Semiannual Report
International
Growth &
Income Fund
April 30, 2000
T. Rowe Price
REPORT HIGHLIGHTS
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International Growth & Income Fund
o International markets rose during the past six months, but were led almost
exclusively by New Economy stocks.
o The fund's returns for the 6- and 12-month periods trailed the MSCI EAFE
Index due to our focus on value stocks.
o Performance was most affected by stock selection in Europe, where the fund
was hurt by its lack of exposure to high-growth sectors such as
telecommunications equipment.
o We expect more volatility in international stocks. A continuation of the
recent shift away from last year's favorite sectors should benefit the
fund.
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.
Fellow Shareholders
International stocks rose during the six months ended April 30, 2000, led almost
exclusively by so-called New Economy stocks in the telecommunications, media,
and technology sectors. Value and cyclical stocks lagged far behind most of the
period, but recovered somewhat after technology stocks began a sharp correction
in mid-March. Fund performance reflected the general lack of investor enthusiasm
for value-oriented and reasonably priced stocks.
Performance Comparison
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Periods Ended 4/30/00 6 Months 12 Months
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International Growth
& Income Fund 3.70% 6.11%
MSCI EAFE Index 6.84 14.17
The International Growth & Income Fund delivered modest returns for the 6-
and 12-month periods, as shown in the table, trailing the performance of
the Morgan Stanley Capital International EAFE (Europe, Australasia, and Far
East) Index in both periods. Our underweighting of New Economy stocks,
particularly in Europe-though in keeping with the fund's value
style-restrained results. Technology, media, and telecom stocks also led
gains in most other markets, but not by so wide a margin as in Europe,
which was home to many of the world's best-performing markets during the
period. The fund's underweighting in communications equipment stocks hurt
performance.
In most international markets, established enterprises such as
packaged-food manufacturers, industrial companies, and utilities were left
behind. Performance was divided between big winners, mostly in the New
Economy sectors, and significant losers. However, market leadership changed
in March as investors grew increasingly concerned about valuations and as
an oversupply of new issues reduced the value of Internet-related
investments. Pharmaceuticals, consumer cyclicals, and financials started to
recover, while most New Economy stocks fell sharply.
Improving international economies provided a supportive backdrop for
stocks. Europe enjoyed stronger-than-expected growth, along with further
consolidation in the telecom and banking sectors. The euro's 13% decline
against the dollar over the past six months, which reduced returns on
European stocks for U.S. investors, can be attributed to several factors:
investment flows out of the euro zone; the persistent gap between the
exceptionally strong U.S. economy and the more moderate European economy;
and higher interest rates in the U.S.
In Japan, while stronger capital expenditure and steadily improving
industrial production signaled a reviving economy, unemployment remained
high and the consumer sector weak. Economic recovery continued throughout
the rest of Asia, and Latin American economies also improved. Mexico's debt
rating was raised to investment grade by Moody's Investors Service, further
boosting regional prospects.
PORTFOLIO REVIEW
At the end of April, Europe represented 66% of net assets, up from 64% in
October. Our largest single country weighting was the U.K., at nearly 20%,
up slightly from six months ago. During the period, we added to our U.K.
holdings while reducing Japanese exposure modestly to 18%. Far East and
Latin America exposures were unchanged at 6% and 3%, respectively, with
substantially all of the latter in Mexico and Brazil. Your fund was
underweighted in Europe and Japan relative to the EAFE index, but
overweighted in the rest of Asia and in Latin America (not represented in
EAFE).
T. Rowe Price Becomes Sole Owner of International Investment Manager
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As an international investor, you may be aware that the T. Rowe Price
international and global stock and bond funds have always been managed by Rowe
Price-Fleming International, Inc., a joint venture formed in 1979 between T.
Rowe Price Associates and London-based Robert Fleming Holdings, Limited.
On April 11, 2000, T. Rowe Price announced an agreement to purchase the 50% of
the joint venture owned by Flemings, thus becoming the sole owner of the
management company. In due course, the name of Rowe Price-Fleming International
will be changed to reflect its new status.
The change in ownership structure will not affect the investment approach or
operations of our international funds. We expect Rowe Price-Fleming's leadership
and professional staff to remain in place, together with the substantial
resources and expertise built up over the past 20 years. Likewise, there will be
no change in the offices in London, Hong Kong, Tokyo, Singapore, Buenos Aires,
Paris, and Baltimore.
Under the U.S. securities laws, the assignment of the funds' investment
management contract to a new entity is subject to shareholder approval.
Accordingly, after the purchase is concluded later this year, we will set a date
for a shareholder meeting and send you a proxy with voting information.
The formation of Rowe Price-Fleming 20 years ago opened the way for T. Rowe
Price to expand the investment services offered to shareholders and clients. As
an integral part of T. Rowe Price, this very successful international investment
manager will provide significant opportunities to enhance those services.
Market Performance
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Six Months Local Local Currency U.S.
Ended 4/30/00 Currency vs. U.S. Dolars Dollars
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France 32.23% -13.30% 14.64%
Germany 33.25 -13.30 15.53
Hong Kong 12.27 - 0.25 11.99
Italy 26.37 -13.30 9.56
Japan 7.07 - 3.44 3.39
Mexico 18.45 2.19 21.04
Netherlands 17.19 -13.30 1.60
Norway 13.09 -12.32 -0.84
Sweden 66.38 - 7.98 53.09
Switzerland 4.18 -11.44 -7.73
United Kingdom 1.57 - 4.64 -3.14
Source: RIMES Online, using MSCI indices.
Europe
Country performance varied widely according to the technology weighting of
each country's equity market. The Swedish and Finnish markets were
strongest, up 53% and 81% in U.S. dollar terms, respectively, due mostly to
the gains of technology leaders Ericsson and Nokia. Each company is by far
the largest in its local market, and neither generally meets your fund's
valuation criteria. We continue to expect that value-oriented stocks will
do well in Europe, aided by policy reforms, a common currency, corporate
restructuring, and takeover activity, as well as by the renewed concern
about valuations among New Economy stocks.
Stocks in Germany rose 16% (more than 33% in local currency terms) as its
large technology and telecom stocks soared, driven in part by merger
activity. In France, technology, media, and telecom stocks accounted for
much of the market's 15% rise in dollar terms and 32% in local currency.
Your fund participated in the outstanding gains of the established national
carriers, Deutsche Telekom and France Telecom. Although the fund is value
oriented, we made some modest New Economy investments in Europe during the
past six months, and did particularly well with Germany's Epcos, a
semiconductor company spun off from Siemens. The stock more than tripled,
enough to become our top contributor before being eliminated based on
valuation. The U.K. and Switzerland, with fewer tech and telecom companies,
were the weakest major markets, falling 3% and 8%, respectively. Poorer
performance from financial services companies, pharmaceuticals, and
industrial cyclicals held back returns in those markets. Large fund
holdings in fine companies such as Imperial Chemical Industries and drug
maker AstraZeneca, both of the U.K., and Holderbank Financiere Glarus, of
Switzerland, declined during the period.
Pie Graph: Geographic Diversification
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Europe Japan Far East Latin America Others & Reserves
66 18 6 3 7
Based on net assets as of 4/30/00.
The union of media and telecom companies also spurred market gains, as
investors viewed favorably the prospects for distributing popular content
via the Internet. In Italy, Telecom Italia surged following its
announcement that it would acquire Seat, the Italian media company, and
combine it with Telecom Italia's dominant Internet subsidiary.
As sector leadership changed in March, neglected energy producers,
financials, basic materials, and pharmaceuticals rebounded, although they
still trailed far behind technology stocks. Energy producers Royal Dutch
Petroleum/Shell Transport & Trading (Netherlands/U.K.) and TotalFina
(France) made tangible progress with restructuring. The latter became more
optimistic about its prospects for cost reductions and various synergies as
the merger between the two previously independent companies progressed
further. After a dull period, the earnings outlook for pharmaceutical giant
Glaxo Wellcome of the U.K. improved, and we purchased the stock in
February. The company's agreement to merge with SmithKline Beecham enhanced
its prospects for growth. Our timing proved fortuitous, as Glaxo Wellcome
was one of our top contributors. The banking sector consolidated as Royal
Bank of Scotland won a battle against Bank of Scotland to acquire NatWest
Bank. Finnish/Swedish Nordic Baltic Holding acquired its Danish neighbor
Unidanmark, and U.K.-based HSBC acquired French/Belgian bank CCF.
Far East and Other
In Japan, stocks peaked early in 1999 and lagged during the past six
months. However, the sedate 3% rise in dollar terms masked volatile swings
and a wide disparity among sectors. Value stocks, in particular,
languished, but the fund benefited from our recent shift away from "deep
value" stocks toward a more modest value tilt, and performance was in line
with the market. We are concerned that the pace of corporate restructuring
and consolidation is not fast enough in Japan to provide a catalyst for the
most undervalued shares.
Our existing holdings and several new positions in established,
fundamentally sound technology and consumer electronics companies performed
well as demand surged for their products. The fund's second-best
contributor for the six months was Kyocera, a leading cellular phone
manufacturer, which also gained from its status as the largest prospective
shareholder in the proposed merger of three Japanese telecom firms. We
eliminated another top holding, Canon, after a powerful run, but purchased
Sony, NEC, and Toshiba. Sony rose sharply following an announcement of its
intention to provide Internet banking, launch an Internet-compatible
product, and split its shares. Restructuring, robust demand, and plans for
Internet alliances and services helped the fund reap modest gains from NEC
and Toshiba. We also purchased Hitachi during the period.
Perceiving that the worst may be over for Japanese bank stocks, we
established a new position in Fuji Bank and added to Sumitomo Bank. In
keeping with our reduced value emphasis in Japan, we eliminated Tokyo
Electric Power and significantly reduced holdings in deep cyclicals such as
Sumitomo Chemicals and Bridgestone.
Industry Diversification
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Percent of Net Assets
10/31/99 4/30/00
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Finance 24.3% 21.7%
Services 15.6 18.7
Consumer Goods 21.5 17.6
Capital Equipment 14.5 17.1
Energy 10.6 9.3
Materials 7.9 8.7
Multi-industry 2.0 2.1
All Other 0.9 0.9
Reserves 2.7 3.9
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Total 100.0% 100.0%
Despite the highflying technology sector, Japan's economy remained
lackluster. Fourth-quarter GDP was off 1.4% from the third quarter, and
unemployment rose to a post-war high of 4.9%. While industrial production
strengthened, worries about future job losses depressed consumer spending
and retail sales as company restructuring and bankruptcies increased.
Underfunding of corporate pensions and planned cuts to national pension
benefits also hurt consumption. Hong Kong, our major position in the
Pacific ex-Japan at 3% of net assets, was among the stronger markets in the
region, while Singapore (3% of net assets) was weak. The announcement of
several Internet-related deals spurred an outstanding gain in Hong Kong
conglomerate Hutchison Whampoa, one of our top five performers in the
period. Hutchison Whampoa has diverse interests that also include property
development, commercial port management, and wireless communications.
Cheung Kong Holdings, a major property development and investment group,
was also strong. In Singapore, DBS Group Holdings (Development Bank of
Singapore) and United Overseas Bank posted solid gains, but Singapore Land
slid and Singapore Airlines was off slightly.
In Australia (2% of net assets), Publishing & Broadcasting put in a strong
showing thanks to its valuable media and Internet businesses. However, the
fund experienced significant declines in retailer Coles Myer, diversified
manufacturer Pacific Dunlop, and mining companies such as Normandy Mining
and Rio Tinto.
Latin America
Though our Latin American holdings are slight (3% of net assets), the
fund's positions there added marginally to performance as Brazil and Mexico
posted strong gains. Brazil's Telebras was one of our top performers in the
past six months with a gain of nearly 70%. Telmex in Mexico gained nearly
38%. Both have significant growth prospects because market penetration is
low and improving economic conditions encourage consumer spending. They
also carry more attractive valuations than their peers in developed
markets.
OUTLOOK
Accelerating deregulation, restructuring, and consolidation in Europe
should boost earnings growth and shareholder value. Japan, however, needs
to complement its leading position in the New Economy with a willingness to
alter traditional ways of doing business. In the rest of Asia, the slow but
steady pace of reform, coupled with economic growth, could fuel the equity
markets. Both New Economy and Old Economy enterprises in Latin America have
great potential as long as the current stable, supportive economic and
political environment endures.
Following a year of speculation in Internet and technology stocks, we
welcome a return to selectivity and a focus on fundamentals (including real
earnings) and valuation. With this transition taking place and interest
rates rising, we expect stock market volatility to continue during the next
few months. However, the likely end of the easy money era in Internet
stocks, and a broadening of market participation to include lagging
sectors, should ultimately boost the quality, value-oriented stocks we
favor. The stronger global economic backdrop and the increasing attention
to shareholder value and strategic consolidation should also benefit the
International Growth & Income Fund.
Respectfully submitted,
Martin G. Wade
Chairman
John R. Ford
President
May 23, 2000
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New President of T. Rowe Price International Funds
After more than 20 years as president of T. Rowe Price International Funds,
Inc., Martin G. Wade has passed the baton to his colleague, John R. Ford. John
Ford has been associated with T. Rowe Price's international investment
management arm since 1984. He currently serves on the Investment Advisory
Committees of all the T. Rowe Price international equity funds.
Mr. Wade was instrumental in the launching of T. Rowe Price's first foreign
stock offering, the International Stock Fund, in 1980, and played a key role
thereafter in the company's increasing presence as an international asset
manager. He remains associated with the International Funds as chairman and is
also a member of the Board of Directors of T. Rowe Price Associates.
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
4/30/00
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Shell Transport & Trading, United Kingdom 1.4%
Glaxo Wellcome, United Kingdom 1.3
NEC, Japan 1.3
Sony, Japan 1.3
ABB, Switzerland 1.2
-----------------------------------------------------------
Toshiba, Japan 1.1
Hutchison Whampoa, Hong Kong 1.1
Vontobel Holdings, Switzerland 1.1
Kyocera, Japan 1.0
Hitachi, Japan 0.9
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Honda, Japan 0.9
Fuji Bank, Japan 0.9
Terumo, Japan 0.9
TotalFina, France 0.9
Deutsche Telekom, Germany 0.8
-----------------------------------------------------------
Sumitomo Bank, Japan 0.8
Imperial Chemical Industries, United Kingdom 0.8
Pearson, United Kingdom 0.8
Telefonica de Espana, Spain 0.8
Telegraaf Holdings, Netherlands 0.8
-----------------------------------------------------------
Bowthorpe, United Kingdom 0.8
Endesa, Spain 0.8
AstraZeneca Group, United Kingdom 0.8
DBS Group Holdings, Singapore 0.8
France Telecom, France 0.8
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Total 24.1%
Note: Table excludes reserves.
T. Rowe Price International Growth & Income Fund
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Performance Comparison
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This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with 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.
Line Graph: INTERNATIONAL GROWTH &INCOME FUND
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MSCI International
EAFE Growth &
Index* Income Fund
12/21/98 10,000 10,000
4/30/99 10,560 10,750
4/30/00 12,056 11,407
*From 12/31/98
Average Annual Compound Total Return
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This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Since Inception
Periods Ended 4/30/00 1 Year Inception Date
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International Growth &
Income Fund 6.11% 10.20% 12/21/98
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
T. Rowe Price International Growth & Income Fund
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Unaudited
Financial Highlights For a share outstanding throughout each period
--------------------------------------------------------------------------------
6 Months 12/31/98
Ended Through
4/30/00 10/31/99
NET ASSET VALUE
Beginning of period $ 11.00 $ 10.00
Investment activities
Net investment income (loss) 0.01* 0.16*
Net realized and
unrealized gain (loss) 0.40 0.84
Total from
investment activities 0.41 1.00
Distributions
Net investment income (0.19) --
Net realized gain (0.23) --
Total distributions (0.42) --
NET ASSET VALUE
End of period $ 10.99 $ 11.00
Ratios/Supplemental Data
Total return(diamond) 3.70%* 10.00%*
Ratio of total expenses to
average net assets 1.25%!* 1.25%!*
Ratio of net investment income
(loss) to average net assets 0.90%!* 1.87%!*
Portfolio turnover rate 60.1%! 35.8%!
Net assets, end of period
(in thousands) $ 10,499 $ 9,776
(diamond) 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, 2000
Statement of Net Assets Shares Value
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In thousands
ARGENTINA 0.5%
Common Stocks 0.5%
Banco de Galicia y Buenos Aires
(Class B) ADR (USD) 924 $ 16
Telecom Argentina Stet -
France Telecom (Class B) ADR (USD) 800 22
Telefonica de Argentina (Class B) ADR (USD) 500 18
Total Argentina (Cost $52) 56
AUSTRALIA 2.4%
Common Stocks 2.4%
Australia & New Zealand Banking 5,900 41
Coles Myer 7,500 28
Normandy Mining 39,000 19
Pacific Dunlop 16,600 14
Publishing & Broadcasting 5,800 45
Rio Tinto 2,000 30
Santos 11,400 26
Westfield Trust 13,700 25
Westpac Banking 3,800 24
Total Australia (Cost $289) 252
AUSTRIA 0.5%
Common Stocks 0.5%
Brau-Union (EUR) 600 25
EVN (EUR) 200 22
Total Austria (Cost $61) 47
BELGIUM 1.1%
Common Stocks 1.1%
Dexia (EUR) 300 39
Electrabel (EUR) 130 32
Solvay (EUR) 700 47
Total Belgium (Cost $147) 118
BRAZIL 0.6%
Common Stocks 0.6%
Companhia Vale do Rio Doce ADR (USD) 1,300 $ 32
Telebras ADR (USD) 300 36
Total Brazil (Cost $49) 68
CHILE 0.1%
Common Stocks 0.1%
Compania de Telecomunicaciones de Chile
(Class A) ADR (USD) 400 7
Enersis ADS (USD) 302 6
Total Chile (Cost $16) 13
DENMARK 0.7%
Common Stocks 0.7%
Danisco 840 25
Tele Danmark A/S 600 44
Total Denmark (Cost $77) 69
FINLAND 0.8%
Common Stocks 0.8%
Kesko (EUR) 3,550 39
Stora Enso (SEK) 4,000 40
Total Finland (Cost $117) 79
FRANCE 11.3%
Common Stocks 11.3%
Accor (EUR) 1,000 37
Alcatel Alsthom (EUR) 300 70
Assurances Generales de France (EUR) 940 47
Aventis (EUR) 412 22
Axa ADR (USD) 1,000 77
B.U.S. Berzelius Umwelt-Service (EUR) 2,000 21
Banque National de Paris (EUR) 400 32
Cie de St. Gobain (EUR) 310 42
Danone (EUR) 200 44
France Telecom ADR (USD) 500 $ 80
Fromageries (EUR) 40 25
Labinal (EUR) 200 21
LVMH (EUR) 80 34
Pechiney (EUR) 800 36
Pernod Ricard (EUR) 800 36
Pinault Printemps Redoute (EUR) 240 48
Renault (EUR) 1,000 46
Aventis (EUR) 1,380 76
Schneider Electric (EUR) 700 46
Societe Generale (EUR) 300 62
Suez Lyonnaise des Eaux (EUR) 400 63
Technip (EUR) 460 52
Total Fina ADR (USD) 400 30
Total Fina (Class B) (EUR) 399 61
Valeo (EUR) 600 33
Vivendi (EUR) 500 49
Total France (Cost $1,142) 1,190
GERMANY 8.6%
Common Stocks 8.6%
Altana (EUR) 560 41
AMB Aachner & Muenchener Beteiligungs (EUR) 400 26
AXA Colonia Konzern (EUR) 420 36
BASF (EUR) 1,010 44
Bayer (EUR) 1,300 54
Bayerische Vereinsbank (EUR) 500 31
Celanese (EUR) 55 1
Daimler Chrysler (USD) 900 52
Deutsche Bank (EUR) 910 61
Deutsche Telekom ADR (USD) 1,300 88
Dresdner Bank (EUR) 1,140 47
Epcos (EUR) 500 71
Heidelberg Zement (EUR) 600 35
HEW-Hamburgische Electricitaets-Werke (EUR) 2,100 38
Linde (EUR) 900 35
Lufthansa (EUR) 1,210 25
MAN (EUR) 1,600 $ 53
RWE (EUR) 1,200 39
Siemens (EUR) 400 59
Veba (EUR) 1,400 70
Total Germany (Cost $911) 906
HONG KONG 3.3%
Common Stocks 3.3%
Cheung Kong Holdings 6,000 71
Hang Seng Bank 4,000 37
Hong Kong Electric 21,000 66
Hutchison Whampoa 8,000 116
Yue Yuen Industrial 26,000 57
Total Hong Kong (Cost $249) 347
ITALY 4.1%
Common Stocks 4.1%
Assicurazioni Generali (EUR) 2,000 57
Banca Commerciale Italiana (EUR) 5,900 28
Benetton Group (EUR) 26,200 48
ENI SPA ADR (USD) 700 36
Falck Acciaierie & Ferriere Lombarde (EUR) 7,000 47
Istituto Nazionale delle Assicurazioni (EUR) 20,000 43
Parmalat Finanz (EUR) 39,000 41
Sanpaolo IMI ADR (USD) 1,400 41
Telecom Italia (EUR) 4,100 57
Toro Assicurazioni (EUR) 2,700 28
Total Italy (Cost $480) 426
JAPAN 17.8%
Common Stocks 17.8%
Bridgestone 2,000 43
Dai Nippon Printing 4,000 68
Denso 2,000 49
Fuji Bank 11,000 92
Hitachi ADR (USD) 800 98
Honda ADR (USD) 1,100 $ 97
JUSCO 3,000 56
Kao 1,000 31
Kuraray 4,000 33
Kyocera 600 100
Makita 4,000 35
Marui 3,000 56
Matsushita Electric Industrial 3,000 79
Mitsui 5,000 37
NEC 5,000 136
Nippon Express 10,000 63
Nippon Telegraph & Telephone ADR (USD) 1,200 76
Sekisui House 6,000 55
Sony ADR (USD) 600 135
Sumitomo Bank 7,000 88
Sumitomo Chemicals 8,000 40
Sumitomo Marine & Fire Insurance 11,000 58
Takeda Chemical Industries 1,000 66
TDK ADR (USD) 500 68
Terumo 3,000 91
Toshiba 12,000 116
Wacoal 1,000 9
Total Japan (Cost $1,674) 1,875
MEXICO 1.6%
Common Stocks 1.6%
Cemex (Represents 2 Class A
and 1 Class B shares) 6,000 26
Femsa UBD (Represents 1 Class B
and 4 Series D shares) 8,000 32
Grupo Financiero Banamex * 13,000 47
Kimberly-Clark de Mexico (Class A) 7,000 22
Telefonos de Mexico (Class L) ADR (USD) 600 35
Total Mexico (Cost $120) 162
NETHERLANDS 5.5%
Common Stocks 5.5%
ABN Amro Holdings ADR (USD) 2,900 60
Akzo Nobel (EUR) 1,700 70
CSM (EUR) 2,200 $ 38
DSM (EUR) 1,200 39
Fortis NI (EUR) 1,700 43
Hagemeyer (EUR) 1,600 32
ING Groep (EUR) 1,200 65
OCE (EUR) 1,300 17
Philips Electronics (USD) 1,200 54
Royal Dutch Petroleum (USD) 800 46
Telegraaf Holdings (EUR) 3,000 83
Vendex KBB (EUR) 2,000 31
Total Netherlands (Cost $684) 578
NEW ZEALAND 0.5%
Common Stocks 0.5%
Fernz 10,000 18
Lion Nathan 6,400 13
Telecom Corp. of New Zealand ADR (USD) 500 17
Total New Zealand (Cost $64) 48
NORWAY 1.6%
Common Stocks 1.6%
Christiania Bank 10,600 49
Norsk Hydro 1,200 44
Orkla (Class A) 3,085 48
Storebrand ASA 4,900 30
Total Norway (Cost $163) 171
SINGAPORE 2.7%
Common Stocks 2.7%
Development Bank of Singapore 5,815 80
Singapore Airlines 5,000 52
Singapore Land 16,000 29
Singapore Press 4,000 78
United Overseas Bank 6,336 44
Total Singapore (Cost $203) 283
SPAIN 3.8%
Common Stocks 3.8%
Banco Bilbao Vizcaya (EUR) 2,500 $ 34
Banco Santander Central Hispanos ADR (USD) 4,000 44
Cristaleria Espanola (EUR) 740 24
Endesa ADR (USD) 3,900 82
Grupo Dragados (EUR) 5,100 39
Iberdrola (EUR) 3,000 38
Repsol ADR (USD) 2,500 52
Telefonica de Espana ADR (USD) 1,254 83
Total Spain (Cost $409) 396
SWEDEN 2.3%
Common Stocks 2.3%
Autoliv 1,500 42
Electrolux (Class B) 4,000 68
Nordic Baltic Holding (DKK)* 10,163 63
Svenska Handelsbanken 5,400 71
Total Sweden (Cost $264) 244
SWITZERLAND 5.8%
Common Stocks 5.8%
ABB 1,134 127
Clariant 125 46
Credit Suisse Group 250 45
Hero 300 33
Holderbank Financiere Glarus 70 79
Schindler Holdings 40 57
Schweizerische Rueckversicherungs 45 72
UBS 160 39
Vontobel Holdings 50 111
Total Switzerland (Cost $619) 609
UNITED KINGDOM 19.9%
Common Stocks 19.9%
Abbey National 3,100 $ 35
Allied Zurich 6,000 60
Associated British Foods 8,008 47
AstraZeneca Group 908 38
AstraZeneca Group ADR (USD) 1,000 42
Bank of Scotland 3,800 34
Bass 4,200 49
BG Group 6,044 36
Blue Circle Industries 9,900 66
Bowthorpe 4,500 83
BP Amoco ADR (USD) 1,500 77
British Aerospace 10,000 62
Cadbury Schweppes ADR (USD) 2,100 56
Diageo ADR (USD) 1,500 51
FKI 20,000 76
GKN 3,700 51
Glaxo Wellcome ADR (USD) 2,200 138
Halifax Group 3,700 35
Hilton Group 8,000 34
HSBC Holdings 4,800 53
Imperial Chemical Industries ADR (USD) 2,500 87
Pearson 2,500 85
Powergen 6,400 40
Railtrack Group 2,500 32
Reed International 9,000 62
Rentokil Group 15,000 41
Rolls Royce 18,000 68
Royal & Sun Alliance 6,181 35
Shell Transport & Trading ADR (USD) 3,000 145
Slough Estates 9,000 50
Smith & Nephew 20,000 58
Tesco 21,000 71
Thames Water 4,200 53
Tomkins ADR (USD) 3,500 43
United Utilities 5,700 55
Woolwich 9,300 45
Total United Kingdom (Cost $2,200) 2,093
UNITED STATES 0.6%
Common Stocks 0.6%
Pharmacia 1,190 $ 59
Total United States (Cost $57) 59
SHORT-TERM INVESTMENTS 2.1%
Money Market Funds 2.1%
Reserve Investment Fund, 6.18% # 224,543 225
Total Short-Term Investments (Cost $225) 225
Total Investments in Securities
98.2% of Net Assets (Cost $10,272) $ 10,314
Other Assets Less Liabilities 185
NET ASSETS $ 10,499
----------
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ 48
Accumulated net realized gain/loss -
net of distributions 689
Net unrealized gain (loss) 38
Paid-in-capital applicable to 955,108
shares of $0.01 par value capital
stock outstanding; 2,000,000,000 shares
of the Corporation authorized 9,724
NET ASSETS $ 10,499
----------
NET ASSET VALUE PER SHARE $ 10.99
----------
* Non-income producing
# Seven-day yield
ADR American depository receipt
ADS American depository share
DKK Danish krone
EUR Euro
SEK Swedish krona
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Growth & Income Fund
--------------------------------------------------------------------------------
Unaudited
Statement of Operations
--------------------------------------------------------------------------------
In thousands
6 Months
Ended
4/30/00
Investment Income (Loss)
Income
Dividend (net of foreign taxes of $12) $ 99
Interest 13
Total income 112
Exenses
Custody and accounting 69
Shareholder servicing 20
Registration 11
Legal and audit 10
Prospectus and shareholder reports 7
Directors 3
Miscellaneous 3
Reimbursed by manager (58)
Total expenses 65
Net investment income (loss) 47
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 718
Foreign currency transactions (22)
Net realized gain (loss) 696
Change in net unrealized gain or loss
Securities (401)
Other assets and liabilities
denominated in foreign currencies (4)
Change in net unrealized gain or loss (405)
Net realized and unrealized gain (loss) 291
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 338
----------
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
6 Months 12/21/98
Ended Through
4/30/00 10/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 47 $ 138
Net realized gain (loss) 696 199
Change in net unrealized
gain or loss (405) 443
Increase (decrease) in net
assets from operations 338 780
Distributions to shareholders
Net investment income (171) --
Net realized gain (206) --
Decrease in net assets
from distributions (377) --
Capital share transactions*
Shares sold 4,846 13,689
Distributions reinvested 354 --
Shares redeemed (4,438) (4,693)
Increase (decrease) in net
assets from capital
share transactions 762 8,996
Net Assets
Increase (decrease)
during period 723 9,776
Beginning of period 9,776 --
End of period $ 10,499 $ 9,776
*Share information
Shares sold 437 1,331
Distributions reinvested 32 --
Shares redeemed (403) (442)
Increase (decrease) in
shares outstanding 66 889
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Growth & Income Fund
--------------------------------------------------------------------------------
Unaudited April 30, 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 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. The fund seeks long-term growth of capital
and reasonable income by investing primarily in the 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.
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 charges.
NOTE - 2 INVESTMENT TRANSACTIONS
Securities Lending The fund lends its securities to approved brokers to
earn additional income and receives cash and U.S. government securities as
collateral against the loans. Cash collateral received is invested in a
money market pooled account by the fund's lending agent. Collateral is
maintained over the life of the loan in an amount not less than 100% of the
value of loaned securities. Although risk is mitigated by the collateral,
the fund could experience a delay in recovering its securities and a
possible loss of income or value if the borrower fails to return them. At
April 30, 2000, the value of loaned securities was $314,000; aggregate
collateral consisted of $330,000 in the securities lending collateral pool
and U.S. government securities valued at $33,000.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $2,849,000 and $2,581,000, respectively, for the six
months ended April 30, 2000.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
At April 30, 2000, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$10,272,000. Net unrealized gain aggregated $42,000 at period-end, of which
$1,250,000 related to appreciated investments and $1,208,000 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 and withheld
from dividend and interest income.
NOTE 5- RELATED PARTY TRANSACTIONS
The fund is managed by Rowe Price-Fleming International, Inc. (the
manager), which is owned by subsidiaries of T. Rowe Price Associates, Inc.
(Price Associates) and Robert Fleming Holdings Limited (Fleming). Price
Associates has entered into an agreement with Fleming to purchase Fleming's
interest in the manager.
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 0.295% for assets in excess of $120 billion. At
April 30, 2000, and for the six months then ended, the effective annual
group fee rate was 0.32%. The fund pays a pro-rata share of the group fee
based on the ratio of its net assets to those of the group.
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, $35,000 of management fees were not accrued by
the fund for the six months ended April 30, 2000, and $58,000 of other
expenses were borne by the manager. Additionally, $166,000 of unaccrued
fees and expenses from a prior period remain subject to reimbursement
through October 31, 2002.
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 $69,000 for the six months ended April 30, 2000, of which
$13,000 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 six months ended
April 30, 2000, totaled $12,000 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 September 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
Tax-Efficient 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.
! 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.
T. Rowe Price Advisory Services and Retirement Resources
--------------------------------------------------------------------------------
Advisory Services, Retirement Resources
T. Rowe Price is your full-service retirement specialist. We have developed
unique advisory services that can help you meet the most difficult
retirement challenges. Our broad array of retirement plans is suitable for
individuals, the self-employed, small businesses, corporations, and
nonprofit organizations. We also provide recordkeeping, communications, and
investment management services, and our educational materials, self-help
planning guides, and software tools are recognized as among the industry's
best. For information or to request literature, call us at 1-800-638-5660,
or visit our Web site at www.troweprice.com.
ADVISORY SERVICES
T. Rowe Price Retirement Income ManagerSM helps retirees or those within
two years of retirement determine how much income they can take in
retirement. The program uses extensive statistical analysis and the input
of financial planning professionals to suggest an income plan that best
meets your objectives.
T. Rowe Price Rollover Investment Service offers asset allocation advice to
those planning a major change in their qualified retirement plans, such as
a 401(k) rollover from a previous employer or an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
Planning and Informational Guides
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
Insights Reports
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
Software Packages
T. Rowe Price Retirement Planning
AnalyzerTM CD-ROM or diskette $19.95.
To order, please call
1-800-541-5760. Also available
on the Internet for $9.95.
T. Rowe Price Variable Annuity AnalyzerTM
CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. Rowe Price Immediate Variable
Annuity (Income Account)
Investment Kits
We will be happy to send you one of our
easy-to-follow investment kits when you
are ready to invest in any T. Rowe Price
retirement vehicle, including IRAs,qualified
plans, small-business plans, or our no-load
variable annuities.
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
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
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price, Invest With Confidence (registered trademark)
T. Rowe Price Investment Services, Inc., Distributor. F127-051 4/30/00
