T. Rowe Price International Stock Portfolio
Semiannual Report
June 30, 1996
Dear Investor
International stock markets and your fund made steady progress during the
first half of the year. Economic activity overseas was much more muted than in
the U.S. but, in Europe at least, this allowed further declines in interest
rates. In Japan the signs of recovery were widespread, but the pace was far
slower than previous recoveries. Southeast Asian markets came to life
following a long dull patch, and the markets of Latin America performed
strongly as confidence returned following the peso crisis 18 months ago. In
currency markets, the U.S. dollar was firm against both the yen and European
currencies.
Performance Review
As shown in the table, the return from the T. Rowe Price International Stock
Portfolio over the six-month period ended June 30 was strong in absolute terms
and was ahead of the unmanaged Morgan Stanley Capital International Europe,
Australia and Far East (EAFE) index. During this period, country weightings
against the index were moderately helpful, and stock selection added
significant value with our quality growth stocks performing well in a number
of markets.
Over the 12-month period, the fund's returns were well ahead of the EAFE
index. Stock selection again added value over this period, and the
underweighting in Japan helped relative returns as the Tokyo market fell
behind. An overweighting in the buoyant markets of Southeast Asia was also
positive, while the portfolio's Latin American positions performed strongly.
Performance Comparison
Periods Ended 6/30/96
_____________________
6 Months 12 Months
_________ _________
International Stock Portfolio 9.04% 16.71%
MSCI EAFE* 4.52 13.29
S&P 500 10.10 26.00
* Net of withholding taxes
Investment Review
Far East
In Japan the economy exploded in the second quarter. In common with other
developed countries, consumer spending is the largest component of the economy
and this sector finally showed some signs of life. Department store sales were
again positive after almost four years of decline. A year ago, when the yen
was at an all-time high, producer prices were in decline and there was serious
concern that a deflationary spiral could take hold. Today the yen is
significantly lower but the Bank of Japan is still able to pursue a supportive
monetary policy without any serious risk of inflation. The financial press has
been dominated by the debate over who should pay for the debts incurred by the
failed housing loan companies. The banks have already recognized large amounts
of their bad debts and have reported sharp losses in the fiscal year just
ended.
The stock market performed reasonably well in local currency terms but,
given the weakness of the yen, dollar returns were less compelling. Our
strategy in Tokyo was to avoid the banking sector (a large part of the index)
and to focus on international technology companies such as Kyocera, NEC, and
Canon.
In Southeast Asia, most stock markets have performed well since the
beginning of the year. A number of these markets traditionally rally at the
time of Chinese New Year, but there were also clear signs that U.S. investors
have returned following two years of underperformance compared with the U.S.
Most of the economies in the region showed high rates of growth but have still
managed to keep inflation and their balance of payments under reasonable
control. Valuations compared with the rest of the world began to look
reasonable again, and an added attraction for the U.S. investor was that many
of these currencies are linked to the strengthening U.S. dollar.
Market Performance
Six Months Ended 6/30/96
____________________________________
Local
Currency
In Local vs US In U.S.
Currency Dollars Dollars
____________________________________
Australia 1.23% 5.81% 7.11%
France 17.27 -5.01 11.40
Germany 11.44 -5.97 4.79
Hong Kong 12.80 -0.11 12.68
Italy 9.38 3.49 13.19
Japan 7.61 -5.95 1.20
Netherlands 19.18 -6.09 11.93
Norway 14.29 -2.75 11.15
Singapore -3.43 0.21 -3.22
Spain 20.87 -5.38 14.37
Sweden 15.20 -0.13 15.05
Switzerland 13.49 -8.07 4.33
United Kingdom 2.57 0.08 2.65
Source: Fame Investor
Malaysia was one of the best performers in the region, up 16% during the
past six months. Foreign investors had become excessively cautious about the
Malaysian economy last year, but following a surprisingly strong trade surplus
in December and increasing signs of an economic soft landing, they rushed back
in February. With its abundance of natural resources, stable politics, and
sensible economic policies, Malaysia remained a core part of our Southeast
Asian positions. Our holdings in United Engineers and Renong are well placed
to benefit from the current infrastructure spending boom.
The Hong Kong market also rallied strongly at the beginning of the year.
Sentiment was supported by a steady stream of positive factors, locally and in
China. Worthy of note were the buoyancy of Hong Kong's real estate market and
the first indications of a bottoming out in sluggish corporate earnings. An
interest rate cut in China, along with signs of a looser monetary policy,
coincided with a more favorable assessment of next year's transfer of Hong
Kong to China.
Not all markets in the region were so robust. South Korea has recently
been weak due to concern about a deterioration in the country's trade
position, but valuations are now starting to look more attractive. Singapore
declined with export growth affected by a worldwide slowdown in the
electronics industry. However, the Singapore economy continues to be very well
managed, and with interest rates staying low, our positions in property stocks
and bank stocks were able to make progress.
Europe
The broad picture in Europe was one of stagnant economic activity countered by
easier monetary policy from most of the central banks.
Germany would be typical here. For some time now the economy has been
suffering from high wage costs, rising taxes, and a strong currency; therefore
the recent moves by the Bundesbank to lower interest rates together with a
weaker deutschemark must be welcome news for the German manufacturing
industry. Given the preponderance of large cyclical and interest
rate-sensitive stocks, we remained underweight in this market but our
positions in the health care stocks Bayer and Rhoen Klinikum performed well.
We also recently added to an old favorite, Gehe, a pharmaceutical wholesaler.
Monetary easing in Germany was welcome news in France where the Chirac
administration was making better progress in tackling the country's large
budget deficit. The economy has also been depressed for some time, and a
combination of lower interest rates and a weak currency could provide a much
needed kick start. After a period of disappointing performance, the French
stock market rose strongly with growth stocks leading the way. We maintained
our overweight position; Eaux Cie Generale, a conglomerate based on water
services, LVMH, a leader in luxury goods, and supermarket chain Carrefour
remained core holdings.
The fund was also overweighted in the Netherlands, which continued to
perform well. Our optimism here was based on individual holdings, the bulk of
which are multinational companies, rather than on the fundamentals of the
Dutch economy. Publishers Elsevier and Wolters Kluwer led the market, but we
recently trimmed our positions here following a period of outstanding
performance. It is interesting to note that a number of our Dutch holdings are
parts of Anglo-Dutch combines in which we also invest through the U.K.-listed
entity. The Royal Dutch Shell Group is jointly owned by Royal Dutch Petroleum
in the Netherlands and Shell Transport & Trading in the U.K. Similarly, Reed
Elsevier is now an international publishing business which can be bought
through Reed International in London and Elsevier in Amsterdam. We owned all
four stocks in the portfolio, a useful reminder that market weightings are to
a significant extent a function of the relative attractiveness of individual
companies.
In the U.K. the economy has recently decelerated, reviving optimism that
interest rates can fall again. With sterling weakening against the dollar,
attention focused on the large multinationals that dominate the index. Our
core holdings Glaxo Wellcome and SmithKline Beecham are two of the world's
leading pharmaceutical companies, but we also own Grand Metropolitan, the
international beverage group, and Cable & Wireless, the telecommunications
company with important interests in the Far East.
CHART 1 - GEOGRAPHICAL DIVERSIFICATION PIE CHART
Turning to the smaller markets, in Italy both the market and the
currency performed well. Following the elections in April, the prime
minister-designate made encouraging statements about fiscal reform and
returning the lira to the European monetary system. Spain also performed well
following the election of a pro-business government, although the party failed
to win an outright majority. In Switzerland the overall market was dull in
dollar terms, but there was a strong performance from pharmaceutical companies
Ciba-Geigy and Sandoz, both holdings in the portfolio, which announced a
merger.
Latin America
The stock markets of Latin America have performed well since the beginning of
the year. In Brazil, a sharp decline in inflation combined with strong
economic growth boosted confidence and gave President Cardoso a high rating in
the opinion polls. This in turn will help him push through much-needed fiscal
reforms. With economic policy on track and the trade account in moderate
surplus, the currency remained steady with positive implications for both
inflation and interest rates.
Mexico has seen the first signs of economic recovery and, with the peso
now more stable, the stock market blazed ahead on increasing confidence that
interest rates can fall from here. Our overweighting in the region versus the
benchmark helped fund performance.
Investment Policy and Outlook
Our current investment policy for the fund is to maintain a neutral weighting
in Europe, an underweighting in Japan, and an overweighting in the smaller
markets of Southeast Asia and Latin America. This strategy is based on several
assumptions. In Europe we see a helpful mix of improving economies and falling
interest rates, and we can also find quality growth stocks with reasonable
valuations by world standards. In Japan, we expect the economic recovery to
continue, but our confidence is tempered by the high valuations in certain
areas of the market and a suspicion that interest rates have reached the
bottom of their cycle.
The overweighting of Southeast Asia assumes that this part of the world
will continue to see high rates of economic growth. Valuations are attractive
following a long period of dull market performance. In Latin America, we
remain optimistic about the long-term prospects. The portfolio remains well
diversified, and we believe that our preference for established growth
companies is appropriate given a background of muted economic activity.
This broad strategy has served the fund well recently and we believe it
will continue to do so in the future.
Respectfully submitted,
Martin G. Wade
President
July 26, 1996
Twenty-Five Largest Holdings
June 30, 1996
Percent of
Company Net Assets
___________________________________ ___________
Wolters Kluwer, Netherlands 2.0%
Elsevier, Netherlands 1.7
Royal Dutch Petroleum, Netherlands 1.6
Telecomunicacoes Brasileiras, Brazil 1.2
National Westminster Bank, United Kingdom 1.1
SmithKline Beecham, United Kingdom 1.1
Eaux Cie Generale, France 1.1
Reed International, United Kingdom 1.0
Astra, Sweden 1.0
ABB, Sweden 0.9
Gehe, Germany 0.9
Mitsubishi Heavy Industries, Japan 0.9
Kyocera, Japan 0.9
Nestle, Switzerland 0.9
Roche Holdings, Switzerland 0.9
Canon, Japan 0.8
Shell Transport & Trading, United Kingdom 0.8
Hong Kong Land Holdings, Hong Kong 0.8
Norsk Hydro, Norway 0.8
Mitsui Fudosan, Japan 0.7
Nippon Denso, Japan 0.7
Technology Resources Industries, Malaysia 0.7
NEC, Japan 0.7
Pinault Printemps, France 0.7
Sumitomo Electric, Japan 0.7
______________________________________________________
Total 24.6%
Industry Diversification
June 30, 1996
Percent of
Net Assets
___________
Services 25.6%
Finance 16.7
Consumer Goods 15.9
Capital Equipment 14.0
Energy 10.5
Materials 7.9
Multi-Industry 3.7
Miscellaneous 0.1
Reserves 5.6
_______________________________________________________
Net Assets 100.0%
Security Classification
June 30, 1996
Percent Market
of Net Cost Value
Percent of Net Assets Assets (000) (000)
______________________ __________ __________ __________
Common Stocks, Rights,
and Warrants 91.4% $115,470 $123,104
Preferred Stocks 3.0 3,328 4,042
Short-Term Investments 4.8 6,489 6,489
_______ _______ _______
Total Investments 99.2 125,287 133,635
Other Assets Less
Liabilities 0.8 1,105 1,105
_______________________________________________________________
Net Assets 100.0% $126,392 $134,740
Average Annual Compound Total Return
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Periods Ended June 30, 1996
Since Inception
1 Year 3/31/94
_______ ________________
16.71% 9.80%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase. Performance does not reflect insurance company contract and other
separate account charges. If these charges were deducted, performance would
have been lower.
CHART 2 - SEC LINE CHART
Statement of Net Assets
T. Rowe Price International Stock Portfolio / June 30, 1996 (Unaudited)
(value in thousands)
Value
ARGENTINA - 0.6%
COMMON STOCKS
3,236 shs Banco de Galicia
Buenos Aires (Class B)
ADR (USD) . . . . . . . $ 84
1,844 Banco Frances del Rio
ADR (USD). . . . . . . . 53
353 Buenos Aires
Embotelladora (Class B)
ADR (USD) . . . . . . . 5
520 Enron Global Power &
Pipeline (USD) . . . . . 13
19,663 Naviera Perez (Class B) . . 129
5,630 * Sociedad Comercial del
Plata . . . . . . . . . 17
690 * Sociedad Comercial del
Plata (144a)
ADR (USD) . . . . . . . 21
3,260 Telecom Argentina Stet
(Class B) . . . . . . . 15
620 Telecom Argentina Stet
(Class B) ADR (USD). . . 29
9,660 Telefonica de Argentina
(Class B) ADR (USD). . . 286
1,200 Transportadora de Gas
del Sur ADR (USD) . . . 15
8,460 YPF Sociedad Anonima
(Class D) ADR (USD). . . 190
Total Argentina 857
AUSTRALIA - 1.7%
COMMON STOCKS
18,000 Amcor . . . . . . . . . . . 122
53,251 Australia Gas & Light . . . 221
23,352 Broken Hill Proprietary . . 323
35,153 Burns Philp & Company . . . 66
12,781 Coca Cola Amatil . . . . . 142
19,316 Howard Smith . . . . . . . 120
8,073 Lend Lease . . . . . . . . 124
12,000 National Australia Bank . . 111
27,032 News Corporation . . . . . 153
30,000 Publishing and
Broadcasting . . . . . . 132
36,600 * TNT . . . . . . . . . . . . 41
48,000 Tabcorp Holdings . . . . . 217
16,500 WMC . . . . . . . . . . . . 118
34,000 Westpac Banking . . . . . . 150
28,000 Woodside Petroleum . . . . 168
2,208
PREFERRED STOCKS
72,000 shs * Sydney Harbour Casino
Holdings . . . . . . . . $ 100
Total Australia 2,308
AUSTRIA - 0.1%
COMMON STOCKS
336 EVN . . . . . . . . . . . . 46
870 Flughafen Wien . . . . . . 60
106
PREFERRED STOCKS
360 Creditanstalt Bankverein . 18
Total Austria 124
BELGIUM - 1.0%
COMMON STOCKS
980 Generale Banque . . . . . . 345
2,390 Kredietbank . . . . . . . . 717
159 UCB . . . . . . . . . . . . 298
Total Belgium 1,360
BRAZIL - 3.2%
COMMON STOCKS
1,700 Brazil Fund (USD) . . . . . 41
1,982,750 Companhia Siderurgica
Nacional . . . . . . . . 51
530,110 Eletrobras . . . . . . . . 142
3,390 Eletrobras ADR (USD) . . . 46
2,130 * Pao de Acucar
GDR (USD) . . . . . . . 35
2,928,150 Telecomunicacoes
Brasileiras . . . . . . 172
58,539 Telecomunicacoes de
Sao Paulo . . . . . . . 10
610,000 Telecomunicacoes de
Rio de Janeiro . . . . . 69
46,580,000 White Martins . . . . . . . 65
631
PREFERRED STOCKS
35,823,857 Banco Bradesco . . . . . . 293
122,160 Banco Itau . . . . . . . . 50
346,128 Brahma . . . . . . . . . . 207
320,560 Brasmotor . . . . . . . . . 100
269,150 Cia Cimento Portland
Itau . . . . . . . . . . 76
830 shs * Cia Energetica de
Sao Paulo ADR,
sponsored (USD) . . . . $ 9
440 * Cia Energetica de Sao
Paulo ADS (USD). . . . . 5
3,928,428 Cia Energetica Minas
Gerais . . . . . . . . . 104
6,556 Cia Energetica Minas
Gerais ADR,
non voting (USD) . . . . 175
209,450 Cia Tecidos Norte
de Minas . . . . . . . . 83
2,292,180 Lojas American . . . . . . 45
500,400 Petrol Brasileiros . . . . 62
4,132,010 Telecomunicacoes
Brasileiras . . . . . . 288
16,897 Telecomunicacoes
Brasileiras ADR
(USD) . . . . . . . . . 1,176
17 Telecomunicacoes
Brasileiras (144a)
ADR (USD) . . . . . . . 1
648,000 Telecomunicacoes de
Minas Gerais . . . . . . 67
1,596,950 Telecomunicacoes de
Sao Paulo . . . . . . . 342
4,698,560 Unibanco . . . . . . . . . 127
159,570,460 Usiminas . . . . . . . . . 168
22,300 Usiminas ADS (USD) . . . . 237
3,615
Total Brazil 4,246
CANADA - 0.2%
COMMON STOCKS
8,630 Alcan Aluminum . . . . . . 263
2,840 Royal Bank of Canada . . . 68
Total Canada 331
CHILE - 0.6%
COMMON STOCKS
141 AFP Providia ADR
(USD) . . . . . . . . . 3
2,440 Chile Fund (USD) . . . . . 60
1,980 Chilectra (144a) ADR
(USD) . . . . . . . . . 110
2,580 Chilgener ADS (USD) . . . . 62
888 Cia de Telecomunicaciones
de Chile ADR (USD) . . . 87
2,070 Compania Cervecerias
Unidas ADS (USD) . . . . 49
6,182 shs Empresa Nacional de
Electric ADS (USD) . . . $ 133
4,826 Enersis ADS (USD) . . . . . 149
18,990 Five Arrows Chile
Investment Trust
(USD) . . . . . . . . . 54
2,120 Genesis Chile Fund
(USD) . . . . . . . . . 88
Total Chile 795
CHINA - 0.5%
COMMON STOCKS
20,500 * Huaneng Power
International (Class N)
ADR (USD) . . . . . . . 367
705,000 Shanghai Petrochemical
(Class H) (HKD) . . . . 200
432,000 Yizheng Chemical Fibre
(Class H) (HKD) . . . . 95
Total China 662
CZECH REPUBLIC - 0.0%
COMMON STOCKS
390 * SPT Telecom . . . . . . . . 48
Total Czech Republic 48
DENMARK - 0.2%
COMMON STOCKS
2,430 Den Danske Bank . . . . . . 163
520 Tele Danmark (Class B) . . 26
2,200 Unidanmark (Class A) . . . 102
Total Denmark 291
FINLAND - 0.2%
COMMON STOCKS
5,680 Nokia (Class A) . . . . . . 210
Total Finland 210
FRANCE - 8.1%
COMMON STOCKS
800 AXA . . . . . . . . . . . . 44
1,825 Accor . . . . . . . . . . . 256
1,410 Alcatel Alsthom . . . . . . 123
3,445 shs Assurances Generales
de France . . . . . . . $ 93
1,140 Canal Plus . . . . . . . . 279
1,400 Carrefour . . . . . . . . . 785
995 * Carrefour, rights . . . . . 275
638 Castorama Dubois . . . . . 126
987 Chargeurs . . . . . . . . . 276
4,120 Cie de St. Gobain . . . . . 552
3,229 Credit Local de France . . 263
12,730 Eaux Cie Generale . . . . . 1,423
2,060 Ecco . . . . . . . . . . . 519
5,750 Elf Aquitaine . . . . . . . 423
1,500 GTM Entrepose . . . . . . . 97
1,518 Guilbert . . . . . . . . . 221
1,410 Havas . . . . . . . . . . . 116
88 Hermes International . . . 23
440 L'Oreal . . . . . . . . . . 146
3,485 LVMH . . . . . . . . . . . 827
3,180 Lapeyre . . . . . . . . . . 186
480 Legrand . . . . . . . . . . 86
2,720 Pinault Printemps . . . . . 952
1,622 Primagaz . . . . . . . . . 180
37 * Primagaz, warrants,
exp. 6/30/98 . . . . . . 1
380 Promodes . . . . . . . . . 110
860 Rexel . . . . . . . . . . . 238
1,996 Sanofi . . . . . . . . . . 150
5,130 * Schneider . . . . . . . . . 269
620 Societe Generale . . . . . 68
1,040 Sodexho . . . . . . . . . . 462
6,600 Television Francaise . . . 755
7,560 Total (Class B) . . . . . . 561
Total France 10,885
GERMANY - 4.1%
COMMON STOCKS
263 Allianz Holdings . . . . . 458
122 Altana . . . . . . . . . . 94
24,300 Bayer . . . . . . . . . . . 861
420 Bilfinger & Berger . . . . 177
256 Buderus . . . . . . . . . . 109
5,990 Deutsche Bank . . . . . . . 285
1,808 Gehe . . . . . . . . . . . 1,215
4,700 Hoechst . . . . . . . . . . 160
690 Hornbach Baumarkt . . . . . 31
660 Mannesmann . . . . . . . . 228
1,493 Praktiker . . . . . . . . . 39
1,590 Rhoen Klinikum . . . . . . 207
860 Sap . . . . . . . . . . . . 128
2,399 Schering . . . . . . . . . 174
3,980 Siemens . . . . . . . . . . 213
13,160 shs Veba . . . . . . . . . . . $ 700
160 * Veba, warrants,
exp. 4/06/98 . . . . . . 46
266 Volkswagen . . . . . . . . 100
80 * Volkswagen International
Finance, warrants,
exp. 10/27/98 . . . . . 9
5,234
PREFERRED STOCKS
1,562 Fielmann . . . . . . . . . 75
2,130 Hornbach . . . . . . . . . 183
107 Krones . . . . . . . . . . 41
299
Total Germany 5,533
HONG KONG - 4.8%
COMMON STOCKS
138,000 Cathay Pacific Airways . . 253
81,000 Dao Heng Bank Group . . . . 313
481,876 First Pacific . . . . . . . 741
366,000 Guangdong Investment . . . 232
1,267,000 Guangzhou Investment . . . 319
105,000 Guoco Group . . . . . . . . 501
474,127 Hong Kong Land
Holdings (USD) . . . . . 1,067
982,000 Hopewell Holdings . . . . . 533
105,000 Hutchison Whampoa . . . . . 661
144,796 New World Development . . . 671
60,000 Swire Pacific (Class A) . . 513
180,000 Wharf Holdings . . . . . . 644
Total Hong Kong 6,448
ITALY - 2.0%
COMMON STOCKS
21,109 Assicurazioni Generali . . 487
132,170 Banca Fideuram . . . . . . 287
33,000 ENI . . . . . . . . . . . . 165
7,031 * Finanziaria Autogrill . . . 8
12,700 IMI . . . . . . . . . . . . 106
3,030 Industrie Natuzzi
ADR (USD) . . . . . . . 155
33,500 Istituto Nazionale delle
Assicurazioni . . . . . 50
32,000 Italgas . . . . . . . . . . 120
12,030 Mediolanum . . . . . . . . 120
1,100 RAS . . . . . . . . . . . . 11
9,000 Rinascente . . . . . . . . 65
450 * Rinascente, warrants,
exp. 11/30/99 . . . . . 0
14,571 shs Sasib, savings shares . . . $ 29
98,900 Stet . . . . . . . . . . . 335
43,000 Stet, savings shares . . . 113
90,378 Telecom Italia . . . . . . 194
174,784 Telecom Italia Mobile . . . 391
31,846 Telecom Italia Mobile,
savings shares . . . . . 43
4,740 * Unicem . . . . . . . . . . 35
Total Italy 2,714
JAPAN - 23.6%
COMMON STOCKS
2,200 Advantest . . . . . . . . . 87
20,000 Alps Electric . . . . . . . 243
46,000 Amada . . . . . . . . . . . 496
54,000 Canon . . . . . . . . . . . 1,126
29,000 Citizen Watch . . . . . . . 242
65 DDI . . . . . . . . . . . . 568
8,000 Daifuku . . . . . . . . . . 123
41,000 Daiichi Pharmaceutical . . 633
40,000 DaiNippon Screen
Manufacturing . . . . . 357
52,000 Daiwa House . . . . . . . . 808
139 East Japan Railway . . . . 731
11,000 Fanuc . . . . . . . . . . . 438
70,000 Hitachi . . . . . . . . . . 653
60,000 Hitachi Zosen . . . . . . . 341
5,000 Honda Motor . . . . . . . . 130
21,000 Inax . . . . . . . . . . . 209
23,000 * Ishihara Sangyo Kaisha . . 92
15,000 Ito-Yokado . . . . . . . . 907
9,000 Kao . . . . . . . . . . . . 122
6,000 Kawada Industries . . . . . 54
21,000 Kokuyo . . . . . . . . . . 582
57,000 Komatsu . . . . . . . . . . 563
17,000 Komori . . . . . . . . . . 435
40,000 Kumagai Gumi . . . . . . . 161
43,000 Kuraray . . . . . . . . . . 484
17,000 Kyocera . . . . . . . . . . 1,205
28,000 Makita . . . . . . . . . . 456
32,000 Marui . . . . . . . . . . . 711
47,000 Matsushita Electric
Industrial . . . . . . . 877
28,000 Mitsubishi . . . . . . . . 369
139,000 Mitsubishi Heavy
Industries . . . . . . . 1,211
25,000 Mitsubishi Paper Mills . . 157
72,000 Mitsui Fudosan . . . . . . 974
20,000 Mitsui Petrochemical
Industries . . . . . . . 161
18,000 Murata Manufacturing . . . 683
90,000 shs NEC . . . . . . . . . . . . $ 979
12,000 National House
Industrial . . . . . . . 188
46,000 Nippon Denso . . . . . . . 1,001
9,000 Nippon Hodo . . . . . . . . 153
226,000 Nippon Steel . . . . . . . 777
60 Nippon Telephone &
Telecom . . . . . . . . 445
46,000 Nomura Securities . . . . . 900
23,000 Pioneer Electronic . . . . 549
4,000 Sangetsu . . . . . . . . . 107
34,000 Sankyo . . . . . . . . . . 883
6,000 Sega Enterprises . . . . . 281
48,000 Sekisui Chemical . . . . . 588
33,000 Sekisui House . . . . . . . 377
5,000 Seven Eleven Japan . . . . 320
45,000 Sharp . . . . . . . . . . . 790
27,900 Shin-Etsu Chemical . . . . 536
12,000 Sony . . . . . . . . . . . 791
70,000 Sumitomo . . . . . . . . . 623
66,000 Sumitomo Electric . . . . . 947
23,000 Sumitomo Forestry . . . . . 343
12,000 TDK . . . . . . . . . . . . 718
86,000 Teijin . . . . . . . . . . 468
20,000 Tokio Marine & Fire
Insurance . . . . . . . 267
7,000 Tokyo Electronics . . . . . 204
20,000 Tokyo Steel
Manufacturing . . . . . 393
33,000 Toppan Printing . . . . . . 483
6,000 Uny . . . . . . . . . . . . 119
8,000 Yurtec . . . . . . . . . . 141
Total Japan 31,760
MALAYSIA - 3.4%
COMMON STOCKS
346,000 Affin Holdings . . . . . . 811
38,200 * Affin Holdings, warrants,
exp. 11/15/99 . . . . . 37
117,000 Berjaya Sports Toto . . . . 387
39,000 Commerce Asset
Holdings . . . . . . . . 238
211,000 MBF Capital . . . . . . . . 291
303,000 Multi-Purpose Holdings . . 488
227,000 Renong . . . . . . . . . . 362
17,125 * Renong, warrants,
exp. 3/31/01 . . . . . . 8
79,000 Tanjong . . . . . . . . . . 298
281,000 * Technology Resources
Industries . . . . . . . 980
99,000 United Engineers . . . . . 687
4,587
PREFERRED STOCKS
27,400 shs * Renong, cv. loan stock,
4.00%, 2/28/01 . . . . . $ 10
Total Malaysia 4,597
MEXICO - 1.8%
COMMON STOCKS
82,767 Cemex (Class B) . . . . . . 321
47,530 Cemex ADS (USD) . . . . . . 339
11,494 Cemex (144a) ADS
(USD) . . . . . . . . . 82
222,466 * Cifra (Class B)
ADR (USD) . . . . . . . 313
19,149 Fomentos Economico
Mexicano (Class B) . . . 54
36,197 * Gruma (Class B) . . . . . . 167
29,084 * Grupo Embotellador de
Mexico . . . . . . . . . 51
48,455 * Grupo Financiero
Banamex (Class B) . . . 101
1,486 * Grupo Financiero
Banamex (Class L) . . . 3
607 * Grupo Financiero
Bancomer (Class L) . . . 0
820 * Grupo Financiero
Bancomer (Class B)
GDS (USD). . . . . . . . 7
95,010 Grupo Industrial Maseca
(Class B) . . . . . . . 99
20,014 Grupo Modelo (Class C). . . 94
3,466 * Grupo Televisa GDR
(USD) . . . . . . . . . 107
6,582 Kimberly-Clark Mexico
(Class A) . . . . . . . 120
4,360 Panamerican Beverages
(Class A) ADR (USD). . . 195
12,866 Telefonos de Mexico
(Class L) ADS (USD). . . 431
Total Mexico 2,484
NETHERLANDS - 9.2%
COMMON STOCKS
11,386 ABN Amro Holdings . . . . . 612
7,040 Ahold . . . . . . . . . . . 382
356 Akzo Nobel . . . . . . . . 43
15,016 CSM . . . . . . . . . . . . 720
151,718 Elsevier . . . . . . . . . 2,304
14,720 Fortis Amev . . . . . . . . 422
2,490 Hagemeyer . . . . . . . . . 178
29,815 ING Groep . . . . . . . . . 890
4,634 shs Koninklijke PTT
Nederland . . . . . . . $ 175
2,000 Nutricia . . . . . . . . . 212
2,750 Otra . . . . . . . . . . . 63
14,621 Polygram . . . . . . . . . 864
14,340 Royal Dutch Petroleum . . . 2,216
4,610 Unilever . . . . . . . . . 668
23,425 Wolters Kluwer . . . . . . 2,663
Total Netherlands 12,412
NEW ZEALAND - 0.5%
COMMON STOCKS
13,000 Air New Zealand
(Class B) . . . . . . . 42
46,000 Carter Holt Harvey . . . . 105
18,000 Fernz . . . . . . . . . . . 54
5,750 * Fletcher Challenge
Building . . . . . . . . 11
5,750 * Fletcher Challenge
Energy . . . . . . . . . 13
72,702 Fletcher Challenge Forests
Division . . . . . . . . 91
11,500 * Fletcher Challenge Paper. . 22
77,000 Telecom Corporation of
New Zealand . . . . . . 324
Total New Zealand 662
NORWAY - 1.4%
COMMON STOCKS
2,310 Bergesen (Class A) . . . . 48
21,487 Norsk Hydro . . . . . . . . 1,053
13,780 Orkla (Class A) . . . . . . 726
3,450 Saga Petroleum
(Class B) . . . . . . . 47
Total Norway 1,874
PERU - 0.0%
COMMON STOCKS
7,030 Telefonica de Peru
(Class B) . . . . . . . 14
Total Peru 14
PORTUGAL - 0.6%
COMMON STOCKS
8,420 Jeronimo Martins . . . . . 743
Total Portugal 743
SINGAPORE - 2.2%
COMMON STOCKS
63,000 shs DBS Land . . . . . . . . . $ 216
19,000 Development Bank of
Singapore . . . . . . . 237
24,000 Far East Levingston
Shipbuilding . . . . . . 133
9,200 Fraser & Neave . . . . . . 95
7,000 Jurong Shipyard . . . . . . 35
12,000 Keppel . . . . . . . . . . 100
27,000 Neptune Orient Lines . . . 28
74,000 Overseas Union Bank . . . . 509
10,000 Sembawang . . . . . . . . . 50
5,000 Singapore Airlines . . . . 53
68,000 Singapore Land . . . . . . 460
14,600 Singapore Press . . . . . . 287
97,000 United Industrial . . . . . 99
59,480 United Overseas Bank . . . 569
10,400 * United Overseas Bank,
warrants, exp. 6/17/97 . 41
Total Singapore 2,912
SOUTH KOREA - 0.6%
COMMON STOCKS
1,500 Cho Hung Bank . . . . . . . 18
5,000 Hanil Securities . . . . . 62
6,600 Korea Electric Power . . . 267
1,200 Samsung Electronic . . . . 101
301 Samsung Electronic, new . . 24
360 * Samsung Electronic
GDR (USD) . . . . . . . 7
315 Samsung Electronic
GDS (USD) . . . . . . . 13
1,197 Samsung Electronic GDS,
1/2 non voting (USD) . . 29
1,048 * Samsung Electronic GDS,
1/2 voting (USD) . . . . 54
35 Samsung Fire & Marine
Insurance . . . . . . . 25
7,000 * Seoul Bank . . . . . . . . 52
1,890 Shinhan Bank . . . . . . . 44
3,000 Yukong . . . . . . . . . . 88
Total South Korea 784
SPAIN - 2.5%
COMMON STOCKS
1,649 Aguas de Barcelona . . . . 61
4,665 Argentaria Banca de
Espana . . . . . . . . . 204
2,200 Banco Popular Espanol . . . 393
7,778 Banco Santander . . . . . . 363
6,417 shs Centros Comerciales
Pryca . . . . . . . . . $ 160
2,470 Continente Central . . . . 59
13,150 Empresa Nacional de
Electricidad . . . . . . 821
333 Fomento de
Construcciones y
Contra . . . . . . . . . 28
2,124 Gas Natural . . . . . . . . 446
30,420 Iberdrola . . . . . . . . . 312
15,311 Repsol . . . . . . . . . . 533
90 Repsol ADR (USD) . . . . . 3
Total Spain 3,383
SWEDEN - 2.4%
COMMON STOCKS
2,340 ABB (Class A) . . . . . . . 249
30,950 Astra (Class B) . . . . . . 1,351
13,410 Atlas Copco (Class B) . . . 250
9,630 Electrolux (Class B) . . . 485
2,500 Esselte (Class B) . . . . . 51
3,690 Hennes & Mauritz
(Class B) . . . . . . . 343
1,930 Sandvik (Class A) . . . . . 44
14,170 Sandvik (Class B) . . . . . 328
2,670 Scribona (Class B) . . . . 28
8,280 Stora Kopparbergs
(Class B) . . . . . . . 109
Total Sweden 3,238
SWITZERLAND - 4.0%
COMMON STOCKS
782 ABB . . . . . . . . . . . . 968
2,590 CS Holding . . . . . . . . 246
523 Ciba-Geigy . . . . . . . . 638
1,047 Nestle . . . . . . . . . . 1,197
156 Roche Holdings . . . . . . 1,191
640 Sandoz . . . . . . . . . . 733
2,120 Schweizerischer
Bankverein . . . . . . . 419
Total Switzerland 5,392
THAILAND - 0.9%
COMMON STOCKS
9,600 Advanced Information
Service . . . . . . . . 150
29,100 Bangkok Bank . . . . . . . 394
19,400 Bank of Ayudhya . . . . . . 107
4,850 * Bank of Ayudhya, rights . . 14
2,500 Land & Houses . . . . . . . 32
2,000 Siam Cement . . . . . . . . 98
15,600 shs Siam Commercial Bank . . . $ 226
17,500 Thai Farmers Bank . . . . . 192
5,500 Total Access
Communications
(USD) . . . . . . . . . 47
Total Thailand 1,260
UNITED KINGDOM - 14.0%
COMMON STOCKS
104,000 Abbey National . . . . . . 872
58,466 Argos . . . . . . . . . . . 674
91,500 Argyll Group . . . . . . . 495
268,000 Asda Group . . . . . . . . 484
14,000 BAA . . . . . . . . . . . . 102
53,000 British Gas . . . . . . . . 147
41,000 British Petroleum . . . . . 357
98,000 Cable & Wireless . . . . . 648
74,860 Cadbury Schweppes . . . . . 592
134,000 Caradon . . . . . . . . . . 452
37,000 Coats Viyella . . . . . . . 100
38,000 Compass Group . . . . . . . 349
62,000 David S. Smith . . . . . . 263
12,100 East Midlands Electricity . 98
23,000 Electrocomponents . . . . . 136
8,000 GKN . . . . . . . . . . 123
64,000 Glaxo Wellcome . . . . . . 862
117,000 Grand Metropolitan . . . . 774
99,000 Guinness . . . . . . . . . 707
11,000 Heywood Williams
Group . . . . . . . . . 40
37,000 Hillsdown Holdings . . . . 101
30,000 John Laing (Class A) . . . 134
89,000 Kingfisher . . . . . . . . 897
63,000 Ladbroke Group . . . . . . 174
35,571 London Electricity . . . . 344
41,984 National Grid Group . . . . 111
161,000 National Westminster
Bank . . . . . . . . . . 1,540
44,000 RTZ . . . . . . . . . . . . 652
73,000 Rank Organisation . . . . . 561
84,000 Reed International . . . . 1,402
30,480 Rolls Royce . . . . . . . . 106
39,000 Sears . . . . . . . . . . . 59
74,500 Shell Transport & Trading . 1,093
139,000 SmithKline Beecham . . . . 1,484
73,000 T & N . . . . . . . . . . . 159
60,000 Tesco . . . . . . . . . . . 275
184,500 Tomkins . . . . . . . . . . 696
70,000 United Newspapers . . . . . 756
Total United Kingdom 18,819
SHORT-TERM INVESTMENTS - 4.8%
COMMERCIAL PAPER
$1,000,000 Ciesco L.P., 5.33%,
7/11/96 . . . . . . . . $ 996
1,000,000 Delaware Funding, 4(2),
5.29%, 7/23/96 . . . . 992
1,000,000 Ford Motor Credit, 5.32%,
7/22/96 . . . . . . . . 993
538,055 Investments in Commercial
Paper through a joint
account, 5.49-5.60%,
7/01/96 . . . . . . . . 538
1,000,000 Island Finance Puerto Rico,
5.32%, 7/12/96 . . . . . 991
1,000,000 Merrill Lynch & Co., 5.32%,
7/08/96 . . . . . . . . 995
1,000,000 Tasmanian Public Finance,
5.35%, 9/23/96 . . . . . 984
Total Short-Term Investments 6,489
Total Investments in Securities - 99.2% of
Net Assets (Cost $125,287) 133,635
Other Assets Less Liabilities . . . . . . . . 1,105
NET ASSETS . . . . . . . . . . . . $ 134,740
Net Assets Consist of:
Accumulated net investment income -
net of distributions . . . . . . . . . . . . $ 1,149
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . . . 549
Net unrealized gain (loss) . . . . . . . . . . 8,348
Paid-in-capital applicable to 11,074,840
shares of $0.0001 par value capital stock
outstanding; 1,000,000,000 shares
authorized . . . . . . . . . . . . 124,694
NET ASSETS . . . . . . . . . . . . $ 134,740
NET ASSET VALUE PER SHARE. . . . . . . . . . . $ 12.17
* Non-income producing
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors."
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at period-end amounts to
0.1% of net assets.
HKD Hong Kong dollar
USD U.S. dollar
Statement of Operations
T. Rowe Price International Stock Portfolio / Six Months Ended June 30, 1996
(Unaudited)
In thousands
INVESTMENT INCOME
Income
Dividend (net of foreign taxes of $197) . . . $ 1,374
Interest. . . . . . . . . . . . . . . . . . . 294
_________
Total income. . . . . . . . . . . . . . . . . 1,668
Expenses
Investment management and administrative. . . 504
_________
Net investment income. . . . . . . . . . . . . . 1,164
_________
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss)
Securities. . . . . . . . . . . . . . . . . . 619
Foreign currency transactions . . . . . . . . (33)
_________
Net realized gain (loss). . . . . . . . . . . 586
_________
Change in net unrealized gain or loss
Securities. . . . . . . . . . . . . . . . . . 6,142
Other assets and liabilities denominated
in foreign currencies . . . . . . . . . . . . 3
_________
Change in net unrealized gain or loss . . . . 6,145
_________
Net realized and unrealized gain (loss). . . . . 6,731
_________
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS . . . . . . . . . . . . . . . $ 7,895
_________
_________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price International Stock Portfolio (Unaudited)
In thousands
Six Months Ended Year Ended
June 30, 1996 December 31, 1995
________________ __________________
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment
income. . . . . . . . . . $ 1,164 $ 353
Net realized
gain (loss) . . . . . . . 586 138
Change in net unrealized
gain or loss. . . . . . . 6,145 2,413
__________ __________
Increase (decrease) in net
assets from operations. . 7,895 2,904
__________ __________
Distributions to shareholders
Net investment income . . (368) (52)
Net realized gain . . . . (157) -
__________ __________
Decrease in net assets
from distributions. . . . (525) (52)
__________ __________
Capital share transactions*
Shares sold . . . . . . . 82,399 41,948
Distributions
reinvested. . . . . . . . 525 52
Shares redeemed . . . . . (7,215) (2,286)
__________ __________
Increase (decrease) in
net assets from capital
share transactions. . . . 75,709 39,714
__________ __________
NET ASSETS
Increase (decrease)
during period. . . . . . . . 83,079 42,566
Beginning of period. . . . . 51,661 9,095
__________ __________
End of period. . . . . . . . $134,740 $ 51,661
__________ __________
__________ __________
*Share information
Shares sold . . . . . . . 7,053 3,906
Distributions reinvested. 46 5
Shares redeemed . . . . . (614) (214)
__________ __________
Increase (decrease) in
shares outstanding . . . . . 6,485 3,697
__________ __________
__________ __________
The accompanying notes are an integral part of these financial statements.
Notes To Financial Statements
T. Rowe Price International Stock Portfolio/June 30, 1996 (Unaudited)
Note 1 - Significant Accounting Policies
T. Rowe Price International Series, Inc. (the corporation) is registered under
the Investment Company Act of 1940. The International Stock Portfolio (the
fund), a diversified, open-end management investment company, is the sole
portfolio currently established by the corporation and commenced operations on
March 31, 1994. The shares of the fund are currently being offered only to
separate accounts of certain insurance companies as an investment medium for
both variable annuity contracts and variable life insurance policies.
Valuation Equity securities listed or regularly traded on a securities
exchange (including Nasdaq) are valued at the last quoted sales price at the
time the valuations are made. A security which is listed or traded on more
than one exchange is valued at the quotation on the exchange determined to be
the primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Short-term debt securities are valued at their cost which, when combined
with accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the
U.S. dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
Currency Translation Assets and liabilities are translated into U.S. dollars
at the prevailing exchange rate at the end of the reporting period. Purchases
and sales of securities and income and expenses are translated into U.S.
dollars at the prevailing exchange rate on the dates of such transactions. The
effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and
losses.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis. Dividend income and distributions
to shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles.
Note 2 - Investment Transactions
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Emerging Markets At June 30, 1996, the fund held investments in securities of
companies located in emerging markets. Future economic or political
developments could adversely affect the liquidity or value, or both, of such
securities.
Commercial Paper Joint Account The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
Securities Lending To earn additional income, the fund lends its securities
to approved brokers. At June 30, 1996, the market value of securities on loan
was $1,877,000, which was fully collateralized with cash. Although the risk is
mitigated by the collateral, the fund could experience a delay in recovering
its securities and a possible loss of income or value if the borrower fails to
return them.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $80,582,000 and $5,727,000, respectively, for the six
months ended June 30, 1996.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
At June 30, 1996, the aggregate cost of investments for federal income
tax and financial reporting purposes was $125,287,000, and net unrealized gain
aggregated $8,348,000, of which $10,314,000 related to appreciated investments
and $1,966,000 to depreciated investments.
Note 4 - Related Party Transactions
The fund is managed by Rowe Price-Fleming International, Inc. (the manager),
which is owned by T. Rowe Price Associates, Inc., Robert Fleming Holdings
Limited, and Jardine Fleming Holdings Limited under a joint venture agreement.
The investment management and administrative agreement between the fund
and the manager provides for an all-inclusive annual fee, computed daily and
paid monthly, equal to 1.05% of the fund's average daily net assets. Pursuant
to the agreement, investment management, shareholder servicing, transfer
agency, accounting, and custody services are provided to the fund, and
interest, taxes, brokerage commissions, and extraordinary expenses are paid
directly by the fund.
During the six months ended June 30, 1996, the fund, in the ordinary
course of business, paid commissions of $8,000 to, and placed security
purchase and sale orders aggregating $2,980,000 with, certain affiliates of
the manager in connection with the execution of various portfolio
transactions.
Financial Highlights
T. Rowe Price International Stock Portfolio (Unaudited)
For a share outstanding throughout each period
_______________________________________
Six Months Year 3/31/94
Ended Ended to
6/30/96 12/31/95 12/31/94
__________ _________ _________
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . . $ 11.26 $ 10.18 $ 10.00
_________ _________ _________
Investment activities
Net investment income . . 0.10 0.07 0.06
Net realized and unrealized
gain (loss) . . . . . . . 0.91 1.06 0.12
_________ _________ _________
Total from investment
activities. . . . . . . . 1.01 1.13 0.18
_________ _________ _________
Distributions
Net investment income . . (0.07) (0.05) -
Net realized gain . . . . (0.03) - -
_________ _________ _________
Total distributions . . . (0.10) (0.05) -
_________ _________ _________
NET ASSET VALUE,
END OF PERIOD. . . . . . . . $ 12.17 $ 11.26 $ 10.18
_________ _________ _________
_________ _________ _________
RATIOS/SUPPLEMENTAL DATA
Total return . . . . . . . . 9.0% 11.2% 1.8%
Ratio of expenses to
average net assets . . . . . 1.05%! 1.05% 1.05%!
Ratio of net investment
income to average
net assets . . . . . . . . . 2.43%! 1.47% 1.50%!
Portfolio turnover rate. . . 13.2%! 17.4% 4.6%!
Average commission
rate paid. . . . . . . . . . $ 0.0014 - -
Net assets,
end of period
(in thousands) . . . . . . . $ 134,740 $ 51,661 $ 9,095
! Annualized.
Chart 1- Geographic Diversification pie chart showing: Europe 50%, Japan 24%,
Far East 14%, Latin America 6%, Other and Reserves 6%.
Chart 2 - Performance Comparison line chart showing the cumulative growth of
$10,000 invested in the International Stock Portfolio from inception (3/31/94)
compared with $10,000 invested in a broad-based index over the same period.
