T. Rowe Price
International Stock Portfolio
Annual Report
December 31, 1996
Dear Investor
Despite a patch of volatility in December, most world stock markets
and your fund ended the year the way they began - on a positive
note. U.S. equities led the charge, which was followed to varying
degrees by international markets. European bourses generally kept
pace with the U.S. juggernaut. The markets of Asia and Latin
America turned in mixed performances but did produce winners,
notably Hong Kong and Brazil, while Japan's protracted slide ended
in another disappointing year.
PERFORMANCE REVIEW
As shown in the table, the returns from the T. Rowe Price
International Stock Portfolio over the 6- and 12-month periods
ended December 31, 1996, surpassed those of the unmanaged Morgan
Stanley Capital International Europe, Australia and Far East (EAFE)
Index. This was primarily due to stock selection and the fund's
underweighting in Japan, which plays a dominant role in the
benchmark. The fund also outperformed the average returns for
similar funds over both periods.
Performance Comparison
Periods Ended 12/31/96 6 Months 12 Months
_____________________________________________________________
International
Stock Portfolio 5.19% 14.70%
MSCI EAFE* 1.46 6.05
Lipper International
Funds Average 3.39 11.78
*Net of withholding taxes.
Much of the fund's strength in the past six months came from
country allocation relative to the EAFE index and the Lipper
benchmark, and the rest resulted from stock selection within
individual markets. Exposure to the markets of the Netherlands,
France, and Brazil helped performance, but our relatively small
Japanese holdings hampered overall results. The concepts of return
on equity and shareholder value, common in the U.S., are beginning
to take hold in Europe, notably in Germany. While these ideas have
yet to make much headway in the Far East, Asian markets are
beginning to reward well-run companies, which helped fund
performance.
INVESTMENT REVIEW
Europe
European markets generally performed well, although there was some
divergence. In U.S. dollar terms, Germany and France rose 8.91% and
9.35%, respectively, for the six-month period; the Netherlands was
up 14.82%, while the U.K. - the best of the major markets - rose
24.13%.
There was dissimilarity in the performance of currencies. Goals for
the European Monetary Union (EMU) crystallized somewhat, and the
program will now include the weaker currencies of Italy and Spain
by the year 2002. Italian bonds and the lira firmed on the news,
with long-term yields moving below those in the U.K. to just under
8%. However, the German mark and the French franc weakened slightly
against the U.S. dollar. The new agreement has caused us to revise
our overall currency assumptions going forward. Previously, we
expected the U.S. dollar to resume its longer-term downtrend
against the mark and its hard currency bloc after a short period of
reversal. We now believe there will be relatively little movement
between the U.S. and European currencies over the longer term.
Market Performance
Six Months Local Local Currency U.S.
Ended 12/31/96 Currency vs. U.S. Dollars Dollars
_________________________________________________________________
______
France 10.42% -0.97% 9.35%
Germany 10.26 -1.23 8.91
Hong Kong 18.01 0.07 18.10
Italy -0.60 0.82 0.21
Japan -11.52 -5.50 -16.38
Mexico 6.00 -3.73 2.04
Netherlands 16.35 -1.32 14.82
Singapore -4.63 0.91 -3.76
Sweden 23.42 -2.82 19.94
Switzerland 5.75 -6.78 -1.43
United Kingdom 12.70 10.14 24.13
Source: Fame Information Services, Inc., using MSCI Indices.
Great Britain continued to enjoy a mini-economic boom outside of
the EMU straitjacket. Consumer confidence was at an all-time high,
unemployment continued to fall, and retail sales showed signs of
improvement. In contrast to much of the rest of the world, the
Chancellor of the Exchequer found it necessary to raise interest
rates in an attempt to stay ahead of the inflationary curve.
The major economic theme across Continental markets was the
advancing debate over shareholder value. Hardly a day passed
without someone comparing the more shareholder-friendly models seen
in the U.S. and the U.K. to the bureaucratic models of many
Continental countries. This is likely to become a lasting theme,
with companies focusing on free cash flow, return on equity, and
improved shareholder relations. We hope this trend spreads to other
parts of the investment world.
On balance, our European stock selections contributed positively to
fund performance over the year. Major holdings include Royal Dutch
Petroleum, Wolters Kluwer, and Elsevier in the Netherlands,
SmithKline Beecham and National Westminster Bank in the U.K., and
Eaux Cie Generale in France.
Far East
Japan was again the major constraint on overall international
performance. During the past six months, Japanese stocks fell
11.52% in local currency terms, but the decline increased to 16.38%
for U.S. investors because of the weakness of the yen. Results were
even worse for smaller Japanese companies.
The key factors were disappointing earnings and a sluggish economy.
There were some pleasant earnings surprises from blue chips such as
Honda Motor, TDK, and Sony, but results were disappointing for most
companies. Japanese multinationals with internationally recognized
products performed well, while heavily regulated domestic firms did
poorly.
The backdrop to this earnings picture was a fragile economy that
showed signs of weakening further. While capital expenditure grew,
consumer restraint resulted in overall household spending falling
3% year-over-year in October and another 1% in November. Corporate
restructuring, the growing acceptance of early retirement packages,
and a lack of consumer confidence were just a few of the many
factors dampening demand, which is not likely to improve anytime
soon since the consumption tax will rise from 3% to 5% next April.
Widespread deregulation is required in Japan, which remains
dominated by a mountain of bureaucratic restrictions. The
government is likely to push for needed reforms during the next few
years. In the interim, the broader Japanese market could remain a
lackluster performer, so we are focusing on globally competitive
companies and a select number of domestic firms that appear well
positioned in this market.
Other Asian markets featuring companies with high returns on equity
and clean balance sheets performed best in what was a decidedly
mixed picture. On top of the list was Hong Kong, which rose 18%
over the last six months. An accelerating economy, subdued interest
rates, and a booming property market provided the catalyst. Long
lines to buy residential properties were again in evidence, a level
of enthusiasm not seen since 1993. It looks as though the economy
could continue to boom throughout 1997, even though Hong Kong
reverts to Chinese rule in July. China's economy is also improving
rapidly, with further easing of credit and improving financial
positions at state-owned enterprises.
Chart 1 - Geographic Diversification
Singapore was disappointing, falling 4.63% in local currency and
3.76% in dollar terms during the last six months. The economies of
both Singapore and Malaysia should improve through 1997 as the
global electronics cycle picks up again. The markets in Korea and
Thailand fell heavily. Korea is being squeezed by increased
competition from Japan because of the weak yen and Japan's broadly
similar industrial structure. Thailand suffered from falling
exports in its over-leveraged economy, which has led to concern
about the health of the banking system. Nevertheless, we believe
the prospects for the region should improve throughout the year.
Latin America
Latin American markets turned in mixed results. Brazil returned
10.97% in dollar terms during the last six months. In contrast,
Mexico rose just 2% and the Chilean market was worse, down 15%.
As ever, it is impossible to view Latin America as a homogeneous
bloc. Inflation continued to edge down in Brazil to an annualized
rate of about 11% from more than 20% at the start of the year. Part
of this improvement was a result of higher interest rates, which
were put in place to slow the rapid expansion of credit-driven
sales and a deterioration in the trade balance exacerbated by
rising imports. However, despite the modest trade worries, there
was further progress in needed fiscal and Social Security reforms.
The longer-term potential of Brazil finally seems closer to being
realized. Our largest holding in this market is Telecomunicacoes
Brasileiras.
In Mexico, although the inflation picture also improved, all eyes
are fixed on the fragility of the banking system.
Sector Diversification
Percent of Percent of
Net Assets Net Assets
6/30/96 12/31/96
_________________________________________________________________
___
Services 25.6% 26.0%
Finance 16.7 16.3
Consumer Goods 15.9 15.5
Capital Equipment 14.0 12.7
Energy 10.5 10.1
Materials 7.9 7.8
Multi-Industry 3.7 3.8
Miscellaneous 0.1 0.1
Reserves 5.6 7.7
___________________________________________________________________
Total 100.0% 100.0%
While its longer-term survival is not in doubt, its continuing
weakness will likely curtail the pace of real loan growth and,
therefore, longer-term economic growth. Nevertheless, we remain
confident that the longer-term story remains intact following
recapitalization, tighter regulation, and enhanced capital
requirements. Mexican stocks look cheap by international standards.
Chile's long-term picture is still superior to most other markets
in the region, given its high savings rate and a history of good
economic management. However, the shorter-term picture is clouded
by overheating. A sharp rise in imports in October, coupled with a
weak copper price and sluggish exports, led to a negative trade
balance. As a result, the upward bias on interest rates is likely
to persist for a while.
INVESTMENT POLICY AND OUTLOOK
International stock valuations remain cheaper than those in the
U.S. Europe and Japan are both at earlier stages of their economic
cycles, and growth in the developing world is still superior to
most established economies. We believe international investors
could be rewarded as foreign companies start to approach the
superior returns on equity of U.S. firms. Moreover, we see few
signs of inflation anywhere and, therefore, expect interest rates
to remain relatively low.
International stocks produced respectable returns overall in 1996,
and we remain optimistic about their prospects in 1997. Low
interest rates, accelerating earnings growth, reasonable
valuations, and a greater awareness of shareholder value could
produce favorable results. Your fund will attempt to capture
returns in a broadly diversified fashion, focusing on companies and
markets that offer superior growth prospects at reasonable
valuations. The emphasis in the portfolio will continue to be a
fairly low weighting in Japan and higher concentrations in the
faster-growing regions. Many world economies are expanding faster
than the U.S., and we expect international markets to provide solid
opportunities for investors.
Respectfully submitted,
Martin G Wade
President
January 17, 1997
Portfolio Highlights
Twenty-Five Largest Holdings
Percent of
Net Assets
12/31/96
__________________________________________________________________
Royal Dutch Petroleum, Netherlands 2.0%
Wolters Kluwer, Netherlands 2.0
Elsevier, Netherlands 1.9
SmithKline Beecham, United Kingdom 1.5
National Westminster Bank, United Kingdom 1.5
Eaux Cie Generale, France 1.2
Telecomunicacoes Brasileiras, Brazil 1.2
Reed International, United Kingdom 1.2
Astra, Sweden 1.1
Novartis, Switzerland 1.1
Shell Transport & Trading, United Kingdom 1.0
Abbey National, United Kingdom 1.0
Roche Holdings, Switzerland 1.0
Carrefour, France 0.9
Mitsubishi Heavy Industries, Japan 0.9
Canon, Japan 0.9
Denso, Japan 0.9
NEC, Japan 0.9
ABB, Switzerland 0.9
Pinault Printemps, France 0.9
Norsk Hydro, Norway 0.8
ING Groep, Netherlands 0.8
Kyocera, Japan 0.8
Kingfisher, United Kingdom 0.8
Nestle, Switzerland 0.7
__________________________________________________________________
Total 27.9%
T. Rowe Price International Stock Portfolio
December 31, 1996
Performance Comparison
This chart shows the value of a hypothetical $10,000 investment in
the fund over the past 10 fiscal year periods or since inception
(for funds lacking 10-year records). The result is compared with a
broad-based average or index. The index return does not reflect
expenses, which have been deducted from the fund's return.
Chart 2 - International Stock Portfolio
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.
Since Inception
Periods Ended 12/31/96 1 YearInception Date
_________________________________________________________________
______
International Stock Portfolio 14.70% 9.94% 3/31/94
Investment return and principal value represent past performance
and will vary. Shares may be worth more or less at redemption than
at original purchase.
Total returns do not include charges imposed by your insurance
company's separate account. If these were included, performance
would have been lower.
Financial Highlights
T. Rowe Price International Stock Portfolio
For a share outstanding
throughout each period
_____________________________________
Year From 3/31/94
Ended to
12/31/96 12/31/95 12/31/94
NET ASSET VALUE
Beginning of period $ 11.26 $ 10.18 $ 10.00
Investment activities
Net investment income 0.09 0.07 0.06
Net realized and
unrealized gain (loss) 1.55 1.06 0.12
Total from
investment activities 1.64 1.13 0.18
Distributions
Net investment income (0.17) (0.05) -
Net realized gain (0.09) - -
Total distributions (0.26) (0.05) -
NET ASSET VALUE
End of period $ 12.64 $ 11.26 $ 10.18
____________________________________
Ratios/Supplemental Data
Total return 14.70% 11.18% 1.80%
Ratio of expenses to
average net assets 1.05% 1.05% 1.05%!
Ratio of net investment
income to average
net assets 1.22% 1.47% 1.50%!
Portfolio turnover rate 9.7% 17.4% 4.6%!
Average commission rate paid $ 0.0014 $ - $-
Net assets, end of period
(in thousands) $ 210,746 $ 51,661 $ 9,095
! Annualized.
The accompanying notes are an integral part of these financial
statements.
Statement of Net Assets
T. Rowe Price International Stock Portfolio
December 31, 1996
Shares/Par Value
In thousands
ARGENTINA 0.6%
Common Stocks 0.6%
Banco de Galicia Buenos Aires
(Class B)
ADR (USD) 6,040 $ 147
Banco Frances del Rio
ADR (USD) 5,458 150
Enron Global Power &
Pipeline (USD) 520 14
Naviera Perez (Class B) 53,386 375
Sociedad Comercial del Plata * 5,630 14
Sociedad Comercial del Plata
ADR (144a) (USD) * 690 18
Telecom Argentina Stet
(Class B) 3,260 14
Telecom Argentina Stet
(Class B) ADR (USD) 620 25
Telefonica de Argentina
(Class B) ADR (USD) 14,370 372
Transportadora de Gas del Sur
ADR (USD) 1,200 15
YPF Sociedad Anonima
(Class D)
ADR (USD) 6,789 171
Total Argentina (Cost $1,158) 1,315
AUSTRALIA 1.6%
Common Stocks 1.5%
Australia & New Zealand Bank
Group 28,000 176
Australia Gas & Light 64,251 366
Broken Hill Proprietary 27,352 390
Commonwealth Bank of
Australia,installment receipts 30,300 189
Howard Smith 14,316 118
Lend Lease 8,073 156
National Australia Bank 19,454 229
National Mutual Holdings* 64,000 96
News Corporation 68,399 361
Publishing and Broadcasting 30,000 146
Tabcorp Holdings 49,000 234
WMC 21,500 135
Westpac Bank 44,000 $ 250
Woodside Petroleum 43,000 314
3,160
Preferred Stocks 0.1%
Sydney Harbour Casino
Holdings * 117,000 180
180
Total Australia (Cost $2,905) 3,340
AUSTRIA 0.1%
Common Stocks 0.1%
Energie Versorgung Nieder 336 51
Flughafen Wien 870 44
Total Austria (Cost $97) 95
BELGIUM 0.9%
Common Stocks 0.9%
Dexia* 995 91
Generale de Banque 1,243 446
Generale de Banque, VVPR
Strip 113 0
Kredietbank 3,470 1,137
UCB 93 242
Total Belgium (Cost $1,661) 1,916
BRAZIL 3.1%
Common Stocks 0.4%
Brazil Fund (USD) 1,700 38
Companhia Siderurgica
Nacional 1,982,750 56
Eletrobras 851,220 305
Eletrobras ADR (USD) 3,390 60
Telecomunicacoes Brasileiras 4,904,150 352
Telecomunicacoes de
Sao Paulo* 58,539 13
White Martins 46,580,000 67
891
Preferred Stocks 2.7%
Banco Bradesco 47,298,985 343
Banco Itau 200,070 87
Brahma 560,158 306
Brasmotor 320,560 89
Cia Cimento Portland Itau 269,150 95
Cia Energetica de Sao Paulo
ADR, sponsored (USD) * 830 $ 10
Cia Energetica de Sao Paulo
ADS (USD) * 440 5
Cia Energetica Minas Gerais 7,050,428 240
Cia Energetica Minas Gerais
ADR, sponsored,non voting (USD) 7,656 259
Cia Tecidos Norte de Minas 209,450 67
Lojas Americanas 2,292,180 30
Pao de Acucar GDR (USD) 7,015 122
Petrol Brasileiros 1,276,245 203
Telecomunicacoes Brasileiras 4,796,499 369
Telecomunicacoes Brasileiras
ADR (USD) 24,346 1,863
Telecomunicacoes Brasileiras
ADR (144a) (USD) 17 1
Telecomunicacoes de Minas
Gerais 648,000 80
Telecomunicacoes de
Sao Paulo 2,076,950 450
Telecomunicacoes do Rio
de Janeiro* 610,000 77
Unibanco 8,968,560 293
Usiminas 267,977,460 273
Usiminas ADS (USD) 28,716 294
5,556
Total Brazil (Cost $5,377) 6,447
CANADA 0.3%
Common Stocks 0.3%
Alcan Aluminum 12,140 410
Royal Bank of Canada 4,030 142
Total Canada (Cost $471) 552
CHILE 0.4%
Common Stocks 0.4%
AFP Providia ADR (USD) 141 3
Chile Fund (USD) 2,440 51
Chilectra ADR (144a) (USD) 1,980 106
Chilgener ADS (USD) 2,580 54
Compania Cervecerias Unidas
ADS (USD) 2,070 33
Compania de Telecomunicaciones
de Chile ADR (USD) 1,248 $ 126
Empresa Nacional de
Electricidad ADS (USD) 7,842 122
Enersis ADS (USD) 4,826 134
Five Arrows Chile Investment
Trust (USD) 18,990 53
Genesis Chile Fund (USD) 2,120 78
Total Chile (Cost $821) 760
CHINA 0.4%
Common Stocks 0.4%
Huaneng Power International
(Class N) ADR (USD) * 20,500 471
Shanghai Petrochemical
(Class H) (HKD) 921,000 280
Yizheng Chemical Fibre
(Class H) (HKD) 592,000 144
Total China (Cost $800) 895
CZECH REPUBLIC 0.0%
Common Stocks 0.0%
SPT Telecom * 630 78
Total Czech Republic (Cost $71) 78
DENMARK 0.2%
Common Stocks 0.2%
Den Danske Bank 3,330 268
Tele Danmark (Class B) 520 29
Unidanmark (Class A) 2,200 114
Total Denmark (Cost $357) 411
FINLAND 0.2%
Common Stocks 0.2%
Nokia (Class A) 7,200 418
Total Finland (Cost $319) 418
FRANCE 8.5%
Common Stocks and Warrants 8.5%
AXA 3,421 218
Accor 2,375 $ 301
Alcatel Alsthom 4,430 356
Assurances Generales
de France 5,475 177
Canal Plus 2,110 466
Carrefour 2,947 1,917
Castorama Dubois 638 110
Chargeurs International* 987 49
Cie de St. Gobain 5,650 799
Credit Local de France,
bearer 2,820 246
Credit Local de France,
registered 409 36
Eaux Cie Generale 20,920 2,592
Elf Aquitaine 6,940 632
GTM Entrepose 2,040 94
Guilbert 2,368 463
Havas 1,410 99
L'Oreal 844 318
LVMH 5,335 1,490
Lapeyre 5,100 293
Legrand 1,910 325
Pathe* 1,147 276
Pinault Printemps 4,540 1,801
Primagaz 2,992 352
Primagaz, warrants, 6/30/98 * 37 1
Rexel 1,120 340
Sanofi 6,231 620
Schneider 7,290 337
Societe Generale 940 102
Sodexho 2,100 1,170
Television Francaise 6,720 642
Total (Class B) 15,308 1,245
Total France (Cost $15,298) 17,867
GERMANY 3.6%
Common Stocks and Warrants 3.4%
Allianz Holdings 407 740
Altana 122 95
Bayer 41,355 1,693
Bilfinger and Berger 5,910 217
Buderus 256 126
Deutsche Bank 3,808 179
Gehe 20,551 1,316
Hoechst 6,470 $ 303
Hornbach Baumarkt 690 22
Mannesmann 930 403
Praktiker 1,493 30
Rhoen Klinikum 3,430 367
SAP 1,060 144
Schering 1,767 148
Veba 21,490 1,243
Veba, warrants, 4/6/98 * 160 51
Volkswagen 356 148
Volkswagen International
Finance, warrants 10/27/98 * 80 12
7,237
Preferred Stocks 0.2%
Fielmann 1,562 49
Hornbach 2,130 152
Krones 107 39
SAP 1,058 148
388
Total Germany (Cost $6,920) 7,625
HONG KONG 4.6%
Common Stocks 4.6%
Cathay Pacific Airways 248,000 391
Dao Heng Bank Group 115,000 552
First Pacific 455,876 592
Guangdong Investment 402,000 387
Guangzhou Investment 819,000 392
Guoco Group 133,000 745
Hong Kong Land
Holdings (USD) 456,127 1,268
Hopewell Holdings 1,051,000 679
Hutchison Whampoa 164,000 1,288
New World Development 212,796 1,438
Swire Pacific (Class A) 88,000 839
Wharf Holdings 223,000 1,113
Total Hong Kong (Cost $8,053) 9,684
INDIA 0.2%
Common Stocks 0.2%
State Bank of India
GDR (USD) * 22,800 410
Total India (Cost $323) 410
INDONESIA 0.0%
Common Stocks 0.0%
Telekom Indonesia (Class B) 44,000 $ 76
Total Indonesia (Cost $70) 76
ITALY 1.8%
Common Stocks and Warrants 1.8%
Banca Fideuram 88,920 195
ENI 102,244 526
Finanziaria Autogrill * 7,031 7
Gucci Group (USD) 1,390 88
IMI 30,710 262
Industrie Natuzzi ADR (USD) 10,060 234
Istituto Nazionale delle
Assicurazioni 33,500 44
Italgas 41,000 172
Mediolanum * 12,030 114
Rinascente 14,000 80
Rinascente, warrants, 11/30/99 * 450 0
Stet 157,900 718
Stet, savings shares 57,000 192
Telecom Italia 132,378 344
Telecom Italia Mobile 281,784 714
Telecom Italia Mobile,
savings shares 52,846 77
Unicem * 4,740 31
Total Italy (Cost $3,120) 3,798
JAPAN 20.1%
Common Stocks 20.1%
Advantest 3,200 150
Alps Electric 23,000 250
Amada 55,000 427
Canon 84,000 1,857
Citizen Watch 29,000 208
DDI 89 589
Daifuku 8,000 101
Daiichi Pharmaceutical 56,000 899
DaiNippon Screen
Manufacturing 51,000 377
Daiwa House 71,000 914
Denso 76,000 1,831
East Japan Railway 187 841
Fanuc 14,600 468
Hitachi 96,000 $ 895
Hitachi Zosen 92,000 358
Honda Motor 5,000 143
Inax 21,000 156
Ishihara Sangyo Kaisha * 23,000 56
Ito-Yokado 22,000 957
Kao 24,000 280
Kawada Industries 6,000 37
Kokuyo 27,000 667
Komatsu 72,000 591
Komori 24,000 510
Kumagai Gumi 40,000 99
Kuraray 64,000 591
Kyocera 27,000 1,683
Makita 37,000 518
Marui 48,000 866
Matsushita Electric
Industrial 76,000 1,240
Mitsubishi 34,000 352
Mitsubishi Heavy
Industries 237,000 1,883
Mitsubishi Paper Mills 25,000 98
Mitsui Fudosan 121,000 1,212
Mitsui Petrochemical
Industries 20,000 104
Murata Manufacturing 27,000 898
NEC 150,000 1,813
National House Industrial 12,000 160
Nippon Hodo 11,000 127
Nippon Steel 334,000 986
Nippon Telephone
& Telecom 73 553
Nomura Securities 74,000 1,112
Pioneer Electronic 33,000 630
Sangetsu 4,000 84
Sankyo 54,000 1,529
Sega Enterprises 9,100 306
Sekisui Chemical 82,000 828
Sekisui House 53,000 540
Seven Eleven Japan 8,000 468
Sharp 70,000 997
Shin-Etsu Chemical 47,150 859
Shiseido 15,000 174
Sony 18,700 1,226
Sumitomo 109,000 859
Sumitomo Electric 110,000 $ 1,539
Sumitomo Forestry 33,000 402
TDK 19,000 1,239
Teijin 139,000 607
Tokio Marine & Fire
Insurance 24,000 226
Tokyo Electronics 11,000 337
Tokyo Steel Manufacturing 29,500 420
Toppan Printing 47,000 588
Uny 29,000 531
Yurtec 10,500 142
Total Japan (Cost $45,611) 42,388
MALAYSIA 3.0%
Common Stocks and Rights 3.0%
Affin Holdings 290,000 798
Berjaya Sports Toto 135,000 674
Commerce Asset Holdings 60,000 451
MBF Capital 211,000 343
Multi-Purpose Holdings 360,000 699
Multi-Purpose Holdings,
rights * 360,000 1
Renong 405,000 718
Resorts World 67,000 305
Tanjong 145,000 580
Technology Resources
Industries * 121,000 239
Time Engineering 94,000 174
United Engineers 152,000 1,372
6,354
Preferred Stocks 0.0%
Renong, cv. loan stock,
4.00%, 5/21/01 * 27,400 11
11
Total Malaysia (Cost $5,504) 6,365
MEXICO 1.6%
Common Stocks 1.6%
Cemex (Class B) 82,767 323
Cemex ADS (USD) 47,530 339
Cemex ADS (144a) (USD) * 11,494 82
Cifra ADR (USD) * 272,674 320
Fomentos Economico
Mexicano (Class B) 19,149 66
Gruma (Class B) * 43,316 $ 264
Gruma ADR (USD) * 4,375 107
Grupo Financiero Banamex
(Class B) * 61,455 130
Grupo Financiero Banamex
(Class L) * 1,486 3
Grupo Financiero Bancomer
(Class L) * 607 0
Grupo Financiero Bancomer
GDS (USD) * 820 6
Grupo Industrial Maseca
(Class B) 153,010 194
Grupo Modelo (Class C) 33,014 192
Grupo Televisa GDR (USD) * 3,145 81
Kimberly-Clark Mexico
(Class A) 8,582 169
Panamerican Beverages
(Class A)
ADR (USD) 7,990 374
Telefonos de Mexico (Class L)
ADS (USD) 22,246 734
Total Mexico (Cost $3,258) 3,384
NETHERLANDS 9.9%
Common Stocks 9.9%
ABN Amro Holdings 16,026 1,043
Ahold 14,306 895
Akzo Nobel 356 49
CSM 14,811 824
Elsevier 233,388 3,947
Fortis Amev 20,220 709
Hagemeyer 3,300 264
ING Groep 47,745 1,720
Koninklijke PTT
Nederland 5,394 206
Nutricia 2,820 429
Otra 2,750 47
Polygram 23,471 1,196
Royal Dutch Petroleum 23,910 4,195
Unilever 7,200 1,274
Wolters Kluwer 30,930 4,111
Total Netherlands (Cost $17,660) 20,909
NEW ZEALAND 0.5%
Common Stocks 0.5%
Air New Zealand (Class B) 16,545 $ 45
Carter Holt Harvey 39,500 89
Fernz 22,000 75
Fletcher Challenge Building 38,750 119
Fletcher Challenge Energy 5,750 17
Fletcher Challenge Forests
Division 134,886 226
Fletcher Challenge Paper 11,500 24
Telecom Corporation of
New Zealand 95,000 485
Total New Zealand (Cost $957) 1,080
NORWAY 1.5%
Common Stocks 1.5%
Bergesen (Class A) 2,310 56
Norsk Hydro 32,337 1,736
Orkla (Class A) 18,980 1,317
Saga Petroleum (Class B) 5,930 92
Total Norway (Cost $2,533) 3,201
PANAMA 0.1%
Common Stocks 0.1%
Banco Latinoamericano de
Exportaciones
(Class E) (USD) 1,998 101
Total Panama (Cost $98) 101
PERU 0.0%
Common Stocks 0.0%
Telefonica del Peru (Class B) 7,030 13
Telefonica del Peru (Class B)
ADR (USD) 2,430 46
Total Peru (Cost $62) 59
PHILIPPINES 0.1%
Common Stocks 0.1%
Philippine National Bank 19,700 234
Total Philippines (Cost $306) 234
PORTUGAL 0.4%
Common Stocks and Rights 0.4%
Jeronimo Martins 8,420 $ 434
Jeronimo Martins,
baby shares * 5,612 270
Jeronimo Martins,
bonus rights * 8,420 142
Jeronimo Martins,
rights to units * 1,403 79
Total Portugal (Cost $661) 925
RUSSIA 0.0%
Common Stocks 0.0%
Gazprom ADR (USD) * 2,760 49
Total Russia (Cost $43) 49
SINGAPORE 2.2%
Common Stocks and Warrants 2.2%
City Developments 17,000 153
DBS Land 74,000 272
Development Bank of
Singapore 24,000 324
Far East Levingston
Shipbuilding 24,000 125
Fraser & Neave 32,200 331
Keppel 12,000 94
Overseas Union Bank 110,000 849
Singapore Airlines 5,000 46
Singapore Land 93,000 515
Singapore Press 38,600 761
United Industrial 97,000 82
United Overseas Bank 83,480 931
United Overseas Bank,
warrants, 6/17/97 * 10,400 37
Total Singapore (Cost $4,341) 4,520
SOUTH KOREA 0.5%
Common Stocks 0.5%
Cho Hung Bank 19,400 161
Hanil Bank 11,800 82
Hanil Securities* 7,000 51
Korea Electric Power 12,400 361
Samsung Electronic 3,770 225
Samsung Electronic, new 301 $ 16
Samsung Electronic
GDR (USD) * 360 4
Samsung Electronic
GDS (USD) * 315 8
Samsung Fire & Marine
Insurance 75 30
Seoul Bank * 5,000 25
Shinhan Bank 4,630 73
Yukong 5,608 107
Total South Korea (Cost $1,637) 1,143
SPAIN 2.4%
Common Stocks 2.4%
Aguas de Barcelona 1,667 69
Aguas de Barcelona, new* 23 1
Argentaria Banca de Espana 4,665 209
Banco Popular Espanol 3,010 591
Banco Santander 10,148 650
Centros Comerciales Pryca 6,417 136
Continente Central 2,470 51
Empresa Nacional de
Electricidad 15,027 1,070
Fomento de Construcciones
y Contra 333 31
Gas Natural 3,131 728
Iberdrola 41,640 590
Repsol 20,971 804
Repsol ADR (USD) 90 3
Telefonica de Espana 8,730 203
Total Spain (Cost $4,142) 5,136
SWEDEN 2.6%
Common Stocks 2.6%
ABB (Class A) 3,310 374
Astra (Class B) 47,590 2,296
Atlas Copco (Class B) 20,000 487
Electrolux (Class B) 12,180 707
Esselte (Class B) 2,500 55
Hennes & Mauritz (Class B) 5,460 756
Sandvik (Class A) 6,010 162
Sandvik (Class B) 19,090 518
Scribona (Class B) 2,670 30
Stora Kopparbergs (Class B) 10,560 144
Total Sweden (Cost $4,414) 5,529
SWITZERLAND 4.2%
Common Stocks 4.2%
ABB 1,152 $ 1,433
Adecco 3,177 797
CS Holding 3,270 336
Nestle 1,437 1,543
Novartis * 1,937 2,218
Roche Holdings 266 2,070
Schweizerischer Bankverein 2,780 529
Total Switzerland (Cost $8,376) 8,926
THAILAND 0.4%
Common Stocks 0.4%
Advanced Information Service 9,600 81
Bangkok Bank 33,900 328
Siam Cement 2,000 63
Siam Commercial Bank 17,600 128
Thai Farmers Bank 17,500 109
Total Access
Communications (USD) 5,500 38
Total Thailand (Cost $1,217) 747
UNITED KINGDOM 16.2%
Common Stocks 16.2%
Abbey National 159,000 2,084
Argos 84,466 1,112
Asda Group 339,000 714
British Gas 79,000 305
British Petroleum 62,000 744
Cable & Wireless 142,000 1,181
Cadbury Schweppes 93,860 792
Caradon 184,000 753
Coats Viyella 51,000 116
Compass Group 53,000 563
David S. Smith 93,000 497
East Midlands Electricity* 12,100 137
Electrocomponents 59,000 469
GKN 8,000 137
Glaxo Wellcome 94,000 1,527
Grand Metropolitan 168,000 1,324
Guinness 136,000 1,070
Heywood Williams Group 11,000 45
Hillsdown Holdings 37,000 127
John Laing (Class A) 30,000 144
Kingfisher 148,000 $ 1,608
Ladbroke Group 90,000 356
London Electricity 48,571 566
National Westminster Bank 271,000 3,185
RTZ 63,000 1,012
Rank Group 100,000 750
Reed International 135,000 2,556
Rolls Royce 30,480 135
Safeway 124,500 864
Sears 39,000 64
Shell Transport & Trading 124,500 2,152
SmithKline Beecham 235,000 3,259
T & N 123,000 366
Tesco 113,000 687
Tomkins 291,500 1,348
United Newspapers 121,000 1,445
Total United Kingdom (Cost $28,631) 34,194
VENEZUELA 0.1%
Common Stocks 0.1%
Compania Anonima Nacional
Telefonos de
Venezuela
ADR (USD) * 3,970 112
Total Venezuela (Cost $91) 112
SHORT-TERM INVESTMENTS 5.8%
Commercial Paper 5.8%
Countrywide Funding,
6.20%, 1/17/97 $1,000,000 997
Dover, 4(2) 5.45%, 1/23/97 1,000,000 997
Ford Motor Credit,
6.10%, 1/17/97 3,000,000 2,992
Indosuez North America,
5.37%, 3/6/97 $2,000,000 $ 1,981
Kingdom of Sweden,
5.40%, 2/3/97 1,000,000 995
Korea Development Bank,
5.34%, 2/27/97 2,000,000 1,983
Tasmanian Public Finance,
5.40%, 6/20/97 2,000,000 1,949
Investments in Commercial
Paper through a
joint account,
6.75-7.10%, 1/2/97 215,989 216
Total Short-Term Investments
(Cost $12,110) 12,110
Total Investments in Securities
98.1% of Net Assets (Cost $189,473) $206,799
Other Assets Less Liabilities 3,947
NET ASSETS $210,746
___________
Net Assets Consist of:
Accumulated net realized gain/loss -
net of distributions $ 107
Net unrealized gain (loss) 17,326
Paid-in-capital applicable to 16,676,941
shares of $0.0001 par value capital stock
outstanding; 1,000,000,000 shares
authorized 193,313
NET ASSETS $210,746
___________
NET ASSET VALUE PER SHARE $ 12.64
___________
* 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 year-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
In thousands
Year
Ended
12/31/96
Investment Income
Income
Dividend (net of foreign taxes of $ 343) $ 2,355
Interest 627
Total income 2,982
Expenses
Investment management and administrative 1,378
Net investment income 1,604
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on
Securities 1,225
Foreign currency transactions (136)
Net realized gain (loss) 1,089
Change in net unrealized gain or loss on
Securities 15,121
Other assets and liabilities
denominated in foreign currencies 1
Change in net unrealized gain or loss 15,122
Net realized and unrealized gain (loss) 16,211
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 17,815
___________
The accompanying notes are an integral part of these financial
statements.
Statement of Changes in Net Assets
T. Rowe Price International Stock Portfolio
In thousands
Year
Ended
12/31/96 12/31/95
Increase (Decrease) in Net Assets
Operations
Net investment income $ 1,604 $ 353
Net realized gain (loss) 1,089 138
Change in net unrealized gain or loss 15,122 2,413
Increase (decrease) in net assets
from operations 17,815 2,904
Distributions to shareholders
Net investment income (1,993) (52)
Net realized gain (1,133) -
Decrease in net assets from distributions (3,126) (52)
Capital share transactions*
Shares sold 153,908 41,948
Distributions reinvested 3,126 52
Shares redeemed (12,638) (2,286)
Increase (decrease) in net assets from
capital share transactions 144,396 39,714
Net Assets
Increase (decrease) during period 159,085 42,566
Beginning of period 51,661 9,095
End of period $210,746 $ 51,661
*Share information
Shares sold 12,891 3,906
Distributions reinvested 255 5
Shares redeemed (1,059) (214)
Increase (decrease) in shares outstanding 12,087 3,697
The accompanying notes are an integral part of these financial
statements.
Notes to Financial Statements
T. Rowe Price International Stock Portfolio
December 31, 1996
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 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 amortized cost which
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 December 31, 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 December 31, 1996, the market
value of securities on loan was $5,216,000, 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 $144,941,000 and $11,807,000,
respectively, for the year ended December 31, 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.
In order for the fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions,
the following reclassifications were made during the year ended
December 31, 1996. The results of operations and net assets were
not affected by the reclassifications.
_______________________________________________________________
Undistributed net investment income $ 37,000
Undistributed net realized gain 31,000
Paid-in-capital (68,000)
At December 31, 1996, the aggregate cost of investments for federal
income tax and financial reporting purposes was $189,473,000, and
net unrealized gain aggregated $17,326,000, of which $24,439,000
related to appreciated investments and $7,113,000 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 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 year ended December 31, 1996, the fund, in the ordinary
course of business, paid commissions of $14,000 to, and placed
security purchase and sale orders aggregating $5,108,000 with,
certain affiliates of the manager in connection with the execution
of various portfolio transactions.
Report of Independent Accountants
To the Board of Directors of T. Rowe Price International Series,
Inc. and Shareholders of the International Stock Portfolio
In our opinion, the accompanying statement of net assets and the
related statements of operations and of changes in net assets and
the financial highlights present fairly, in all material respects,
the financial position of the International Stock Portfolio
(constituting T. Rowe Price International Series, Inc., hereafter
referred to as the "Fund") at December 31, 1996, and the results of
its operations, the changes in its net assets and the financial
highlights for each of the fiscal periods presented, in conformity
with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits
of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities
at December 31, 1996 by correspondence with custodians and, where
appropriate, the application of alternative auditing procedures for
unsettled security transactions, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 20, 1997
Invest With Confidence(registered trademark)
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to contractholders
and to others who have received a copy of the portfolio's
prospectus.
T. Rowe Price Investment Services, Inc., Distributor
TRP653 (3/97)
RPRTISP 12/31/96
Chart 1 - Geographic Diversification - pie chart showing: Europe
53%, Japan 20%, Far East 13%, Latin America 6%, Other and Reserves
8%.
Chart 2 - International Stock Portfolio - Performance Comparison
showing the cumulative growth of $10,000 invested in the
International Stock Portfolio from inception compared with $10,000
invested in a broad-based index or average over the same period.
