<PAGE>
Annual Report
INTERNATIONAL
STOCK FUND
----------------
OCTOBER 31, 2000
----------------
[LOGO OF T. ROWE PRICE]
T. ROWE PRICE
<PAGE>
REPORT HIGHLIGHTS
--------------------------------------------------------------------------------
International Stock Fund
. International stocks fell during the past six months as a rally in
defensive shares failed to compensate for a steep correction in technology
stocks.
. The fund turned in sharply negative returns for the six-month period and
eked out slightly positive results for the past 12 months.
. Performance was mixed versus the MSCI EAFE Index and the average returns
for similar funds in both periods.
. Stocks in Europe and Japan suffered the worst damage while Latin America
fared better because of its lack of exposure to tech shares.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
<PAGE>
FELLOW SHAREHOLDERS
International stocks declined during the six months ended October 31, 2000.
During the first half of your fund's fiscal year, Internet-related telecom,
media, and technology stocks rose sharply. Leadership changed in the second half
as a severe correction hit these sectors, while the more defensive consumer
staple, pharmaceutical, and banking stocks found their footing. The recovery in
defensive issues, however, failed to compensate for the steep decline in tech
stocks. As a result, international stock markets posted heavy overall losses
during the past six months.
----------------------
PERFORMANCE COMPARISON
----------------------
Periods Ended 10/31/00 6 Months 12 Months
--------------------------------------------------------------------------------
International Stock Fund -10.40% 2.28%
MSCI EAFE Index - 8.89 -2.66
Lipper International
Funds Average -10.00 2.70
Fund performance during the past six months trailed the MSCI EAFE Index and was
slightly behind the Lipper average for similar funds. The fund's focus on
telecom, media, and technology stocks, and its lower exposure to recovering
defensive shares, hurt relative results. However, for the 12-month period, the
media and technology sectors boosted results versus the index although the
return lagged the Lipper average. The portfolio's telecom, banking, and
technology hardware holdings, as well as an underweighted position in Japan and
an overweighted exposure to Latin America, aided performance over the fund's
fiscal year.
Investors had driven telecom, media, and technology stocks higher in 1999 and
early 2000 on the expectation that their potential for powerful growth could be
sustained. However, signs of moderating demand, profit warnings, and abundant
new issuance finally weighed on these sectors and pushed share prices down to
more realistic levels. Investors began to focus on established companies whose
shares had been beaten down, including food producers, pharmaceuticals, and
banks.
1
<PAGE>
-----------------------
CAN THE EURO ALSO RISE?
--------------------------------------------------------------------------------
Understanding why the euro has been weak helps explain why it should recover.
Several factors have pushed the euro--the common currency for 11 countries in
Continental Europe--down 27% since its launch on January 1, 1999. Chris Rothery,
a portfolio manager at T. Rowe Price International (TRPI), thinks each of these
factors could moderate or reverse in the next year.
Capital flows into the U.S. have risen sharply in recent years as European
companies acquired an unprecedented number of U.S. businesses and as Europeans
invested in U.S. financial assets. Both trends are moderating, however. This
year's weakness in the U.S. stock market has made investment here less
attractive. "The Nasdaq bubble appears to have been pricked, which should also
take some steam out of the dollar," says Rothery.
The persistent strength of the U.S. economy has also hurt the euro, as it makes
the U.S. a more attractive place to invest. But U.S. growth has showed signs of
slowing recently, narrowing the advantage over European growth.
Higher-yielding U.S. government bonds also lured investors. Recently, however,
long-term U.S. rates have declined while those in the euro zone have remained
stable.
Since the euro's launch, oil prices have more than tripled, and Europe's demand
for the dollars needed to pay for oil has surged. But oil prices are stabilizing
and expected to trend lower.
While the Federal Reserve is respected and well established, the European
Central Bank (ECB) has less than two years' experience. ECB officials have
aggravated investors' uncertainty by making confusing remarks. Lately, ECB
officials have become more politically astute and are expected to make more
careful statements.
Though TRPI portfolio managers have been surprised by the extent of the euro's
decline, they point out that markets often overshoot. It would be a mistake for
U.S. investors to shun euro assets, says Rothery.
John Ford, TRPI's chief investment officer, sees Europe at an earlier stage of
the economic cycle than the U.S., with greater room for productivity
improvement. "If we can get into a virtuous cycle, then investors can benefit
from better economic performance, higher returns on capital, and a strong chance
of currency appreciation to boot," Ford says.
THE EURO VS. THE U.S. DOLL AR
--------------------------------------------------------------------------------
December 31, 1998 -- October 31, 2000
[GRAPH]
[PLOT POINTS TO COME]
Chart shows the euro--the common currency of 11 countries in Continental
Europe--has declined steadily in value versus the U.S. dollar since its January
1, 1999, launch.
2
<PAGE>
Broader concerns weighing on the equities markets included slower economic
growth, high oil prices, and euro weakness. Economic growth eased in Europe,
while in Japan the consumer sector remained weak and rising bankruptcies failed
to alleviate concerns about unemployment. Economic growth in the rest of Asia
was strong, although recurring worries about financial stability plagued some
emerging markets.
PORTFOLIO REVIEW
--------------------------
GEOGRAPHIC DIVERSIFICATION
--------------------------------------------------------------------------------
[GRAPH]
[PLOT POINTS TO COME]
Based on net assets as of 10/31/00.
At the end of October, Europe represented 63% of net assets, up from 59% in
April. Within Europe, the U.K. remained the largest country exposure at 22% of
net assets. We had 18% invested in Japan, down from 21% in April. In the Far
East, the weighting fell from 8% to 5%, while in Latin America 4% of the
portfolio was split between Mexico and Brazil. The fund is underweighted in
Europe and Japan relative to the MSCI EAFE Index, and overweighted in the Far
East and Latin America. The changes in regional allocations resulted from
differences in local performance, as well as from sales of stocks that had risen
sharply and which we felt were unlikely to make further gains. Purchases
included banks with strong market positions and restructuring potential, and
stocks in commercial services. We also added to selected technology and media
stocks with valuable assets that we thought were oversold. We reduced positions
in technology and some media and service holdings that had soared.
Europe
Sharp declines in major telecom, media, and technology stocks and the weakness
of the euro impeded stock market performance in Europe. The telecoms hurt
markets in Germany and France, while large tele-com handset and equipment stocks
Nokia and LM Ericsson had a serious impact on Finnish and Swedish markets. On
the other hand,
3
<PAGE>
Switzerland held up better because telecom stocks are an insignificant part of
the Swiss market.
. Telecoms
------------------
MARKET PERFORMANCE
--------------------------------------------------------------------------------
Six Months Local Local Currency U.S.
Ended 10/31/00 Currency vs. U.S. Dollars Dollars
--------------------------------------------------------------------------------
France 0.66% -6.99% -6.37%
Germany -5.58 -6.98 -12.18
Hong Kong -11.74 -0.13 -11.85
Italy 9.53 -6.98 1.88
Japan -13.51 -1.02 -14.39
Mexico -0.67 -1.87 -2.53
Netherlands 6.37 -6.98 -1.06
Singapore -10.17 -2.73 -12.63
Sweden -18.52 -10.65 -27.19
Switzerland 7.27 -4.32 2.65
United Kingdom 4.74 -7.20 -2.81
Source: RIMES Online, using MSCI indices.
European governments began to auction off the spectrum that telecom operators
need to provide third-generation, Internet-compatible mobile telephone services.
In the U.K., companies paid unexpectedly high prices, and more licenses than
expected were sold in Germany at generally steep prices. Telecom stocks such as
British Telecom and Deutsche Telekom fell as investors worried about the high
costs for services that will not be rolled out until 2002, with more competitors
than expected in the important German market. In addition, there were fears that
until the new services are launched, mobile telecom growth may slow because
European penetration is already around 50%. At the end of the period, the
withdrawal of one bidder from Italy's auction resulted in lower-than-expected
prices. Relief over this development, the conclusion of the largest license
auctions, and the low level of telecom stock prices stimulated a modest
recovery. Diversified telecoms performed significantly worse than mobile
telecoms because earnings from traditional fixed-line services have fallen.
Mobile telecoms, including Vodafone Group and Telecom Italia Mobile, performed
far better.
. Technology
The challenges to telecom company growth and profitability have direct
implications for technology hardware companies that have benefited from strong
demand. Mobile handset suppliers, component manufacturers, and equipment and
infrastructure producers declined after
4
<PAGE>
extended periods of extraordinary gains. Despite increasing its market share,
world leading handset manufacturer Nokia, our second-largest holding, fell as
investors worried about future growth prospects. Results of the handset
businesses at LM Ericsson and Philips Electronics were disappointing, and news
from other players in the market also indicated that demand for handsets was
healthy but softening. A weaker outlook for handsets and reports of poor PC
sales in Europe hurt businesses that produce components, such as semiconductors.
European semiconductor equipment manufacturer ASM Lithography, specialized
semiconductor producer STMicroelectronics, and Philips Electronics (which has a
major semiconductor business) all fell. Despite excellent results and full order
books, disappointments from technology companies such as Intel in the U.S.
adversely affected their performance. Optical network equipment producers such
as Alcatel performed better, but as the broader sector fell they also slipped
lower. Although Europe's technology hardware industry slumped over the recent
six months, over the 12-month period it achieved a stunning return approached
only by that of the media sector. Earnings growth of technology companies
remained far superior to those of companies in other sectors.
. Media
The media industry performed poorly during the past six months, but 12-month
returns were superior. Hopes faded that media companies could accelerate
earnings by providing advertising space and program content to Internet portals
and interactive TV. Signs that European economic growth was slowing,
contributing to weaker advertising spending, raised concerns. French broadcaster
Societe Television Francaise 1 declined after a sharp rise. Dutch directory
giant VNU, which owns Nielsen Research in the U.S., also gave back some earlier
gains. WPP Group was weak until the end of the period largely due to initial
concerns about its acquisition of U.S. advertising agency Y&R. U.K. publisher
Reed International, which had performed poorly six months ago due to its lack of
Internet services, rose strongly in the recent period. New management, progress
migrating publications to the Web, and the proposed acquisition of U.S. company
Harcourt all supported Reed's rise. Longer term, the liberalization of
advertising in Europe and increasing demand for market research and
entertainment media bode well for the sector.
5
<PAGE>
. Financials
Financial companies continued to restructure and make acquisitions. Strong
results lifted Royal Bank of Scotland Group, a major holding, which is reaping
the benefits of restructuring and cost-cutting after last year's acquisition of
U.K. bank NatWest. In Italy, banks Banca Intesa and UniCredito Italiano, as well
as insurer Alleanza Assicurazioni, performed well. Banca Intesa has a new,
highly regarded CEO and has gained full control of a large subsidiary, enabling
the company to fully integrate its businesses, cut costs, and reap synergies.
Other European banks also made acquisitions to strengthen their market positions
and leverage their expertise. Finnish/Swedish group Nordic Baltic Holding --
another strong performer -- acquired Christiania Bank of Norway. Dutch banking
and insurance group ING Groep acquired U.S. insurer Reliastar and Aetna's
financial services businesses, giving it an inside track in U.S. life and
annuity premiums. Fortis began to integrate its Dutch and Belgian businesses and
announced the acquisition of a Dutch insurer. Both ING and Fortis performed
strongly. Swiss bank UBS acquired U.S. financial services group PaineWebber for
$12 billion, while Spanish banks Banco Santander Central Hispano and Banco
Bilbao Vizcaya Argentaria acquired Mexican banks to extend their presence in the
rapidly growing Latin American market.
. Food and Beverage
Unilever, Nestle, and Diageo rose as investors sought their more predictable
defensive characteristics. Anglo/Dutch Unilever acquired U.S. Bestfoods for $20
billion to create the world's second-largest food manufacturer. Increased demand
from emerging markets together with cost-cutting and sales of noncore,
lower-return businesses helped Nestle's earnings. U.K.'s Diageo announced plans
to merge its food business, Pillsbury, with General Mills in the U.S. to form
the largest listed U.S. food business and the world's fourth-largest food
company. Diageo will focus on its higher-margin drinks and spirits businesses.
. Pharmaceuticals
Sanofi-Synthelabo, Aventis, AstraZeneca Group, and biotech company Celltech
Group were among your portfolio's leading performers. Healthy sales growth and
cost-cutting pushed Sanofi and Aventis higher. AstraZeneca climbed as new drugs
with encouraging prospects were approved or launched. Celltech's results were
above expectations, raising confidence in its already-launched drugs, strong
U.S. corporate partners, and a pipeline with many late-stage drugs.
6
<PAGE>
. Economic Review for Europe
European indicators point to gently slowing economic growth. Euro zone GDP grew
3.7% in the second quarter year-over-year. Regional business surveys and
industrial production peaked around June, then eased but remained at healthy
levels. Unemployment across the region continued to fall. Oil price strength and
euro weakness lifted euro zone year-over-year inflation to 2.8% by September
(1.4% excluding oil). Given its 2.0% inflation target, the European Central Bank
raised interest rates half a percentage point in two steps, to 4.75%.
The U.K. economy weakened, in part because the strength of sterling relative to
the depressed euro caused difficulty for exporters. U.K. inflation remained
below the Bank of England's target, and GDP rose in the third quarter. The euro
and sterling both fell 7% over the six months. The decline of sterling was a
welcome correction from a high level, but the euro's decline caused concern as
the currency was already depressed. Factors contributing to euro weakness
included the sharp increase of corporate acquisitions in the U.S. and -- until
recently -- surprisingly strong U.S. economic growth and stock market strength.
In mid-September, the European Central Bank intervened in currency markets in
concert with the U.S. Federal Reserve and other G7 central banks.
Progress with structural reforms continued. The German parliament's final
approval of significant business tax cuts -- expected to stimulate business and
improve shareholder returns -- was a major achievement. Germany's action spurred
France and other euro zone countries to announce similar tax cuts so they would
remain attractive to businesses that might otherwise relocate to countries with
lower taxes. Germany later pressed ahead with proposals for important pension
reforms that would further reduce the cost burden on businesses.
------------------------
INDUSTRY DIVERSIFICATION
--------------------------------------------------------------------------------
Percent of Net Assets
4/30/00 10/31/00
Services 39.4% 29.8%
Finance 16.4 21.3
Capital Equipment 18.1 18.7
Consumer Goods 14.2 14.5
Energy 6.0 6.7
All Other 2.9 3.6
Reserves 3.0 5.4
Total 100.0% 100.0%
7
<PAGE>
Japan
International concerns about technology component demand, sales by foreign
investors and banks, and bankruptcies of major businesses hurt Japan's stock
market. Weakness was broadly based and only a few cyclical and defensive sectors
rose. Banks, pharmaceuticals, and consumer goods declined moderately, but
telecom and technology stocks fell more sharply. As a result of the controversy
surrounding Bridgestone's Firestone tires, the stock and its sector suffered.
Your fund had only a small position in Bridgestone, which we sold shortly after
the initial allegations were revealed.
. Banks
The bankruptcies of major companies depressed bank stocks to multi-year lows. As
fears diminished and investors continued to avoid tele-com and technology
stocks, the banking sector recovered somewhat. The banks resisted some requests
for debt forgiveness and the government refused to rescue a major retailer.
Despite these signs of progress, Japan needs to show a greater willingness to
let insolvent businesses collapse rather than prop them up with subsidies. Banks
continued their sales of cross-holdings in one another's shares and in other
Japanese companies. The announced merger of Daichi Kangyo, IBJ, and Fuji Bank
proceeded with the stock market listing of the newly formed holding company for
the merged group, Mizuho Holdings.
. Technology and Consumer Electronics
Hardware component makers were hurt by concerns about slackening demand for
mobile telecom parts, PCs, and semiconductors. Suppliers including Kyocera,
Murata Manufacturing, Toshiba, and NEC announced better-than-expected results
and raised their forecasts, but fears about future earnings caused their stocks
to fall over the six-month period. However, they outperformed the overall
market over 12 months. Canon, benefiting from its success in gaining market
share as its competitors struggled, outperformed the general market during the
recent six months and turned in excellent results for the fiscal year. Consumer
electronics giant Matsushita Electric Industrial, known for its Panasonic
brand, performed strongly, but Sony fell sharply. Parts shortages forced Sony
to halve the size of its eagerly awaited PlayStation 2 launch in the U.S., and
the firm's quarterly results disappointed investors.
8
<PAGE>
. Telecoms
Following increased pressure from the U.S., the government reduced the
interconnection rates that the government-controlled Nippon Telegraph &
Telephone (NTT), one of our larger holdings, charges other companies. Concerns
that this will increase competition and reduce NTT's revenues spurred the
company to expand its international interests and acquire U.S. Web host Verio.
In October, the government sold over $11 billion worth of its shares in NTT,
reducing its stake to 46%. This put pressure on NTT's share price, although over
the longer term reduced government control should open the door for more
rigorous management that could enhance shareholder value. NTT's mobile
subsidiary, NTT DoCoMo, outstripped forecasts as the number of its Internet
subscribers climbed to 12 million. NTT DoCoMo also expanded abroad, buying
stakes in Dutch and U.K. mobile telecom operators, signing a strategic alliance
with AOL, and acquiring control of AOL's Japanese subsidiary. The prospect of
further share issuance hurt NTT DoCoMo's recent performance, although the stock
performed well relative to the general market over the year.
. Economic Review for Japan
... POCKETS OF
ECONOMIC STRENGTH ARE
LIMITED TO
MAJOR MANUFACTURERS.
While Japan is no longer technically in a recession, pockets of economic
strength are limited to major manufacturers. The confidence of large
manufacturing firms has been better than that of nonmanufacturing and smaller
firms. Capital expenditure was also heavily skewed toward the large
manufacturers. Second-quarter GDP was higher than anticipated, and industrial
production was solid in the third quarter. However, consumers remained reluctant
to spend as corporate restructuring and rising bankruptcies kept unemployment
above historic levels. Perceiving the economy to be stable enough to withstand a
slight interest rate increase, The Bank of Japan ended its zero-interest-rate
policy and raised rates to 0.25%. Yet, the continuing fragility of the economic
recovery led the government to announce an economic stimulus package amounting
to $100 billion. The measure has been criticized since Japan's debt is already
130% of GDP and fiscal spending is only a short-term fix that postpones
painful, but essential, structural changes. Moody's downgraded Japanese
government debt, reflecting the rating agency's concern about the country's
increasing indebtedness.
9
<PAGE>
Far East
Strong oil prices and slowing global growth hurt markets across the Pacific.
High levels of stock issuance planned for the coming quarters also dampened
regional performance. Local problems added to the pressure on South Korea,
Taiwan, and, to a lesser extent, India. Economic data and company results were
mostly equal to or above expectations. However, other negative factors prevented
telecom, media, and technology stocks from maintaining earlier peaks. Over the
six-month period, banks rose as concerns about U.S. interest rate hikes
subsided.
. Telecom and Media
Telecom stocks China Mobile (Hong Kong) and China Unicom, registered in Hong
Kong but providing services across China, both reported better-than-expected
results, and their subscriber numbers continued to climb sharply. The advent of
mobile telecom services, marketed in ways that are affordable to the Chinese
population, has opened vast markets. Hong Kong-based Internet company Pacific
Century CyberWorks acquired Hong Kong's largest telecom and formed a joint
venture with Australian telecom Telstra. Conglomerate Hutchison Whampoa and its
parent Cheung Kong Holdings reported robust earnings. Hutchison's telecom
interests include stakes in Vodafone, Voicestream, and China Unicom.
. Technology
Technology stocks including Samsung Electronics and Taiwan Semiconductor
Manufacturing (TSMC) struggled due to indications of slower demand for mobile
handset components, weak PC sales, and falling semiconductor prices. Following
earlier shortages, manufacturers over-ordered components, but demand failed to
meet expectations and prices fell. Despite strong results from Samsung and TSMC,
negative sentiment about the outlook drove share prices lower.
. Economic Review for the Far East
Economic growth and industrial production in smaller countries moderated but
remained strong. In Hong Kong and China, a strong recovery took hold. The U.S.
Senate's vote to grant China normal trade status removed a major hurdle in
China's path to join the World Trade Organization. The government of Singapore
took steps to reduce its control of business and put pressure on local companies
to restructure and become globally competitive. In South Korea, the government
and
10
<PAGE>
banks appeared to take a firmer line with debt-laden companies but failed
to follow through. In Taiwan, political infighting and the poor health of the
banks created uncertainty. The government stepped in with an economic stimulus
package and raised the possibility of allowing foreigners to invest in or
acquire Taiwanese banks.
Latin America
Mexican and Brazilian markets performed better than most international markets,
largely because of the lack of technology stocks. The clear victory of
opposition candidate Vicente Fox in Mexico's presidential election also helped.
Mexico's banks and Brazil's energy companies performed strongly. The Mexican
government promoted banking reforms, and the acquisition of Mexican banks by
foreign banks fostered confidence in Mexico's banking system. Brazil's leading
energy group, Petroleo Brasileiro (Petrobras), capped off a buoyant six months
by announcing a significant oil discovery. Strong oil prices, a successful
listing on the New York Stock Exchange, and the Brazilian government's steps to
remove limits on energy prices contributed to Petrobras's rise over the six
months.
Mexico's dominant telecom, Telefonos de Mexico, split its business into mobile
and fixed-line divisions. The good news was balanced by a government decision to
cut fixed-line rates that Telmex can charge and to increase competition in the
industry. The Brazilian telecom sector struggled because the government
announced auctions for a significant number of next-generation mobile spectrum
licenses in the first quarter of 2001.
. Economic Review for Latin America
Mexico's fiscal prudence, progress with banking reforms, and strong exports
fostered better growth, lower inflation, and a firm currency. Close ties to the
booming U.S. economy and higher oil prices were other reasons for the country's
prosperity. There have been concerns that the vigorous economy would suffer if
the U.S. economy slowed and oil prices returned to previous levels, but banking
system improvements, fiscal reforms, and other fundamental changes may enable
Mexico to avoid a boom-bust scenario. In Brazil, economic recovery remained on
track. During the period, the central bank cut interest rates from 18.5% to
16.5%, and the government passed additional reforms.
11
<PAGE>
INVESTMENT OUTLOOK
In Europe, increasing management focus on returns and fiscal reforms should aid
earnings growth. The backdrop for stocks should also improve as interest rates
and oil prices peak, and the undervalued euro begins to recover. In Japan, the
economic environment is more challenging, but valuations are moving toward the
bottom of their recent ranges. Although it is difficult to see a short-term
catalyst for the Japanese stock market, the downside appears limited. Elsewhere
in Asia, further market liberalization, structural reforms, and improved
corporate governance are essential if the region's superior long-term economic
growth is to translate into strong stock market performance. The recent period
of greater political stability and economic health bode well for Mexico and
Brazil.
Internationally, economies have been slowing, but we expect them to improve by
the second half of 2001. Technology sector earnings growth is likely to ease
from recent peaks but should remain significantly above that of other sectors.
Due to the short-term uncertainty about economic growth, oil prices, technology
trends, and the direction of the euro, markets could continue to be weak or
volatile. However, we expect these factors to mitigate in coming months and
remain cautiously optimistic about the prospects for the fund in the year ahead.
Respectfully submitted,
/s/ John R. Ford
John R. Ford
President, T. Rowe Price International Funds, Inc.
November 24, 2000
12
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
--------------------
PORTFOLIO HIGHLIGHTS
--------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
10/31/00
--------------------------------------------------------------------------------
Vodafone Group, United Kingdom 3.0%
Nokia, Finland 2.2
Royal Bank of Scotland Group, United Kingdom 2.1
Glaxo Wellcome, United Kingdom 2.0
TotalFinaElf, France 1.6
--------------------------------------------------------------------------------
Shell Transport & Trading, United Kingdom 1.6
Sony, Japan 1.6
Vivendi, France 1.5
Reed International, United Kingdom 1.4
LM Ericsson, Sweden 1.4
--------------------------------------------------------------------------------
Philips Electronics, Netherlands 1.4
ING Groep, Netherlands 1.4
Canon, Japan 1.3
Banca Intesa, Italy 1.2
Cable & Wireless, United Kingdom 1.2
--------------------------------------------------------------------------------
VNU, Netherlands 1.2
Nestle, Switzerland 1.2
Granada Compass, United Kingdom 1.2
Aventis, France 1.1
AXA, France 1.1
--------------------------------------------------------------------------------
SmithKline Beecham, United Kingdom 1.1
Matsushita Electric Industrial, Japan 1.1
Kyocera, Japan 1.1
Nippon Telegraph & Telephone, Japan 1.0
Securitas, Sweden 1.0
Total 36.0%
Note: Table excludes reserves.
13
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
----------------------
PERFORMANCE COMPARISON
--------------------------------------------------------------------------------
These charts show the value of a hypothetical $10,000 investment in each
fund over the past 10 fiscal year periods or since inception (for funds
lacking 10-year records). The result is compared with benchmarks, which
may include a broad-based market index and a peer group average or index.
Market indexes do not include expenses, which are deducted from fund
returns as well as mutual fund averages and indexes.
INTERNATIONAL STOCK SHARES
--------------------------------------------------------------------------------
[GRAPH]
[PLOT POINTS TO COME]
INTERNATIONAL STOCK ADVISOR CLASS SHARES
--------------------------------------------------------------------------------
[GRAPH]
[PLOT POINTS TO COME]
------------------------------------
AVERAGE ANNUAL COMPOUND TOTAL RETURN
--------------------------------------------------------------------------------
This table shows how each fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Since Inception
Periods Ended 10/31/00 1 Year 5 Years 10 Years Inception Date
--------------------------------------------------------------------------------
International Stock shares 2.28% 10.46% 10.16% -- --
International Stock
Advisor Class shares -- -- -- -15.69% 3/31/00
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
14
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
--------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
--------------------------------------------------------------------------------
International Stock shares
Year
Ended
10/31/00 10/31/99 10/31/98 10/31/97 10/31/96
NET ASSET VALUE
Beginning of period $ 16.70 $ 14.39 $ 14.14 $ 13.47 $12.09
Investment activities
Net investment income (loss) 0.10 0.17 0.23 0.19 0.19
Net realized and
unrealized gain (loss) 0.35 2.71 0.77 0.86 1.57
Total from
investment activities 0.45 2.88 1.00 1.05 1.76
Distributions
Net investment income (0.13) (0.22) (0.20) (0.18) (0.18)
Net realized gain (0.91) (0.35) (0.55) (0.20) (0.20)
Total distributions (1.04) (0.57) (0.75) (0.38) (0.38)
NET ASSET VALUE
End of period $ 16.11 $ 16.70 $ 14.39 $ 14.14 $13.47
================================================
Ratios/Supplemental Data
Total return/\ 2.28% 20.67% 7.48% 7.90% 14.87%
Ratio of total expenses to
average net assets 0.84% 0.85% 0.85% 0.85% 0.88%
Ratio of net investment
income (loss) to average
net assets 0.55% 1.05% 1.50% 1.33% 1.58%
Portfolio turnover rate 38.2% 17.6% 12.2% 15.8% 11.6%
Net assets, end of period
(in millions) $10,458 $10,615 $ 9,537 $10,005 $8,776
/\ Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
--------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
--------------------------------------------------------------------------------
International Stock Advisor Class shares
3/31/00
Through
10/31/00
NET ASSET VALUE
Beginning of period $ 19.12
Investment activities
Net investment income (loss) 0.02
Net realized and
unrealized gain (loss) (3.02)
Total from
investment activities (3.00)
NET ASSET VALUE
End of period $ 16.12
========
Ratios/Supplemental Data
Total return/\ (15.69%)
Ratio of total expenses to
average net assets 0.83%+
Ratio of net investment
income (loss) to average
net assets 0.63%+
Portfolio turnover rate 38.2%
Net assets, end of period
(in thousands) $ 1,500
/\ 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.
16
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
October 31, 2000
------------------------
PORTFOLIO OF INVESTMENTS Shares Value
--------------------------------------------------------------------------------
In thousands
AUSTRALIA 1.6%
Common Stocks 1.0%
Brambles Industries 1,089,000 $ 28,235
Commonwealth Bank of Australia 1,119,448 16,659
Publishing & Broadcasting 3,902,850 26,643
Telstra 9,063,693 29,580
----------
101,117
----------
Preferred Stocks 0.6%
News Corporation 7,509,184 67,338
----------
67,338
----------
Total Australia (Cost $152,491) 168,455
----------
BELGIUM 0.8%
Common Stocks 0.8%
Dexia (EUR) 212,652 31,959
Fortis B (EUR) 1,239,275 37,964
Societe Europeenne des Satellites (Class A) (EUR) 57,900 7,714
UCB (EUR) 135,450 4,828
----------
Total Belgium (Cost $44,688) 82,465
----------
BRAZIL 1.5%
Common Stocks 0.8%
Embratel Participacoes ADR (USD) 496,000 8,029
Petroleo Brasileiro (Petrobras) ADR (USD) * 473,200 13,752
Telebras ADR (USD) 769,799 56,388
Unibanco GDR (USD) 421,960 10,655
----------
88,824
----------
Preferred Stocks 0.7%
Petroleo Brasileiro (Petrobras) 2,510,331 66,552
Telesp Cellular Participacoes 477,260,206 5,645
----------
72,197
----------
Total Brazil (Cost $150,634) 161,021
----------
17
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
CANADA 1.3%
Common Stocks 1.3%
Alcan Aluminum 432,360 $ 13,601
Celestica (USD) * 1,146,036 82,371
Nortel Networks (USD) 168,000 7,644
Nortel Networks 461,420 20,873
Royal Bank of Canada 371,840 11,758
----------
Total Canada (Cost $75,696) 136,247
----------
DENMARK 0.1%
Common Stocks 0.1%
Tele Danmark 138,274 6,544
----------
Total Denmark (Cost $5,453) 6,544
----------
FINLAND 2.2%
Common Stocks 2.2%
Nokia (EUR) 5,625,918 231,499
----------
Total Finland (Cost $30,830) 231,499
----------
FRANCE 11.9%
Common Stocks 11.9%
Alcatel (EUR) 1,606,950 98,047
Altran Technologies (EUR) 101,540 20,758
Aventis (EUR) 1,445,194 104,243
Aventis (DAX Exchange) (EUR) 223,030 15,993
AXA (EUR) 906,308 119,978
BNP Paribas (EUR) 1,141,530 98,420
Bouygues (EUR) 389,400 19,827
Canal Plus (EUR) 60,760 8,791
Cap Gemini (EUR) 183,650 29,299
Compagnie de St. Gobain (EUR) 231,048 30,567
Groupe Danone (EUR) 125,830 17,597
Hermes International (EUR) 149,390 20,157
L'Oreal (EUR) 174,740 13,346
Lafarge (EUR) 65,643 4,846
18
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
Legrand (EUR) 214,933 $ 34,654
LVMH (EUR) 177,610 12,962
Sanofi-Synthelabo (EUR) 1,476,136 77,664
Schneider Electric (EUR) 201,661 13,134
Societe Generale (EUR) 341,068 19,363
Societe Television Francaise 1 (EUR) 1,694,670 92,470
Sodexho Alliance (EUR) 84,901 13,293
STMicroelectronics (EUR) 1,095,651 55,275
TotalFinaElf (Class B) (EUR) 1,190,252 170,294
Vivendi (EUR) 2,162,082 155,403
----------
Total France (Cost $815,677) 1,246,381
----------
GERMANY 3.8%
Common Stocks 3.8%
Allianz (EUR) 170,760 57,898
Bayer (EUR) 354,862 15,403
Bayerische Hypo-und Vereinsbank (EUR) 1,134,777 62,304
Deutsche Bank (EUR) 1,086,805 88,980
Deutsche Telekom (EUR) 268,372 10,077
E.On (EUR) 499,136 25,363
Gehe (EUR) 603,872 21,984
Rhoen-Klinikum (EUR) 198,784 10,838
SAP (EUR) 497,100 81,795
Siemens (EUR) 131,182 16,704
----------
Total Germany (Cost $289,558) 391,346
----------
HONG KONG 2.7%
Common Stocks 2.7%
Cheung Kong Holdings 5,550,000 61,378
China Mobile (Hong Kong) * 13,627,000 87,364
China Unicom * 4,882,000 9,796
Dao Heng Bank Group 4,241,000 21,425
Henderson Land Development 1,891,000 8,147
Hutchison Whampoa 5,759,500 71,634
Pacific Century CyberWorks * 23,221,117 17,865
----------
Total Hong Kong (Cost $174,485) 277,609
----------
19
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
INDIA 0.7%
Common Stocks 0.7%
Global Tele-Systems * 1,258,421 $ 28,321
Hindustan Lever 6,196,000 23,583
ICICI Limited 5,796,122 9,266
ICICI Limited ADR (USD) 1,476,847 13,938
----------
Total India (Cost $111,137) 75,108
----------
IRELAND 0.3%
Common Stocks 0.3%
SmartForce ADR (USD) * 607,671 30,498
----------
Total Ireland (Cost $14,186) 30,498
----------
ITALY 5.5%
Common Stocks 5.5%
Alleanza Assicurazioni (EUR) 2,413,500 32,012
Assicurazioni Generali (EUR) 359,000 11,805
Banca Intesa (EUR) 30,284,517 125,670
Bipop-Carire (EUR) 5,498,000 43,484
ENI (EUR) 9,048,855 48,991
Mediaset (EUR) 855,000 12,371
Mediolanum (EUR) 2,683,325 39,325
Olivetti (EUR) 16,651,515 50,446
San Paolo IMI (EUR) 471,884 7,649
Tecnost (EUR) * 5,484,000 18,475
Telecom Italia (EUR) 2,701,473 31,292
Telecom Italia Mobile (EUR) 9,859,182 83,832
UniCredito Italiano (EUR) 14,464,666 73,648
----------
Total Italy (Cost $396,604) 579,000
----------
20
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
JAPAN 18.5%
Common Stocks 18.5%
Canon 3,388,000 $ 134,446
DDI 1,978 9,281
East Japan Railway 2,399 13,785
Fanuc 439,900 39,509
Fuji Television 4,833 53,151
Fujitsu 2,276,000 40,549
Furukawa Electric * 819,000 21,542
Hitachi 1,470,000 15,762
Ito-Yokado 374,000 16,898
Kao 687,000 20,588
Kokuyo 1,058,000 16,290
Kyocera 857,000 111,528
Makita 1,403,000 10,222
Marui 2,129,000 31,414
Matsushita Communication Industrial 135,800 17,797
Matsushita Electric Industrial 4,061,000 117,980
Mitsui Fudosan 3,739,000 45,301
Mizuho Holdings * 13,208 101,558
Murata Manufacturing 878,600 105,160
NEC 5,148,000 98,134
Nippon Telegraph & Telephone 11,944 108,696
Nomura Securities 4,073,000 86,413
NTT DoCoMo 3,206 79,037
Sankyo 1,407,000 31,012
Seven-Eleven Japan 737,000 47,956
Shin-Etsu Chemical 822,000 33,749
Shiseido 1,266,000 16,360
Softbank 295,500 17,738
Sony 2,071,500 165,545
Sumitomo 3,107,000 27,336
Sumitomo Bank 6,235,000 75,713
TDK 327,000 32,965
Tokyo Electron 531,200 41,575
21
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
Toshiba 11,551,000 $ 82,571
Yamanouchi Pharmaceutical 1,541,000 69,766
----------
Total Japan (Cost $1,596,726) 1,937,327
----------
MEXICO 2.1%
Common Stocks 2.1%
Fomennto Economico Mexico UBD units
(Represents 1 Series B and
Series D shares) 7,144,360 27,195
Grupo Iusacell ADR (USD) * 883,000 11,479
Grupo Televisa GDR (USD) * 1,688,566 91,394
Telefonos de Mexico (Telmex) (Class L) ADR (USD) 1,561,174 84,206
----------
Total Mexico (Cost $ 177,318) 214,274
----------
NETHERLANDS 6.5%
Common Stocks 6.5%
ABN Amro Holding (EUR) 547,369 12,681
Akzo Nobel (EUR) 93,698 4,266
ASM Lithography (EUR) * 2,113,250 57,762
CSM (EUR) 596,708 13,621
Equant (EUR) * 165,911 5,554
Fortis (EUR) 1,758,504 53,722
ING Groep (EUR) 2,115,080 145,240
KPN (EUR) 476,079 9,643
Philips Electronics (EUR) 3,703,344 145,537
Royal Dutch Petroleum (EUR) 1,180,472 70,012
United Pan-Europe Communications (EUR) * 226,980 3,978
VNU (EUR) 2,574,870 121,269
Wolters Kluwer (EUR) 1,400,994 31,529
----------
Total Netherlands (Cost $448,271) 674,814
----------
NEW ZEALAND 0.1%
Common Stocks 0.1%
Telecom Corporation of New Zealand 5,703,628 12,622
----------
Total New Zealand (Cost $24,831) 12,622
----------
22
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
NORWAY 0.2%
Common Stocks 0.2%
Orkla (Class A) 1,352,094 $ 24,407
----------
Total Norway (Cost $10,745) 24,407
PORTUGAL 0.1%
Common Stocks 0.1%
Jeronimo Martins (EUR) 787,016 7,587
----------
Total Portugal (Cost $5,227) 7,587
----------
SINGAPORE 0.7%
Common Stocks 0.7%
DBS Group Holdings 973,000 11,468
Singapore Telecommunications 7,362,000 12,198
United Overseas Bank 7,040,592 52,114
----------
Total Singapore (Cost $69,585) 75,780
----------
SOUTH KOREA 0.7%
Common Stocks 0.7%
Korea Telecom ADR (USD) 918,300 33,862
Pohang Iron & Steel ADR (USD) 353,333 5,587
Samsung Electronics 269,717 33,789
----------
Total South Korea (Cost $69,642) 73,238
----------
SPAIN 2.8%
Common Stocks 2.8%
Banco Bilbao Vizcaya Argentaria (EUR) 5,392,097 71,839
Banco Santander Central Hispano (EUR) 6,676,053 64,698
Empresa Nacional de Electricidad (EUR) 3,091,750 50,374
Repsol (EUR) 1,440,952 22,891
Telefonica (EUR) * 2,900,799 55,312
Telefonica ADR (USD) * 429,527 24,886
----------
Total Spain (Cost $233,425) 290,000
----------
23
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
SWEDEN 3.7%
Common Stocks 3.7%
Atlas Copco (Class B) 299,088 $ 6,181
Electrolux (Class B) 1,207,475 15,226
Hennes & Mauritz (Class B) 1,917,100 35,878
LM Ericsson (Class B) * 10,990,740 146,290
Nordic Baltic Holding * 7,536,824 56,570
Nordic Baltic Holding (DKK) 1,150,333 8,657
Sandvik 418,510 9,235
Securitas (Class B) 5,042,936 107,497
----------
Total Sweden (Cost $330,896) 385,534
----------
SWITZERLAND 3.7%
Common Stocks 3.7%
ABB 318,274 28,285
ABB (SEK) 237,127 21,073
Adecco 72,862 50,382
Credit Suisse Group 222,085 41,635
Nestle 58,446 121,112
Roche Holding 4,817 44,000
UBS 592,940 82,133
----------
Total Switzerland (Cost $219,163) 388,620
----------
TAIWAN 0.6%
Common Stocks 0.6%
Hon Hai Precision Industry 4,470,900 23,392
Taiwan Semiconductor Manufacturing * 13,398,126 40,651
----------
Total Taiwan (Cost $68,346) 64,043
----------
UNITED KINGDOM 22.1%
Common Stocks 22.1%
Abbey National 1,399,350 19,431
AstraZeneca Group 1,896,620 89,272
Autonomy Corporation * 144,500 7,380
Baltimore Technologies * 2,261,000 17,387
24
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
BG Group 1,385,897 $ 5,590
BP Amoco 4,923,000 41,751
British Telecom 3,505,000 41,142
Cable & Wireless 8,580,150 121,630
Cadbury Schweppes 5,470,792 33,954
Celltech Group * 1,542,000 31,055
Centrica 2,938,768 10,180
David S. Smith Holdings 1,692,560 3,733
Diageo 5,764,652 54,432
Dimension Data * 999,000 8,741
Electrocomponents 1,722,000 17,290
GKN 388,000 4,495
Glaxo Wellcome 7,417,210 213,626
Granada Compass * 13,961,380 120,936
Granada Media * 910,280 5,336
Hays 7,629,000 41,648
Hilton Group 2,191,470 6,097
HSBC Holdings (HKD) 1,652,800 22,994
Kingfisher 4,608,233 27,681
Lattice Group * 1,385,897 2,946
Marconi 4,864,100 61,577
Reed International 16,180,175 148,842
Rio Tinto 3,697,900 59,825
Royal Bank of Scotland Group 9,803,129 220,043
Shell Transport & Trading 20,711,000 166,781
SmithKline Beecham 9,191,680 118,696
Standard Chartered 3,461,000 49,966
Tesco 10,760,092 41,060
Tomkins 11,022,954 26,430
Unilever 4,763,107 32,257
United News & Media 1,813,215 22,578
Vodafone Group 75,203,746 314,256
WPP Group 7,719,000 103,991
----------
Total United Kingdom (Cost $1,928,842) 2,315,029
----------
25
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
UNITED STATES 0.4%
Common Stocks 0.4%
Comverse Technology * 219,492 $ 24,521
Flextronics * 580,600 22,045
-----------
Total United States (Cost $37,774) 46,566
-----------
SHORT-TERM INVESTMENTS 0.9%
Money Market Funds 0.9%
Reserve Investment Fund, 6.68% # 98,562,546 98,563
-----------
Total Short-Term Investments (Cost $98,563) 98,563
-----------
Total Investments in Securities
95.5% of Net Assets (Cost $7,580,793) $ 9,994,577
Other Assets Less Liabilities 464,886
-----------
NET ASSETS $10,459,463
===========
* Non-income producing
# Seven-day yield
ADR American depository receipt
DKK Danish krone
EUR Euro
GDR Global depository receipt
HKD Hong Kong dollar
SEK Swedish krona
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
October 31, 2000
-------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value (cost $7,580,793) $ 9,994,577
Securities lending collateral 1,383,686
Other assets 579,627
Total assets 11,957,890
Liabilities
Obligation to return securities lending collateral 1,383,686
Other liabilities 114,741
Total liabilities 1,498,427
NET ASSETS $ 10,459,463
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 56,520
Accumulated net realized gain/loss - net of distributions 747,491
Net unrealized gain (loss) 2,408,393
Paid-in-capital applicable to 649,347,456 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 7,247,059
NET ASSETS $ 10,459,463
-------------
NET ASSET VALUE PER SHARE
International Stock shares
($10,457,963,729/649,254,432 shares outstanding) $ 16.11
-------------
International Stock Advisor Class shares
($1,499,751/93,024 shares outstanding) $ 16.12
-------------
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/00
Investment Income (Loss)
Income
Dividend (net of foreign taxes of $17,286) $ 136,491
Interest (net of foreign taxes of $100) 21,367
Securities lending 8,127
-----------
Total Income 165,985
-----------
Expenses
Investment management 79,269
Shareholder servicing
International Stock shares 16,358
International Stock Advisor Class shares --
Custody and accounting 3,421
Prospectus and shareholder reports
International Stock shares 536
International Stock Advisor Class shares --
Registration 396
Legal and audit 42
Directors 16
Miscellaneous 64
-----------
Total expenses 100,102
Expenses paid indirectly (9)
-----------
Net expenses 100,093
-----------
Net investment income (loss) 65,892
-----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 991,758
Futures 21,914
Foreign currency transactions (44,950)
-----------
Net realized gain (loss) 968,722
-----------
Change in net unrealized gain or loss
Securities (742,749)
Other assets and liabilities
denominated in foreign currencies (4,767)
-----------
Change in net unrealized gain or loss (747,516)
-----------
Net realized and unrealized gain (loss) 221,206
-----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 287,098
-----------
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
Year
Ended
10/31/00 10/31/99
Increase (Decrease) in Net Assets
Operations
<S> <C> <C>
Net investment income (loss) $ 65,892 $ 105,886
Net realized gain (loss) 968,722 589,813
Change in net unrealized gain or loss (747,516) 1,201,410
------------------------------
Increase (decrease) in net assets from operations 287,098 1,897,109
------------------------------
Distributions to shareholders
Net investment income
International Stock shares (82,371) (144,745)
Net realized gain
International Stock shares (576,571) (230,270)
------------------------------
Decrease in net assets from distributions (658,942) (375,015)
------------------------------
Capital share transactions*
Shares sold
International Stock shares 4,436,179 2,598,320
International Stock Advisor Class shares 2,672 --
Distributions reinvested
International Stock shares 591,749 351,615
Shares redeemed
International Stock shares (4,813,545) (3,393,820)
International Stock Advisor Class shares (1,086) --
------------------------------
Increase (decrease) in net assets from
capital share transactions 215,969 (443,885)
------------------------------
Net Assets
Increase (decrease) during period (155,875) 1,078,209
Beginning of period 10,615,338 9,537,129
------------------------------
End of period $ 10,459,463 $10,615,338
------------------------------
*Share information
Shares sold
International Stock shares 246,549 168,506
International Stock Advisor Class shares 152 --
Distributions reinvested
International Stock shares 34,284 24,520
Shares redeemed
International Stock shares (267,043) (220,433)
International Stock Advisor Class shares (59) --
------------------------------
Increase (decrease) in shares outstanding 13,883 (27,407)
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
October 31, 2000
------------------------------
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. The fund seeks long-term growth of capital
through investments primarily in the common stocks of established, non-U.S.
companies. The fund has two classes of shares - International Stock, offered
since May 9, 1980, and International Stock Advisor Class, first offered on March
31, 2000. International Stock Advisor Class sells its shares only through
financial intermediaries, which it compensates for distribution and certain
administrative services under a Board-approved Rule 12b-1 plan. Each class has
exclusive voting rights on matters related solely to that class, separate voting
rights on matters that relate to both classes, and, in all other respects, the
same rights and obligations as the other class.
The accompanying financial statements were prepared in accordance with generally
accepted accounting principles, which require the use of estimates made by fund
management.
Valuation Equity securities are valued at the last quoted sales price at the
time the valuations are made. A security that 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.
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 denominated in foreign currencies
are translated into U.S. dollar values each day at the prevailing exchange rate,
using the mean of the bid and offer prices of such currencies against U.S.
dollars quoted by a major bank. 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.
30
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
Class Accounting The International Stock Advisor Class pays distribution and
administrative expenses, in the form of Rule 12b-1 fees, in an amount not
exceeding 0.25% of the class's average net assets; no such fees were incurred
during the period ended October 31, 2000. Shareholder servicing, prospectus, and
shareholder report expenses are charged directly to the class to which they
relate. Expenses common to both classes, investment income, and realized and
unrealized gains and losses are allocated to the classes based upon the relative
daily net assets of each class. Income distributions are declared and paid by
each class on an annual basis. Capital gain distributions are declared and paid
by the fund on an annual basis.
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 net investment income and realized gains
determined in accordance with generally accepted accounting principles. Expenses
paid indirectly reflect credits earned on daily uninvested cash balances at the
custodian and are 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 October 31, 2000, the value of loaned
securities was $1,345,082,000; aggregate collateral consisted of $1,383,686,000
in the securities lending collateral pool and U.S. government securities valued
at $11,539,000.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $4,317,658,000 and $4,916,453,000, respectively, for the
year ended October 31, 2000.
31
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
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.
In order for the fund's capital accounts and distributions to shareholders to
reflect the tax character of certain transactions, the following
reclassifications were made during the year ended October 31, 2000. The
reclassifications relate primarily to a tax practice that treats a portion of
the proceeds from each redemption of capital shares as a distribution of taxable
net investment income and/or realized capital gain. The results of operations
and net assets were not affected by the increases/(decreases) to these accounts.
--------------------------------------------------------------------------------
Undistributed net realized gain $ (6,589,000)
Undistributed net investment income (182,723,000)
Paid-in-capital 189,312,000
At October 31, 2000, the cost of investments for federal income tax purposes was
substantially the same as for financial reporting and totaled $7,580,793,000.
Net unrealized gain aggregated $2,413,784,000 at period-end, of which
$2,965,119,000 related to appreciated investments and $551,335,000 to
depreciated investments.
NOTE 4 - FOREIGN TAXES
The fund is subject to foreign income taxes imposed by certain countries in
which it invests. Foreign income taxes are accrued by the fund as a reduction of
dividend and interest income.
NOTE 5 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price International, Inc. (the manager), a wholly
owned subsidiary of T. Rowe Price Associates, Inc. (Price Associates). The
investment management agreement between the fund and the manager provides for an
annual investment management fee, of which $5,934,000 was payable at October
31,2000. 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
32
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
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 0.295% for assets
in excess of $120 billion. At October 31, 2000, and for the year 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.
The manager has agreed to bear any expenses through December 31, 2001, which
would cause International Stock Advisor Class's ratio of expenses to average net
assets to exceed 1.15%. Thereafter, through December 31, 2003, International
Stock Advisor Class is required to reimburse the manager for these expenses,
provided that its average net assets have grown or expenses have declined
sufficiently to allow reimbursement without causing its ratio of expenses to
average net assets to exceed 1.15.
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. 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 $11,075,000 for the year ended
October 31, 2000, of which $983,000 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, Price Associates, and, in the case of T. Rowe Price Spectrum
International, T. Rowe Price International. Spectrum International and Spectrum
Growth Fund held approximately 7.1% of the outstanding International Stock
shares at October 31, 2000. For the year then ended, the fund was allocated
$1,770,000 of Spectrum expenses, $144,000 of which was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by Price Associates. The Reserve Funds are
33
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
offered as cash management options only to mutual funds and other accounts
managed by Price Associates or T. Rowe Price International, and are not
available to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the year ended October 31,
2000, totaled $17,705,000 and are reflected as interest income in the
accompanying Statement of Operations.
During the year ended October 31, 2000, the fund, in the ordinary course of
business, placed security purchase and sale orders aggregating $218,462,000 with
certain affiliates of the manager and paid commissions of $255,000 related
thereto.
34
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
----------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Board of Directors of T. Rowe Price International Funds, Inc. and
Shareholders of International Stock Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of International Stock Fund (one of
the portfolios comprising T. Rowe Price International Funds, Inc., hereafter
referred to as the "Fund") at October 31, 2000, and the results of its
operations, the changes in its net assets and the financial highlights for each
of the fiscal periods presented, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 2000 by correspondence with the custodian, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 17, 2000
35
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
------------------------------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 10/31/00
--------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The Fund's distributions to shareholders included:
. $3,831,000 from short-term capital gains,
. $755,463,000 from long-term capital gains, subject to the 20% rate gains
category.
The fund will pass through foreign source income of $118,447,000 and foreign
taxes paid of $14,247,000.
36
<PAGE>
T. ROWE PRICE INTERNATIONAL STOCK FUND
--------------------------------------------------------------------------------
-----------------------
ANNUAL MEETING RESULTS
--------------------------------------------------------------------------------
The T. Rowe Price International Stock Fund held an annual meeting on October 25,
2000, to approve a new investment management agreement, to elect directors, and
to ratify the appointment of PricewaterhouseCoopers LLP as the fund's
independent accountants.
The results of voting were as follows (by number of shares):
For approval of a new investment management agreement:
Affirmative: 357,937,938.582
Against: 3,563,466.364
Abstain: 6,954,909.109
Total 368,456,314.055
For nominees to the Board of Directors of the International
Stock Fund:
M. David Testa
Affirmative: 364,023,550.570
Withheld: 4,432,763.485
Total 368,456,314.055
Martin G. Wade
Affirmative: 363,949,245.659
Withheld: 4,507,068.396
Total 368,456,314.055
Anthony W. Deering
Affirmative: 363,841,286.724
Withheld: 4,615,027.331
Total 368,456,314.055
Donald W. Dick, Jr.
Affirmative: 363,949,949.916
Withheld: 4,506,364.139
Total 368,456,314.055
Paul M. Wythes
Affirmative: 363,572,130.451
Withheld: 4,884,183.604
Total 368,456,314.055
To ratify the appointment of PricewaterhouseCoopers LLP
as independent accountants:
Affirmative: 362,018,182.143
Against: 2,540,030.013
Abstain: 3,898,101.899
Total 368,456,314.055
37
<PAGE>
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
For the hearing impaired, call:
1-800-367-0763
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
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.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site.
Baltimore Area
Downtown - new address
105 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
2260 Briargate Parkway
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
San Francisco Area
1990 North California Boulevard
Suite 100
Walnut Creek
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
[LOGO OF T.ROWE PRICE]
T. Rowe Price Investment Services, Inc., Distributor. F37-050 10/31/00
