<PAGE>
Semiannual Report
International
Stock Fund
April 30, 1999
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price
<PAGE>
Report Highlights
- --------------------------------------------------------------------------------
International Stock Fund
. International stocks rallied strongly during the six months ended April 30,
with Asian markets picking up the pace following earlier strength in
Europe.
. The fund turned in solid results during the period but trailed the MSCI
EAFE and Lipper peer group average because of an underweighting in Japan
and our emphasis on growth over rebounding cyclical stocks.
. The U.K. market was one of the best in Europe and represented the
portfolio's largest country position.
. We eliminated stocks that appeared overvalued and added to companies with
good business franchises and steady growth prospects.
. We intend to keep about 70% of portfolio assets in Europe and maintain our
preference for growth stocks, which we believe offer good potential for
capital growth.
<PAGE>
Fellow Shareholders
International stock markets performed well during the six months ended April 30,
and the strong rally that began in October continued for the balance of 1998.
However, as we moved into 1999 leadership changed with the European markets
losing ground and the Far Eastern markets picking up the pace. This change in
leadership is consistent with the relative economic cycles between the two
regions. The large economies of Europe remain becalmed, but in the Far East
there are distinct signs of recovery. Despite the fanfare that surrounded its
launch in January, the euro weakened significantly against the U.S. dollar,
which undercut returns from the Eurozone markets for U.S. investors.
Performance Comparison
- -----------------------------------------------------------------
Periods Ended 4/30/99 6 Months 12 Months
- -----------------------------------------------------------------
International Stock Fund 13.87% 6.61%
.................................................................
MSCI EAFE Index 15.44 9.81
.................................................................
Lipper International Funds Average 15.11 3.23
.................................................................
Against this background of generally buoyant stock markets, your fund registered
strong absolute returns, particularly over the last six months. Relative results
were more mixed, and fund returns trailed the MSCI EAFE Index over both the 6-
and 12-month periods. This was principally due to an underweighting in Japan and
a low exposure to its banking sector, a large part of the index that recovered
sharply this year. As with the U.S. market, large-cap stocks continued to lead
many international markets, and our positions in non-index stocks also impaired
our returns relative to the index. Investment results over the 12 months were
better than our peer group average as our preference for steady growers helped
us during a period when there was uncertainty about world economic growth. More
recently, this uncertainty has receded, and with more cyclical stocks leading
markets fund results have slipped a little against our peers.
The broad themes pushing world markets higher were improving sentiment,
recovering capital flows, and falling global interest rates. In
1
<PAGE>
Europe there was the additional stimulus of heavy corporate activity, with
transactions in the first four months of 1999 totaling $641 billion compared
with $864 billion for the whole of 1998. The financial sector was active with
the announcement of a number of major deals that will hasten the consolidation
of Europe's banking industry. As in the U.S., leading telecommunication
companies were also making moves to strengthen their strategic positions in this
attractive sector. Perhaps the surprise in Europe was the weakness of the euro
following its launch at the beginning of the year. A slowdown in the important
economies of Germany and Italy allowed euro interest rates to decline, but the
Kosovo situation and the prospect of extended conflict at Europe's doorstep also
cast a shadow over the new currency. Since January, securities listed on the 11
stock markets of the Eurozone have been denominated in euros, and a fall of 11%
against the dollar was embarrassing for the authorities and uncomfortable for
the dollar-based investor.
In the Pacific, there were some sharp rallies in the smaller markets where there
are signs that a number of economies are successfully introducing necessary
reforms following the traumas of a year ago. Even in Japan there was some better
news on the economy, and investors were encouraged to see the government take
appropriate action to recapitalize the banking sector. The Tokyo market rallied
strongly with financial stocks taking the lead. Japan also saw an increase in
corporate activity with Goodyear acquiring Sumitomo Rubber and Renault buying
about 35% of fellow automaker Nissan. For a country that has been cautious about
foreign control of its corporations, these were landmark deals.
Market Performance
- ----------------------------------------------------------------------
Six Months Local Local Currency U.S.
Ended 4/30/99 Currency vs. U.S. Dollars Dollars
- ----------------------------------------------------------------------
France 24.33% -10.37% 11.43%
......................................................................
Germany 16.48 -10.41 4.35
......................................................................
Hong Kong 28.01 -0.06 27.94
......................................................................
Italy 25.70 -10.49 12.51
......................................................................
Japan 30.14 -2.38 27.05
......................................................................
Mexico 33.09 8.22 44.03
......................................................................
Netherlands 26.16 -10.34 13.12
......................................................................
Norway 11.63 -5.32 5.69
......................................................................
Sweden 29.52 -7.06 20.38
......................................................................
Switzerland 13.74 -11.06 1.16
......................................................................
United Kingdom 21.46 -3.86 16.77
......................................................................
Source: FAME Information Services, Inc.; using MSCI indices.
2
<PAGE>
INVESTMENT REVIEW
Europe
There has been a significant divergence within the economies of Europe, by far
our largest commitment at 70% of assets, with the major ones making little
progress and some of the small ones growing quite strongly.
Germany has usually been the locomotive of Europe, but its manufacturing sector
is weak at the moment and low interest rates have failed to get the economy
moving. There have been several wage settlements at levels significantly higher
than inflation, and there is little confidence among Germany's business leaders
in Gerhard Schroeder's new government of the Center Left. His former Finance
Minister, Oskar Lafontaine, was making strident calls for easier money that were
embarrassing for the new European Central Bank, whose mandate requires resolute
independence in the face of political coercion. Perhaps realizing his position
was increasingly difficult, Mr. Lafontaine resigned at the beginning of the
year, enabling Mr. Schroeder to improve his control after a wobbly start.
Germany's poor economic performance was reflected in its stock market, which has
made little progress. Our underweighting here was helpful but some of our larger
positions underperformed. SAP, the business management software company,
suffered from a slowdown in overseas markets and Gehe, the pharmaceutical
wholesaler and retailer, fell prey to regulatory concerns despite continued
sound growth in revenue and profits.
In France, the stock market did better, helped by signs of economic recovery and
continued restructuring in the corporate sector. Banque Nationale de Paris
amazed the financial sector with its audacious bid for both Paribas and Societe
Generale just as they were contemplating a friendly merger. Vivendi, the
utilities-based conglomerate and a key holding, demonstrated its international
ambitions with an $8 billion acquisition of U.S. Filter, and the consumer goods
company Pinault Printemps Redoute, another core holding, intervened in the
hostile bid by LVMH for Gucci by buying a 40% stake in the latter.
The Netherlands was another solid gainer with interest returning to Royal Dutch
Petroleum, a beneficiary of the rising oil price. Our additions to Philips
Electronics proved timely as the stock rallied strongly on the back of global
recovery and demand for technology products, but our position in Wolters Kluwer,
an international publisher with a
3
<PAGE>
steady growth record, lagged as investors turned to more cyclical stocks. The
Swiss market was another one where steady growers such as Nestle (confectionery
and food) and Novartis (pharmaceuticals) were left on the sidelines,
particularly as they announced earnings that were below expectations. However
Roche Holdings, the pharmaceuticals major, announced strong results and pleased
investors with the additional good news that the U.S. FDA had approved its
anti-obesity drug.
The U.K. market, which was the largest single country position in the portfolio,
was one of the best in Europe as stocks recently established new highs.
Investors were pleased with steady declines in interest rates and rising
optimism that a hard landing for the economy could be avoided. Stock market
performance was helped by the resilience of sterling, which (unlike the euro)
held up well against the U.S. dollar. Kingfisher performed well following its
deal with France's Castorama to establish Europe's largest do-it-yourself
retailer. In April, it announced a merger with supermarket Asda Group that will
create the U.K.'s largest retailer. This will allow cross-selling opportunities
and greater purchasing power, and will establish a platform to compete
internationally.
[PIE CHART APPEARS HERE]
GEOGRAPHIC DIVERSIFICATION
Europe 70%
Japan 17%
Latin America 5%
Far East 6%
Other and Reserves 2%
Based on net assets as of 4/30/99.
Turning to Scandinavia, the star performer was Sweden with Astra, a key
portfolio holding in the pharmaceutical sector, finalizing its merger with
Zeneca of the U.K. The combined group now has the scale to compete with the
largest companies in terms of research and international marketing. Household
appliance manufacturer Electrolux performed well on the back of an improvement
in operating margins and a buoyant U.S. market.
Far East
In Japan the economy remained depressed. GDP declined 2.5% in 1998, and in the
fiscal year ended March 1999 it declined again by a similar amount. Industrial
production was weak with auto produc-
4
<PAGE>
tion during the last fiscal year falling to a 20-year low. Consumer spending was
also subdued with chain store sales in March showing one of the largest declines
on record. Therefore, the current picture of the Japanese economy is bleak, but
one or two signs have encouraged the optimists. The government has become more
assertive in providing the right background for the economic recovery, having at
last come to grips with banking sector problems by announcing a $500 billion
bailout. The recently established Financial Supervisory Agency (FSA) acted
decisively to bail out both the Long Term Credit Bank and the Nippon Credit
Bank. In addition, we have also seen the first phase of reform of Japan's
archaic tax system, with cuts in corporate rates that will be welcomed by the
country's hard-pressed businesses. Investors, too, should benefit from lower tax
rates and a more rational tax system.
Aside from government initiatives, corporations increasingly recognize the need
for restructuring. Major international corporations such as Sony have announced
extensive rationalization of their manufacturing capacity, which will inevitably
involve layoffs both in Japan and overseas. Announcements like these might be
routine in the U.S., but it must be remembered that Japan has a culture of
lifetime employment and such changes must be handled sensitively.
Despite this gloomy economic news, the Tokyo stock market rallied strongly in
the six months under review. Perhaps the most important stimulus was the large
recapitalization program that removed much uncertainty from the important
banking sector. Corporate news was also encouraging with numerous announcements
about restructuring and several exporters noting that their regional markets had
shown significant improvement.
Looking at our Japanese portfolio in more detail, announcements of specific
restructuring from NEC and Sony helped performance, and there was foreign
support for a number of our core blue chip holdings. TDK was left behind due to
worries over stronger-than-expected price competition for magneto resistance
heads. The absence of bank stocks in our portfolio, for so long a successful
strategy, hindered results somewhat as the sector moved powerfully ahead
following the government's recapitalization program.
Our portfolio structure in the Pacific outside of Japan is fairly conservative.
Hong Kong avoided the traumas of over investment and currency collapse that
plagued the rest of the region but still suffered a sharp contraction in its
economy. To protect the link between the Hong Kong
5
<PAGE>
and the U.S. dollar, the authorities maintained a high interest rate policy for
most of 1998, but the price for this was a weak real estate market and
deflation. However, Hong Kong remains a key financial center for the Pacific,
and its stock market rallied strongly as interest rates fell and investors
refocused on the region.
Australia seems to have come through the regional crises almost unscathed. The
economy is growing steadily and there has been a virtuous mix of low inflation
and a strong currency. Unemployment declined moderately and consumer sentiment
remained healthy. In common with a number of Pacific economies, the recent
improvement in commodity prices should help prospects. Thus we have added the
natural resources leader Broken Hill Proprietary, which has also introduced new
management and a restructuring plan that should improve shareholder value.
However, the bulk of the portfolio remained in service sectors such as banks and
telecommunications/media stocks, which have all done well.
Latin America
Latin America had an extraordinary half year, and Brazil was center stage as
usual. Late last year there was optimism that Brazil was back on the road to
reform. President Cardoso emerged from the October elections unscathed, and by
early November he had announced a new fiscal stability program. It provided a
mix of spending cuts and tax increases but offered a longer-term "Working
Agenda" to tackle the root causes of the structural problems. Such an ambitious
program would require new legislation, but the International Monetary Fund was
confident enough to release its promised $41 billion financial package.
Nevertheless, in early December, to the surprise and dismay of markets, Congress
failed to pass several fiscal measures on which the IMF package
Industry Diversification
- ----------------------------------------------
Percent of Net Assets
10/31/98 4/30/99
- ----------------------------------------------
Services 29.3% 30.4%
..............................................
Finance 19.7 21.5
..............................................
Consumer Goods 21.1 20.8
..............................................
Capital Equipment 11.2 12.2
..............................................
Energy 9.7 9.1
..............................................
Materials 3.8 3.3
..............................................
Multi-industry 2.0 1.2
..............................................
All Other 0.1 0.1
..............................................
Reserves 3.1 1.4
- ----------------------------------------------
Total 100.0% 100.0%
6
<PAGE>
was based. By mid-January the government faced an overwhelming wave of currency
selling and the Central Bank was forced to stop defending the real, which
devalued by over 30% in less than three weeks. With sky-high interest rates and
a massive fiscal deficit, the question of a government default was openly
discussed, but just as all seemed lost Congress passed the crucial legislation
it had rejected earlier. Confidence was further improved with the appointment of
Arminio Fraga, previously a savvy investor with George Soros, as president of
the Central Bank. The big question for Brazil is whether the currency
devaluation will be followed by a surge of inflation. Opinions on this vary
widely, but at present consumer prices remain stable. Now, after two months of
renewed international confidence, the markets could have great opportunities
ahead. However, we should not forget that Brazil has a poor record for meeting
IMF targets and implementing fiscal reform.
With Brazil engulfed by these traumas, the expectation was that Mexico would be
dragged down as well, but this time was different. The Mexican stock market held
up remarkably well during the Brazilian crisis and then performed far better
than other regional markets during the recovery. Due to its close associations
with the U.S. economy, Mexico has clearly been a prime beneficiary of the robust
U.S. growth. Despite low oil prices, its 1998 fiscal deficit was only 1.2% of
GDP, and the government's economic policies remained disciplined and convincing.
The Mexican peso has even strengthened against the dollar, and as a clear
beneficiary from the recent increase in the oil price, it is not surprising that
the stock market was one of the best performers during the six months under
review. The Argentine economy slowed sharply following the Brazilian
devaluation, but the banking system is now far stronger than when confidence was
last tested five years ago. With the Argentine peso maintaining parity with the
U.S. dollar, investor confidence has held. The government was even able to
access international markets and has already covered much of its financing needs
for this year. In Chile the economy is also suffering from a regional slowdown
with declining retail sales and the current account deficit, which is affected
by a weak copper price, remains an ongoing problem. However, based on its
policies of privatization and deregulation, low import tariff barriers, and
disciplined fiscal policy, Chile's economy remains one of the most successful in
the region. After a period of adjustment it should resume its growth path,
particularly if the price of copper has bottomed. Despite the uncertainties,
stock markets of both Chile and Argentina participated in the strong rally
throughout the region.
7
<PAGE>
Investment Policy and Outlook
Our current investment policy is to maintain about 70% of portfolio assets in
Europe, with the U.K. at 20% the largest single country weighting. Japan at 17%
is second-largest and is somewhat lower than its weighting in the MSCI Index.
Our positions in the balance of the Pacific are just over 6% (in line with the
index weighting). Exposure to Latin America, which is not in the benchmark, was
just under 5% of the portfolio. During the past six months there were no
significant regional shifts, but there were numerous changes to individual
holdings. We sold where individual valuations looked extended but added to
positions or created new ones that fit our criteria of strong businesses, steady
growth, and reasonable valuation.
Going forward, our policy will be to continue to maintain the fund's geographic
mix. Despite the recent volatility in emerging markets, we believe that some
exposure to them is appropriate. The prospects for international markets will
depend significantly on whether the U.S. economy behaves in a way that will
maintain the benign environment of low inflation and stable interest rates. Its
performance over the last five years has been quite remarkable, and this has
been a major positive influence on both the U.S. stock market and investor
sentiment internationally. If the U.S. economy can continue to deliver its
favorable mix of steady growth, negligible inflation, and stable interest rates,
the investment environment will remain positive. In addition, if overseas
economies take over the leadership role, the case for international
diversification becomes compelling. We believe our country weightings and our
preference for growth stocks with reasonable valuations should help us achieve
our goal of long-term capital growth.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
May 21, 1999
8
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/99
- --------------------------------------------------------------------------------
National Westminster Bank, United Kingdom 2.8%
................................................................................
SmithKline Beecham, United Kingdom 1.9
................................................................................
Wolters Kluwer, Netherlands 1.8
................................................................................
Kingfisher, United Kingdom 1.8
................................................................................
Shell Transport & Trading, United Kingdom 1.7
- --------------------------------------------------------------------------------
Telecom Italia, Italy 1.7
................................................................................
Nestle, Switzerland 1.6
................................................................................
ING Groep, Netherlands 1.6
................................................................................
Glaxo Wellcome, United Kingdom 1.4
................................................................................
Diageo, United Kingdom 1.4
- --------------------------------------------------------------------------------
Vivendi, France 1.3
................................................................................
Novartis, Switzerland 1.2
................................................................................
Telebras, Brazil 1.2
................................................................................
Fortis, Netherlands 1.1
................................................................................
UBS, Switzerland 1.1
- --------------------------------------------------------------------------------
Total, France 1.1
................................................................................
Reed International, United Kingdom 1.0
................................................................................
Roche Holdings, Switzerland 1.0
................................................................................
Telefonica de Espana, Spain 1.0
................................................................................
Unilever, Netherlands 1.0
- --------------------------------------------------------------------------------
Cable and Wireless, United Kingdom 0.9
................................................................................
Mannesmann, Germany 0.9
................................................................................
Nokia, Finland 0.9
................................................................................
Nippon Telegraph & Telephone, Japan 0.9
................................................................................
AstraZeneca, Sweden 0.9
- --------------------------------------------------------------------------------
Total 33.2%
Note: Table excludes reserves
9
<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.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MSCI EAFE Index Lipper International Funds Average International Stock Fund International Stock Fund
--------------- -------------------------- -------------------------------- ------------------------
<S> <C> <C> <C> <C>
4/30/89 10,000 10,000 10,000 10,000
Apr-90 8,715 10,689 10,799 10,799
Apr-91 9,125 11,002 11,365 11,365
Apr-92 8,379 11,536 12,085 12,085
Apr-93 10,227 12,562 13,171 13,171
Apr-94 11,960 15,503 16,300 16,300
Apr-95 12,664 15,599 16,607 16,607
Apr-96 14,151 18,135 19,592 19,592
Apr-97 14,067 19,580 20,985 20,985
Apr-98 16,772 23,943 24,524 24,524
Apr-99 18,417 24,281 26,145 26,145
</TABLE>
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 4/30/99 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
International Stock Fund 6.61% 10.10% 9.91% 10.09%
................................................................................
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
10
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Unaudited
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
4/30/99 10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 14.39 $ 14.14 $ 13.47 $ 12.09 $ 12.84 $ 11.74
...............................................................................................
Investment activities
Net investment income 0.06 0.23 0.19 0.19 0.18 0.09
Net realized and
unrealized gain (loss) 1.88 0.77 0.86 1.57 (0.19) 1.30
...............................................................................................
Total from
investment activities 1.94 1.00 1.05 1.76 (0.01) 1.39
...............................................................................................
Distributions
Net investment income (0.22) (0.20) (0.18) (0.18) (0.12) (0.09)
Net realized gain (0.35) (0.55) (0.20) (0.20) (0.62) (0.20)
...............................................................................................
Total distributions (0.57) (0.75) (0.38) (0.38) (0.74) (0.29)
...............................................................................................
NET ASSET VALUE
End of period $ 15.76 $ 14.39 $ 14.14 $ 13.47 $ 12.09 $ 12.84
-----------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Total return(R) 13.87% 7.48% 7.90% 14.87% 0.38% 12.03%
....................................................................................................................................
Ratio of total expenses to
average net assets 0.85%+ 0.85% 0.85% 0.88% 0.91% 0.96%
....................................................................................................................................
Ratio of net investment
income to average
net assets 0.83%+ 1.50% 1.33% 1.58% 1.56% 1.11%
....................................................................................................................................
Portfolio turnover rate 11.8%+ 12.2% 15.8% 11.6% 17.8% 22.9%
....................................................................................................................................
Net assets, end of period
(in millions) $ 10,262 $ 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.
+ Annualized
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Unaudited April 30, 1999
<TABLE>
<CAPTION>
Portfolio of Investments Shares Value
- -------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
ARGENTINA 0.9%
Common Stocks 0.9%
Banco de Galicia Buenos Aires (Class B) ADR (USD) 349,610 $ 8,063
....................................................................................
Banco Frances del Rio de la Plata ADR (USD) 351,620 9,054
....................................................................................
Telefonica de Argentina (Class B) ADR (USD) 526,380 19,673
....................................................................................
YPF Sociedad Anonima (Class D) ADR (USD) 1,253,442 52,645
....................................................................................
Total Argentina (Cost $62,626) 89,435
..........
<CAPTION>
AUSTRALIA 3.0%
Common Stocks 2.7%
<S> <C> <C>
Australian Gas Light 1,980,598 14,024
....................................................................................
Brambles Industries 698,000 20,511
....................................................................................
Broken Hill Proprietary 1,271,000 14,369
....................................................................................
Colonial Limited 6,982,030 26,290
....................................................................................
Commonwealth Bank of Australia 1,899,448 34,585
....................................................................................
Goodman Fielder 9,183,000 8,872
....................................................................................
Lend Lease 1,113,888 15,017
....................................................................................
News Corporation 2,956,968 24,781
....................................................................................
Publishing & Broadcasting 4,135,850 27,799
....................................................................................
Tabcorp Holdings 2,378,000 19,340
....................................................................................
Telstra 6,189,693 33,587
....................................................................................
Westpac Bank 4,797,600 36,625
....................................................................................
275,800
..........
<CAPTION>
Preferred Stocks 0.3%
<S> <C> <C>
News Corporation 2,595,184 20,285
....................................................................................
Star City Holdings 9,409,000 10,585
....................................................................................
30,870
..........
Total Australia (Cost $205,455) 306,670
..........
<CAPTION>
BELGIUM 1.6%
Common Stocks 1.6%
<S> <C> <C>
Dexia (EUR) 85,972 13,223
....................................................................................
Fortis (EUR) 1,432,305 48,041
....................................................................................
KBC Bancassurance Holding (EUR) 1,357,980 84,209
....................................................................................
Societe Europeenne des Satellites (Class A) (EUR) * 57,900 8,861
....................................................................................
UCB (EUR) * 270,900 12,592
....................................................................................
Total Belgium (Cost $77,469) 166,926
..........
</TABLE>
12
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio of Investments Shares Value
- ---------------------------------------------------------------------------------------
In thousands
BRAZIL 2.1%
Common Stocks 1.4%
<S> <C> <C>
Pao de Acucar GDR (USD) 380,883 $ 6,642
.......................................................................................
Telebras ADR (USD) * 1,347,239 122,851
.......................................................................................
Telecomunicacoes de Sao Paulo 4,095,886 308
.......................................................................................
Telesp 970,556 0
.......................................................................................
Unibanco GDR (USD) 421,960 10,470
.......................................................................................
140,271
.............
<CAPTION>
Preferred Stocks 0.7%
<S> <C> <C>
Banco Bradesco 1,370,562,854 7,261
.......................................................................................
Banco Itau 16,287,000 8,629
.......................................................................................
Cia Cimento Portland Itau 18,159,000 1,957
.......................................................................................
Cia Energetica Minas Gerais 321,753,231 7,651
.......................................................................................
Cia Energetica Minas Gerais ADR, Sponsored
Nonvoting (USD) 383,727 9,305
.......................................................................................
Pao de Acucar GDS (USD) 21,100 368
.......................................................................................
Petrol Brasileiros 164,345,189 26,616
.......................................................................................
Telebras ADR (USD)* 1,347,239 105
.......................................................................................
Telecomunicacoes de Sao Paulo 95,227,243 11,868
.......................................................................................
Telecomunicacoes de Sao Paulo Celular (Class B) 98,621,744 4,216
.......................................................................................
77,976
.............
Total Brazil (Cost $237,634) 218,247
.............
<CAPTION>
CANADA 0.2%
Common Stocks 0.2%
<S> <C> <C>
Alcan Aluminum 500,630 15,794
.......................................................................................
Royal Bank of Canada 185,920 9,066
.......................................................................................
Total Canada (Cost $15,537) 24,860
.............
<CAPTION>
CHILE 0.1%
Common Stocks 0.1%
<S> <C> <C>
Chilectra ADR (144a) (USD) 306,640 6,784
.......................................................................................
Compania Cervecerias Unidas ADS (USD) 143,529 3,526
.......................................................................................
Total Chile (Cost $7,529) 10,310
.............
</TABLE>
13
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Portfolio of Investments Shares Value
- --------------------------------------------------------------------------------
In thousands
CHINA 0.4%
Common Stocks 0.4%
China Telecom (HKD) 11,272,000 $ 25,741
................................................................................
Huaneng Power International ADR (USD) * 1,251,000 16,810
................................................................................
Total China (Cost $44,715) 42,551
.................
DENMARK 0.4%
Common Stocks 0.4%
Den Danske Bank 138,950 15,998
................................................................................
Tele Danmark 138,267 14,249
................................................................................
Unidanmark (Class A) 121,329 8,330
................................................................................
Total Denmark (Cost $25,989) 38,577
.................
FINLAND 0.9%
Common Stocks 0.9%
Nokia 1,197,368 92,464
................................................................................
Total Finland (Cost $6,928) 92,464
.................
FRANCE 10.2%
Common Stocks 10.2%
AXA (EUR) 571,790 73,814
................................................................................
Alcatel Alsthom (EUR) 338,684 41,575
................................................................................
Carrefour (EUR) 84,848 67,225
................................................................................
Cie de St. Gobain (EUR) 260,578 44,732
................................................................................
Credit Commercial de France (EUR) 382,844 40,444
................................................................................
Danone (EUR) 138,690 37,067
................................................................................
Dexia France (EUR) 131,308 18,380
................................................................................
Dexia France, Bearer (EUR) 65,532 9,173
................................................................................
Elf Aquitaine (EUR) 265,335 41,204
................................................................................
L'Oreal (EUR) 34,948 22,373
................................................................................
Lafarge (EUR) 131,887 12,818
................................................................................
Lapeyre (EUR) 153,135 11,648
................................................................................
Legrand (EUR) 116,133 27,726
................................................................................
Pinault Printemps Redoute (EUR) 533,300 88,450
................................................................................
Sanofi (EUR) 443,739 69,518
................................................................................
Schneider (EUR) 902,092 58,846
................................................................................
14
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Portfolio of Investments Shares Value
- --------------------------------------------------------------------------------
In thousands
Societe Generale (EUR) 205,414 $ 36,760
................................................................................
Sodexho Alliance (EUR) 389,976 63,979
................................................................................
Television Francaise (EUR) 194,037 37,921
................................................................................
Total (Class B) (EUR) 794,134 108,724
................................................................................
Vivendi (EUR) 573,012 133,838
................................................................................
Total France (Cost $640,063) 1,046,215
................
GERMANY 6.3%
Common Stocks 5.9%
Allianz (EUR) 161,010 51,282
................................................................................
Bayer (EUR) 857,942 36,435
................................................................................
Bayerische Vereinsbank (EUR) 1,196,337 77,977
................................................................................
Deutsche Bank (EUR) 777,548 45,177
................................................................................
Deutsche Bank New (EUR) * 86,393 4,837
................................................................................
Deutsche Telekom (EUR) 1,051,738 41,442
................................................................................
Dresdner Bank (EUR) 1,030,292 44,407
................................................................................
Gehe (EUR) 1,207,752 55,500
................................................................................
Hoechst (EUR) 321,230 15,220
................................................................................
Hornbach Baumarkt (EUR) 54,440 1,380
................................................................................
Mannesmann (EUR) 704,460 92,726
................................................................................
Rhoen Klinikum (EUR) 169,688 17,030
................................................................................
SAP (EUR) 132,900 42,540
................................................................................
Siemens (EUR) 294,612 21,786
................................................................................
Veba (EUR) 748,706 41,049
................................................................................
Volkswagen (EUR) 206,610 14,646
................................................................................
603,434
.................
Preferred Stocks 0.4%
Fielmann (EUR) 30,426 1,189
................................................................................
Fresenius (EUR) 56,550 9,857
................................................................................
SAP (EUR) 70,579 26,469
................................................................................
37,515
.................
Total Germany (Cost $488,718) 640,949
.................
HONG KONG 1.9%
Common Stocks 1.9%
CLP Holdings 5,112,000 27,502
................................................................................
Cheung Kong Holdings 1,349,000 12,270
................................................................................
15
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Portfolio of Investments Shares Value
- --------------------------------------------------------------------------------
In thousands
HSBC Holdings 619,600 $ 22,942
................................................................................
Henderson Land Development 4,474,000 27,014
................................................................................
Hong Kong Telecommunications 6,206,400 16,655
................................................................................
Hutchison Whampoa 7,723,000 69,498
................................................................................
Sun Hung Kai Properties 2,128,000 18,601
................................................................................
Total Hong Kong (Cost $141,318) 194,482
............
INDIA 0.2%
Common Stocks 0.2%
Mahanagar Telephone GDR (USD) 970,000 10,088
................................................................................
State Bank of India GDR (USD) 1,042,500 9,278
................................................................................
Total India (Cost $26,351) 19,366
............
IRELAND 0.1%
Common Stocks 0.1%
CBT Group ADR (USD) * 798,111 12,371
................................................................................
Total Ireland (Cost $25,310) 12,371
............
ITALY 5.9%
Common Stocks 5.9%
Assicurazioni Generali (EUR) 1,132,652 44,092
................................................................................
Banca Commerciale Italiana (EUR) 1,870,000 15,389
................................................................................
Banca di Roma (EUR) 12,438,000 20,498
................................................................................
Banca Popolare di Brescia (EUR) 669,000 23,004
................................................................................
Credito Italiano (EUR) 10,200,666 51,725
................................................................................
ENI (EUR) 9,593,855 63,141
................................................................................
Gucci Group (USD) 283,571 21,392
................................................................................
Istituto Nazionale delle Assicurazioni (EUR) 17,743,000 46,859
................................................................................
Italgas (EUR) 1,676,093 7,454
................................................................................
Mediolanum (EUR) 3,293,325 21,744
................................................................................
Sao Paolo IMI (EUR) 3,259,884 48,901
................................................................................
Telecom Italia (EUR) 16,026,445 170,489
................................................................................
Telecom Italia Mobile (EUR) 11,911,182 70,968
................................................................................
Total Italy (Cost $377,913) 605,656
............
16
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Portfolio of Investments Shares Value
- --------------------------------------------------------------------------------
In thousands
JAPAN 17.1%
Common Stocks 17.1%
Alps Electric 918,000 $ 15,567
................................................................................
Amada 1,245,000 7,819
................................................................................
Canon 3,580,000 87,536
................................................................................
Citizen Watch 1,033,000 8,564
................................................................................
DDI 4,789 23,781
................................................................................
Daiichi Pharmaceutical 1,875,000 30,460
................................................................................
Daiwa House 2,162,000 25,798
................................................................................
Denso 3,474,000 70,545
................................................................................
East Japan Railway 5,230 30,876
................................................................................
Fanuc 494,600 21,537
................................................................................
Fujitsu 1,587,000 27,177
................................................................................
Hitachi 4,247,000 31,011
................................................................................
Honda Motor 261,000 11,496
................................................................................
Ito-Yokado 596,000 36,583
................................................................................
Kao 2,069,000 52,496
................................................................................
Kokuyo 1,137,000 17,090
................................................................................
Komori 1,058,000 19,579
................................................................................
Kuraray 2,455,000 27,958
................................................................................
Kyocera 897,000 53,255
................................................................................
Makita 1,403,000 15,062
................................................................................
Marui 2,882,000 47,808
................................................................................
Matsushita Electric Industrial 4,127,000 78,448
................................................................................
Mitsubishi 2,572,000 17,015
................................................................................
Mitsubishi Heavy Industries 11,714,000 51,302
................................................................................
Mitsui Fudosan 5,701,000 52,513
................................................................................
Murata Manufacturing 1,236,000 70,691
................................................................................
NEC 6,614,000 78,978
................................................................................
Nippon Telegraph & Telephone 8,450 91,986
................................................................................
Nomura Securities 4,133,000 44,576
................................................................................
NTT Mobile Communication Network 951 55,744
................................................................................
Pioneer Electronic 485,000 9,219
................................................................................
Sankyo 2,814,000 59,028
................................................................................
Sekisui Chemical 3,428,000 22,907
................................................................................
Sekisui House 2,104,000 23,556
................................................................................
Seven-Eleven Japan 338,000 28,841
................................................................................
17
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio of Investments Shares Value
- --------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Shin-Etsu Chemical 1,361,000 $ 43,308
..................................................................................................
Shiseido 1,266,000 19,930
..................................................................................................
Sony 962,400 89,857
..................................................................................................
Sumitomo 4,471,000 33,021
..................................................................................................
Sumitomo Electric Industries 5,512,000 66,696
..................................................................................................
TDK 884,000 66,844
..................................................................................................
Tokio Marine & Fire Insurance 1,246,000 14,513
..................................................................................................
Tokyo Electronics 518,000 29,496
..................................................................................................
Toppan Printing 2,026,000 24,362
..................................................................................................
Uny 1,111,000 17,676
..................................................................................................
Total Japan (Cost $1,699,635) 1,752,505
..........
<CAPTION>
MEXICO 1.8%
Common Stocks 1.8%
<S> <C> <C>
Cemex (Class B) 1,534,044 7,122
..................................................................................................
Cemex, Participating Certificates (Represents 1 Class A share) 50,141 233
..................................................................................................
Cemex ADS (Represents 2 Participating Certificates)(USD) 351,000 3,313
..................................................................................................
Cemex ADS (Represents 2 Participating Certificates)
(144a) (USD) 1,714,463 16,180
..................................................................................................
Femsa UBD (Represents 1 Class B and 4 Series D (Class L) shares) * 4,291,360 15,326
..................................................................................................
Gruma (Class B) 2,279,476 4,372
..................................................................................................
Gruma ADR (USD) 548,546 4,251
..................................................................................................
Grupo Financiero Bancomer (Class B) GDS (USD) 72,250 510
..................................................................................................
Grupo Financiero Bancomer (Class L) 53,515 15
..................................................................................................
Grupo Industrial Maseca (Class B) 6,373,007 4,414
..................................................................................................
Grupo Modelo (Class C) 5,529,264 14,571
..................................................................................................
Grupo Televisa GDR (USD) * 516,966 21,196
..................................................................................................
Kimberly-Clark de Mexico (Class A) 3,617,309 14,094
..................................................................................................
Telefonos de Mexico (Class L) ADR (USD) 931,222 70,540
..................................................................................................
TV Azteca ADR (USD) 571,700 4,002
..................................................................................................
Total Mexico (Cost $174,180) 180,139
..........
<CAPTION>
NETHERLANDS 9.8%
Common Stocks 9.8%
<S> <C> <C>
ABN Amro (EUR) 2,153,498 51,300
..................................................................................................
Ahold (EUR) 1,929,066 71,631
..................................................................................................
</TABLE>
18
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Portfolio of Investments Shares Value
- --------------------------------------------------------------------------------
In thousands
Akzo Nobel (EUR) 188,266 $ 8,502
................................................................................
ASM Lithography (EUR) 1,138,640 47,994
................................................................................
CSM (EUR) 819,769 43,820
................................................................................
Elsevier (EUR) 5,116,742 76,485
................................................................................
Equant (EUR) 54,380 4,935
................................................................................
Fortis NI (EUR) 1,879,554 66,913
................................................................................
ING Groep (EUR) 2,626,180 161,742
................................................................................
KPN (EUR) 236,387 9,864
................................................................................
Numico (EUR) 617,830 23,235
................................................................................
Philips Electronics (EUR) 853,060 73,446
................................................................................
Royal Dutch Petroleum (EUR) 1,321,552 76,924
................................................................................
STMicroelectronics (EUR) 269,430 28,064
................................................................................
TNT Post Groep (EUR) 271,557 7,315
................................................................................
Unilever (EUR) 730,086 49,978
................................................................................
VNU (EUR) 506,590 20,497
................................................................................
Wolters Kluwer (EUR) 4,294,648 186,919
................................................................................
Total Netherlands (Cost $626,368) 1,009,564
...........
NEW ZEALAND 0.3%
Common Stocks 0.3%
Telecom Corporation of New Zealand 5,703,628 29,710
................................................................................
Total New Zealand (Cost $24,831) 29,710
...........
NORWAY 1.1%
Common Stocks 1.1%
Bergesen (Class A) 198,750 2,977
................................................................................
Norsk Hydro 1,240,096 55,491
................................................................................
Orkla (Class A) 3,277,374 54,969
................................................................................
Saga Petroleum 314,380 3,482
................................................................................
Total Norway (Cost $98,827) 116,919
...........
PORTUGAL 0.4%
Common Stocks 0.4%
Jeronimo Martins (EUR) 1,358,173 44,693
................................................................................
Total Portugal (Cost $11,188) 44,693
...........
19
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Portfolio of Investments Shares Value
- --------------------------------------------------------------------------------
In thousands
RUSSIA 0.0%
Common Stocks 0.0%
Rao Gazprom ADS (USD) 426,330 $ 4,530
................................................................................
Total Russia (Cost $7,680) 4,530
.............
SINGAPORE 0.4%
Common Stocks 0.4%
Singapore Press 1,072,627 15,808
................................................................................
United Overseas Bank 2,814,000 21,732
................................................................................
Total Singapore (Cost $35,175) 37,540
.............
SOUTH KOREA 0.2%
Common Stocks 0.2%
Samsung Electronics 255,155 19,622
................................................................................
Total South Korea (Cost $25,180) 19,622
.............
SPAIN 3.1%
Common Stocks and Rights 3.1%
Argentaria Banca de Espana (EUR) 1,012,766 23,816
................................................................................
Banco Bilbao Vizcaya (EUR) 1,212,540 18,138
................................................................................
Banco Popular Espanol (EUR) 175,840 12,446
................................................................................
Banco Santander (EUR) 2,496,254 54,218
................................................................................
Empresa Nacional de Electricidad (EUR) 1,511,160 33,588
................................................................................
Gas Natural (EUR) 284,141 22,948
................................................................................
Iberdrola (EUR) 2,479,149 34,701
................................................................................
Repsol (EUR) 1,156,560 18,815
................................................................................
Telefonica de Espana (EUR) 2,148,094 100,641
................................................................................
Telefonica de espana, Rights, 5/20/99 (EUR)* 2,148,094 1,997
................................................................................
Total Spain (Cost $181,156) 321,308
.............
SWEDEN 3.7%
Common Stocks 3.7%
ABB (Class A) 1,658,450 23,097
................................................................................
AstraZeneca Group ADR 2,324,660 90,650
................................................................................
Atlas Copco (Class B) 1,009,868 26,572
................................................................................
20
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Portfolio of Investments Shares Value
- --------------------------------------------------------------------------------
In thousands
Electrolux (Class B) 2,842,165 $ 57,604
................................................................................
Esselte (Class B) 299,610 4,670
................................................................................
Granges 275,121 4,663
................................................................................
Hennes and Mauritz (Class B) 990,025 85,308
................................................................................
Nordbanken 8,293,354 52,098
................................................................................
Sandvik (Class B) 945,420 21,347
................................................................................
Securitas (Class B) 734,408 10,881
................................................................................
Total Sweden (Cost $199,020) 376,890
...........
SWITZERLAND 6.6%
Common Stocks 6.6%
ABB 32,170 46,915
................................................................................
Adecco 128,792 64,915
................................................................................
Credit Suisse Group 257,355 51,026
................................................................................
Nestle 88,126 163,059
................................................................................
Novartis 86,609 126,760
................................................................................
Roche Holdings 8,706 102,370
................................................................................
Swisscom 43,996 16,148
................................................................................
UBS 322,935 109,642
................................................................................
Total Switzerland (Cost $446,769) 680,835
...........
UNITED KINGDOM 19.9%
Common Stocks 19.9%
Abbey National 2,922,700 65,862
................................................................................
Asda Group 9,799,000 32,552
................................................................................
BG 3,530,270 19,877
................................................................................
British Petroleum 2,909,500 55,183
................................................................................
Cable & Wireless 6,764,050 96,953
................................................................................
Cadbury Schweppes 4,697,793 62,650
................................................................................
Caradon 7,896,238 20,070
................................................................................
Centrica * 3,295,040 6,692
................................................................................
Compass Group 4,478,000 45,600
................................................................................
David S. Smith 4,107,120 8,854
................................................................................
Diageo 12,531,305 144,339
................................................................................
Electrocomponents 2,429,000 20,710
................................................................................
GKN 779,000 13,296
................................................................................
21
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio of Investments Shares Value
- ----------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Glaxo Wellcome 4,914,710 $ 145,476
..................................................................................
Heywood Williams Group 1,034,875 4,578
..................................................................................
John Laing (Class A) 1,797,000 9,222
..................................................................................
Kingfisher 12,163,466 181,998
..................................................................................
Ladbroke Group 4,402,940 21,160
..................................................................................
National Westminster Bank 12,011,780 287,531
..................................................................................
Rank Group 2,471,825 10,279
..................................................................................
Reed International 11,656,860 106,138
..................................................................................
Rio Tinto 3,509,900 61,207
..................................................................................
Rolls Royce 2,669,925 12,381
..................................................................................
Safeway 5,979,920 24,916
..................................................................................
Shell Transport & Trading 22,986,000 172,685
..................................................................................
SmithKline Beecham 14,884,280 196,344
..................................................................................
Tesco 16,435,185 48,847
..................................................................................
Tomkins 13,103,954 56,074
..................................................................................
Unilever 5,682,000 50,639
..................................................................................
United News & Media 4,804,430 58,430
..................................................................................
Total United Kingdom (Cost $1,174,886) 2,040,543
.............
<CAPTION>
SHORT-TERM INVESTMENTS 1.1%
Money Market Funds 1.1%
<S> <C> <C>
Reserve Investment Fund, 5.01% # 107,773,794 107,774
..................................................................................
Total Short-Term Investments (Cost $107,774) 107,774
.............
Total Investments in Securities
99.7% of Net Assets (Cost $7,196,224) $ 10,231,651
Other Assets Less Liabilities 30,164
............
NET ASSETS $ 10,261,815
------------
</TABLE>
* non-income producing
# Seven-day yield
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 period-end amounts to
0.22% of net assets.
ADR American depository receipt
ADS American depository share
EUR European currency unit
GDR Global depository receipt
GDS Global depository share
HKD Hong Kong dollar
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Unaudited April 30, 1999
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
- ----------------------------------------------------------------------------------------
In thousands
<S> <C>
Assets
Investments in securities, at value (cost $7,196,224) $10,231,651
Securities lending collateral 2,809,353
Other assets 94,275
...........
Total assets 13,135,279
...........
Liabilities
Obligation to return securities lending collateral 2,809,353
Other liabilities 64,111
...........
Total liabilities 2,873,464
...........
NET ASSETS $10,261,815
-----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 40,976
Accumulated net realized gain/loss - net of distributions 92,834
Net unrealized gain (loss) 3,034,990
Paid-in-capital applicable to 651,255,192 shares of $0.01 par
value capital stock outstanding; 2,000,000,000 shares
of the Corporation authorized 7,093,015
...........
NET ASSETS $10,261,815
-----------
NET ASSET VALUE PER SHARE $ 15.76
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Unaudited April 30, 1999
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
4/30/99
Investment Income
Income
Dividend (net of foreign taxes of $8,995) $ 74,032
Interest 8,811
...........
Total income 82,843
...........
Expenses
Investment management 33,081
Shareholder servicing 6,961
Custody and accounting 1,468
Prospectus and shareholder reports 462
Legal and audit 59
Registration 30
Directors 8
Miscellaneous 23
...........
Total expenses 42,092
Expenses paid indirectly (3)
...........
Net expenses 42,089
...........
Net investment income 40,754
...........
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 172,550
Foreign currency transactions (1,445)
...........
Net realized gain (loss) 171,105
...........
Change in net unrealized gain or loss
Securities 1,081,812
Other assets and liabilities
denominated in foreign currencies (1,321)
...........
Change in net unrealized gain or loss 1,080,491
...........
Net realized and unrealized gain (loss) 1,251,596
...........
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 1,292,350
-----------
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Unaudited April 30, 1999
Statement of Changes In Net Assets
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
4/30/99 10/31/98
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 40,754 $ 151,187
Net realized gain (loss) 171,105 187,607
Change in net unrealized gain or loss 1,080,491 380,637
................................
Increase (decrease) in net assets from operations 1,292,350 719,431
................................
Distributions to shareholders
Net investment income (144,746) (138,108)
Net realized gain (230,270) (379,734)
................................
Decrease in net assets from distributions (375,016) (517,842)
................................
Capital share transactions*
Shares sold 1,203,596 2,424,698
Distributions reinvested 351,615 485,438
Shares redeemed (1,747,859) (3,579,766)
................................
Increase (decrease) in net assets from capital
share transactions (192,648) (669,630)
................................
Net Assets
Increase (decrease) during period 724,686 (468,041)
Beginning of period 9,537,129 10,005,170
................................
End of period $ 10,261,815 $ 9,537,129
--------------------------------
* Share information
Shares sold 80,652 167,589
Distributions reinvested 24,520 36,308
Shares redeemed (116,788) (248,730)
................................
Increase (decrease) in shares outstanding (11,616) (44,833)
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
Unaudited April 30, 1999
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price International Funds, Inc. (the corporation) is registered under
the Investment Company Act of 1940. The 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. 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
26
<PAGE>
T. Rowe Price International Stock Fund
- --------------------------------------------------------------------------------
with generally accepted accounting principles. Expenses paid indirectly reflect
credits earned on daily, uninvested cash balances at the custodian, used to
reduce the fund's custody charges.
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. government 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 April 30, 1999, the value of loaned securities
was $2,728,936,000; aggregate collateral consisted of $2,809,353,000 in the
securities lending collateral pool and U.S. government securities valued at
$57,242,000.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $573,416,000 and $947,182,000, respectively, for the six
months ended April 30, 1999.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At April 30, 1999, the cost of investments for federal income tax purposes was
substantially the same as for financial reporting and totaled $7,196,224,000.
Net unrealized gain aggregated $3,035,427,000 at period-end, of which
$3,393,922,000 related to appreciated investments and $358,495,000 to
depreciated investments.
27
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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 $5,596,000 was payable at
April 30, 1999. 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 April 30, 1999, and for the six months 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 $4,620,000 for
the six months ended April 30, 1999, of which $890,000 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 5.6% of the outstanding shares of the
fund at April 30, 1999. For the six months then ended, the fund was allocated
$890,000 of Spectrum expenses, $186,000 of which was payable at period-end.
28
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T. Rowe Price International Stock Fund
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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 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 six months ended April 30, 1999, totaled
$5,071,000 and are reflected as interest income in the accompanying Statement of
Operations.
During the six months ended April 30, 1999, the fund, in the ordinary course of
business, placed security purchase and sale orders aggregating $819,958,000 with
certain affiliates of the manager and paid no commissions of $1,486,000 related
thereto.
29
<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 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 appropriate to the fund or funds
covered in this report.
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
4200 West Cypress St.
10th Floor
Tampa, FL 33607
4410 ArrowsWest Drive
Colorado Springs, CO 80907
Warner Center Plaza 5
Mezzanine Level
21800 Oxnard Street, Suite 270
Woodland Hills, CA 91367
(opens mid-June)
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor.
