<PAGE>
PROSPECTUS
March 1, 1999
revised to
December 30, 1999
T. Rowe Price International Funds-- Equity Portfolios
A choice of global, international, and regional stock funds for investors
seeking capital growth by diversifying beyond U.S. borders.
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
T. ROWE PRICE RAM LOGO
<PAGE>
T. Rowe Price International Funds, Inc.
Prospectus
March 1, 1999 revised to December 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 ABOUT THE FUNDS
Fund, Market, and Risk Characteristics 1
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Other Information About the Funds 12
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2 ABOUT YOUR ACCOUNT
Pricing Shares and Receiving 15
Sale Proceeds
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Distributions and Taxes 17
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Transaction Procedures and 20
Special Requirements
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3 MORE ABOUT THE FUNDS
Organization and Management 23
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Understanding Performance Information 26
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Investment Policies and Practices 27
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Financial Highlights 33
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4 INVESTING WITH T. ROWE PRICE
Account Requirements 37
and Transaction Information
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Opening a New Account 37
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Purchasing Additional Shares 39
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Exchanging and Redeeming 39
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Rights Reserved by the Funds 41
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Information About Your Services 41
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T. Rowe Price Brokerage 43
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Investment Information 44
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</TABLE>
Rowe Price-Fleming International, Inc. ("Price-Fleming") was founded in 1979
as a joint venture between T. Rowe Price Associates, Inc. and Robert Fleming
Holdings, Ltd. As of December 31, 1998, Price-Fleming managed $32.9 billion in
foreign stocks and bonds through its offices in Baltimore, London, Tokyo,
Singapore, Hong Kong, Buenos Aires, and Paris.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any
depository institution. Shares are not insured by the FDIC, Federal Reserve, or
any other government agency, and are subject to investment risks, including
possible loss of the principal amount invested.
<PAGE>
ABOUT THE FUNDS
1
FUND, MARKET, AND RISK CHARACTERISTICS: WHAT TO EXPECT
----------------------------------------------------------
To help you decide whether any of T. Rowe Price's international equity funds
are appropriate for you, this section reviews each fund's investment
objective, strategy, and potential risks.
What are each fund's objectives and principal investment strategies?
Worldwide funds:
International Stock Fund
Objective: Long-term growth of capital through investments primarily in the
common stocks of established, non-U.S. companies.
Strategy: We expect to invest substantially all of the fund's assets outside
the U.S. and to diversify broadly among developed and emerging countries
throughout the world. Stock selection reflects a growth style. We may
purchase the stocks of companies of any size, but our focus will typically be
on large and, to a lesser extent, medium-sized companies.
Growth Investing
Price-Fleming employs in-depth fundamental research in an effort to
identify companies capable of achieving and sustaining above-average,
long-term earnings growth. We seek to purchase such stocks at reasonable
prices in relation to present or anticipated earnings, cash flow, or book
value, and valuation factors often influence our allocations among large-,
mid-, or small-cap shares.
While we invest with an awareness of the global economic backdrop and our
outlook for individual countries, bottom-up stock selection is the focus of
our decision-making. Country allocation is driven largely by stock
selection, though we may limit investments in markets that appear to have
poor overall prospects.
In selecting stocks, we generally favor companies with one or more of the
following characteristics:
. leading market position;
. attractive business niche;
. strong franchise or natural monopoly;
. technological leadership or proprietary advantages;
. seasoned management;
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T. ROWE PRICE
. earnings growth and cash flow sufficient to support growing dividends;
. healthy balance sheet with relatively low debt.
International Growth & Income Fund
Objective: Long-term growth of capital and reasonable income through
investments primarily in the common stocks of mature, dividend-paying
non-U.S. companies.
Strategy: We expect to invest substantially all of the fund's assets outside
the U.S. and to diversify broadly, primarily among the world's developed
countries. Stock selection is more value-oriented than that of our other
international funds. Price-Fleming combines bottom-up research and a global,
regional, and country outlook with proprietary quantitative analysis. Though
we still favor stocks that meet many of the criteria set forth in the Growth
Investing section, we place less emphasis on above-average earnings growth
and more on "value" characteristics such as above-average dividend yields or
below-average price/earnings or price/ book value ratios. Typically, the fund
will invest in large, mature companies that have favorable prospects for
capital appreciation, as determined by Price-Fleming. Investments in emerging
markets will be modest, and limited to more mature developing countries. With
respect to individual security, country, and industry weightings,
International Growth & Income will be somewhat more diversified than
International Stock Fund.
Global Stock Fund
Objective: Long-term growth of capital through investments primarily in the
common stocks of established companies throughout the world, including the
U.S.
Strategy: We will diversify broadly by investing in a variety of industries
in developed and emerging markets. Normally, the fund will invest in at least
five countries, one of which will be the U.S. The stock selection reflects a
growth style. (See Growth Investing under International Stock Fund.) While we
can purchase stocks without regard to a company's market capitalization
(shares outstanding multiplied by share price), investments will generally be
in large and, to a lesser extent, medium-sized companies. The percentage of
assets invested in U.S. and foreign stocks will vary over time according to
the manager's outlook.
International Discovery Fund
Objective: Long-term growth of capital through investments primarily in the
common stocks of rapidly growing, small to medium-sized companies outside the
U.S.
Strategy: We expect to invest substantially all of the fund's assets outside
the U.S. and to diversify broadly among developed and emerging countries
throughout the world. Stock selection reflects a growth style. (See Growth
Investing under International Stock Fund.) The fund will emphasize small to
medium-sized compa-
<PAGE>
nies. Depending on conditions, the fund's portfolio should be composed of at
least 10 countries and 100 different companies.
Emerging Markets Stock Fund
Objective: Long-term growth of capital through investments primarily in the
common stocks of large and small companies located, or with primary
operations, in emerging markets.
Strategy: We expect to be broadly diversified across emerging markets in
Latin America, Asia, Europe, Africa, and the Middle East. Stock selection
reflects a growth style. (See Growth Investing under International Stock
Fund.) An emerging market includes any country defined as emerging or
developing by the International Bank for Reconstruction and Development
(World Bank), the International Finance Corporation, or the United Nations.
Countries in which the fund may invest are listed below and others will be
added as opportunities develop:
. Asia: China, Hong Kong, Indonesia, India, Korea, Pakistan, Philippines,
Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam.
. Latin America: Argentina, Belize, Brazil, Chile, Colombia, Mexico, Panama,
Peru, and Venezuela.
. Europe: Croatia, Czech Republic, Estonia, Greece, Hungary, Latvia,
Lithuania, Poland, Portugal, Romania, Russia, Slovakia, and Turkey.
. Africa and the Middle East: Botswana, Egypt, Israel, Jordan, Mauritius,
Morocco, Nigeria, South Africa, Tunisia, and Zimbabwe.
Regional or country funds:
European Stock Fund
Objective: Long-term growth of capital through investments primarily in the
common stocks of large and small European companies. Current income is a
secondary objective.
Strategy: Normally, at least five countries will be represented in the
portfolio, and investments may be made in any of the countries listed below,
as well as others as their markets develop:
. Primary Emphasis: France, Germany, Netherlands, Italy, Spain, Sweden,
Switzerland, and United Kingdom.
. Others: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, Greece,
Hungary, Ireland, Israel, Latvia, Lithuania, Luxembourg, Norway, Poland,
Portugal, Russia, Slovakia, and Turkey.
Stock selection reflects a growth style. (See Growth Investing under
International Stock Fund.) We also seek to take advantage of opportunities
arising from such
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T. ROWE PRICE
trends as privatization, the reduction of trade barriers, progress toward
economic and monetary union, and the potential growth of the emerging
economies of Eastern Europe.
Japan Fund
Objective: Long-term growth of capital through investments in common stocks
of large and small companies located, or with primary operations, in Japan.
Strategy: We expect to diversify broadly across a wide range of industries
and companies. Stock selection reflects a growth style. (See Growth Investing
under International Stock Fund.)
Note: For special pricing and transaction information about the Japan Fund,
please see Pricing Shares and Receiving Sale Proceeds.
Latin America Fund
Objective: Long-term growth of capital through investments primarily in the
common stocks of companies located, or with primary operations, in Latin
America.
Strategy: We normally expect to invest in at least four countries.
Investments may be made in the countries below, as well as others as their
markets develop:
. Primary Emphasis: Mexico, Brazil, Chile, Argentina, Venezuela, and Peru.
. Others: Belize, Colombia, Ecuador, and Guatemala.
Stock selection reflects a growth style. (See Growth Investing under
International Stock Fund.) We may make substantial investments (at times more
than 25% of total assets) in the telephone companies of various Latin
American countries. These utilities play a critical role in a country's
economic development. The fund is registered as "nondiversified," meaning it
may invest a greater portion of assets in a single company and own more of
the company's voting securities than is permissible for a "diversified" fund.
New Asia Fund
Objective: Long-term growth of capital through investments in large and small
companies located, or with primary operations, in Asia (excluding Japan).
Strategy: Investments may be made in any of the countries listed below, as
well as others as their markets develop:
. Primary Emphasis: Australia, Hong Kong, Indonesia, India, New Zealand,
Philippines, Singapore, South Korea, Taiwan, and Thailand.
. Others: China, Pakistan, and Vietnam.
Stock selection reflects a growth style. (See Growth Investing under
International Stock Fund.)
<PAGE>
<TABLE>
Table 1 International Funds Comparison Guide
<CAPTION>
<S> <S> <S> <C> <S>
Expected
r
isk
/
r
eward
r
elative
Geographic Company to
Fund focus emphasis one another
Global Stock Worldwide Large, Lower
(including U.S.) well established
----------------------------------------------------------------
European Stock Europe All sizes Moderate
(including Eastern
Europe)
----------------------------------------------------------------
International Growth Worldwide Large, Moderate
& Income (excluding U.S.) well established
---------------------------------------------------------------------
International Stock Worldwide Large, Moderate
(excluding U.S.) well established
----------------------------------------------------------------
International Worldwide Small to Higher
Discovery (excluding U.S.) medium-sized
----------------------------------------------------------------
Japan Japan All sizes Higher
----------------------------------------------------------------
Emerging Markets Worldwide All sizes Highest
Stock (excluding U.S.)
----------------------------------------------------------------
Latin America Latin America All sizes Highest
----------------------------------------------------------------
New Asia Far East and Pacific All sizes Highest
Basin (excluding
Japan)
---------------------------------------------------------------------------------------------
</TABLE>
While each fund invests primarily in common stocks, we may also purchase
other securities, including futures and options, in keeping with each fund's
objectives.
Each fund may sell securities for a variety of reasons, such as to secure
gains, limit losses, or redeploy assets into more promising opportunities.
What are the main risks of investing in the funds?
As with all stock funds, each fund's share price can fall because of weakness
in one or more of its primary equity markets, a particular industry, or
specific holdings. Stock markets can decline for many reasons, including
adverse political or economic developments, changes in investor psychology,
or heavy institutional selling. The prospects for an industry or company may
deteriorate because of a variety of factors, including disappointing earnings
or changes in the competitive environment. In addition, our assessment of
companies held in a fund may prove incorrect, resulting in losses or poor
performance by those holdings, even in rising markets.
The risk profile of the funds varies with the investment style they pursue,
their geographic focus, and whether they invest in developed markets,
emerging markets, or both. Even investments in countries with highly
developed economies are subject to significant risks. For example, Japanese
stocks have been in a steep decline for much of the 1990s.
Funds that invest overseas generally carry more risk than funds that invest
strictly in U.S. assets. Some particular risks affecting these funds include
the following:
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T. ROWE PRICE
. Currency risk This refers to a decline in the value of a foreign currency
versus the U.S. dollar, which reduces the dollar value of securities
denominated in that currency. The overall impact on a fund's holdings can be
significant and long-lasting, depending on the currencies represented in the
portfolio, how each one appreciates or depreciates in relation to the U.S.
dollar, and whether currency positions are hedged. Under normal conditions,
the funds do not engage in extensive foreign currency hedging programs.
Further, exchange rate movements are unpredictable and it is not possible to
effectively hedge the currency risks of many developing countries. The
introduction of the new european common currency on January 1, 1999, may have
unanticipated adverse effects.
. Geographic risk (Japan and regional funds) Funds that are less diversified
across geographic regions, countries, industries, or individual companies are
generally riskier than more diversified funds. Thus, for example, investors
in the Japan Fund are fully exposed to that country's economic cycles, stock
market valuations, and currency exchange rates which could increase both its
risks and potential rewards compared with a more diversified fund. In
addition, investors in Japan should be aware of specific problems, including
tax laws that discourage consumer spending and dampen growth, deflation, a
banking system burdened with bad loans, and the government's unsatisfactory
progress on effecting credible solutions to these problems. And, there is
additional risk with the nondiversified Latin America Fund, because it can
invest more of its assets in a smaller number of companies and may invest
significantly in telephone companies. The economies and financial markets of
certain regions - such as Latin America and Asia -can be highly
interdependent and may decline all at the same time.
. Emerging market risk (Emerging Markets Stock, Latin America, New Asia; other
funds to a lesser degree, except Japan) Investments in emerging markets are
subject to abrupt and severe price declines. The economic and political
structures of developing nations, in most cases, do not compare favorably
with the U.S. or other developed countries in terms of wealth and stability,
and their financial markets often lack liquidity. These economies are less
well developed, and can be overly reliant on particular industries, more
vulnerable to the ebb and flow of international trade, trade barriers, and
other protectionist or retaliatory measures. Certain countries have legacies
of hyperinflation and currency devaluations, particularly Russia and many
Latin American nations, and more recently many Asian countries. Investments
in countries or regions that have recently begun moving away from central
planning and state-owned industries toward free markets should be regarded as
speculative. While certain countries have made progress in economic growth,
liberalization, fiscal discipline, and political and social stability, there
is no assurance these trends will continue. Some countries have histories of
instability and upheaval that could cause their governments to act in a
detrimental or hostile manner toward private enterprise or foreign
investment. Significant external risks currently affect some emerging
countries.
<PAGE>
Governments in many emerging market countries participate to a significant
degree in their economies and securities markets. The volatility of emerging
markets may be heightened by the actions of a few major investors. For
example, substantial increases or decreases in cash flows of mutual funds
investing in these markets could significantly affect local stock prices and,
therefore, fund share prices. These factors make investing in such countries
significantly riskier than in other countries and any one of them could cause
a fund's share price to decline.
. Other risks of foreign investing Other risks result from the varying stages
of economic and political development of foreign countries, the differing
regulatory environments and accounting standards of non-U.S. markets, and
higher transaction costs. A fund's investment in any country could be subject
to actions such as capital or currency controls, nationalizing a company or
industry, expropriating assets, or imposing punitive taxes which would have a
severe effect on security prices and impair a fund's ability to repatriate
capital or income. In addition, portfolio securities may be listed on foreign
exchanges that are open on days when the fund does not compute its share
price. As a result, the fund's net asset value may be significantly affected
by trading on days when shareholders cannot make transactions.
. While certain countries have made progress in economic growth,
liberalization, fiscal discipline, and political and social stability, there
is no assurance these trends will continue.
. Small and medium-sized company risk (International Discovery; others to a
lesser degree) To the extent each fund invests in small- and
mid-capitalization stocks, it is likely to be more volatile than a fund that
invests only in large companies. Small and medium-sized companies are
generally riskier because they may have limited product lines, capital, and
managerial resources. Their securities may trade less frequently and with
greater price swings.
. Futures/options risk To the extent each fund uses futures and options, it
is exposed to additional volatility and potential losses.
. Year 2000 risk Companies, organizations, governmental entities, and markets
in which each fund invests will be affected by the Year 2000 problem. (See
the discussion in Section 3.) While at this time each fund cannot predict the
degree of impact, it is possible that foreign markets will be less prepared
than U.S. ones. The funds' returns could be adversely affected as a result.
As with all mutual funds, there can be no guarantee a fund will achieve its
objective.
. Each fund's share price may decline, so when you sell your shares, you may
lose money.
<PAGE>
T. ROWE PRICE
How can I tell which fund is most appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for the inherent risk of common stock and international
investments. Your decision should take into account whether you have any
other foreign stock investments. If not, you may wish to invest in a widely
diversified fund to gain the broadest exposure to global opportunities. A
diversified emerging markets fund may be an appropriate part of your
portfolio if you are supplementing existing holdings primarily in developed
foreign markets. If you seek to supplement a diversified portfolio with a
concentrated investment, a regional or single-country fund may be an
appropriate part of your portfolio.
Each fund can be used in both regular and tax-deferred accounts, such as
IRAs.
. The fund or funds you select should not represent your complete investment
program or be used for short-term trading purposes.
How has each fund performed in the past?
The bar charts and the average annual total return table indicate risk by
illustrating how much returns can differ from one year to the next. Each
fund's past performance is no guarantee of its future returns.
The funds can also experience short-term performance swings, as shown in the
following charts by the best and worst calendar quarter returns during the
years depicted in the charts.
<TABLE>
<CAPTION>
<S> <C>
LOGO LOGO
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
LOGO LOGO
</TABLE>
<TABLE>
<CAPTION>
Calendar Year Total Returns
Fund "90" "91" "92" "93" "94" "95" "96" "97" "98"
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International
Stock -8.89 15.87 -3.47 40.11 -0.76 11.39 15.99 2.70 16.14
Global Stock -- -- -- -- -- -- 20.01 13.23 22.50
International
Discovery -12.84 11.69 -9.08 49.85 -7.63 -4.36 13.87 -5.67 6.12
Emerging
Markets Stock -- -- -- -- -- -- 11.82 1.23 -28.75
European Stock -- 7.31 -5.56 27.24 4.06 21.86 25.87 17.01 25.82
Japan -- -- -13.40 20.61 15.09 -3.12 -10.99 -22.08 9.16
Latin America -- -- -- -- -15.92 -18.70 23.35 31.88 -35.43
New Asia -- 19.32 11.24 78.76 -19.15 3.75 13.51 -37.13 -11.11
---------------------------------------------------------------------------------------
</TABLE>
International Stock Fund Quarter ended Total return
Best quarter 9/30/89 14.89%
Worst quarter 9/30/90 -18.70%
Global Stock Fund Quarter ended Total return
Best quarter 3/31/1998 14.7%
Worst quarter 9/30/1998 -12.83%
International Discovery Fund Quarter ended Total return
Best quarter 9/30/89 25.02%
Worst quarter 9/30/90 -21.98%
<PAGE>
T. ROWE PRICE
Emerging Markets Stock Fund Quarter ended Total return
Best quarter 6/30/95 10.50%
Worst quarter 9/30/98 -25.20%
European Stock Fund Quarter ended Total return
Best quarter 3/31/98 17.87%
Worst quarter 9/30/98 -14.01%
Japan Fund Quarter ended Total return
Best quarter 6/30/97 20.39%
Worst quarter 12/31/97-20.55%
Latin America Fund Quarter ended Total return
Best quarter 9/30/94 27.26%
Worst quarter 9/30/98 -29.13%
New Asia Fund Quarter ended Total return
Best quarter 12/31/9333.88%
Worst quarter 12/31/97-27.05%
<TABLE>
Table 2 Average Annual Total Returns
<CAPTION>
Periods ended December 31, 1998
Shorter of
10 years or Inception
Fund 1 year 5 years since inception date
-----
<S> <C> <C> <C> <S> <S>
International Stock 16.14% 8.87% 10.45% 05/09/80
----------------------------------------------
MSCI EAFE Index 20.33 9.50 5.85
Lipper International
Funds Average 13.02 7.69 8.98
International Discovery 6.12 0.14 6.59 12/30/88
----------------------------------------------
MSCI EAFE Index 20.33 9.50 5.85
European Stock 25.82 18.63 12.95 02/28/90
----------------------------------------------
MSCI Europe Index 28.91 19.53 14.92
Lipper European Funds
Average 22.55 16.05 10.31
Japan 9.16 -3.33 -1.78 12/30/91
----------------------------------------------
TSE First Section Index 6.63 -5.66 -4.94
TSE Second Section Index 13.69 -8.93 -8.54
Lipper Japan Funds
Average 8.17 -3.66 -2.97
New Asia -11.11 -11.86 3.06 09/28/90
----------------------------------------------
MSCI All Country Far
East Free Ex-Japan -4.82 -11.95 7.71
Lipper Pacific Ex-Japan
Funds Average -9.05 -11.89 2.79
Latin America -35.43 -6.41 -6.31 12/29/93
----------------------------------------------
MSCI EMF Latin America
Index -35.11 -- -1.74
Lipper Latin America -38.21 -6.81 -6.81
Funds Average
------------------------------------------------------------------------------
Emerging Markets Stock -28.75 -- -3.68 03/31/95
----------------------------------------------
MSCI Emerging Markets
Free Index -25.34 -- -7.14
Lipper Emerging Markets
Funds Average -26.83 -10.25 -5.00
Global Stock 22.50 -- 18.48 12/29/95
----------------------------------------------
MSCI World Index 24.80 16.19 18.25
Lipper Global Funds 14.34 11.98 14.67
Average
------------------------------------------------------------------------------
</TABLE>
<PAGE>
These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
What fees or expenses will I pay?
The funds are 100% no load. The International Discovery, Latin America, and
Emerging Markets Stock Funds impose a 2% redemption fee, payable to the
funds, on shares purchased and held less than one year. There are no other
fees or charges to buy or sell fund shares, reinvest dividends, or exchange
into other T. Rowe Price funds. There are no 12b-1 fees.
<TABLE>
Table 3 Fees and Expenses of the Funds
<CAPTION> Shareholder
fees (fees
paid directly
from your Annual fund operating expenses/b/
investment) (expenses that are deducted from fund assets)
Total annual Fee waiver/
Fund Redemption Management Other fund operating expense Net
fees/a/ fee expenses expenses reimbursement expenses -----
-----------------------------
<S> <C> <C> <C> <C> <C> <C> <S>
International Stock -- 0.67% 0.18% 0.85% -- 0.85%
------------------------------------------------------------------------------
International Discovery 2%/a/ 1.07 0.40 1.47 -- 1.47
------------------------------------------------------------------------------
European Stock -- 0.82 0.23 1.05 -- 1.05
------------------------------------------------------------------------------
Japan -- 0.82 0.50 1.32 -- 1.32
------------------------------------------------------------------------------
New Asia -- 0.82 0.47 1.29 -- 1.29
------------------------------------------------------------------------------
Latin America 2%/a/ 1.07 0.46 1.53 -- 1.53
------------------------------------------------------------------------------
Emerging Markets Stock /c/ 2%/a/ 1.07 0.69 1.76 0.01% 1.75
------------------------------------------------------------------------------
Global Stock /d/ -- 0.67 1.00 1.67 0.47 1.20
------------------------------------------------------------------------------
International -- 0.67 0.59 1.26 0.01 1.25
Growth & Income
----------------------------------------------------------------------------------------------------------------
</TABLE>
/a/
On shares purchased and held for less than one year (details under Contingent
Redemption Fees in Pricing Shares and Receiving Sale Proceeds).
/b/Price-Fleming is contractually obligated to waive its fees and bear any
expenses to the extent such fees or expenses would cause the funds' ratios of
expenses to average net assets to exceed the indicated percentage
limitations. Fees waived or expenses paid or assumed are subject to
reimbursement to Price-Fleming by each fund through the indicated
reimbursement date, but no reimbursement will be made if it would result in a
fund's expense ratio exceeding its specified limit. A summary of the funds'
expense limitations and the periods for
<PAGE>
T. ROWE PRICE
which they are effective is set forth below:
<TABLE>
<CAPTION>
<S> <S> <C> <S> <S>
Fund Limitation Period Expense Ratio Limitation Reimbursement Date
Emerging Markets 11/1/99-10/31/01 1.75% 10/31/03
Stock
-----------------------------------------------------------------
Global Stock 11/1/99-10/31/01 1.20% 10/31/03
-----------------------------------------------------------------
International
Growth & Income 12/1/98-10/31/00 1.25% 10/31/02
</TABLE>
/c/The Emerging Markets Stock Fund operated under a 1.75% expense ratio
limitation that expired on October 31, 1998. Effective November 1, 1998,
Price-Fleming agreed to extend the expense limitation for a period of one
year through October 31, 1999. Fees waived or expenses assumed under these
agreements are subject to reimbursement to Price-Fleming by the fund whenever
the fund's expense ratio is below 1.75%. However, no reimbursement will be
made after October 31, 2000 (for the first agreement); or after October 31,
2001 (for the second agreement); or if it would result in the expense ratio
exceeding 1.75%.
/d/The Global Stock Fund previously operated under a 1.20% limitation that
expired October 31, 1999. The reimbursement period for this limitation
extends through October 31, 2001.
Example. The following table gives you a rough idea of how expense ratios
may translate into dollars and helps you to compare the cost of investing in
these funds with that of other funds. Although your actual costs may be
higher or lower, the table shows how much you would pay if operating expenses
remain the same, the expense limitations currently in place are not renewed
(if applicable), you invest $10,000, you earn a 5% annual return, and you
hold the investment for the following periods:
<TABLE>
<CAPTION>
Fund 1 year 3 years 5 years 10 years
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <S>
International Stock $ 87 $271 $471 $1,049
------------------------------------
International Discovery 150 465 803 1,757
------------------------------------
European Stock 107 334 579 1,283
------------------------------------
Japan 134 418 723 1,590
------------------------------------
New Asia 131 409 708 1,556
------------------------------------
Latin America 156 483 834 1,824
------------------------------------
Emerging Markets Stock 178 551 949 2,062
------------------------------------
Global Stock 122 381 660 1,455
------------------------------------
International Growth & Income 127 397 686 1,511
---------------------------------------------------------------------------------------
</TABLE>
OTHER INFORMATION ABOUT THE FUNDS
----------------------------------------------------------
What are some of the potential rewards of investing overseas through the funds?
Investing abroad increases the opportunities available to you. Many foreign
countries may have greater potential for economic growth than the U.S. does.
Emerging market, regional, and single-country funds allow investors to seek
potentially superior growth in the areas they view as most promising, but
with commensurately higher risks. Foreign investments also provide effective
diversification for an all-U.S. portfolio, since historically their returns
have not moved in sync with U.S. stocks over long time periods. Investing a
portion of your over-
<PAGE>
all portfolio in foreign stock funds can enhance your diversification while
providing the opportunity to boost long-term returns.
How does the portfolio manager try to reduce risk?
The principal tools we use to try to reduce risk are intensive research and
diversification. Currency hedging techniques may be used from time to time.
. Price-Fleming employs a team of experienced portfolio managers and analysts,
with offices in Baltimore, London, Tokyo, Singapore, Hong Kong, Buenos Aires,
and Paris. In addition to conducting our own on-site research on portfolio
countries and companies, we have close ties to investment analysts based
throughout the world. Portfolio managers keep close watch on individual
investments as well as on political and economic trends in each country and
region. Holdings are adjusted according to the manager's analysis and
outlook.
. Diversification significantly reduces, but does not eliminate, risk. The
impact on each fund's share price from a drop in the price of a particular
stock is reduced substantially by investing in a portfolio with dozens of
different companies. Likewise, the impact of unfavorable developments in a
particular country is reduced when investments are spread among many
countries. Investors should pay close attention to how many countries a fund
typically expects to invest in, particularly in regard to our regional funds
and, of course, the single-country Japan Fund. However, the economies and
financial markets of countries in a certain region may be influenced heavily
by one another.
. Though the funds don't normally engage in extensive currency hedging, fund
managers can employ currency forwards and options to hedge the risk to the
portfolio when foreign exchange movements are expected to be unfavorable for
U.S. investors. In a general sense, these tools allow a manager to lock in a
specified exchange rate for a stated period of time. (For more details,
please see Foreign Currency Transactions under Investment Policies and
Practices.) If the manager's forecast proves to be wrong, such a hedge may
cause a loss. Also, it may be difficult or impractical to hedge currency risk
in many emerging countries.
What are the potential rewards of investing in small companies overseas?
In general, small companies are more dynamic and can adapt more quickly than
larger ones to changing economic and market conditions, which may help them
increase their earnings faster. In addition, the movement of small-company
shares is not perfectly correlated with the movements of large-cap stocks.
Since most U.S.-based international funds focus on large or medium-sized
foreign companies, adding a small-cap international fund could enhance the
diversification of a portfolio while providing the opportunity to boost
long-term returns.
<PAGE>
T. ROWE PRICE
How may the euro affect the funds?
The introduction of the new european common currency, the euro, on January 1,
1999, should not have an immediate impact on fund share prices. However, the
move to a common currency by 11 diverse nations with varying economic and
political systems does carry risks for funds with significant investments in
euro-denominated assets. (The participating nations are Germany, France,
Italy, the Netherlands, Spain, Portugal, Austria, Belgium, Finland, Ireland,
and Luxembourg.) The new currency, or the economies of those countries, could
be adversely affected if the European Economic and Monetary Union does not
appear to be working smoothly. On the other hand, the euro may be beneficial
over time by encouraging competition and productivity.
Is there other information I can review before making a decision?
Investment Policies and Practices in Section 3 discusses various types of
portfolio securities the funds may purchase as well as types of management
practices the funds may use.
You should also review the information in Section 2 that discusses contingent
redemption fees and account maintenance fees for the International Discovery,
Latin America, and Emerging Markets Stock Funds.
<PAGE>
ABOUT YOUR ACCOUNT
2
PRICING SHARES AND RECEIVING SALE PROCEEDS
----------------------------------------------------------
Here are some procedures you should know when investing in a T. Rowe Price
fund.
How and when shares are priced
The share price (also called "net asset value" or NAV per share) for each
fund, except the Japan Fund, is calculated at 4 p.m. ET each day the New York
Stock Exchange is open for business. The share price for the Japan Fund is
calculated at 4 p.m. ET each day the New York Stock Exchange and the Tokyo
Stock Exchange are both open for business. To calculate the NAV, a fund's
assets are valued and totaled, liabilities are subtracted, and the balance,
called net assets, is divided by the number of shares outstanding. Current
market values are used to price fund shares.
Each fund's portfolio securities usually are valued on the basis of the most
recent closing market prices at 4 p.m. ET when the funds calculate their
NAVs. Most of the securities in which the funds invest, however, are traded
in markets that close before that time. For securities primarily traded in
the Far East, for example, the most recent closing prices may be as much as
15 hours old at 4 p.m. Normally, developments that could affect the values of
portfolio securities that occur between the close of the foreign market and 4
p.m. ET will not be reflected in the funds' NAVs. However, if a fund
determines that such developments are so significant that they will clearly
and materially affect the value of the fund's securities, the fund may adjust
the previous closing prices to reflect fair value or use the next available
opening market prices to value its portfolio securities.
. The various ways you can buy, sell, and exchange shares are explained at the
end of this prospectus and on the New Account Form. These procedures may
differ for institutional and employer-sponsored retirement accounts.
How your purchase, sale, or exchange price is determined
If we receive your request in correct form by 4 p.m. ET, your transaction
will be priced at that day's NAV. If we receive it after 4 p.m., it will be
priced at the next business day's NAV.
We cannot accept orders that request a particular day or price for your
transaction or any other special conditions.
Fund shares may be purchased through various third-party intermediaries
including banks, brokers, and investment advisers. Where authorized by a
fund, orders will be priced at the NAV next computed after receipt by the
intermediary. Consult your intermediary to determine when your orders will be
priced. The intermediary may charge a fee for its services.
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T. ROWE PRICE
Note: The time at which transactions and shares are priced and the time until
which orders are accepted may be changed in case of an emergency or if the
New York Stock Exchange closes at a time other than 4 p.m. ET.
Japan Fund: Pricing and Transactions
The fund will not process orders on any day when either the New York or Tokyo
Stock Exchange is closed. Orders received on such days will be priced on the
next day the fund computes its net asset value. As such, you may experience a
delay in purchasing or redeeming fund shares. Exchanges: If you wish to
exchange into the Japan Fund on a day the New York Stock Exchange is open but
the Tokyo Stock Exchange is closed, the exchange out of the other T. Rowe
Price fund will be processed on that day, but Japan Fund shares will not be
purchased until the day the Japan Fund reopens. If you wish to exchange out
of the Japan Fund on a day when the New York Stock Exchange is open but the
Tokyo Stock Exchange is closed, the exchange will be delayed until the Japan
Fund reopens.
The Tokyo Stock Exchange is scheduled to be closed on the following weekdays:
In 1999 - January 1, 15; February 11; March 22; April 29; May 3, 4, 5; July
20; September 15, 23; October 11; November 3, 23; and December 23. In 2000 -
January 3; February 11; March 20; May 3, 4, 5; July 20; September 15; October
10; and November 3 and 23. If the Tokyo Stock Exchange closes on dates not
listed, the fund will not be priced on those dates.
How you can receive the proceeds from a sale
. When filling out the New Account Form, you may wish to give yourself the
widest range of options for receiving proceeds from a sale.
If your request is received by 4 p.m. ET in correct form, proceeds are
usually sent on the next business day. Proceeds can be sent to you by mail or
to your bank account by Automated Clearing House (ACH) transfer or bank wire.
Proceeds sent by ACH transfer should be credited the second day after the
sale. ACH is an automated method of initiating payments from, and receiving
payments in, your financial institution account. The ACH system is supported
by over 20,000 banks, savings banks, and credit unions. Proceeds sent by bank
wire should be credited to your account the next business day.
. Exception: Under certain circumstances and when deemed to be in each fund's
best interests, your proceeds may not be sent for up to five business days
after we receive your sale or exchange request. If you are exchanging into
another fund, your purchase order will be priced at that fund's NAV on the
fifth business day after the exchange. If you are exchanging into a bond or
money fund, your new investment will not begin to earn dividends until the
sixth business day.
. If for some reason we cannot accept your request to sell shares, we will
contact you.
<PAGE>
Contingent Redemption Fee
(Latin America, International Discovery, and Emerging Markets Stock Funds)
The funds can experience substantial price fluctuations and are intended for
long-term investors. Short-term "market timers" who engage in frequent
purchases and redemptions can disrupt the funds' investment programs and
create additional transaction costs that are borne by all shareholders. For
these reasons, the funds assess a 2% fee on redemptions (including exchanges)
of fund shares held for less than one year.
Redemption fees are paid to each fund to help offset transaction costs and to
protect the funds' long-term shareholders. Each fund will use the "first-in,
first-out" (FIFO) method to determine the one-year holding period. Under this
method, the date of the redemption or exchange will be compared to the
earliest purchase date of shares held in the account. If this holding period
is less than one year, the fee will be charged.
The fee does not apply to any shares purchased through reinvested
distributions (dividends and capital gains) or to shares held in retirement
plans such as 401(k), 403(b), 457, Keogh, profit sharing, SIMPLE IRA,
SEP-IRA, and money purchase pension accounts. The fee does apply to shares
held in IRA accounts and to shares purchased through automatic investment
plans (described under Shareholder Services). The fee may apply to shares in
retirement plans held in broker omnibus accounts.
In determining "one year," the funds will use the anniversary date of a
transaction. Thus, shares purchased on March 1, 1999, for example, will be
subject to the fee if they are redeemed on or prior to February 28, 2000. If
they are redeemed on or after March 1, 2000, they will not be subject to the
fee.
USEFUL INFORMATION ON DISTRIBUTIONS AND TAXES
----------------------------------------------------------
. All net investment income and realized capital gains are distributed to
shareholders.
Dividends and Other Distributions
Dividend and capital gain distributions are reinvested in additional fund
shares in your account unless you select another option on your New Account
Form. The advantage of reinvesting distributions arises from compounding;
that is, you receive income dividends and capital gain distributions on a
rising number of shares.
Distributions not reinvested are paid by check or transmitted to your bank
account via ACH. If the Post Office cannot deliver your check, or if your
check remains uncashed for six months, the fund reserves the right to
reinvest your
<PAGE>
T. ROWE PRICE
distribution check in your account at the NAV on the business day of the
reinvestment and to reinvest all subsequent distributions in shares of the
fund. No interest will accrue on amounts represented by uncashed distribution
or redemption checks.
Income dividends
. The funds declare and pay dividends (if any) annually.
. The dividends of each fund (other than Global Stock Fund) will not be
eligible for the 70% deduction for dividends received by corporations, if, as
expected, none of the fund's income consists of dividends paid by U.S.
corporations. The dividends of the Global Stock Fund will be eligible for the
70% deduction for dividends received by corporations only to the extent the
fund's income consists of dividends paid by U.S. corporations.
Capital gains
. A capital gain or loss is the difference between the purchase and sale price
of a security.
. If a fund has net capital gains for the year (after subtracting any capital
losses), they are usually declared and paid in December to shareholders of
record on a specified date that month.
Tax Information
. You will be sent timely information for your tax filing needs.
You need to be aware of the possible tax consequences when:
. You sell fund shares, including an exchange from one fund to another.
. The fund makes a distribution to your account.
Taxes on fund redemptions
When you sell shares in any fund, you may realize a gain or loss. An exchange
from one fund to another is still a sale for tax purposes.
In January, you will be sent Form 1099-B indicating the date and amount of
each sale you made in the fund during the prior year. This information will
also be reported to the IRS. For new accounts or those opened by exchange in
1983 or later, we will provide the gain or loss on the shares you sold during
the year, based on the "average cost," single category method. This
information is not reported to the IRS, and you do not have to use it. You
may calculate the cost basis using other methods acceptable to the IRS, such
as "specific identification."
To help you maintain accurate records, we send you a confirmation immediately
following each transaction you make (except for systematic purchases and
redemptions) and a year-end statement detailing all your transactions in each
fund account during the year.
<PAGE>
Taxes on fund distributions
. The following summary does not apply to retirement accounts, such as IRAs,
which are not subject to current tax.
In January, you will be sent Form 1099-DIV indicating the tax status of any
dividend and capital gain distributions made to you. This information will
also be reported to the IRS. Distributions are generally taxable to you for
the year in which they were paid. You will be sent any additional information
you need to determine your taxes on fund distributions, such as the portion
of your dividends, if any, that may be exempt from state income taxes.
The tax treatment of a capital gain distribution is determined by how long
the fund held the portfolio securities, not how long you held shares in the
fund. Short-term (one year or less) capital gain distributions are taxable at
the same rate as ordinary income and long-term gains on securities held more
than 12 months, are taxed at a maximum rate of 20%. If you realized a loss on
the sale or exchange of fund shares that you held six months or less, your
short-term loss will be reclassified to a long-term loss to the extent of any
long-term capital gain distribution received during the period you held the
shares.
Distributions resulting from the sale of certain foreign currencies and debt
securities, to the extent of foreign exchange gains, are taxed as ordinary
income or loss. If the fund pays nonrefundable taxes to foreign governments
during the year, the taxes will reduce the fund's dividends but will still be
included in your taxable income. However, you may be able to claim an
offsetting credit or deduction on your tax return for your portion of foreign
taxes paid by the fund.
. Distributions are taxable whether reinvested in additional shares or
received in cash.
Tax effect of buying shares before a capital gain distribution
If you buy shares shortly before or on the "record date" - the date that
establishes you as the person to receive the upcoming distribution - you will
receive a portion of the money you just invested in the form of a taxable
distribution. Therefore, you may wish to find out a fund's record date before
investing. Of course, a fund's share price may, at any time, reflect
undistributed capital gains or income and unrealized appreciation, which may
result in future taxable distributions.
Note: For information on the tax consequences of hedging, please see
Investment Policies and Practices.
<PAGE>
T. ROWE PRICE
TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS
----------------------------------------------------------
. Following these procedures helps assure timely and accurate transactions.
Purchase Conditions
Nonpayment
If your payment is not received or you pay with a check or ACH transfer that
does not clear, your purchase will be canceled. You will be responsible for
any losses or expenses incurred by each fund or transfer agent, and the fund
can redeem shares you own in this or another identically registered T. Rowe
Price fund as reimbursement. Each fund and its agents have the right to
reject or cancel any purchase, exchange, or redemption due to nonpayment.
U.S. dollars
All purchases must be paid for in U.S. dollars; checks must be drawn on U.S.
banks.
Sale (Redemption) Conditions
Holds on immediate redemptions: 10-day hold
If you sell shares that you just purchased and paid for by check or ACH
transfer, the funds will process your redemption but will generally delay
sending you the proceeds for up to 10 calendar days to allow the check or
transfer to clear. If your redemption request was sent by mail or mailgram,
proceeds will be mailed no later than the seventh calendar day following
receipt unless the check or ACH transfer has not cleared. (The 10-day hold
does not apply to the following: purchases paid for by bank wire; cashier's,
certified, or treasurer's checks; or automatic purchases through your
paycheck.) The funds do not accept purchases made by credit card check.
Telephone, Tele*Access/(R)/, and personal computer transactions
Exchange and redemption services through telephone and Tele*Access are
established automatically when you sign the New Account Form unless you check
the boxes that state you do not want these services. Personal computer
transactions must be authorized separately. T. Rowe Price funds and their
agents use reasonable procedures (including shareholder identity
verification) to confirm that instructions given by telephone or computer are
genuine, they are not liable for acting on these instructions. If these
procedures are not followed, it is the opinion of certain regulatory agencies
that the funds and their agents may be liable for any losses that may result
from acting on the instructions. A confirmation is sent promptly after a
transaction. All telephone conversations are recorded.
Redemptions over $250,000
Large sales can adversely affect a portfolio manager's ability to implement a
fund's investment strategy by causing the premature sale of securities that
would otherwise be held. If, in any 90-day period, you redeem (sell) more
than
<PAGE>
$250,000, or your sale amounts to more than 1% of fund net assets, the fund
has the right to pay the difference between the redemption amount and the
lesser of the two previously mentioned figures with securities from the fund.
Excessive Trading
. T. Rowe Price may bar excessive traders from purchasing shares.
Frequent trades, involving either substantial fund assets or a substantial
portion of your account or accounts controlled by you, can disrupt management
of the fund and raise its expenses.
. Trades placed directly with T. Rowe Price If you trade directly with T.
Rowe Price, you can make one purchase and sale involving the same fund within
any 120-day period. For example, if you are in fund A, you can move
substantial assets from fund A to fund B and, within the next 120 days, sell
your shares in fund B to return to fund A or move to fund C. If you exceed
this limit, you are in violation of our excessive trading policy.
Two types of transactions are exempt from this policy: 1) trades solely in
money market funds (exchanges between a money fund and a nonmoney fund are
not exempt); and 2) systematic purchases or redemptions (see Information
About Your Services).
. Trades placed through intermediaries If you purchase fund shares through an
intermediary including a broker, bank, investment adviser, or other third
party and hold them for less than 60 calendar days, you are in violation of
our excessive trading policy.
. If you violate our excessive trading policy, you may be barred indefinitely
and without further notice from further purchases of T. Rowe Price funds.
Keeping Your Account Open
Due to the relatively high cost to a fund of maintaining small accounts, we
ask you to maintain an account balance of at least $1,000. If your balance is
below $1,000 for three months or longer, we have the right to close your
account after giving you 60 days in which to increase your balance.
Small Account Fee
Because of the disproportionately high costs of servicing accounts with low
balances, a $10 fee, paid to T. Rowe Price Services, the funds' transfer
agent, will automatically be deducted from nonretirement accounts with
balances falling below a minimum level. The valuation of accounts and the
deduction are expected to take place during the last five business days of
September. The fee will be deducted from accounts with balances below $2,000,
except for UGMA/ UTMA accounts, for which the limit is $500. The fee will be
waived for any investor whose T. Rowe Price mutual fund investments total
$25,000 or more.
<PAGE>
T. ROWE PRICE
Accounts employing automatic investing (e.g., payroll deduction, automatic
purchase from a bank account, etc.) are also exempt from the charge. The fee
will not apply to IRAs and other retirement plan accounts. (A separate
custodial fee may apply to IRAs and other retirement plan accounts.)
Signature Guarantees
. A signature guarantee is designed to protect you and the T. Rowe Price funds
from fraud by verifying your signature.
You may need to have your signature guaranteed in certain situations, such
as:
. Written requests 1) to redeem over $100,000, or 2) to wire redemption
proceeds.
. Remitting redemption proceeds to any person, address, or bank account not on
record.
. Transferring redemption proceeds to a T. Rowe Price fund account with a
different registration (name or ownership) from yours.
. Establishing certain services after the account is opened.
You can obtain a signature guarantee from most banks, savings institutions,
broker-dealers, and other guarantors acceptable to T. Rowe Price. We cannot
accept guarantees from notaries public or organizations that do not provide
reimbursement in the case of fraud.
<PAGE>
MORE ABOUT THE FUNDS
3
ORGANIZATION AND MANAGEMENT
----------------------------------------------------------
How are the funds organized?
T. Rowe Price International Funds, Inc. (the "corporation"), currently
consists of 12 series, each representing a separate class of shares and
having different objectives and investment policies. The 12 series and the
years in which each was established are as follows: International Stock Fund,
1980; International Bond Fund, 1986; International Discovery Fund, 1988;
European Stock Fund, New Asia Fund, Global Bond Fund, 1990; Japan Fund, 1991;
Latin America Fund, 1993; Emerging Markets Bond Fund, 1994; Emerging Markets
Stock Fund, Global Stock Fund, 1995, and International Growth & Income Fund,
1998. Effective May 1, 1998, the T. Rowe Price Global Government Bond Fund
changed its name to the T. Rowe Price Global Bond Fund. (The bond funds are
described in a separate prospectus.)
What is meant by "shares"?
As with all mutual funds, investors purchase shares when they put money in a
fund. These shares are part of a fund's authorized capital stock, but share
certificates are not issued.
Each share and fractional share entitles the shareholder to:
. Receive a proportional interest in a fund's income and capital gain
distributions.
. Cast one vote per share on certain fund matters, including the election of
fund directors, changes in fundamental policies, or approval of changes in
the fund's management contract.
Do T. Rowe Price funds have annual shareholder meetings?
The funds are not required to hold annual meetings and, to avoid unnecessary
costs to fund shareholders, do not intend to do so except when certain
matters, such as a change in a fund's fundamental policies, must be decided.
In addition, shareholders representing at least 10% of all eligible votes may
call a special meeting, if they wish, for the purpose of voting on the
removal of any fund director or trustee. If a meeting is held and you cannot
attend, you can vote by proxy. Before the meeting, the fund will send you
proxy materials that explain the issues to be decided and include
instructions on voting by mail or telephone, or on the Internet.
Who runs the funds?
General Oversight
The corporation is governed by a Board of Directors that meets regularly to
review the funds' investments, performance, expenses, and other business
<PAGE>
T. ROWE PRICE
affairs. The Board elects the corporation's officers. The policy of the
corporation is that the majority of Board members are independent of
Price-Fleming.
. All decisions regarding the purchase and sale of fund investments are made
by Price-Fleming - specifically by each fund's Investment Advisory Group.
Investment Manager
Price-Fleming is responsible for selection and management of each fund's
portfolio investments. Price-Fleming's U.S. office is located at 100 East
Pratt Street, Baltimore, Maryland 21202. Price-Fleming also has offices in
London, Tokyo, Singapore, Hong Kong, Buenos Aires, and Paris. Price-Fleming
was incorporated in Maryland in 1979 as a joint venture between T. Rowe Price
and Robert Fleming Holdings Limited (Flemings).
T. Rowe Price, Flemings, and Jardine Fleming Group Limited (Jardine Fleming)
are owners of Price-Fleming. The common stock of Price-Fleming is 50% owned
by a wholly owned subsidiary of T. Rowe Price, 25% by a subsidiary of
Flemings, and 25% by a subsidiary of Jardine Fleming. (Half of Jardine
Fleming is owned by Flemings and half by Jardine Matheson Holdings Limited
(Jardine Matheson). Subject to regulatory approvals, Flemings expects to
acquire Jardine Matheson's half interest in Jardine Fleming during the first
half of 1999. Upon completion of this transaction, Flemings will own 100% of
Jardine Fleming.) T. Rowe Price has the right to elect a majority of the
Board of Directors of Price-Fleming, and Flemings has the right to elect the
remaining directors, one of whom will be nominated by Jardine Fleming.
. Flemings is a diversified investment organization which participates in a
global network of regional investment offices in New York, London, Zurich,
Geneva, Tokyo, Hong Kong, Manila, Kuala Lumpur, Seoul, Taipei, Bombay,
Jakarta, Singapore, Bangkok, and Johannesburg.
Portfolio Management
Each fund has an Investment Advisory Group that has day-to-day responsibility
for managing the portfolio and developing and executing each fund's
investment program. The members of each advisory group are listed below.
Global Stock Fund Martin G. Wade, John R. Ford, James B.M. Seddon, Mark C.J.
Bickford-Smith, Robert W. Smith, and David J.L. Warren.
International Stock Fund Martin G. Wade, John R. Ford, James B.M. Seddon,
Mark C.J. Bickford-Smith, and David J.L. Warren.
International Discovery Fund Martin G. Wade, Frances Dydasco, Mark J.T.
Edwards, Ian J. MacDonald, and Justin Thomson.
European Stock Fund Martin G. Wade, Robert A. Revel-Chion, and James B.M.
Seddon.
<PAGE>
Japan Fund Martin G. Wade, Ian J. MacDonald, and David J.L. Warren.
New Asia Fund Martin G. Wade, Frances Dydasco, and Mark J.T. Edwards.
Latin America Fund Martin G. Wade and Benedict R.F. Thomas.
Emerging Markets Stock Fund Martin G. Wade, Christopher D. Alderson, Frances
Dydasco, Mark J.T. Edwards, and Benedict R.F. Thomas.
International Growth & Income Fund Martin G. Wade, Richard T. Whitney, John
R. Ford, James B.M. Seddon, and Robert W. Smith.
Martin Wade joined Price-Fleming in 1979 and has 30 years of experience with
the Fleming Group in research, client service, and investment management.
(Fleming Group includes Robert Fleming and/or Jardine Fleming.) Christopher
Alderson joined Price-Fleming in 1988 and has 13 years of experience with the
Fleming Group in research and portfolio management. Mark Bickford-Smith
joined Price-Fleming in 1995 and has 14 years of experience with the Fleming
Group in research and financial analysis. Mark Edwards joined Price-Fleming
in 1987 and has 17 years of experience in financial analysis. John Ford
joined Price-Fleming in 1982 and has 19 years of experience with the Fleming
Group in research and portfolio management. James Seddon joined Price-Fleming
in 1987 and has 12 years of experience in portfolio management. Robert Smith
joined Price-Fleming in 1996, has been with T. Rowe Price since 1992, and has
12 years of experience in financial analysis. Benedict Thomas joined
Price-Fleming in 1988 and has 10 years of portfolio management experience.
David Warren joined Price-Fleming in 1983 and has 18 years of experience in
equity research, fixed income research, and portfolio management. Frances
Dydasco joined Price-Fleming in 1996 and has 10 years of experience in
research and financial analysis. Ian MacDonald joined Price-Fleming in 1998
and has 14 years of experience in equity research and portfolio management.
Robert Revel-Chion joined Price-Fleming in 1998 and has 10 years of
experience in investment management (four years of which were within the
Fleming Group). Justin Thomson joined Price-Fleming in 1998 and has seven
years experience in portfolio management. Richard Whitney joined
Price-Fleming in 1998, has been with T. Rowe Price since 1985, and has 16
years of experience in equity research and portfolio management.
Portfolio Transactions
Decisions with respect to the purchase and sale of a fund's portfolio
securities on behalf of each fund are made by Price-Fleming. The
corporation's Board of Directors has authorized Price-Fleming to utilize
affiliates of Flemings and Jardine Fleming in the capacity of broker in
connection with the execution of a fund's portfolio transactions if
Price-Fleming believes that doing so would result in an economic advantage
(in the form of lower execution costs or otherwise) being obtained by the
fund.
<PAGE>
T. ROWE PRICE
The Management Fee
This fee has two parts - an "individual fund fee," which reflects a fund's
particular characteristics, and a "group fee." The group fee, which is
designed to reflect the benefits of the shared resources of the T. Rowe Price
investment management complex, is calculated daily based on the combined net
assets of all T. Rowe Price funds (except the Spectrum Funds, and any
institutional, index, or private label mutual funds). The group fee schedule
(shown below) is graduated, declining as the asset total rises, so
shareholders benefit from the overall growth in mutual fund assets.
<TABLE>
Group Fee Schedule
<CAPTION>
<S> <C> <C> <C>
0.334% First $50 billion/a/
-----------------------------------------
0.305% Next $30 billion
-----------------------------------------
0.300% Thereafter
-----------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Represents a blended group fee rate containing various break points.
Each fund's portion of the group fee is determined by the ratio of its daily
net assets to the daily net assets of all the T. Rowe Price funds described
previously. Based on combined T. Rowe Price funds' assets of over $89 billion
at December 31, 1998, the group fee was 0.32%. The individual fund fees are
as follows: International Stock, Global Stock, and International Growth &
Income Funds, 0.35%; European Stock, Japan, and New Asia Funds, 0.50%;
International Discovery, Latin America, and Emerging Markets Stock Funds,
0.75%.
Research and Administration
Certain administrative support is provided by T. Rowe Price, which receives
from Price-Fleming a fee of 0.15% of the market value of all assets in equity
accounts, 0.15% of the market value of all assets in active fixed income
accounts, and 0.035% of the market value of all assets in passive fixed
income accounts under Price-Fleming's management. Additional investment
research and administrative support for equity investments is provided to
Price-Fleming by Fleming Investment Management Limited (FIM) and Jardine
Fleming International Holdings Limited (JFIH), for which each receives from
Price-Fleming a fee of 0.075% of the market value of all assets in equity
accounts under Price-Fleming's management. FIM and JFIH also provide research
and administration support for fixed income accounts for which each receive a
fee of 0.075% of the market value of all assets in active fixed income
accounts and 0.175% of such market value in passive fixed income accounts
under Price-Fleming's management. FIM is a wholly owned subsidiary of
Flemings. JFIH is a wholly owned subsidiary of Jardine Fleming.
UNDERSTANDING PERFORMANCE INFORMATION
----------------------------------------------------------
This section should help you understand the terms used to describe fund
performance. You will come across them in shareholder reports you receive
from us; in
<PAGE>
our newsletter, The Price Report; in Insights articles; in T. Rowe Price
advertisements; and in the media.
Total Return
This tells you how much an investment in a fund has changed in value over a
given time period. It reflects any net increase or decrease in the share
price and assumes that all dividends and capital gains (if any) paid during
the period were reinvested in additional shares. Therefore, total return
numbers include the effect of compounding.
Advertisements for a fund may include cumulative or average annual total
return figures, which may be compared with various indices, other performance
measures, or other mutual funds.
Cumulative Total Return
This is the actual return of an investment for a specified period. A
cumulative return does not indicate how much the value of the investment may
have fluctuated during the period. For example, a fund could have a 10-year
positive cumulative return despite experiencing three negative years during
that time.
Average Annual Total Return
This is always hypothetical and should not be confused with actual
year-by-year results. It smooths out all the variations in annual performance
to tell you what constant year-by-year return would have produced the
investment's actual cumulative return. This gives you an idea of an
investment's annual contribution to your portfolio, provided you held it for
the entire period.
INVESTMENT POLICIES AND PRACTICES
----------------------------------------------------------
This section takes a detailed look at some of the types of securities each
fund may hold in its portfolio and the various kinds of investment practices
that may be used in day-to-day portfolio management. The funds' investment
programs are subject to further restrictions and risks described in the
Statement of Additional Information.
Shareholder approval is required to substantively change a fund's objectives
and certain investment restrictions noted in the following section as
"fundamental policies." The managers also follow certain "operating
policies," which can be changed without shareholder approval. However,
significant changes are discussed with shareholders in fund reports. Each
fund adheres to applicable investment restrictions and policies at the time
it makes an investment. A later change in circumstances will not require the
sale of an investment if it was proper at the time it was made.
Each fund's holdings of certain kinds of investments cannot exceed maximum
percentages of total assets, which are set forth in this prospectus. For
instance,
<PAGE>
T. ROWE PRICE
each fund is not permitted to invest more than 10% of total assets in hybrid
instruments. While these restrictions provide a useful level of detail about
a fund's investment program, investors should not view them as an accurate
gauge of the potential risk of such investments. For example, in a given
period, a 5% investment in hybrid instruments could have significantly more
of an impact on a fund's share price than its weighting in the portfolio. The
net effect of a particular investment depends on its volatility and the size
of its overall return in relation to the performance of all the funds' other
investments.
Changes in each fund's holdings, performance, and the contribution of various
investments are discussed in the shareholder reports sent to you.
. Fund managers have considerable leeway in choosing investment strategies and
selecting securities they believe will help each fund achieve its objective.
Types of Portfolio Securities
In seeking to meet its investment objective, each fund may invest in any type
of security or instrument (including certain potentially high-risk
derivatives described in this section) whose investment characteristics are
consistent with the fund's investment program. The following pages describe
various types of portfolio securities and investment management practices of
the funds.
Fundamental policy With the exception of Latin America Fund, a fund will not
purchase a security if, as a result, with respect to 75% of its total assets,
more than 5% of the fund's total assets would be invested in securities of a
single issuer or more than 10% of the outstanding voting securities of the
issuer would be held by the fund.
Nondiversified Status--Latin America Fund
The fund is registered as a nondiversified mutual fund. This means that the
fund may invest a greater portion of its assets in, and own a greater amount
of the voting securities of, a single company than a diversified fund which
may subject the fund to greater risk with respect to its portfolio
securities. However, because the fund intends to qualify as a "regulated
investment company" under the Internal Revenue Code, it must invest so that,
at the end of each calendar quarter, with respect to 50% of its total assets,
not more than 5% of its assets are invested in the securities of a single
issuer.
Each fund invests primarily in common stocks and may, to a lesser degree,
purchase other types of securities described below.
Common and Preferred Stocks
Stocks represent shares of ownership in a company. Generally, preferred stock
has a specified dividend and ranks after bonds and before common stocks in
its claim on income for dividend payments and on assets should the company be
liquidated. After other claims are satisfied, common stockholders participate
in
<PAGE>
company profits on a pro-rata basis; profits may be paid out in dividends or
reinvested in the company to help it grow. Increases and decreases in
earnings are usually reflected in a company's stock price, so common stocks
generally have the greatest appreciation and depreciation potential of all
corporate securities. While most preferred stocks pay a dividend, each fund
may purchase preferred stock where the issuer has omitted, or is in danger of
omitting, payment of its dividend. Such investments would be made primarily
for their capital appreciation potential.
Convertible Securities and Warrants
The funds may invest in debt or preferred equity securities convertible into,
or exchangeable for, equity securities. Traditionally, convertible securities
have paid dividends or interest at rates higher than common stocks but lower
than nonconvertible securities. They generally participate in the
appreciation or depreciation of the underlying stock into which they are
convertible, but to a lesser degree. In recent years, convertibles have been
developed which combine higher or lower current income with options and other
features. Warrants are options to buy a stated number of shares of common
stock at a specified price anytime during the life of the warrants
(generally, two or more years).
Fixed Income Securities
The funds may invest in any type of investment-grade security. The Global
Stock Fund may also invest up to 5% of its total assets in
below-investment-grade bonds, commonly referred to as "junk" bonds. Such
securities would be purchased in companies which meet the investment criteria
for the fund. The price of a bond fluctuates with changes in interest rates,
rising when interest rates fall and falling when interest rates rise. Junk
bond prices can be much more volatile and have a greater risk of default than
investment-grade bonds.
Hybrid Instruments
These instruments (a type of potentially high-risk derivative) can combine
the characteristics of securities, futures, and options. For example, the
principal amount, redemption, or conversion terms of a security could be
related to the market price of some commodity, currency, or securities index.
Such securities may bear interest or pay dividends at below market or even
relatively nominal rates. Under certain conditions, the redemption value of
such an investment could be zero.
. Hybrids can have volatile prices and limited liquidity, and their use by the
funds may not be successful.
Operating policy Each fund may invest up to 10% of its total assets in
hybrid instruments.
<PAGE>
T. ROWE PRICE
Private Placements
These securities are sold directly to a small number of investors, usually
institutions. Unlike public offerings, such securities are not registered
with the SEC. Although certain of these securities may be readily sold, for
example, under Rule 144A, others may be illiquid, and their sale may involve
substantial delays and additional costs.
Operating policy Each fund may invest up to 15% of its net assets in
illiquid securities.
Types of Management Practices
Reserve Position
Each fund will hold a certain portion of its assets in money market reserves.
Each fund's reserve position is expected to consist primarily of shares of
one or more T. Rowe Price internal money market funds. Short-term,
high-quality U.S. and foreign dollar-denominated money market securities,
including repurchase agreements, may also be held. For temporary, defensive
purposes, the funds may invest without limitation in money market reserves.
The effect of taking such a position is that the fund may not achieve its
investment objective. The reserve position provides flexibility in meeting
redemptions, expenses, and the timing of new investments and can serve as a
short-term defense during periods of unusual market volatility.
Borrowing Money and Transferring Assets
Each fund can borrow money from banks and other Price funds as a temporary
measure for emergency purposes, to facilitate redemption requests, or for
other purposes consistent with each fund's investment objective and program.
Such borrowings may be collateralized with fund assets, subject to
restrictions.
Fundamental policy Borrowings may not exceed 33/1//\\/3/\\% of total fund
assets.
Operating policy Each fund may not transfer as collateral any portfolio
securities except as necessary in connection with permissible borrowings or
investments, and then such transfers may not exceed 33/1//\\/3/\\% of the
fund's total assets. Each fund may not purchase additional securities when
borrowings exceed 5% of total assets.
Foreign Currency Transactions
The funds will normally conduct their foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market, or through entering into forward contracts
to purchase or sell foreign currencies. The funds will generally not enter
into a forward contract with a term greater than one year.
The funds will generally enter into forward foreign currency exchange
contracts only under two circumstances. First, when a fund enters into a
contract for the purchase or sale of a security denominated in a foreign
currency, it may desire to
<PAGE>
"lock in" the U.S. dollar price of the security. Second, when Price-Fleming
believes that the currency of a particular foreign country may suffer or
enjoy a substantial movement against another currency, it may enter into a
forward contract to sell or buy the former foreign currency (or another
currency which acts as a proxy for that currency), approximating the value of
some or all of the fund's portfolio securities denominated in such foreign
currency. Under certain circumstances, a fund may commit a substantial
portion or the entire value of its portfolio to the consummation of these
contracts. Price-Fleming will consider the effect such a commitment of its
portfolio to forward contracts would have on the investment program of the
fund and the flexibility of the fund to purchase additional securities.
Although forward contracts will be used primarily to protect the fund from
adverse currency movements, they also involve the risk that anticipated
currency movements will not be accurately predicted, and a fund's total
return could be adversely affected as a result.
There are certain markets where it is not possible to engage in effective
foreign currency hedging. This may be true, for example, for the currencies
of various emerging markets where the foreign exchange markets are not
sufficiently developed to permit hedging activity to take place.
Futures and Options
Futures (a type of potentially high-risk derivative) are often used to manage
or hedge risk because they enable the investor to buy or sell an asset in the
future at an agreed-upon price. Options (another type of potentially
high-risk derivative) give the investor the right (where the investor
purchases the option), or the obligation (where the investor writes (sells)
the option), to buy or sell an asset at a predetermined price in the future.
Each fund may buy and sell futures and options contracts for any number of
reasons, including: to manage its exposure to changes in securities prices
and foreign currencies; as an efficient means of adjusting its overall
exposure to certain markets; in an effort to enhance income; as a cash
management tool; and to protect the value of portfolio securities. Each fund
may purchase, sell, or write call and put options on securities, financial
indices, and foreign currencies.
Futures contracts and options may not always be successful hedges; their
prices can be highly volatile; using them could lower each fund's total
return, and the potential loss from the use of futures can exceed a fund's
initial investment in such contracts.
Operating policies Futures: Initial margin deposits and premiums on options
used for non-hedging purposes will not equal more than 5% of each fund's net
asset value. Options on securities: The total market value of securities
against which each fund writes call or put options may not exceed 25% of its
total assets. Each fund will not commit more than 5% of its total assets to
premiums when purchasing call or put options.
<PAGE>
T. ROWE PRICE
Tax Consequences of Hedging
Under applicable tax law, the funds may be required to limit their gains from
hedging in foreign currency forwards, futures, and options. Although the
funds are expected to comply with such limits, the extent to which these
limits apply is subject to tax regulations as yet unissued. Hedging may also
result in the application of the mark-to-market and straddle provisions of
the Internal Revenue Code. These provisions could result in an increase (or
decrease) in the amount of taxable dividends paid by the funds and could
affect whether dividends paid by the funds are classified as capital gains or
ordinary income.
Lending of Portfolio Securities
Like other mutual funds, each fund may lend securities to broker-dealers,
other institutions, or other persons to earn additional income. The principal
risk is the potential insolvency of the broker-dealer or other borrower. In
this event, each fund could experience delays in recovering its securities
and possibly capital losses.
Fundamental policy The value of loaned securities may not exceed
33/1//\\/3/\\% of total fund assets.
Portfolio Turnover
Turnover is an indication of frequency. The funds will not generally trade in
securities for short-term profits, but when circumstances warrant, securities
may be purchased and sold without regard to the length of time held. A high
turnover rate may increase transaction costs and result in higher capital
gain distributions by the funds. The funds' portfolio turnover rates for the
previous three fiscal periods are shown in Table 4.
<TABLE>
Table 4 Portfolio Turnover Rates
<CAPTION>
Fund 1998 1997 1996
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Stock 12.2% 15.8% 11.6%
------------------------------------
International Discovery 34.2 72.7 52.0
------------------------------------
European Stock 26.8 17.5 14.1
------------------------------------
Japan 66.9 32.3 29.8
------------------------------------
New Asia 68.1 41.8 42.0
-----------------------------------------
Latin America 19.0 32.7 22.0
------------------------------------
Emerging Markets Stock 54.5 84.3 41.7
------------------------------------
Global Stock 47.1 41.8 50.0/a/
-------------------------------------------------------------------
</TABLE>
/a/ Annualized.
European Stock, Japan, New Asia, Latin America, and Emerging Markets Stock
Funds
Location of Company
In determining the domicile or nationality of a company, the funds would
primarily consider the following factors: whether the company is organized
under the
<PAGE>
laws of a particular country; or, whether the company derives a significant
proportion (at least 50%) of its revenues or profits from goods produced or
sold, investments made, or services performed in the country or has at least
50% of its assets situated in that country.
Each of these funds will invest at least 65% of its total assets in companies
located (as defined above) in the respective countries or regions indicated.
International Stock, International Discovery, International Growth & Income,
and Global Stock Funds
Each fund will invest at least 65% of its total assets in a manner which
reflects its international or global character, respectively. In the case of
the international funds, this requires that the funds invest in at least
three countries outside of the U.S. For the global fund, this means that the
fund must invest in at least three countries, one of which may include the
U.S.
Year 2000 Processing Issue
Many computer programs use two digits rather than four to identify the year.
These programs, if not adapted, will not correctly handle the change from
"99" to "00" on January 1, 2000, and will not be able to perform necessary
functions. The Year 2000 issue affects virtually all companies and
organizations.
T. Rowe Price and Price-Fleming have implemented steps intended to assure
that major computer systems and processes are capable of Year 2000
processing. We are working with third parties to assess the adequacy of their
compliance efforts and are developing contingency plans intended to assure
that third-party noncompliance will not materially affect our operations.
Companies, organizations, governmental entities, and markets in which the T.
Rowe Price funds invest will be affected by the Year 2000 issue, but at this
time the funds cannot predict the degree of impact. For funds that invest in
foreign markets, especially emerging markets, it is possible foreign
companies and markets will not be as prepared for Year 2000 as domestic
companies and markets. To the extent the effect of Year 2000 is negative, a
fund's returns could be reduced.
FINANCIAL HIGHLIGHTS
----------------------------------------------------------
Table 5, which provides information about each fund's financial history, is
based on a single share outstanding throughout each fiscal year. Each fund's
section of the table is part of the fund's financial statements, which are
included in its annual report and are incorporated by reference into the
Statement of Additional Information (available upon request). The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in each fund (assuming reinvestment of all dividends
and distributions). The financial statements in the annual report were
audited by the funds' independent accountants, PricewaterhouseCoopers LLP.
<PAGE>
T. ROWE PRICE
<TABLE>
Table 5 Financial Highlights
Footnotes
are on page 36.
<CAPTION>
Income From Investment Operations Less Distributions
Net gains or
Net asset losses on Dividends
value, Net securities Total from (from net Distributions
Period beginning investment (both realized investment investment (from capital Returns of Total
ended of period income and unrealized) operations income) gains) capital distributions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
International Stock/a/
1994 $11.74 $ 0.09 $ 1.30 $ 1.39 $(0.09) $(0.20) -- $(0.29)
---------------------------------------------------------------------------------------------------------------------
1995 12.84 0.18 (0.19) (0.01) (0.12) (0.62) -- (0.74)
---------------------------------------------------------------------------------------------------------------------
1996 12.09 0.19 1.57 1.76 (0.18) (0.20) -- (0.38)
---------------------------------------------------------------------------------------------------------------------
1997 13.47 0.19 0.86 1.05 (0.18) (0.20) -- (0.38)
---------------------------------------------------------------------------------------------------------------------
1998 14.14 0.23 0.77 1.00 (0.20) (0.55) -- (0.75)
International Discovery
1994 $16.16 $ 0.04 $ 1.52 $ 1.56 $(0.07) $(0.02) -- $(0.09)
---------------------------------------------------------------------------------------------------------------------
1995 17.63 0.10 (2.38) (2.28) (0.06) (0.87) -- (0.93)
---------------------------------------------------------------------------------------------------------------------
1996 14.43 0.07 1.59 1.66 (0.10) (0.02) -- (0.12)
---------------------------------------------------------------------------------------------------------------------
1997 15.97 0.02 0.25 0.27 (0.07) (0.06) -- (0.13)
---------------------------------------------------------------------------------------------------------------------
1998 16.11 0.05 (0.92) (0.87) -- (0.25) -- (0.25)
European Stock
1994 $11.37 $ 0.14 $ 1.26 $ 1.40 $(0.04) $(0.01) -- $(0.05)
---------------------------------------------------------------------------------------------------------------------
1995 12.72 0.20 1.60 1.80 (0.12) (0.05) -- (0.17)
---------------------------------------------------------------------------------------------------------------------
1996 14.35 0.25 2.79 3.04 (0.21) (0.25) -- (0.46)
---------------------------------------------------------------------------------------------------------------------
1997 16.93 0.25 3.12 3.37 (0.26) (0.20) -- (0.46)
---------------------------------------------------------------------------------------------------------------------
1998 19.84 0.28 3.52 3.80 (0.25) (1.01) -- (1.26)
Japan
1994 $11.58 $(0.06)/b/ $ 0.97 $ 0.91 -- $(0.85) -- )
---------------------------------------------------------------------------------------------------------------------
1995 11.64 (0.04 ) (1.40) (1.44) -- (0.81) -- (0.81)
---------------------------------------------------------------------------------------------------------------------
1996 9.39 (0.05) (0.32) (0.37) -- -- -- --
---------------------------------------------------------------------------------------------------------------------
1997 9.02 (0.03) (1.02) (1.05) -- -- -- --
---------------------------------------------------------------------------------------------------------------------
1998 7.97 (0.03) (1.22) (1.25) -- -- -- --
New Asia/c/
1994 $ 9.88 $ 0.06 $ 0.36 $ 0.42 $(0.04) $(0.19) -- $(0.23)
---------------------------------------------------------------------------------------------------------------------
1995 10.07 0.08 (1.07) (0.99) (0.07) (0.89) -- (0.96)
---------------------------------------------------------------------------------------------------------------------
1996 8.12 0.06 0.55 0.61 (0.09) -- -- (0.09)
---------------------------------------------------------------------------------------------------------------------
1997 8.64 0.09 (2.71) (2.62) (0.06) (0.01) -- (0.07)
---------------------------------------------------------------------------------------------------------------------
1998 5.95 0.13 (1.07) (0.94) (0.08) -- (0.08)
Latin America
1994/d/ $10.00 $(0.03) $ 0.29/e/ $ 0.26 -- -- -- --
---------------------------------------------------------------------------------------------------------------------
1995 10.32 0.05 (3.92) (3.87) -- -- -- --
---------------------------------------------------------------------------------------------------------------------
1996 6.49 0.10 1.60 1.70 $(0.06) -- -- )
---------------------------------------------------------------------------------------------------------------------
1997 8.14 0.13 1.44 1.57 (0.11) ) -- (0.14)
---------------------------------------------------------------------------------------------------------------------
1998 9.60 0.16 (2.45) (2.29) (0.12) -- (0.12)
-------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Stock
1995/g/ $10.00 $ 0.02/h/ $ 0.44/e/ $ 0.46 -- -- -- --
---------------------------------------------------------------------------------------------------------------------
1996 10.48 0.02/h/ 1.08 1.10 $(0.01) -- -- )
---------------------------------------------------------------------------------------------------------------------
1997 11.59 0.02 (0.23) (0.21) (0.04) ) -- (0.34)
---------------------------------------------------------------------------------------------------------------------
1998 11.08 0.05/h/ (3.06) (3.01) (0.15) -- (0.15)
Global Stock
1996/i/ $10.00 $ 0.05/j/ $ 1.30 $ 1.35 -- -- -- --
---------------------------------------------------------------------------------------------------------------------
1997 11.35 0.06/j/ 1.84 1.90 $(0.06) $(0.18) -- $(0.24)
---------------------------------------------------------------------------------------------------------------------
1998 13.01 0.09/j/ 1.52 1.61 (0.06) (0.53) (0.59)
-------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
</TABLE>
<PAGE>
<TABLE>
Table 5 Financial Highlights
<CAPTION>
Net Asset Value Ratios/Supplemental Data
Redemption Ratio of
fees added Net asset Net assets, net income to Portfolio
Period to paid-in- value, end Total return end of period Ratio of expenses average net turnover
ended capital of period (in thousands) to average net assets assets rate
<S> <C> <C> <C> <C> <C> <C> <C> <S>
International Stock/a/
1994 -- $12.84 12.03% $ 6,205,713 0.96% 1.11% 22.9%
-------------------------------------------------------------------------------------------------------------------
1995 -- 12.09 0.38 6,385,905 0.91 1.56 17.8
-------------------------------------------------------------------------------------------------------------------
1996 -- 13.47 14.87 8,775,736 0.88 1.58 11.6
-------------------------------------------------------------------------------------------------------------------
1997 -- 14.14 7.90 10,005,170 0.85 1.33 15.8
-------------------------------------------------------------------------------------------------------------------
1998 14.39 7.48/k/ 9,537,129 0.85 1.50 12.2
International Discovery
1994 -- $17.63 9.67% $ 503,442 1.50% 0.38% 57.4%
-------------------------------------------------------------------------------------------------------------------
1995 $0.01 14.43 (13.06) 325,374 1.50 0.55 43.5
-------------------------------------------------------------------------------------------------------------------
1996 -- 15.97 11.60 325,639 1.45 0.40 52.0
-------------------------------------------------------------------------------------------------------------------
1997 -- 16.11 1.69 254,430 1.41 0.13 72.7
-------------------------------------------------------------------------------------------------------------------
1998 14.99/k/ (5.40) 189,001 1.47 0.25 34.2
European Stock
1994 -- $12.72 12.35% $ 337,498 1.25% 1.19% 24.5%
-------------------------------------------------------------------------------------------------------------------
1995 -- 14.35 14.41 490,573 1.20 1.75 17.2
-------------------------------------------------------------------------------------------------------------------
1996 -- 16.93 21.76 704,887 1.12 1.81 14.1
-------------------------------------------------------------------------------------------------------------------
1997 -- 19.84 20.30 984,083 1.06 1.41 17.5
-------------------------------------------------------------------------------------------------------------------
1998 22.38 20.12/k/ 1,412,008 1.05 1.39 26.8
----------------------------------------------------------------------------------------------------------------------------------
Japan
1994 -- $11.64 $ 203,303 1.50%/b/ (0.68)%/b/ 61.5%
-------------------------------------------------------------------------------------------------------------------
1995 -- 9.39 (12.87) 181,383 1.50 (0.48) 62.4
-------------------------------------------------------------------------------------------------------------------
1996 -- 9.02 (3.94) 167,118 1.32 (0.48) 29.8
-------------------------------------------------------------------------------------------------------------------
1997 -- 7.97 (11.64) 170,830 1.24 (0.39) 32.3
-------------------------------------------------------------------------------------------------------------------
1998 6.72 (15.68)/k/ 150,949 1.32 (0.37) 66.9
New Asia/c/
1994 -- $10.07 4.11% $ 2,302,841 1.22% 0.85% 63.2%
-------------------------------------------------------------------------------------------------------------------
1995 -- 8.12 (9.70) 1,908,893 1.15 0.97 63.7
-------------------------------------------------------------------------------------------------------------------
1996 -- 8.64 7.58 2,041,396 1.11 0.66 42.0
-------------------------------------------------------------------------------------------------------------------
1997 -- 5.95 (30.61) 876,787 1.10 0.76 41.8
-------------------------------------------------------------------------------------------------------------------
1998 4.93 (15.97)/k/ 632,836 1.29 2.33 68.1
Latin America
1994/d/ $0.06 $10.32 3.20% $ 198,435 1.99%/f/ (0.35)%/f/ 12.2%/f/
-------------------------------------------------------------------------------------------------------------------
1995 0.04 6.49 (37.11) 148,600 1.82 0.76 18.9
-------------------------------------------------------------------------------------------------------------------
1996 0.01 8.14 26.52 213,691 1.66 1.29 22.0
-------------------------------------------------------------------------------------------------------------------
1997 0.03 9.60 19.94 398,066 1.47 1.30 32.7
-------------------------------------------------------------------------------------------------------------------
1998 0.03 7.22 (23.93)/k/ 204,761 1.53 1.35 19.0
Emerging Markets Stock
1995/g/ $0.02 $10.48 4.80 %/h/ $ 14,399 1.75%/fh/ 0.54%/fh/ 28.8%/f/
-------------------------------------------------------------------------------------------------------------------
1996 0.02 11.59 10.69/h/ 67,896 1.75/h/ 0.44/h/ 41.7
-------------------------------------------------------------------------------------------------------------------
1997 0.04 11.08 (1.60)/h/ 119,285 1.75/h/ 0.21/h/ 84.3
-------------------------------------------------------------------------------------------------------------------
1998 0.03 7.95 (27.31)/hk/ 69,752 1.75/h/ 0.46/h/ 54.5
Global Stock
1996/i/ -- $11.35 13.50%/j/ $ 14,916 1.30%/fj/ 0.88%/fj/ 50.0%/f/
-------------------------------------------------------------------------------------------------------------------
1997 -- 13.01 16.98/j/ 32,020 1.30/j/ 0.68/j/ 41.8
-------------------------------------------------------------------------------------------------------------------
1998 14.03 12.89/jk/ 44,116 1.20/j/ 0.76/j/ 47.1
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
T. ROWE PRICE
/a/
All per-share figures reflect the 2-for-1 stock split effective August 31,
1987.
/b/Excludes expenses in excess of a 1.50% voluntary expense limitation in
effect through October 31, 1995.
/c /All per-share figures reflect the 2-for-1 stock split effective May 27,
1994.
/d/
For the period December 29, 1993 (commencement of operations) to October 31,
1994.
/e/The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout the
period. This amount is inconsistent with the fund's aggregate gains and
losses because of the timing of sales and redemptions of fund shares in
relation to fluctuating market values for the investment portfolio.
/f/ Annualized.
/g/For the period March 31, 1995 (commencement of operations) to October 31,
1995.
/h/
Excludes expenses in excess of a 1.75% voluntary expense limitation in effect
through October 31, 1999.
/i/
For the period December 29, 1995 (commencement of operations) to October 31,
1996.
/j/
Excludes expenses in excess of a 1.30% voluntary expense limitation in effect
through October 31, 1997.
/k/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.
<PAGE>
INVESTING WITH T. ROWE PRICE
4
ACCOUNT REQUIREMENTS AND TRANSACTION INFORMATION
----------------------------------------------------------
Tax Identification Number
We must have your correct Social Security or corporate tax identification number
on a signed New Account Form or W-9 Form. Otherwise, federal law requires the
funds to withhold a percentage (currently 31%) of your dividends, capital gain
distributions, and redemptions, and may subject you to an IRS fine. If this
information is not received within 60 days after your account is established,
your account may be redeemed, priced at the NAV on the date of redemption.
Always verify your transactions by carefully reviewing the confirmation we send
you. Please report any discrepancies to Shareholder Services promptly.
Employer-Sponsored Retirement Plans and Institutional Accounts T. Rowe Price
Trust Company 1-800-492-7670
Transaction procedures in the following sections may not apply to
employer-sponsored retirement plans and institutional accounts. For procedures
regarding employer-sponsored retirement plans, please call T. Rowe Price Trust
Company or consult your plan administrator. For institutional account
procedures, please call your designated account manager or service
representative.
OPENING A NEW ACCOUNT
----------------------------------------------------------
$2,500 minimum initial investment; $1,000 for retirement plans or gifts or
transfers to minors (UGMA/UTMA) accounts
Account Registration
If you own other T. Rowe Price funds, be sure to register any new account just
like your existing accounts so you can exchange among them easily. (The name and
account type would have to be identical.)
By Mail
Please make your check payable to T. Rowe Price Funds (otherwise it will be
returned) and send your check, together with the New Account Form, to the
appropriate address in the next paragraph. We do not accept third-party checks
to open new accounts, except for IRA Rollover checks that are properly endorsed.
<PAGE>
T. ROWE PRICE
Mail via United States Postal Service
T. Rowe Price Account Services P.O. Box 17300 Baltimore, MD 21297-1300
Mail via private carriers/overnight services
T. Rowe Price Account Services 10090 Red Run Blvd. Owings Mills, MD 21117-4842
By Wire
Call Investor Services for an account number and give the following wire
information to your bank:
Receiving Bank: PNC Bank, N.A. (Pittsburgh) Receiving Bank ABA#: 043000096
Beneficiary: T. Rowe Price [fund name] Beneficiary Account: 1004397951
Originator to Beneficiary Information (OBI): name of owner(s) and account
number
Complete a New Account Form and mail it to one of the appropriate addresses
listed previously.
Note: No services will be established and IRS penalty withholding may occur
until a signed New Account Form is received. Also, retirement plan accounts and
IRAs cannot be opened by wire.
By Exchange
Call Shareholder Services or use Tele*Access or your personal computer (see
Automated Services under Information About Your Services). The new account will
have the same registration as the account from which you are exchanging.
Services for the new account may be carried over by telephone request if
preauthorized on the existing account. For limitations on exchanging, see
explanation of Excessive Trading under Transaction Procedures and Special
Requirements.
In Person
Drop off your New Account Form at any location listed on the cover and obtain a
receipt.
<PAGE>
PURCHASING ADDITIONAL SHARES
----------------------------------------------------------
$100 minimum purchase; $50 minimum for retirement plans, Automatic Asset
Builder, and gifts or transfers to minors (UGMA/UTMA) accounts
By ACH Transfer
Use Tele*Access or your personal computer or call Investor Services if you have
established electronic transfers using the ACH network.
By Wire
Call Shareholder Services or use the wire address listed in Opening a New
Account.
By Mail
1. Make your check payable to T. Rowe Price Funds (otherwise it may be
returned).
2. Mail the check to us at the following address with either a fund reinvestment
slip or a note indicating the fund you want to buy and your fund account
number.
3. Remember to provide your account number and the fund name on the memo line of
your check.
Mail via United States Postal Service
T. Rowe Price Funds Account Services P.O. Box 17300 Baltimore, MD 21297-1300
/(For //mail via private carriers and overnight services//, see previous /
/section.)/
By Automatic Asset Builder
Fill out the Automatic Asset Builder section on the New Account or Shareholder
Services Form.
EXCHANGING AND REDEEMING SHARES
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Exchange Service
You can move money from one account to an existing identically registered
account or open a new identically registered account. Remember, exchanges are
purchases and sales for tax purposes. (Exchanges into a state tax-free fund are
limited to investors living in states where the fund is registered.) Some of the
T. Rowe Price funds may impose a redemption fee of
<PAGE>
T. ROWE PRICE
0.5% to 2% on shares held for less than six months or one year, as specified in
the prospectus. The fee is paid to the fund.
By Phone
Call Shareholder Services
If you find our phones busy during unusually volatile markets, please consider
placing your order by your personal computer, Tele*Access (if you have
previously authorized telephone services), mailgram, or express mail. For
exchange policies, please see Transaction Procedures and Special Requirements -
Excessive Trading.
Redemption proceeds can be mailed to your account address, sent by ACH transfer
to your bank, or wired to your bank (provided your bank information is already
on file). For charges, see Electronic Transfers - By Wire under Information
About Your Services.
By Mail
For each account involved, provide the account name, number, fund name, and
exchange or redemption amount. For exchanges, be sure to indicate any fund you
are exchanging out of and the fund or funds you are exchanging into. T. Rowe
Price requires the signatures of all owners exactly as registered, and possibly
a signature guarantee (see Transaction Procedures and Special Requirements -
Signature Guarantees). Please use the appropriate address below:
Mail via United States Postal Service
For nonretirement and IRA accounts
T. Rowe Price Account Services P.O. Box 17302 Baltimore, MD 21297-1302
For employer-sponsored retirement accounts
T. Rowe Price Trust Company P.O. Box 17479 Baltimore, MD 21297-1479
/(For// //mail via private carriers and overnight services//, see the
//addresses / /listed in the //Opening a New Account section.)/
Redemptions from employer-sponsored retirement accounts must be in writing;
please call T. Rowe Price Trust Company or your plan administrator for
instructions. IRA distributions may be requested in writing or by telephone;
please call Shareholder
<PAGE>
Services to obtain an IRA Distribution Form or an IRA Shareholder Services Form
to authorize the telephone redemption service.
RIGHTS RESERVED BY THE FUNDS
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Each fund and its agents reserve the following rights: (1) to waive or lower
investment minimums; (2) to accept initial purchases by telephone or mailgram;
(3) to refuse any purchase or exchange order; (4) to cancel or rescind any
purchase or exchange order (including, but not limited to, orders deemed to
result in excessive trading, market timing, fraud, or 5% ownership) upon notice
to the shareholder within five business days of the trade or if the written
confirmation has not been received by the shareholder, whichever is sooner; (5)
to freeze any account and suspend account services when notice has been received
of a dispute between the registered or beneficial account owners or there is
reason to believe a fraudulent transaction may occur; (6) to otherwise modify
the conditions of purchase and any services at any time; or (7) to act on
instructions believed to be genuine. These actions will be taken when, in the
sole discretion of management, they are deemed to be in the best interest of the
fund.
In an effort to protect each fund from the possible adverse effects of a
substantial redemption in a large account, as a matter of general policy, no
shareholder or group of shareholders controlled by the same person or group of
persons will knowingly be permitted to purchase in excess of 5% of the
outstanding shares of the fund, except upon approval of the fund's management.
INFORMATION ABOUT YOUR SERVICES
----------------------------------------------------------
Shareholder Services 1-800-225-5132 Investor Services 1-800-638-5660
Many services are available to you as a T. Rowe Price shareholder; some you
receive automatically, and others you must authorize or request on the New
Account Form. By signing up for services on the New Account Form rather than
later on, you avoid having to complete a separate form and obtain a signature
guarantee. This
<PAGE>
T. ROWE PRICE
section discusses some of the services currently offered. Our Services Guide,
which we mail to all new shareholders, contains detailed descriptions of these
and other services.
Note: Corporate and other institutional accounts require an original or
certified resolution to establish services and to redeem by mail. For more
information, call Investor Services.
Retirement Plans
We offer a wide range of plans for individuals, institutions, and large and
small businesses: Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP-IRAs, Keoghs
(profit sharing, money purchase pension), 401(k), and 403(b)(7). For information
on IRAs, call Investor Services. For information on all other retirement plans,
including our no-load variable annuity, please call our Trust Company at
1-800-492-7670.
Automated Services Tele*Access 1-800-638-2587 24 hours, 7 days
Tele*Access
24-hour service via toll-free number enables you to (1) access information on
fund yields, prices, distributions, account balances, and your latest
transaction; (2) request checks, prospectuses, services forms, duplicate
statements, and tax forms; and (3) initiate purchase, redemption, and exchange
transactions in your accounts (see Electronic Transfers in this section).
Web Address www.troweprice.com
After obtaining proper authorization, account transactions may also be conducted
through our Web site on the Internet. If you subscribe to America Online/(R)/,
you can access our Web site via keyword "T. Rowe Price" and conduct transactions
in your account.
Plan Account Line 1-800-401-3279
Plan Account Line
This 24-hour service is similar to Tele*Access but is designed specifically to
meet the needs of retirement plan investors.
Telephone and Walk-In Services
Buy, sell, or exchange shares by calling one of our service representatives or
by visiting one of our investor center locations whose addresses are listed on
the back cover.
<PAGE>
Electronic Transfers
By ACH
With no charges to pay, you can initiate a purchase or redemption for as little
as $100 or as much as $100,000 between your bank account and fund account using
the ACH network. Enter instructions via Tele*Access or your personal computer,
or call Shareholder Services.
By Wire
Electronic transfers can be conducted via bank wire. There is currently a $5 fee
for wire redemptions under $5,000, and your bank may charge for incoming or
outgoing wire transfers regardless of size.
Checkwriting
(Not available for equity funds, or the High Yield or Emerging Markets Bond
Funds) You may write an unlimited number of free checks on any money market
fund, and most bond funds, with a minimum of $500 per check. Keep in mind,
however, that a check results in a redemption; a check written on a bond fund
will create a taxable event which you and we must report to the IRS.
Automatic Investing
($50 minimum) You can invest automatically in several different ways, including:
Automatic Asset Builder
You instruct us to move $50 or more from your bank account, or you can instruct
your employer to send all or a portion of your paycheck to the fund or funds you
designate.
Automatic Exchange
You can set up systematic investments from one fund account into another, such
as from a money fund into a stock fund.
T. ROWE PRICE BROKERAGE
----------------------------------------------------------
To open an account 1-800-638-5660 For existing brokerage investors
1-800-225-7720
This service gives you the opportunity to consolidate all of your investments
with one company. Investments available through our brokerage service include
stocks, options, bonds, and others at commission savings over full-service
brokers. We also provide a wide range of services, including:
<PAGE>
T. ROWE PRICE
Automated telephone and computer services
You can enter stock and option orders, access quotes, and review account
information around the clock by phone with Tele-Trader or via the Internet with
Internet-Trader. Any trades executed through Tele-Trader save you an additional
10% on commissions. You will save 20% on commissions for stock trades and 10% on
option trades when you use Internet-Trader. All trades are subject to a $35
minimum commission except stock trades placed through Internet-Trader, which are
subject to a $29.95 minimum commission.
Investor information
A variety of informative reports, such as our Brokerage Insights series and S&P
Market Month newsletter, as well as access to on-line research tools can help
you better evaluate economic trends and investment opportunities.
Dividend Reinvestment Service
Virtually all stocks held in customer accounts are eligible for this free
service.
/T. Rowe Price// Brokerage is a division of T. Rowe Price Investment /
/Services, Inc., Member NASD/SIPC./
INVESTMENT INFORMATION
----------------------------------------------------------
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information in addition to account statements. Most of this information is also
available on our Web site at www.troweprice.com.
Shareholder Reports
Fund managers' reviews of their strategies and performance. If several members
of a household own the same fund, only one fund report is mailed to that
address. To receive additional copies, please call Shareholder Services or write
to us at 100 East Pratt Street, Baltimore, Maryland 21202.
The T. Rowe Price Report
A quarterly investment newsletter discussing markets and financial strategies.
<PAGE>
Performance Update
A 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 T. Rowe
Price Guide to International Investing, Managing Your Retirement Distribution,
Personal Strategy Planner, Retirees Financial Guide, Retirement Planning Kit,
and Tax Considerations for Investors.
<PAGE>
To help you achieve your financial goals, T. Rowe Price offers a wide range of
stock, bond, and money market investments, as well as convenient services and
informative reports.
For Mutual Fund or T. Rowe Price Brokerage Information
Investor Services
1-800-638-5660
For Existing Accounts
Shareholder Services
1-800-225-5132
For Yields, Prices, Account Information, or to Conduct Transactions
Tele*Access/(R)/
24 hours, 7 days 1-800-638-2587
Internet Address
www.troweprice.com
Plan Account Line
For retirement plan investors 1-800-401-3279
Walk-in
Investor Centers
101 East Lombard St. Baltimore, MD 21202
T. Rowe Price Financial Center 10090 Red Run Blvd. Owings Mills, MD 21117
Farragut Square 900 17th Street, N.W. Washington, D.C. 20006
ARCO Tower 31st Floor 515 South Flower St. Los Angeles, CA 90071
4200 West Cypress St. 10th Floor Tampa, FL 33607
Headquarters
100 East Pratt St. Baltimore, MD 21202
A Statement of Additional Information about the fund has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
prospectus. Further information about the fund's investments, including a review
of market conditions and the manager's recent strategies and their impact on
performance, is available in the annual and semiannual shareholder reports. To
obtain free copies of any of these documents, or for shareholder inquiries, call
1-800-638-5660.
Fund reports and Statements of Additional Information are also available from
the Securities and Exchange Commission by calling 1-800-SEC-0330 or by writing
the SEC's Public Reference Section, Washington, D.C. 20549-6009 (you will be
charged a duplicating fee); by visiting the SEC's public reference room; or by
consulting the SEC's Web site at www.sec.gov.
1940 Act File No. 811-2958
LOGO
C01-040 12/30/99
