCI indices.
4
<PAGE>
Britain's trade is with Continental Europe, the authorities will want to ensure
that sterling closely shadows the euro.
The U.K. stock market, where we committed nearly 19% of portfolio assets,
behaved reasonably well during recent turbulence, with pharmaceutical giants
such as Glaxo Wellcome and SmithKline Beecham exhibiting their defensive
qualities. As on the Continent, companies have been positioning themselves for
an ever more integrated Europe. A good example is Kingfisher, which revealed
plans to swap its home improvement business for a stake in Castorama, the number
one do-it-yourself retailer in France. British Petroleum surprised the market
with its merger with Amoco in the U.S., and we recently added to Unilever, the
multinational consumer goods company that continues to increase profits by
restructuring, cutting costs, and improving asset utilization.
Turning to the Continent, the most important news was Germany's election of
Gerhard Schroeder as the new Chancellor, marking a political shift to the
center-left. The core Euro Zone economies of Germany, France, and Italy are each
showing similar characteristics of sluggish growth and stubbornly high
unemployment. Their left-of-center governments are putting pressure on the ECB
to adopt more stimulatory policies, but with considerable independence built
into its constitution, the ECB's priority will be controlling inflation. All
Continental markets fell sharply in August and early September, but declines
were softened for U.S. investors by the strength of local currencies against the
dollar. Our core positions such as publishers Wolters Kluwer (the Netherlands)
and Reed International (U.K.) continued to show steady profit growth, and their
stocks held up well. In France the drug company Sanofi and retailer Pinault-
Printemps announced better-than-expected results, as did the pharmaceutical
wholesaler and retailer Gehe, one of our largest positions in Germany.
Although the portfolio is slightly underweighted in the financial sector, many
leading stocks suffered during the recent correction. In the Netherlands, ING
and leading Swiss banks Credit Suisse and UBS fell sharply when they announced
higher-than-expected exposure to Russia and other emerging markets.
Far East
Japan's economy moved into recession with the announcement that GDP for the
quarter ended September 30 contracted 0.8% compared with the first fiscal
quarter. Policymakers face two major issues. First,
5
<PAGE>
since private consumption is such a large component of GDP, they badly need to
stimulate consumer spending. Traditionally, Japanese corporations have looked
after their employees from cradle to grave, but these cherished values have been
challenged with rising unemployment and widespread discussion on whether Japan
can really provide for its growing number of retirees. Because of such
uncertainties, consumer spending remains depressed despite historically low
interest rates.
The second issue is the country's banking crisis, which came to a head a year
ago but has still not been confronted fully by the authorities. Many of Japan's
banks are technically insolvent even though the full extent of their bad debts
has not been disclosed. The government should probably close the weak banks and
recapitalize the better ones, but continuing inaction has contributed to poor
sentiment in the stock market. The Tankan survey of business confidence for
September revealed that sentiment was worse than expected. This survey is a key
leading indicator for future growth and capital expenditure, and it is worrisome
that it showed no sign of improvement.
There has been widespread dissatisfaction in Japan with the government's
performance, and the disastrous showing of the ruling Liberal Democratic Party
(LDP) in July's election was no surprise. Following this setback Prime Minister
Hashimoto resigned, but it looked like business as usual when Keizo Obuchi, the
most conservative of the three leading candidates, became LDP leader and Prime
Minister. It remains to be seen whether he will implement the radical policies
Japan needs. Perhaps the biggest surprise came from the currency market when the
yen recovered sharply against the U.S. dollar in October. Many hedge fund
operators had been borrowing yen to buy higher-yielding U.S. Treasuries. As the
yen weakened, this strategy provided a currency gain, but as the yen recovered
traders scrambled to cover their open positions, which accelerated its upward
momentum.
- --------------------------
Geographic Diversification
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Europe 72%
Japan 16%
Far East 5%
Latin America 4%
Others and Reserves 3%
Based on the assets as of 10/31/98
6
<PAGE>
The Japanese market was weak during the past six months, but the strength of the
yen moderated these declines for U.S. investors, as can be seen in the table on
page 4. We biased our holdings toward international companies operating in the
technology, consumer electronics, and business equipment fields such as Sony,
Canon, and Matsushita. These stocks performed relatively well, particularly
during periods when the yen was weak. Recently they have started to look
somewhat overvalued, and since many of them are exporters their prospects will
be hampered if the yen improves further. Therefore, we reduced positions in
Canon and TDK and invested the proceeds in more cyclical growth companies with
strong cash flow.
Our positions in the rest of Asia were very small and were dominated by the
stock markets of Australia and Hong Kong. The Australian economy has shown
moderate growth, a considerable achievement given the downturn in Asian
countries that are now Australia's major trading partners. In the recent general
election, Mr. Howard's liberal coalition just managed to retain power, which was
well received by the stock market. The economy will benefit from gradual labor
reform and further privatization of government assets. Our positions in
Australia included media conglomerate News Corporation, banking stocks such as
Westpac Bank and National Australian Bank, and several utilities. Given the
continued deflation in world commodity prices, we have avoided the natural
resource sector.
In Hong Kong, sentiment was dominated by a fierce battle to maintain the
exchange rate peg between the Hong Kong and U.S. dollars in the face of intense
speculation to break it. As the pressure on the Hong Kong currency mounted, the
first tactic was a dramatic increase in interest rates that only served to
provide speculators with an opportunity to sell stocks short in a falling
market. Hong Kong's
- ------------------------
INDUSTRY DIVERSIFICATION
- --------------------------------------------------------------------------------
Percent of Net Assets
4/30/98 10/31/98
- --------------------------------------------------------------------------------
Services 26.9% 29.3%
...............................................................................
Consumer Goods 19.7 21.1
...............................................................................
Finance 21.0 19.7
...............................................................................
Capital Equipment 11.3 11.2
...............................................................................
Energy 10.8 9.7
...............................................................................
Materials 4.1 3.8
...............................................................................
Multi-industry 2.7 2.0
...............................................................................
All Other 0.1 0.1
...............................................................................
Reserves 3.4 3.1
- --------------------------------------------------------------------------------
Total 100.0% 100.0%
7
<PAGE>
Financial Secretary broadened his defense by using Hong Kong's foreign exchange
reserves to support the stock market -- a courageous strategy considering the
free market principles that have made an important contribution to Hong Kong's
prosperity. Happily the strategy worked, the speculators retreated, and the
currency peg held, but the price paid was significant damage to the economy
itself, particularly the real estate market that is so sensitive to interest
rates. Although we expect the broad economic picture in Hong Kong to remain
difficult, its stock market houses some of the region's strongest and best-
managed companies. Trading, transport, and real estate conglomerate Hutchison
Whampoa remained a core holding and performed well during the past six months.
We also had positions in infrastructure plays such as Hong Kong's HK Telecom and
China's Huaneng Power International.
At the end of October, your portfolio had negligible positions in other Pacific
markets where the economies will take some time to recover from the financial
collapse that began a year ago. Having said this, the stock markets in many of
these emerging economies have recently stabilized following their disastrous
falls during the early summer. We are not yet tempted to return to these markets
but continue to monitor the situation carefully.
Latin America
The stock markets of Latin America were weak for most of the year and continued
to show extreme volatility. Brazil suffered huge outflows of foreign exchange
reserves in both August and September, and the exchange rate of the real against
the U.S. dollar was maintained only by a massive increase in interest rates. By
the middle of September, a vicious circle of higher interest rates, failing
confidence, and increased capital outflows threatened to spiral into a major
market rout, but an indication that there would be a $41 billion support package
sponsored by the IMF helped stabilize the capital markets. President Cardoso
seemed to have persuaded the electorate that he had sufficient experience and
skill to deal with the financial crisis and was reelected with a comfortable
majority. However the major weakness of the Brazilian economy is the
persistently high fiscal deficit. Now that Brazil's financial crisis has receded
and elections are over, the markets will be looking for significant action on
the deficit rather than statements of good intent.
In contrast to Brazil, Argentina demonstrated its commitment
to fiscal discipline by cutting spending more than $1.3 billion to achieve the
8
<PAGE>
fiscal deficit target of 1% of GDP agreed to with the IMF. Argentina was one of
the region's better-performing stock markets over the six months, and increasing
evidence of its economic self-discipline was a contributing factor. In Mexico,
the economy held up remarkably well despite rising interest rates and a weak
peso. Its stock market was also battered during the emerging market crisis, but
its closer ties to the U.S. will afford some protection.
Key holdings include telecommunications giants Telebras in Brazil and Telmex in
Mexico. Both companies have great potential as rising prosperity increases fixed
line telephone penetration in these highly populated countries and powers the
growth of cellular technology.
INVESTMENT POLICY AND OUTLOOK
The fiscal year under review was frustrating for international investors. It
started well, and by midsummer many markets reached new highs, but the
turbulence of August and early September was very disappointing. Despite the
soundness of the U.S. economy, even Wall Street was caught up in this worldwide
correction.
Now that stock markets have settled down, it is worth taking a cold hard look at
how world economies might develop from here. The starting point should be
Europe, which accounts for just over 70% of the portfolio. In only a few weeks,
the euro will arrive and 11 European countries will make a major commitment to
economic integration when they adopt full monetary union. This by itself will be
a significant achievement, but the price has been lower economic growth than
would otherwise have been the case. The prize for their endeavors, however, will
be a single currency market where the potential is underpinned by sound public
finance, lower inflation, and a current account surplus. This will provide a
strong platform for future growth and is in sharp contrast to economies of the
Pacific that are still struggling. Also, many observers now feel the euro will
be a strong currency against the dollar, and if more international trade is
denominated in the euro, central banks throughout the world will increasingly
regard it as a key currency for their foreign exchange reserves. Companies in
which we invest are already exploiting the opportunities of closer integration
in Europe, and management increasingly recognizes the importance of shareholder
value. For all these reasons, it makes sense that Europe should dominate our
international portfolio.
9
<PAGE>
It is perhaps more difficult to make a compelling case for other overseas
markets, but there is still plenty of opportunity. Despite continuing problems
in Japan, its stock market is too large to ignore entirely and is showing signs
of stabilizing after a long decline. As we mentioned before, Tokyo remains the
home of world-class corporations, many of which form the heart of our Japanese
portfolio. These holdings have served us well, and it is time to begin
considering some more domestically oriented blue chips. However, although we can
find Japanese companies we like, there is still too much economic uncertainty
for us to make a major push back into this market.
Turning to emerging markets, the economic turmoil that overwhelmed the smaller
Asian economies a year ago has yet to work itself out, and our positions in Asia
outside of Japan remain very low. In contrast with some of the smaller Asian
economies, governments of key Latin American countries are committed to reform
and have shown admirable economic discipline during difficult times. We believe
they are well positioned for the future and any international portfolio,
including ours, should have a commitment to this part of the world.
Thus, the fund's geographical allocation seems appropriate, and our commitment
to growth companies priced at reasonable valuations will be helpful, in our
view, if we encounter a period of slower economic growth. We believe this
strategy makes sense for the current environment and will prove rewarding in the
future.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
November 23, 1998
10
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
10/31/98
- ------------------------------------------------------------------------------
National Westminster Bank, United Kingdom 2.4%
..............................................................................
Wolters Kluwer, Netherlands 2.2
..............................................................................
SmithKline Beecham, United Kingdom 2.1
..............................................................................
Nestle, Switzerland 2.0
..............................................................................
Glaxo Wellcome, United Kingdom 1.7
- ------------------------------------------------------------------------------
Vivendi, France 1.5
..............................................................................
Royal Dutch Petroleum, Netherlands 1.5
..............................................................................
Diageo, United Kingdom 1.5
..............................................................................
Novartis, Switzerland 1.4
..............................................................................
Kingfisher, United Kingdom 1.3
- ------------------------------------------------------------------------------
ING Groep, Netherlands 1.3
..............................................................................
Shell Transport & Trading, United Kingdom 1.2
..............................................................................
Unilever, Netherlands 1.1
..............................................................................
Roche Holdings, Switzerland 1.1
..............................................................................
Telecom Italia, Italy 1.1
- ------------------------------------------------------------------------------
Reed International, United Kingdom 1.1
..............................................................................
KBC Bancassurance Holding, Belgium 1.0
..............................................................................
Total, France 1.0
..............................................................................
UBS, Switzerland 1.0
..............................................................................
Gehe, Germany 1.0
- ------------------------------------------------------------------------------
SAP, Germany 0.9
..............................................................................
Pinault Printemps Redoute, France 0.9
..............................................................................
Telebras, Brazil 0.9
..............................................................................
Bayerische Vereinsbank, Germany 0.9
..............................................................................
Telefonica de Espana, Spain 0.9
- ------------------------------------------------------------------------------
Total 33.0%
11
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
- ------------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with a broad-based average or index. The index
return does not reflect expenses, which have been deducted from the fund's
return.
INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
As of 10/31/98
Lipper International
MCSI EAFE Index International Stock Fund Funds Average
10/31/88 10000 10000 10000
10/31/89 10840 11488 11524
10/31/90 9479 11983 11504
10/31/91 10172 13136 12470
10/31/92 8860 12737 11922
10/31/93 12216 17058 15951
10/31/94 13484 19111 17777
10/31/95 13475 19183 17892
10/31/96 14930 22037 19996
10/31/97 15664 23779 22444
10/31/98 17223 25556 23399
- --------------------------------------
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.
Periods Ended 10/31/98 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
International Stock Fund 7.48% 10.03% 8.42% 9.84%
................................................................................
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
12
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<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 $ 14.14 $ 13.47 $ 12.09 $ 12.84 $ 11.74
....................................................................
Investment activities
Net investment income 0.23 0.19 0.19 0.18 0.09
Net realized and
unrealized gain (loss) 0.77 0.86 1.57 (0.19) 1.30
....................................................................
Total from
investment activities 1.00 1.05 1.76 (0.01) 1.39
....................................................................
Distributions
Net investment income (0.20) (0.18) (0.18) (0.12) (0.09)
Net realized gain (0.55) (0.20) (0.20) (0.62) (0.20)
....................................................................
Total distributions (0.75) (0.38) (0.38) (0.74) (0.29)
....................................................................
NET ASSET VALUE
End of period $ 14.39 $ 14.14 $ 13.47 $ 12.09 $ 12.84
--------------------------------------------------------------------
Ratios/Supplemental Data
Total return+ 7.48% 7.90% 14.87% 0.38% 12.03%
..................................................................................................................
Ratio of expenses to
average net assets 0.85% 0.85% 0.88% 0.91% 0.96%
..................................................................................................................
Ratio of net investment
income to average
net assets 1.50% 1.33% 1.58% 1.56% 1.11%
..................................................................................................................
Portfolio turnover rate 12.2% 15.8% 11.6% 17.8% 22.9%
..................................................................................................................
Net assets, end of period
(in millions) $ 9,537 $ 10,005 $ 8,776 $ 6,386 $ 6,206
..................................................................................................................
</TABLE>
+ 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.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
October 31, 1998
- --------------------------
PORTFOLIO OF INVESTMENTS Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
ARGENTINA 0.8%
Common Stocks 0.8%
Banco de Galicia Buenos Aires
(Class B) ADR (USD) 320,744 $ 5,473
................................................................................
Banco Frances del Rio de la Plata ADR (USD) 351,620 7,340
................................................................................
Perez Companc (Class B) 2,307,027 11,400
................................................................................
Telefonica de Argentina (Class B) ADR (USD) 599,410 19,818
................................................................................
YPF Sociedad Anonima (Class D) ADR (USD) 1,253,442 36,272
................................................................................
Total Argentina (Cost $73,753) 80,303
.................
AUSTRALIA 2.6%
Common Stocks 2.4%
AMP Limited * 830,000 9,880
................................................................................
Australian Gas Light Company 1,980,598 14,256
................................................................................
Brambles Industries 554,000 12,159
................................................................................
Broken Hill Proprietary 1,356,316 11,537
................................................................................
Colonial Limited 4,002,430 13,122
................................................................................
Commonwealth Bank of Australia 1,767,106 21,983
................................................................................
Fosters Brewing Group 2,436,000 5,988
................................................................................
Goodman Fielder 5,542,000 7,324
................................................................................
John Fairfax Holdings 5,444,000 9,534
................................................................................
Lend Lease 463,444 10,231
................................................................................
National Australia Bank 848,060 11,245
................................................................................
News Corporation 2,953,334 20,190
................................................................................
Publishing & Broadcasting 2,540,850 10,091
................................................................................
Tabcorp Holdings 2,378,000 15,831
................................................................................
Telstra 6,716,693 26,676
................................................................................
Westpac Bank 3,140,754 19,113
................................................................................
Woodside Petroleum 1,675,000 8,858
................................................................................
228,018
.................
Preferred Stocks 0.2%
News Corporation 2,586,750 15,564
................................................................................
Star City Holdings 9,409,000 6,415
................................................................................
21,979
.................
Total Australia (Cost $214,570) 249,997
.................
14
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- -------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
BELGIUM 1.9%
Common Stocks 1.9%
Dexia 85,972 $ 13,956
................................................................................
Fortis 159,145 45,709
................................................................................
KBC Bancassurance Holding 1,357,980 94,729
................................................................................
Societe Europeenne des Satellites * 57,900 9,655
................................................................................
UCB 2,709 15,811
................................................................................
Total Belgium (Cost $77,469) 179,860
.................
BRAZIL 1.9%
Common Stocks 0.1%
Pao de Acucar ADR (USD) 345,830 5,577
................................................................................
Telecomunicacoes de Sao Paulo * 4,095,886 445
................................................................................
Unibanco GDR (USD) 421,960 7,384
................................................................................
13,406
.................
Preferred Stocks 1.8%
Banco Bradesco 1,370,562,854 7,813
................................................................................
Banco Itau 16,287,000 7,919
................................................................................
Brahma 18,014,535 8,457
................................................................................
Cia Cimento Portland Itau 18,159,000 2,436
................................................................................
Cia Energetica Minas Gerais 321,753,231 6,257
................................................................................
Cia Energetica Minas Gerais ADR, Sponsored,
Nonvoting (USD) 383,727 7,387
................................................................................
Encorpar * 13,940,000 19
................................................................................
Pao de Acucar GDS (USD) 21,100 340
................................................................................
Petrol Brasileiros 164,345,189 20,665
................................................................................
Telebras ADR (USD) 1,163,133 88,325
................................................................................
Telecomunicacoes de Sao Paulo 103,449,243 17,344
................................................................................
Telecomunicacoes de Sao Paulo Celular
(Class B) * 98,621,744 4,878
................................................................................
171,840
.................
Total Brazil (Cost $230,979) 185,246
.................
CANADA 0.2%
Common Stocks 0.2%
Alcan Aluminum 500,630 12,572
................................................................................
Royal Bank of Canada 185,920 8,567
................................................................................
Total Canada (Cost $15,537) 21,139
.................
15
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CHILE 0.1%
Common Stocks 0.1%
Chilectra ADR (144a) (USD) 306,640 $ 5,941
................................................................................
Compania Cervecerias Unidas ADS (USD) 160,311 2,886
................................................................................
Santa Isabel ADR (USD) 7,784 45
................................................................................
Total Chile (Cost $8,129) 8,872
.................
CHINA 0.2%
Common Stocks 0.2%
Huaneng Power International ADR (USD) * 1,251,000 17,201
................................................................................
Total China (Cost $23,637) 17,201
.................
CZECH REPUBLIC 0.1%
Common Stocks 0.1%
SPT Telecom 357,640 5,411
................................................................................
Total Czech Republic (Cost $3,397) 5,411
.................
DENMARK 0.4%
Common Stocks 0.4%
Den Danske Bank 138,950 18,864
................................................................................
Tele Danmark (Class B) 60,017 6,537
................................................................................
Unidanmark (Class A) 121,329 9,247
................................................................................
Total Denmark (Cost $15,310) 34,648
.................
FINLAND 0.6%
Common Stocks 0.6%
Nokia (Class A) 598,684 54,545
................................................................................
Total Finland (Cost $6,928) 54,545
.................
FRANCE 10.4%
Common Stocks 10.4%
AXA 591,660 66,877
................................................................................
Accor 48,103 10,104
................................................................................
Alcatel Alsthom 338,684 37,734
................................................................................
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- -------------------------------------------------------------------------------
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
Canal Plus 35,940 $ 8,720
.......................................................................
Carrefour 61,818 41,035
.......................................................................
Cie de St. Gobain 260,578 38,553
.......................................................................
Credit Commercial de France 382,844 26,888
.......................................................................
Danone 138,690 36,670
.......................................................................
Dexia France 76,168 11,228
.......................................................................
Dexia France, Bearer 65,532 9,660
.......................................................................
Dexia France, Registered 1999++ 55,140 8,128
.......................................................................
Elf Aquitaine 292,965 33,906
.......................................................................
GTM Entrepose 75,850 8,219
.......................................................................
L'Oreal 34,948 19,971
.......................................................................
Lafarge 164,547 16,822
.......................................................................
Lapeyre 175,400 15,469
.......................................................................
Legrand 79,363 20,227
.......................................................................
Pathe 50,590 9,661
.......................................................................
Pinault Printemps Redoute 533,300 89,269
.......................................................................
Primagaz 7,718 695
.......................................................................
Sanofi 443,739 69,485
.......................................................................
Schneider 744,562 44,197
.......................................................................
Societe Generale 205,414 27,175
.......................................................................
Sodexho Alliance 356,006 69,139
.......................................................................
Television Francaise 220,354 36,409
.......................................................................
Total (Class B) 794,134 91,621
.......................................................................
Vivendi 641,532 146,530
.......................................................................
Total France (Cost $643,165) 994,392
...................
GERMANY 7.6%
Common Stocks and Warrants 7.0%
Allianz 161,010 55,209
.......................................................................
Bayer 857,942 34,856
.......................................................................
Bayerische Vereinsbank 1,084,037 86,056
.......................................................................
Bilfinger & Berger 14,790 295
.......................................................................
Buderus 16,705 6,948
.......................................................................
Deutsche Bank 777,548 48,347
.......................................................................
Deutsche Telekom 1,376,418 37,491
.......................................................................
Dresdner Bank 1,121,932 43,685
.......................................................................
Dresdner Bank, Warrants, 4/30/02 * 603,525 8,526
.......................................................................
17
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- -------------------------------------------------------------------------------
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
Gehe 1,207,752 $ 90,773
.......................................................................
Hoechst 321,230 13,419
.......................................................................
Hornbach Baumarkt 63,890 2,777
.......................................................................
Mannesmann 728,980 71,732
.......................................................................
Rhoen Klinikum 169,688 16,902
.......................................................................
SAP 132,900 55,759
.......................................................................
Siemens 335,512 20,173
.......................................................................
Veba 1,000,746 55,882
.......................................................................
Volkswagen 206,610 15,529
.......................................................................
664,359
...................
Preferred Stocks 0.6%
Fielmann 104,076 4,681
.......................................................................
Fresenius 56,550 9,695
.......................................................................
Hornbach Holdings 121,630 9,164
.......................................................................
SAP 70,579 34,384
.......................................................................
57,924
...................
Total Germany (Cost $540,838) 722,283
...................
HONG KONG 1.4%
Common Stocks 1.4%
CLP Holdings 3,074,000 17,424
.......................................................................
Cheung Kong Holdings 958,000 6,556
.......................................................................
Hang Seng Bank 1,095,000 9,472
.......................................................................
Henderson Land Development 3,781,000 18,649
.......................................................................
Hong Kong Telecommunications 7,728,400 15,467
.......................................................................
Hutchison Whampoa 8,625,000 61,806
.......................................................................
Sun Hung Kai Properties 926,000 6,426
.......................................................................
Total Hong Kong (Cost $116,769) 135,800
...................
INDIA 0.2%
Common Stocks 0.2%
Mahanagar Telephone GDR (USD) 970,000 10,646
.......................................................................
State Bank of India GDR (USD) 1,042,500 8,418
.......................................................................
Total India (Cost $26,351) 19,064
...................
18
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- ------------------------------------------------------------------------------
Shares/Par Value
- ------------------------------------------------------------------------------
In thousands
IRELAND 0.0%
Common Stocks 0.0%
CBT Group ADR (USD) * 353,042 $ 4,214
......................................................................
Total Ireland (Cost $17,967) 4,214
..................
ITALY 5.3%
Common Stocks 5.3%
Assicurazioni Generali 1,132,652 40,552
......................................................................
Banca Commerciale Italiana 2,289,000 14,143
......................................................................
Banca di Roma 19,025,000 33,187
......................................................................
Credito Italiano 10,845,666 58,212
......................................................................
ENI 9,593,855 57,052
......................................................................
Gucci Group (USD) 283,571 10,811
......................................................................
IMI 3,119,507 47,947
......................................................................
Industrie Natuzzi ADR (USD) 382,210 6,951
......................................................................
Istituto Nazionale delle Assicurazioni 7,395,000 20,364
......................................................................
Italgas 2,340,093 10,712
......................................................................
Mediolanum 989,265 24,618
......................................................................
Rinascente 745,400 7,183
......................................................................
Telecom Italia 14,413,445 104,175
......................................................................
Telecom Italia Mobile 11,911,182 69,126
......................................................................
Total Italy (Cost $339,508) 505,033
..................
JAPAN 15.9%
Common Stocks 15.9%
Advantest 175,500 11,065
......................................................................
Alps Electric 918,000 12,631
......................................................................
Amada 2,624,000 15,688
......................................................................
Canon 3,707,000 70,114
......................................................................
Citizen Watch 1,319,000 7,286
......................................................................
DDI 5,040 14,699
......................................................................
Daifuku 512,000 2,161
......................................................................
Daiichi Pharmaceutical 1,875,000 31,282
......................................................................
DaiNippon Screen Manufacturing 2,310,000 5,053
......................................................................
Daiwa House 2,383,000 26,880
......................................................................
Denso 3,965,000 74,654
......................................................................
19
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- ------------------------------------------------------------------------------
Shares/Par Value
- ------------------------------------------------------------------------------
In thousands
East Japan Railway 6,688 $ 39,641
......................................................................
Fanuc 520,600 15,630
......................................................................
Fujitsu 910,000 9,679
......................................................................
Hitachi 4,687,000 23,841
......................................................................
Honda Motor 307,000 9,217
......................................................................
Inax 1,209,000 5,984
......................................................................
Ito-Yokado 947,000 55,238
......................................................................
Kao 2,069,000 41,884
......................................................................
Kokuyo 1,207,000 16,048
......................................................................
Komatsu 2,472,000 13,359
......................................................................
Komori 1,058,000 19,421
......................................................................
Kuraray 2,802,000 29,875
......................................................................
Kyocera 981,000 43,336
......................................................................
Makita 1,719,000 18,166
......................................................................
Marui 2,882,000 50,184
......................................................................
Matsushita Electric Industrial 4,127,000 60,570
......................................................................
Mitsubishi 2,932,000 15,518
......................................................................
Mitsubishi Heavy Industries 12,315,000 47,536
......................................................................
Mitsui Fudosan 5,991,000 39,775
......................................................................
Murata Manufacturing 1,236,000 41,666
......................................................................
NEC 6,614,000 48,961
......................................................................
NTT Mobile Communication Network 467 16,865
......................................................................
Nippon Telegraph & Telephone 3,447 26,966
......................................................................
Nomura Securities 4,252,000 32,096
......................................................................
Pioneer Electronic 797,000 13,126
......................................................................
Sangetsu 272,000 3,360
......................................................................
Sankyo 2,814,000 63,483
......................................................................
Sekisui Chemical 3,907,000 21,281
......................................................................
Sekisui House 2,379,000 23,692
......................................................................
Seven-Eleven Japan 338,000 25,688
......................................................................
Shin-Etsu Chemical 2,252,000 44,816
......................................................................
Shiseido 1,548,000 16,943
......................................................................
Sony 1,015,900 64,485
......................................................................
Sumitomo 4,849,000 23,209
......................................................................
Sumitomo Electric Industries 5,983,000 66,204
......................................................................
Sumitomo Forestry 1,508,000 10,258
......................................................................
TDK 915,000 60,278
......................................................................
20
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- ------------------------------------------------------------------------------
Shares/Par Value
- ------------------------------------------------------------------------------
In thousands
Tokio Marine & Fire Insurance 1,246,000 $ 14,161
......................................................................
Tokyo Electronics 570,000 18,531
......................................................................
Tokyo Steel Manufacturing 1,227,000 5,578
......................................................................
Toppan Printing 2,317,000 23,750
......................................................................
Uny 1,252,000 20,405
......................................................................
Yurtec 552,000 2,865
......................................................................
Total Japan (Cost $1,899,295) 1,515,082
..................
MEXICO 1.5%
Common Stocks 1.5%
Cemex, Participating Certificates
(Represents 1 Class A share) 50,141 119
......................................................................
Cemex (Class B) 1,534,044 4,265
......................................................................
Cemex ADS (Represents 2 Participating
Certificates) (USD) 351,000 1,623
......................................................................
Cemex ADS (Represents 2 Participating
Certificates) (144a) (USD) 1,714,463 7,929
......................................................................
Cifra (Class V) ADR (USD) * 149,307 2,025
......................................................................
Femsa UBD (Represents 1 Class B,
2 Series D (Class B) and 2
Series D (Class L) shares) 4,291,360 11,060
......................................................................
Gruma (Class B) * 2,279,476 5,412
......................................................................
Gruma (Class B) ADS (144a) (USD) * 548,546 5,485
......................................................................
Grupo Financiero Bancomer (Class B)
GDS (USD) 72,250 298
......................................................................
Grupo Financiero Bancomer (Class L) 53,515 6
......................................................................
Grupo Industrial Maseca (Class B) 6,373,007 5,170
......................................................................
Grupo Modelo (Class C) 5,529,264 11,652
......................................................................
Grupo Televisa ADR (USD) * 516,966 14,023
......................................................................
Kimberly-Clark de Mexico (Class A) 3,617,309 10,486
......................................................................
Panamerican Beverages (Class A)
(USD) 694,742 14,069
......................................................................
Telefonos de Mexico (Class L)
ADR (USD) 931,222 49,180
......................................................................
TV Azteca ADR (USD) 571,700 5,002
......................................................................
Total Mexico (Cost $193,236) 147,804
..................
NETHERLANDS 11.1%
Common Stocks 11.1%
ABN Amro 2,153,498 40,340
......................................................................
ASM Lithography 1,138,640 28,886
......................................................................
Ahold 1,996,196 66,346
......................................................................
Akzo Nobel 248,416 9,652
......................................................................
21
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- -------------------------------------------------------------------------------
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
CSM 819,769 $ 40,364
........................................................................
Elsevier 5,116,742 72,022
........................................................................
Fortis Amev 991,427 64,364
........................................................................
ING Groep 2,626,180 127,061
........................................................................
KPN 307,817 11,960
........................................................................
Numico 839,170 33,011
........................................................................
Philips Electronics 541,030 28,782
........................................................................
Polygram 965,084 56,868
........................................................................
Royal Dutch Petroleum 2,981,382 143,927
........................................................................
STMicroelectronics (FRF) * 298,280 18,254
........................................................................
TNT Post Groep 307,817 8,237
........................................................................
Unilever 1,296,196 96,151
........................................................................
Wolters Kluwer 1,101,342 213,378
........................................................................
Total Netherlands (Cost $707,724) 1,059,603
....................
NEW ZEALAND 0.2%
Common Stocks 0.2%
Telecom Corporation of New Zealand 3,026,628 12,421
........................................................................
Telecom Corporation of New Zealand,
Installment Receipts, 3/31/99 1,492,000 2,908
........................................................................
Total New Zealand (Cost $16,309) 15,329
....................
NORWAY 1.4%
Common Stocks 1.4%
Bergesen (Class A) 198,750 2,753
........................................................................
Norsk Hydro 1,493,586 64,908
........................................................................
Orkla (Class A) 3,889,904 65,769
........................................................................
Saga Petroleum (Class B) 314,380 3,992
........................................................................
Total Norway (Cost $111,668) 137,422
....................
PANAMA 0.0%
Common Stocks 0.0%
Banco Latinoamericano de
Exportaciones (Class E) (USD) 95,191 2,064
........................................................................
Total Panama (Cost $4,701) 2,064
....................
22
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
PERU 0.0%
Common Stocks 0.0%
Credicorp (USD) 93,338 $ 630
........................................................................
Telefonica del Peru (Class B) 1,033,003 1,347
........................................................................
Total Peru (Cost $3,455) 1,977
....................
PORTUGAL 0.5%
Common Stocks 0.5%
Jeronimo Martins 1,018,630 44,123
........................................................................
Total Portugal (Cost $9,293) 44,123
....................
RUSSIA 0.1%
Common Stocks 0.1%
Lukoil ADR (USD) 76,550 1,244
........................................................................
Rao Gazprom ADS (USD) 426,330 3,975
........................................................................
Total Russia (Cost $13,004) 5,219
....................
SINGAPORE 0.2%
Common Stocks 0.2%
Singapore Press 1,072,627 9,293
........................................................................
Singapore Telecommunications 4,996,000 8,626
........................................................................
Total Singapore (Cost $25,113) 17,919
....................
SOUTH KOREA 0.1%
Common Stocks 0.1%
Samsung Electronics 241,907 9,900
........................................................................
Total South Korea (Cost $24,601) 9,900
....................
SPAIN 3.0%
Common Stocks 3.0%
Argentaria Banca de Espana 1,064,856 23,170
........................................................................
Banco Bilbao Vizcaya 1,212,540 16,355
........................................................................
Banco Popular Espanol 80,486 4,971
........................................................................
Banco Santander 2,447,308 44,825
........................................................................
23
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- -------------------------------------------------------------------------------
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
Banco Santander, New * 48,946 $ 891
........................................................................
Empresa Nacional de Electricidad 1,511,160 38,085
........................................................................
Gas Natural 298,791 25,730
........................................................................
Iberdrola 1,731,659 27,968
........................................................................
Repsol 409,800 20,569
........................................................................
Telefonica de Espana 1,881,191 84,938
........................................................................
Total Spain (Cost $151,246) 287,502
....................
SWEDEN 3.4%
Common Stocks 3.4%
ABB (Class A) 1,888,340 19,957
........................................................................
Astra (Class B) 4,607,851 72,311
........................................................................
Atlas Copco (Class B) 1,061,958 24,692
........................................................................
Electrolux (Class B) 2,842,165 42,782
........................................................................
Esselte (Class B) 299,610 4,375
........................................................................
Granges 275,121 3,595
........................................................................
Hennes and Mauritz (Class B) 1,147,605 80,859
........................................................................
Nordbanken 8,534,334 51,167
........................................................................
Sandvik (Class A) 175,000 3,598
........................................................................
Sandvik (Class B) 945,420 19,439
........................................................................
Scribona (Class B) 233,080 806
........................................................................
Sifo Group (Class B) * 233,080 896
........................................................................
Total Sweden (Cost $196,614) 324,477
....................
SWITZERLAND 7.0%
Common Stocks 7.0%
ABB 32,170 38,500
........................................................................
Adecco 132,562 52,817
........................................................................
Credit Suisse Group 269,495 41,410
........................................................................
Nestle 88,126 187,267
........................................................................
Novartis 74,779 134,628
........................................................................
Roche Holdings 8,986 104,758
........................................................................
Swisscom * 43,996 14,900
........................................................................
UBS * 334,145 91,592
........................................................................
Total Switzerland (Cost $426,064) 665,872
....................
24
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- -------------------------------------------------------------------------------
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
UNITED KINGDOM 18.8%
Common Stocks 18.8%
Abbey National 2,922,700 $ 56,646
........................................................................
Asda Group 11,158,000 29,678
........................................................................
BG 3,530,270 23,162
........................................................................
British Petroleum 2,909,500 43,194
........................................................................
Cable & Wireless 6,764,050 76,134
........................................................................
Cadbury Schweppes 4,697,793 71,944
........................................................................
Caradon 8,429,238 17,635
........................................................................
Centrica * 3,295,040 6,397
........................................................................
Compass Group 4,478,000 45,447
........................................................................
David S. Smith Holdings 4,107,120 8,593
........................................................................
Diageo 12,966,305 141,061
........................................................................
Electrocomponents 2,590,000 17,079
........................................................................
Fairview Holdings * 378,500 513
........................................................................
GKN 1,008,000 12,141
........................................................................
Glaxo Wellcome 5,084,710 157,610
........................................................................
Heywood Williams Group 1,034,875 3,291
........................................................................
Hillsdown Holdings 757,000 1,071
........................................................................
John Laing (Class A) 1,797,000 9,023
........................................................................
Kingfisher 14,415,466 127,343
........................................................................
Ladbroke Group 5,012,940 18,207
........................................................................
National Westminster Bank 13,504,780 226,933
........................................................................
Rank Group 2,471,825 10,343
........................................................................
Reed International 12,061,860 102,050
........................................................................
Rio Tinto 3,509,900 42,590
........................................................................
Rolls Royce 2,669,925 9,853
........................................................................
Safeway 6,287,920 31,572
........................................................................
Shell Transport & Trading 19,550,000 117,994
........................................................................
SmithKline Beecham 16,409,280 204,265
........................................................................
Tesco 16,435,185 45,112
........................................................................
Tomkins 14,251,430 65,952
........................................................................
Unilever 1,008,000 10,123
........................................................................
United News & Media 5,070,430 56,095
........................................................................
Total United Kingdom (Cost $1,151,107) 1,789,051
....................
25
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- -------------------------------------------------------------------------------
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
SHORT-TERM INVESTMENTS 2.7%
Money Market Funds 2.7%
Reserve Investment Fund, 5.41% # 258,089,773 $ 258,090
........................................................................
Total Short-term Investments (Cost $258,090) 258,090
....................
Total Investments in Securities
99.6% of Net Assets (Cost $7,545,827) $ 9,499,442
Other Assets Less Liabilities 37,687
....................
NET ASSETS $ 9,537,129
--------------------
* Non-income producing
# Seven-day yield
++ Securities contain some restrictions as to public resale - total of
such securities at year-end amounts to 0.1% of net assets.
144a Security was purchased pursuant to Rule 144a under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers -- total of such securities at year-end amounts to
0.20% of net assets.
ADR American depository receipt
ADS American depository share
FRF French franc
GDR Global depository receipt
GDS Global depository share
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- -------------------------------------------------------------------------------
October 31, 1998
- ---------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments in securities, at value (cost $7,545,827) $ 9,499,442
Securities lending collateral pool 928,683
Other assets 81,993
...................
Total assets 10,510,118
...................
Liabilities
Securities lending collateral 928,683
Other liabilities 44,306
...................
Total liabilities 972,989
...................
NET ASSETS $ 9,537,129
-------------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 144,968
Accumulated net realized gain/loss - net of distributions 151,999
Net unrealized gain (loss) 1,954,499
Paid-in-capital applicable to 662,871,265 shares of $0.01 par
value capital stock outstanding; 2,000,000,000 shares
of the Corporation authorized 7,285,663
...................
NET ASSETS $ 9,537,129
-------------------
NET ASSET VALUE PER SHARE $ 14.39
-------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
- -------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/98
Investment Income
Income
Dividend (net of foreign taxes of $ 28,692) $ 213,223
Interest 23,952
.................
Total income 237,175
.................
Expenses
Investment management 67,677
Shareholder servicing 14,153
Custody and accounting 3,141
Prospectus and shareholder reports 808
Registration 66
Legal and audit 42
Directors 19
Miscellaneous 82
.................
Total expenses 85,988
.................
Net investment income 151,187
.................
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 195,359
Foreign currency transactions (7,752)
.................
Net realized gain (loss) 187,607
.................
Change in net unrealized gain or loss
Securities 380,008
Other assets and liabilities
denominated in foreign currencies 629
.................
Change in net unrealized gain or loss 380,637
.................
Net realized and unrealized gain (loss) 568,244
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 719,431
-----------------
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/98 10/31/97
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 151,187 $ 133,615
Net realized gain (loss) 187,607 365,480
Change in net unrealized gain or loss 380,637 185,530
.....................................
Increase (decrease) in net assets from operations 719,431 684,625
.....................................
Distributions to shareholders
Net investment income (138,108) (118,692)
Net realized gain (379,734) (131,885)
.....................................
Decrease in net assets from distributions (517,842) (250,577)
.....................................
Capital share transactions *
Shares sold 2,424,698 3,077,870
Distributions reinvested 485,438 232,168
Shares redeemed (3,579,766) (2,514,652)
.....................................
Increase (decrease) in net assets from capital
share transactions (669,630) 795,386
.....................................
Net Assets
Increase (decrease) during period (468,041) 1,229,434
Beginning of period 10,005,170 8,775,736
.....................................
End of period $ 9,537,129 $ 10,005,170
-------------------------------------
* Share information
Shares sold 167,589 212,623
Distributions reinvested 36,308 17,059
Shares redeemed (248,730) (173,550)
.....................................
Increase (decrease) in shares outstanding (44,833) 56,132
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
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October 31, 1998
- -------------------------------
NOTES TO FINANCIAL STATEMENTS
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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price International Funds, Inc. (the corporation) is registered
under the Investment Company Act of 1940. The International Stock Fund
(the fund), a diversified, open-end management investment company, is
one of the portfolios established by the corporation and commenced
operations on May 9, 1980.
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.
30
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
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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
$936,738,000; aggregate collateral consisted of $928,683,000 in the
securities lending collateral pool and U.S. Treasury securities valued
at $46,225,000.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $1,182,354,000 and $2,191,720,000, 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 $7,545,827,000. Net unrealized gain aggregated $1,953,615,000 at
year end, of which $2,720,084,000 related to appreciated investments and
$766,469,000 to depreciated investments.
31
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
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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 $5,141,000
was payable at October 31, 1998. The fee is computed daily and paid
monthly, and consists of an individual fund fee equal to 0.35% of
average daily net assets and a group fee. The group fee is based on the
combined assets of certain mutual funds sponsored by the manager or
Price Associates (the group). The group fee rate ranges from 0.48% for
the first $1 billion of assets to 0.30% 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.
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 $9,245,000 for the year
ended October 31, 1998, of which $907,000 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 and Spectrum
Growth Fund held approximately 6.3% of the
32
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
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outstanding shares of the International Stock Fund at October 31, 1998.
For the year then ended, the fund was allocated $1,543,000 of Spectrum
expenses, $129,000 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
$14,359,000 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
$249,067,000 with certain affiliates of the manager and paid commissions
of $537,000 related thereto.
- -------------------------------------------------------------
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:
. $6,904,000 from short-term capital gains,
. $372,830,000 from long-term capital gains; of which $255,426,000 was
subject to the 20% rate gains category and $117,404,000 to the 28% rate
gains category.
The fund will pass through foreign source income of $161,223,000 and foreign
taxes paid of $26,260,000.
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33
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
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- -----------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of T. Rowe Price International Funds, Inc. and
Shareholders of International 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
International 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
34
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
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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(R) 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.
35
<PAGE>
T. ROWE PRICE MUTUAL FUNDS
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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
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
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.
36
<PAGE>
T. ROWE PRICE DISCOUNT BROKERAGE
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DISCOUNT BROKERAGE
A Division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC
This low-cost service gives you the opportunity to easily
consolidate all your investments with one company. Through
T. Rowe Price Discount Brokerage, you can buy and sell
individual securities--stocks, bonds, options, and
others--as well as mutual funds at considerable commission
savings over full-service brokers.* We also provide a wide
range of services, including:
Automated Telephone and Internet Services You can enter
trades, access quotes, and review account information 24
hours a day, seven days a week. Any trades executed through
these programs provide additional savings on commissions.**
Investor Information A variety of informative reports, such
as our Brokerage Insights series, S&P Market Month
newsletter, and select stock reports, can help you better
evaluate economic trends and investment opportunities.
Dividend Reinvestment Service Virtually all stocks held in
customer accounts are eligible for this service, free of
charge.
*Based on an April 1998 survey for representative-assisted
stock trades. Services vary by firm, and commissions may
vary by size of order.
**Discount applies to our current commission schedule. All
trades subject to a $35 minimum commission except equity
trades placed through Internet-Trader, which are subject to
a $29.95 minimum commission.
37
<PAGE>
For yield, price, last transaction, current balance, or to conduct transactions,
24 hours, 7 days a week, call Tele*Access/(R)/:
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 International
Stock Fund(R).
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
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor. F37-050 10/31/98
