Semiannual Report
International
Growth &
Income Fund
April 30, 1999
T. Rowe Price
Report Highlights
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International Growth & Income Fund
o International markets were generally favorable for the fund's first
four months of operation.
o The fund posted a solid return that exceeded its benchmark index; our
value bias in stock selection was beneficial.
o Strong returns in many European countries and in Japan were reduced for
U.S. investors by the dollar's strength versus the euro and yen.
o Europe is the fund's largest geographic exposure at 63% of net assets;
Japan is second at 16%.
o Prospects are positive for foreign markets particularly if the U.S.
economy remains strong without igniting inflationary pressures.
Fellow Shareholders
This is our first report since the fund's inception on December 21, 1998, and we
would like to welcome all shareholders. International markets were generally
positive for the fund's first four months of operation, although returns on
Japanese and most European stocks were reduced for U.S. investors by the
dollar's strength versus the yen and the euro, Europe's new common currency.
Performance Comparison
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Period Ended 4/30/99 4 Months (since 12/31/98)
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International Growth & Income Fund 5.81%
MSCI EAFE Index 5.60
The fund's four-month return was a solid 5.81%, about 20 basis points
higher than our benchmark MSCI EAFE Index (Morgan Stanley Capital
International Europe, Australasia, and Far East Index). Results benefited
from our bias toward stocks with value characteristics, since some of the
best-performing stocks in Europe-our largest regional exposure-were
cyclical companies whose stocks frequently have "value" as opposed to
"growth" characteristics. (Since inception on December 21, the fund has
gained 7.50%.)
MARKET ENVIRONMENT
The broad themes driving world markets higher in recent months were
improving sentiment, recovering capital flows, and a generally benign
interest rate environment. Economic growth continued to be uneven in the
major economies of Europe. At the top end, France and Spain are growing 2%
to 3% per annum, driven by strong domestic demand, while Germany and Italy
are growing only 1% to 1.5%. The latter countries have particularly
suffered from reduced global demand in the manufacturing sector and slow
consumer spending. In Germany, the recently elected government lurched from
blunder to blunder, resulting in widespread criticism and unpopularity. The
finance minister resigned in March after numerous confrontations over tax
policy with domestic companies, which responded by threatening to relocate
their operations, and over monetary policy with the European Central Bank
(ECB), which was keen to establish its independence. The new finance
minister favors a more pragmatic, noninterventionist approach, and this
cleared the way for the ECB to cut rates more than expected, from 3% to
2.5%. Despite the recent sharp rise in the oil price, there is very little
inflationary pressure in Europe due to high unemployment, increased
competition, and now the greater ease of price comparisons brought about by
the euro.
In the Pacific, there were some major rallies in the smaller countries amid
signs that a number of them 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
allocate 7.5 trillion yen ($62 billion) 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.
IMPACT OF THE EURO
The European Union's new single currency began trading on January 1, 1999.
In the short term, contrary to expectations, the euro has been weak, for
three main reasons. First, economic growth in the Eurozone was less than
forecast, and this has prompted the ECB to cut rates. At the same time, the
U.S. economy grew faster than anticipated, and this meant the interest rate
differential continued to favor the U.S. dollar. Second, political fighting
between the German Finance Minister and the ECB led to a lack of confidence
in the euro. This has now been resolved in favor of the ECB. Third, the
Balkans conflict on Europe's doorstep has led to investors preferring the
safe haven status of the U.S. dollar. These factors led to a 9% decline in
the currency's value from its launch through April 30.
In the longer term, the move to a single currency is expected to bring
several benefits, both macroeconomic and microeconomic, such as currency
certainty within the Eurozone, low inflation, lower costs, more
competition, and more efficient capital markets. To survive in such an
environment, companies must either have the lowest cost base in their
industry or a sustainable business model. Many have examined their
competitive positions and sought improvements; the unprecedented number of
mergers and acquisitions in the past six months is testimony to this. So
far, this type of activity in Europe has principally been among telecoms,
pharmaceuticals, and banks. The fund benefited through the involvement of
some of our holdings.
PORTFOLIO REVIEW
Europe
European stocks composed 63% of the fund's net assets on April 30, and the
United Kingdom represented about one-third of all stocks in this group. In
recent months, the more cyclically exposed sectors-metals, forestry
products, and oils, for example-have performed best across Europe as
investors began to anticipate a recovery in global economic growth. The
pickup in underlying demand for technology products has also helped the
electronics sector, while telecommunication stocks appeared strong but have
been held back since January by high valuations. Bank stocks recovered from
fears of a global liquidity crisis and emerging market bad debt problems,
as buoyant financial markets generated large trading and commission income.
By comparison, the safe, steady growers suffered in such an environment,
with business services, food, and health care declining.
Market Performance
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Four Months Local Local Currency U.S.
Ended 4/30/99 Currency vs. U.S. Dollars Dollars
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France 11.69% - 9.90% 0.62%
Germany 7.39 - 9.90 - 3.24
Hong Kong 30.48 - 0.04 30.43
Italy 4.56 - 9.90 - 5.80
Japan 23.74 - 5.50 16.93
Mexico 36.52 6.45 45.32
Netherlands 9.77 - 9.90 - 1.10
Norway 21.78 - 2.15 19.16
Sweden 15.75 - 3.63 11.55
Switzerland 3.43 - 9.79 - 6.69
United Kingdom 11.97 - 3.23 8.35
Source: FAME Information Services, Inc., using MSCI indices.
The U.K. was the star performer of the major European countries. Fears that
the domestic economy was heading into recession have been eased by
successive cuts in interest rates from 7% to 5.25% by the Bank of England.
There was also growing evidence that consumer demand is beginning to
strengthen. Better fundamentals together with strong liquidity and low
valuations by European standards led to the U.K. market's better
performance. As the table on page 3 shows, U.K. stocks in general returned
almost 12% for the four months but the return to U.S. investors was trimmed
to 8.35% by the rise of the U.S. dollar against the pound. (The U.K. has
not yet adopted the euro.)
Our two largest holdings in the fund, Shell Transport & Trading and BP
Amoco benefited from the strong rise in oil prices, while Imperial Chemical
and Rolls Royce reflected renewed interest in cyclical companies.
Our holdings in countries adopting the euro generally performed well in
local currency terms, but gave back much of this performance due to the
rise in the dollar. The Netherlands represents about 6% of net assets and
our largest holdings there are Akzo Nobel, a diversified chemical
manufacturer and ING Groep, a leading financial services company. As is
true of most holdings in the fund, these stocks are selling at very
reasonable valuations. We have over 8% of assets invested in France, with a
major holding in Axa, an insurance company that owns U.S. insurer
Equitable. Significant merger and acquisition activity in France is a
welcome sign that companies there may be becoming more shareholder
friendly.
With just under 7% of assets in Germany, we are underweighted versus the
EAFE index. The bulk of our German exposure is through cyclical stocks,
such as the chemical firms Bayer and BASF. Italy, about 5% of assets, was a
hive of activity, with the major story being a hostile-and ultimately
successful-bid for Telecom Italia by Olivetti. Other holdings in Italy
include several banks, such as San Paolo-IMI and the food processor
Parmalat.
Not all of Europe has joined the euro. Markets still trading in their
national currency include Switzerland, Sweden, and of course the U.K. About
half of our 6% position in Switzerland consists of ABB, which builds
transportation and power-generating equipment, Vontobel Holdings, an
insurer, and Holderbank Financiere Glarus, a cement manufacturer with
facilities around the world.
Sweden (3%) was a strong performer in Europe. Astra's merger with Zeneca of
the U.K. was well received as the combination now has the scale to compete
with the largest companies in the pharmaceutical industry. The significant
rise in Electrolux was fueled by its successful drive to improve operating
margins, buoyant U.S. consumer demand for appliances, and low valuation.
Geographic Diversification
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Europe Japan Far East Other and Reserves
63 16 10 11
Based on net assets as of 4/30/99.
Japan
Japanese stocks were strong during the four months since the fund commenced
operations. A string of positive news and government stimulus efforts in
the fourth quarter of 1998 led to improved investor sentiment. The
government initiated a bailout program of problem financial institutions,
and many major corporations announced restructuring plans. The yen also
stabilized somewhat versus the dollar, improving prospects for Japan's
major exporters. Financial companies and the telecommunications sector led
the stock rebound, with the largest gains occurring among medium and
smaller companies.
Still, Japan's fundamentals are weak, and we expect the economy to remain
in the doldrums for some time. The structural changes needed for a real
recovery are likely to take place over a number of years, and corporate
restructuring will probably be piecemeal and evolutionary. Nonetheless,
there is a real and accelerating reform trend, leading to genuine profit
growth enhancement for the medium term.
Japan is our second-largest major regional exposure at 16% of net assets
and accounted for eight of our 25 largest holdings on April 30. Despite the
overall problems in Japan, it is still the second-largest market and
economy in the world, and many of its companies are strong competitors. Our
holdings include Bridgestone, a tire manufacturer that owns Firestone and
supplies Goodyear. Another holding is Canon, one of the world's dominant
office product companies with substantial interests in cameras and video
equipment.
Far East
Excluding Japan, we have another 10% of net assets in the Pacific Rim,
principally in Hong Kong, Australia, and New Zealand. Hong Kong is home to
some of the most financially sound and best-managed companies in the Far
East, but currently its economy is struggling with its first recession in
13 years. One of our holdings there is Hutchison Whampoa, a diversified
investment and property development company that will benefit when the Hong
Kong economy recovers. Generally, stocks in Hong Kong have among the most
attractive valuations in the world.
Australian stocks performed well in the period. Natural resource stocks
dominate this market, and the pickup in some commodity prices triggered
good returns. Rio Tinto, an energy exploration and production firm,
performed well, as did Santos, a broad-based international mining company.
Latin America
We have only a little over 1% of the portfolio in this region, specifically
Brazil, Chile, Argentina, and Mexico. Stock market volatility has been extreme
in the past year even by the region's standards. Stocks were clobbered by the
"flight to quality" after the Russian financial crisis of August 1998, and then
a rebound in the fall was torpedoed by Brazil's failure to enact expected fiscal
reforms and subsequent currency devaluation. However, the Brazilian Congress
finally passed some needed measures to rein in the government's deficit, and
when inflation appeared more restrained than expected, stocks in the region
surged. Mexico suffered least from this period of turmoil, and its economy is in
the best position to show positive growth. Our holdings in this part of the
world performed very well, led by the Mexican cement company Cemex and the
Brazilian telephone stock Telebras.
Industry Diversification
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Percent of Net Assets
4/30/99
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Finance 22.7%
Consumer Goods 19.5
Services 16.4
Capital Equipment 11.1
Energy 10.4
Materials 8.1
Multi-industry 2.1
All Other 1.0
Reserves 8.7
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Total 100.0%
OUTLOOK
Since Europe is by far our largest exposure, it is appropriate to first
address the prospects there. After three years of excellent stock returns,
Europe has taken a breather. The economy is weaker than anticipated, but
recent cuts in interest rates and the euro's drop in value should pave the
way for improvement. However, many nations need to lower taxes, deregulate
labor practices, and reduce government debt. The advent of the euro will
intensify pressure for these changes. In addition, we expect continuing
corporate restructuring to increase competitiveness and shareholder value
in Europe as the advantages of a single market are realized. Therefore, we
are optimistic about the region and expect to find attractive values in
many markets. In Japan and other areas we see signs of economic progress,
and seek to invest in companies poised to benefit from rebounding
economies.
The prospects for global markets will depend significantly on whether the
U.S. economy behaves in a way that allows the benign environment of low
inflation and stable interest rates to continue. 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. can continue to deliver a mix of steady
growth, negligible inflation, and favorable interest rates, the investment
environment should remain positive. In addition, if overseas economies take
over the leadership role, the case for international diversification
becomes compelling.
We believe our focus on foreign stocks with sound businesses and attractive
valuations will provide solid results over time that offer significant
diversification benefits for U.S. stock portfolios.
Respectfully submitted,
Martin G. Wade President
May 24, 1999
T. Rowe Price International Growth & Income Fund
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/99
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Shell Transport & Trading, United Kingdom 1.4%
BP Amoco, United Kingdom 1.3
Imperial Chemical, United Kingdom 1.1
Bridgestone, Japan 1.1
Axa, France 1.1
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ABB, Switzerland 1.0
Canon, Japan 1.0
Honda, Japan 1.0
AstraZeneca, United Kingdom 1.0
Takeda Chemical Industries, Japan 0.9
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Vontobel Holdings, Switzerland 0.9
Tokyo Electric Power, Japan 0.9
Holderbank Financiere Glarus, Switzerland 0.9
British Telecommunications, United Kingdom 0.9
Rolls Royce, United Kingdom 0.9
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Electrolux, Sweden 0.8
Mitsui & Co., Japan 0.8
UBS, Switzerland 0.8
Akzo Nobel, Netherlands 0.8
Kao, Japan 0.8
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Sumitomo Marine & Fire Insurance, Japan 0.8
Repsol, Spain 0.8
ING Groep, Netherlands 0.8
BG, United Kingdom 0.7
Hutchison Whampoa, Hong Kong 0.7
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Total 23.2%
Note: Table excludes reserves.
T. Rowe Price International Growth & Income Fund
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Unaudited
Financial Highlights For a share outstanding throughout the period
12/21/98
Through
4/30/99
NET ASSET VALUE
Beginning of period $10.00
Investment activities
Net investment income 0.06*
Net realized and unrealized gain (loss) 0.69
Total from investment activities 0.75
NET ASSET VALUE
End of period $10.75
------
Ratios/Supplemental Data
Total return(#) 7.50%*
Ratio of total expenses to
average net assets 1.25%*!
Ratio of net investment
income to average net assets 2.31%*!
Portfolio turnover rate 25.3%!
Net assets, end of period
(in thousands) $9,813
(#) 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
* Excludes expenses in excess of a 1.25% voluntary expense limitation in
effect through 10/31/00.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Growth & Income Fund
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Unaudited April 30, 1999
Statement of Net Assets Shares Value
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In thousands
ARGENTINA 0.3%
Common Stocks 0.3%
Banco de Galicia Buenos Aires (Class B) ADR (USD) 300 $ 7
Telefonica de Argentina (Class B) ADR (USD) 300 11
YPF Sociedad Anonima (Class D) ADR (USD) 300 13
Total Argentina (Cost $23) 31
AUSTRALIA 3.3%
Common Stocks 3.3%
Australia & New Zealand Bank Group 5,900 47
Coles Myer Limited 7,500 40
Normandy Mining 39,000 34
Pacific Dunlop 16,600 29
Publishing & Broadcasting 5,800 39
Rio Tinto 2,000 34
Santos 11,400 39
Westfield Trust 13,700 30
Westpac Bank 3,800 29
Total Australia (Cost $289) 321
AUSTRIA 0.6%
Common Stocks 0.6%
Brau-Union 600 30
EVN Energie Versorgung Nieder 200 30
Total Austria (Cost $61) 60
BELGIUM 1.1%
Common Stocks 1.1%
Dexia (EUR) 240 37
Electrabel (EUR) 105 34
Solvay (EUR) 500 35
Total Belgium (Cost $117) 106
BRAZIL 0.3%
Common Stocks 0.3%
Telebras ADR (USD) 300 $ 27
27
Preferred Stocks 0.0%
Telebras ADR (USD) * 300 0
0
Total Brazil (Cost $23) 27
CHILE 0.2%
Common Stocks 0.2%
Compania de Telecomunicaciones de Chile (Class A) ADR 400 10
Enersis ADS (USD) 302 6
Total Chile (Cost $16) 16
DENMARK 1.3%
Common Stocks 1.3%
Danisco 840 39
Tele Danmark 300 31
Unidanmark (Class A) 800 55
Total Denmark (Cost $139) 125
FINLAND 1.0%
Common Stocks 1.0%
Kesko (EUR) 3,050 48
Merita (EUR) 7,610 45
Valmet (EUR) 780 10
Total Finland (Cost $99) 103
FRANCE 8.6%
Common Stocks 8.6%
Accor (EUR) 200 53
Assurances Generales de France (EUR) 940 50
Axa ADR (USD) 1,000 64
B.U.S. Berzelius Umwelt-Service (EUR) 2,000 19
Banque National de Paris (EUR) 400 $ 33
Cie de St. Gobain (EUR) 310 53
Elf Aquitaine (EUR) 280 43
Eridania Beghin-Say (EUR) 340 47
France Telecom ADR (USD) 500 41
Fromageries (EUR) 40 29
Labinal (EUR) 180 45
LVMH (EUR) 80 21
Pernod Ricard (EUR) 800 54
Pinault Printemps Redoute (EUR) 240 40
Renault SA (EUR) 1,000 42
Rhone Poulenc (EUR) 1,080 51
Schneider (EUR) 700 46
Societe Generale (EUR) 300 54
Technip (EUR) 460 55
Total France (Cost $804) 840
GERMANY 6.6%
Common Stocks 6.6%
Altana AG (EUR) 560 34
Amb Aach & Mun Bet (EUR) 400 42
AXA Colonia Konzern (EUR) 420 40
BASF AG (EUR) 1,010 44
Bayer (EUR) 900 38
Bayerische Vereinsbank (EUR) 500 33
Daimler Chrysler Ag (EUR) 600 59
Deutsche Bank (EUR) 710 41
Deutsche Telekom ADR (USD) 1,000 39
Dresdner Bank (EUR) 740 32
Heidelberg Zement (EUR) 600 41
HEW-Hamburgische Electricitaets-Werke (EUR) 1,400 32
Hoechst (EUR) 550 26
Lufthansa (EUR) 2,210 51
Man Ag (EUR) 1,600 50
Veba (EUR) 800 44
Total Germany (Cost $630) 646
HONG KONG 2.9%
Common Stocks 2.9%
Cheung Kong Holdings 6,000 $ 55
Hang Seng Bank 4,000 47
Hong Kong Electric 21,000 67
Hutchison Whampoa 8,000 72
Yue Yuen Industrial 21,000 46
Total Hong Kong (Cost $238) 287
ITALY 4.6%
Common Stocks 4.6%
Banca Commerciale Italiana (EUR) 5,900 49
Benetton Group (EUR) 26,200 47
ENI SPA ADR (USD) 700 46
Falck Acciaierie & Ferriere Lombarde (EUR) 7,000 52
Istituto Bancario San Paolo di Torino ADR (USD) 1,400 42
Istituto Nazionale delle Assicurazioni (EUR) 20,000 53
Montedison Spa (EUR) 57,600 55
Parmalat Finanz (EUR) 19,000 27
Telecom Italia (EUR) 4,100 44
Toro Assicurazioni (EUR) 2,700 40
Total Italy (Cost $454) 455
JAPAN 16.2%
Common Stocks 16.2%
Bridgestone 4,000 107
Canon 4,000 98
Dai Nippon Printing 4,000 63
Daiichi Pharmaceutical 3,000 49
Denso 3,000 61
Fuji Photo Film ADR (USD) 1,500 57
Honda ADR (USD) 1,100 97
Japan Tobacco 6 60
JUSCO 3,000 60
Kao 3,000 76
Kuraray 4,000 46
Kyocera 1,000 $ 59
Marui 3,000 50
Mitsubishi Heavy Industries 12,000 53
Mitsui & Co 11,000 81
Nippon Express 10,000 65
Sekisui House 6,000 67
Sumitomo Chemicals 13,000 58
Sumitomo Marine & Fire Insurance 11,000 75
Takeda Chemical Industries 2,000 87
Terumo 3,000 65
Tokyo Electric Power 4,000 85
Wacoal 4,000 43
WEBS Index Fund (USD) 2,000 24
Total Japan (Cost $1,447) 1,586
MEXICO 0.5%
Common Stocks 0.5%
Cemex 'A' 6,000 28
Telefonos de Mexico (Class L) ADR (USD) 300 23
Total Mexico (Cost $30) 51
NETHERLANDS 5.5%
Common Stocks 5.5%
ABN Amro Holdings (EUR) 2,900 68
Akzo Nobel (EUR) 1,700 77
CSM (EUR) 1,100 59
Fortis Nl (EUR) 1,700 61
Hagemeyer (EUR) 1,600 54
ING Groep (EUR) 1,200 74
KLM Royal Dutch Air ADR (USD) 1,400 42
OCE (EUR) 1,300 38
Telegraaf Holdings (EUR) 3,000 65
Total Netherlands (Cost $527) 538
NEW ZEALAND 1.4%
Common Stocks 1.4%
Fernz 20,000 $ 67
Lion Nathan 11,400 29
Telecom Corp. of New Zealand ADR (USD) 1,000 41
Total New Zealand (Cost $127) 137
NORWAY 1.0%
Common Stocks 1.0%
Christiania Bank 8,400 32
Orkla (Class A) 2,200 37
Storebrand ASA 4,900 36
Total Norway (Cost $101) 105
SINGAPORE 2.2%
Common Stocks 2.2%
Development Bank of Singapore 4,000 42
Singapore Airlines 4,000 37
Singapore Land 16,000 51
Singapore Press 3,000 44
United Overseas Bank 5,000 39
Total Singapore (Cost $159) 213
SPAIN 3.5%
Common Stocks 3.5%
Argentaria Banca de Espana (EUR) 1,500 36
Banco Santander Cen Hispanos ADR (USD) 2,000 43
Cristaleria Espanola (EUR) 740 41
Dragados Y Construcciones (EUR) 1,700 57
Endesa ADR (USD) 1,900 42
Repsol ADR (USD) 4,500 74
Telefonica de Espana ADR (USD) 410 57
Total Spain (Cost $366) 350
SWEDEN 3.1%
Common Stocks 3.1%
AstraZeneca Group ADR (USD) 908 $ 35
Autoliv 1,500 52
Electrolux (Class B) 4,000 81
Scania AB 2,400 67
Svenska Handelsbank 1,800 68
Total Sweden (Cost $295) 303
SWITZERLAND 6.0%
Common Stocks 6.0%
ABB 70 102
Hero 100 50
Holderbank Financiere Glarus 70 84
Novartis 40 59
Schindler Holdings 40 63
Schweizerische Rueckversicherungs 30 66
UBS 230 78
Vontobel Holdings 50 86
Total Switzerland (Cost $598) 588
UNITED KINGDOM 20.5%
Common Stocks 20.5%
Abbey National 3,100 70
Associated British Foods 9,100 66
AstraZeneca ADR (USD) 1,500 59
Bank of Scotland 3,800 57
Bass 4,200 66
BG 12,800 72
Blue Circle Industries 9,900 66
Bowthorpe 9,000 71
BP Amoco ADR (USD) 1,100 125
British Airport Authorities 5,300 55
British Telecommunications ADR (USD) 500 84
Cadbury Schweppes ADR (USD) 1,300 70
Diageo ADR (USD) 1,500 69
GKN 3,700 $ 63
Halifax 4,000 56
HSBC Holdings 1,600 61
Imperial Chemical ADR (USD) 2,500 108
J. Sainsbury 5,100 33
Ladbroke Group 8,000 38
Pearson 2,500 53
Powergen 6,400 70
Rolls Royce 18,000 84
Royal Sun Alliance 6,800 59
Shell Transport & Trading ADR (USD) 3,000 136
Slough Estates 9,000 49
Tesco 21,000 62
Thames Water 4,200 59
Tomkins ADR (USD) 434 8
United Utilities 5,700 65
WEBS Index Fund 1,000 22
Woolwich 9,300 59
Total United Kingdom (Cost $1,932) 2,015
UNITED STATES 0.6%
Common Stocks 0.6%
Pharmacia & Upjohn 1,000 56
Total United States (Cost $57) 56
Short-term Investments 7.6%
Money Market Funds 7.6%
Reserve Investment Fund, 5.01% # 748,704 749
Total Short-Term Investments (Cost $749) 749
Total Investments in Securities
98.9% of Net Assets (Cost $9,281) $ 9,708
Other Assets Less Liabilities 105
NET ASSETS $ 9,813
----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 52
Accumulated net realized gain/loss - net of distributions 95
Net unrealized gain (loss) 427
Paid-in-capital applicable to 912,879 shares of $0.01 par
value capital stock outstanding; 2,000,000,000 shares
of the Corporation authorized 9,239
NET ASSETS $ 9,813
----------
NET ASSET VALUE PER SHARE $ 10.75
----------
* Non-income producing
# Seven-day yield
ADR American depository receipt
ADS American depository share
EUR European currency unit
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Growth & Income Fund
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Unaudited
Statement of Operations
In thousands
12/21/98
Through
4/30/99
Investment Income
Income
Dividend (net of foreign taxes of $8) $ 63
Interest 16
Total income 79
Expenses
Custody and accounting 45
Shareholder servicing 9
Registration 2
Prospectus and shareholder reports 2
Legal and audit 2
Directors 2
Reimbursed by manager (35)
Total expenses 27
Net investment income 52
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 101
Foreign currency transactions (6)
Net realized gain (loss) 95
Change in net unrealized gain or loss on securities 427
Net realized and unrealized gain (loss) 522
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 574
---------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Growth & Income Fund
- --------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
In thousands
12/21/98
Through
4/30/99
Increase (Decrease) in Net Assets
Operations
Net investment income $ 52
Net realized gain (loss) 95
Change in net unrealized gain or loss 427
Increase (decrease) in net assets from operations 574
Capital share transactions*
Shares sold 10,230
Shares redeemed (991)
Increase (decrease) in net assets from capital
share transactions 9,239
Net Assets
Increase (decrease) during period 9,813
Beginning of period --
End of period $ 9,813
----------
*Share information
Shares sold 1,011
Shares redeemed (98)
Increase (decrease) in shares outstanding 913
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Growth & Income Fund
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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 Growth & Income
Fund (the fund), a diversified, open-end management investment company, is
one of the portfolios established by the corporation and commenced
operations on December 21, 1998. Its goals are long-term growth of capital
and reasonable current income through investments, primarily in common
stocks of mature, dividend paying, non-U.S. companies.
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.
Premiums and Discounts Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
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. Credits earned on
daily, uninvested cash balances at the custodian are used to reduce the
fund's custody credits.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $7,931,000 and $424,000, respectively, for the
period ended April 30, 1999.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends 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
$9,281,000. Net unrealized gain aggregated $427,000 at period end, of which
$741,000 related to appreciated investments and $314,000 to depreciated
investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The fund is managed by Rowe Price-Fleming International, Inc. (the
manager), which is owned by T. Rowe Price Associates, Inc. (Price
Associates), Robert Fleming Holdings Limited, and Jardine Fleming Holdings
Limited under a joint venture agreement.
The investment management agreement between the fund and the manager
provides for an annual investment management fee. 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 period 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.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through October 31, 2000, which would cause
the fund's ratio of total expenses to average net assets to exceed 1.25%.
Thereafter, through October 31, 2002, the fund is required to reimburse the
manager for these expenses, provided that average net assets have grown or
expenses have declined sufficiently to allow reimbursement without causing
the fund's ratio of total expenses to average net assets to exceed 1.25%.
Pursuant to this agreement, $15,000 of management fees were not accrued by
the fund for the period ended April 30, 1999, and $69,000 of other expenses
were borne by the manager.
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 $46,000 for the period ended April 30, 1999, of
which $11,000 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
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 period ended April
30, 1999, totaled $10,000 and are reflected as interest income in the
accompanying Statement of Operations.
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
Knowledgeable Service Representatives
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET. In Person Available in T.
Rowe Price Investor Centers.
Account Services
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(registered trademark) and
the T. Rowe
Price Web site on the Internet. Address: www.troweprice.com
Brokerage Services*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over full-service 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.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a January 1999 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary depending on
size of order.
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
STOCK FUNDS
- -----------------------------
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Growth & Income
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
* Closed to new investors. ** Formerly named Florida Insured Intermediate
Tax-Free. *** Formerly named Tax-Free Insured Intermediate Bond.
! Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
funds.
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.
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access(registered trademark):
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)
Invest With Confidence(registered trademark)
T. Rowe Price Investment Services, Inc., Distributor. F127-051 4/30/99
