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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Section Rule 14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Institutional International Funds, Inc. 033-29697/811-5833
Foreign Equity Fund
T. Rowe Price International Funds, Inc. 002-65539/811-2958
T. Rowe Price International Stock Fund
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. Rowe Price International Bond Fund--Advisor Class
T. Rowe Price International Stock Fund--Advisor Class
T. Rowe Price Spectrum Fund, Inc. 033-10992/811-4998
Spectrum International Fund
T. Rowe Price International Series, Inc. 033-52171/811-07145
T. Rowe Price International Stock Portfolio
_________________________________________________________________
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Institutional International Funds, Inc. 033-29697/811-5833
Foreign Equity Fund
T. Rowe Price International Funds, Inc. 002-65539/811-2958
T. Rowe Price International Stock Fund
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
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T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. Rowe Price International Bond Fund--Advisor Class
T. Rowe Price International Stock Fund--Advisor Class
T. Rowe Price Spectrum Fund, Inc. 033-10992/811-4998
Spectrum International Fund
T. Rowe Price International Series, Inc. 033-52171/811-07145
T. Rowe Price International Stock Portfolio
_______________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________
3)
Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): (1)
________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________
5) Total fee paid:
________________________________________________________
[ ] Fee paid previously with preliminary materials.
________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
_______________________________________________________
2) Form, schedule, or Registration Statement no.:
________________________________________________________
3) Filing party:
________________________________________________________
4) Date filed:
________________________________________________________
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INTERNATIONAL FUNDS PROXY AND ANNUAL MEETING
VENUE:
The International Funds will hold an annual meeting of shareholders on
Wednesday, October 25, 2000 at 2:00 pm ET.
Four Seasons Hotel
2800 Pennsylvania Avenue, NW
Washington, D.C. 20007
A Notice of the Annual Meeting of Shareholders will be sent to all International
Fund shareholders of record at the close of business on August 25, 2000.
The shareholders of each fund will vote only on those proposals that apply to
their fund(s).
Shareholders will "vote" the number of shares they held as of the close of
business on August 25, 2000.
The notice is scheduled for mailing on or about September 1, 2000.
The Boards of the funds recommend that shareholders vote in favor of each
proposal.
BACKGROUND:
On August 8, 2000, T. Rowe Price acquired Robert Flemings' 50% share of Rowe
Price-Fleming International (RPFI). The SEC considers this to represent a change
in control of RPFI, the manager of all of our international funds. SEC rules
stipulate that shareholders approve new management contracts whenever there is a
change in control of the fund manager.
Importantly, the substance of the management agreements remains unchanged:
The management fee rates for each fund will stay the same. RPFI, under its new
name of T. Rowe Price International (TRPI), will continue to manage the funds.
INTERNATIONAL FUNDS INCLUDED IN THE PROXY:
Institutional International Funds, Inc. consisting of its series:
Foreign Equity Fund
T. Rowe Price International Funds, Inc. consisting of its series:
T. Rowe Price International Stock Fund
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
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T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. Rowe Price International Bond Fund - Advisor Class
T. Rowe Price International Stock Fund - Advisor Class
T. Rowe Price Spectrum Fund, Inc. consisting of one of its series:
Spectrum International Fund
T. Rowe Price International Series, Inc. consisting of its series: T.
Rowe Price International Stock Portfolio
OVERVIEW
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ISSUE: Shareholders of each international fund must approve new
management contracts between the funds and T. Rowe Price
International (TRPI).
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WHY: The SEC considers T. Rowe Price's acquisition of Robert
Flemings'
50% share of RPFI a change in control of the funds'
investment manager.
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WHAT STAYS THE TRPI continues as the fund manager for each portfolio.
SAME:
TRPI will continue to:
make portfolio decisions;
conduct primary research;
use a team approach.
The terms of the new contracts will remain unchanged:
Expense ratios;
Management fee rates;
Structure (group fee + individual fund fee);
Length.
Note: If the merger of the Global Bond Fund is approved,
the
total annual fund operating expenses will be reduced from
1.52% (currently capped at 1.00% to 0.90%. This reduction
is
not due to the organizational change (RPFI to TRPI)
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WHAT CHANGES: Not much.
We have changed the name of RPFI to T. Rowe Price
International
(TRPI) to reflect the fact that TRPI is now a fully owned
subsidiary of
TRPA. Importantly, TRPI is not a new company, it is the new
name for RPFI.
Any significant changes to portfolio teams will be
communicated to shareholders.
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THE MATTERS TO BE ACTED ON INCLUDE:
1. ALL FUNDS.
To approve or disapprove a new investment management agreement for each fund;
2. FOREIGN EQUITY FUND.
To approve or disapprove amending a fundamental policy of the fund to permit
it to engage in securities lending;
3. NEW ASIA FUND.
To approve or disapprove amending a fundamental policy of the fund to change
its status from diversified to non-diversified;
4. ALL FUNDS EXCEPT SPECTRUM INTERNATIONAL.
To elect five directors to serve on the Boards of the funds until the next
annual meeting, if any, or until their successors shall have been duly elected
and qualified;
5. ALL FUNDS.
To ratify or reject the appointment of the firm of PricewaterhouseCoopers LLP
as independent accountants for each fund's current fiscal year; and
6. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENTS THEREOF.
QUESTIONS AND ANSWERS
WHAT IS THE NEW CORPORATE STRUCTURE? HOW DOES IT COMPARE TO THE OLD ONE?
T. Rowe Price International, Inc. (formerly Rowe Price-Fleming
International) is a wholly owned subsidiary of T. Rowe Price Associates.
Formerly, Rowe Price-Fleming International was a 50/50 joint venture
between T. Rowe Price and Flemings.
WHAT CAUSED THIS OWNERSHIP CHANGE TO OCCUR?
Both joint venture partners recognized that our corporate structure no
longer made sense as the priorities of the owners diverged. Flemings'
decision to be acquired by Chase created the high probability of internal
competition across a number of business areas, which would have created a
potentially disruptive operating environment for the joint venture.
WILL THE WAY IN WHICH YOU MANAGE PORTFOLIOS BE ALTERED BY THE TRANSACTION?
No. The transaction will not change in any way our team structure, basic
investment philosophy or investment process, nor do we expect it to change
the roles of the investment professionals currently managing your
portfolio.
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WHAT ARE THE BENEFITS OF THE NEW OWNERSHIP?
The primary benefits are an increased commitment to proprietary research
and enhanced interaction between our international investment team and T.
Rowe Price's domestically-oriented investment professionals. In light of
the globalization of industries and the increasing influence of sectoral
factors in international investment, we believe that closer interaction
will strengthen our understanding of these important sectoral influences.
We also expect to benefit from an increased commitment to information
systems/technology and the growing array of analytical and information
management tools emanating from the US.
WILL YOU BE MOVING OFFICES?
Offices in each of our current geographic locations will be maintained, but
we will eventually move out of Flemings offices into our own space. Our
transition agreement with Flemings allows us to remain within offices of
our former parent for up to 12 months after the deal closed.
LONDON:
In September 2000, our London office will move to a new building along
with Flemings, as part of a move planned well before the change in
ownership was announced. In March 2001, we expect to move into our own
offices. These offices have been identified and are situated only a
few blocks from our current location in London's Financial District.
We have a new phone number for the London office: 011-44-20-7742-4514.
This number is effective today and will change when we move again in
early 2001.
HONG KONG, TOKYO, SINGAPORE, AND PARIS:
Our personnel in these offices are expected to move out of Flemings'
space by the end of 2000. The search for new office space is nearly
completed.
BUENOS AIRES:
We will maintain our current office in Buenos Aires.
BALTIMORE:
We will remain at 100 East Pratt Street.
HOW IS RESEARCH AFFECTED?
Our research effort is essentially independent of Flemings. We continue to
expand our team of international analysts, now six in total, and we are
moving to integrate more fully with T. Rowe Price's extensive team of US
sector-based analysts. Gonzalo Pangaro, our Latin American analyst based in
Buenos Aires, has been appointed Director of International Research and
will move to London next year. He will work together with Bill Stromberg,
Director of U.S. Equity Research, to develop our combined resources going
forward.
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In addition, Dean Tenerelli recently joined us as a global
telecommunications analyst and will be based in London. Dean has 10 years
of research and money management experience and will work closely with T.
Rowe Price's US telecommunications analysts.
WHAT ABOUT TRADING?
We are establishing our own trading desk for European securities which will
supplant the Flemings facility that we have been using. Trading for the
Pacific markets is already handled by our own trading desk in Hong Kong,
and trading for the Americas is largely handled by the T. Rowe Price equity
trading in Baltimore. The conversion of our European trading function is
proceeding on schedule and we expect a smooth transition. In the meantime,
we will continue to utilize the Flemings European trading desk until our
desk is operational.
We have hired Clive Williams, formerly head trader of GT/Invesco Asset
Management in London, as our head European trader. We have also hired two
additional traders who will join us in the next several weeks. We expect
that our trading desk will be up and running this Fall.
WILL THERE BE CHANGES IN INFORMATION TECHNOLOGY (IT) SYSTEMS?
Information technology and systems is an area of significant focus for a
number of our administrative and IT personnel. We will be migrating from
Flemings' systems to T. Rowe Price's systems and standards for trading,
record keeping, portfolio administration, analytics, communications, desk
standards, support and security.
TRADING SYSTEMS:
We are in the process of moving from Flemings' in-house trading
platform to Merrin, a leading trade order management system currently
used by T. Rowe Price. The conversion is well ahead of schedule and
should be completed by year-end.
PORTFOLIO RECORD KEEPING:
We are in the process of moving from an in-house Flemings' system to
Global Portfolio System(R) (GPS), a comprehensive ledger-based
multicurrency portfolio accounting system used by T. Rowe Price. We
expect to make this transition by mid-2001.
PORTFOLIO ANALYTICS:
In 1999, we started a conversion to VisionTM - a proprietary portfolio
analytics system built and used by T. Rowe Price for U.S. portfolio
analysis. VisionTM is now operational for international portfolios,
and the transition is essentially complete.
Communications, security and IT support will all conform to the T. Rowe
Price stan-
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dard to allow for maximum connectivity between offices. This will permit a
common e-mail and desk platform throughout the company in every location.
HAVE T. ROWE PRICE INTERNATIONAL PERSONNEL BEEN INTEGRATED INTO THE OVERALL
T. ROWE PRICE MANAGEMENT STRUCTURE? HAVE THERE BEEN ANY OTHER CHANGES IN
MANAGEMENT OR PERSONNEL?
To reflect the importance of T. Rowe Price International to T. Rowe Price,
David Warren has joined the Management Committee of T. Rowe Price, the
group that guides the firm's overall strategy. Martin Wade has joined the
T. Rowe Price Board of Directors and its Compensation Committee, and has
resigned from the Flemings Board. Our full investment team, client service
group and administrative personnel are expected to remain in place.
ANSWERS TO THE FOLLOWING QUESTIONS, CAN BE FOUND ON THE REFERENCED PAGE OF THE
PROXY DOCUMENT .
Be sure to review the Proxy Information that has been distributed to all sites;
keep the material handy to answer shareholders' questions.
The following page references should answer the most frequently asked questions
and should aid you in responding to inquiries about the proxy or the annual
meeting.
GENERAL INFORMATION: PAGES 3 - 4
Who is asking for my vote? Page 3
Who is eligible to vote? Page 3
What are shareholders being asked to vote on? Page 4 (see proposals)
How can I get more information about the funds? Page 4
PROPOSAL NO. 1 NEW INVESTMENT MANAGEMENT AGREEMENTS BETWEEN T. ROWE PRICE
INTERNATIONAL, INC. AND THE FUNDS: PAGES 5 - 15
Why are shareholders being asked to approve new investment management
agreements? Page 5
How do the Proposed Agreements differ from the current ones? Page 5
What matters were considered by the Boards in recommending the new
advisory agreements? Pages 5 - 6
When were the current agreements adopted? Pages 6 - 7
What do the funds currently pay to Price International for its advisory
services?
Pages 7 - 12
What services does Price International provide under the current and
Proposed Agreements? Page 12
Who else provides services to the funds? Page 13
What services are provided under these other agreements? Pages 13 - 15
What vote is required to approve the new Investment Management Agree-
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ments?
Page 15
PROPOSAL NO. 2 AMENDMENT OF THE FOREIGN EQUITY FUND'S FUNDAMENTAL POLICY
ON SECURITIES LENDING: PAGES 16 - 17
What vote is required to approve this amendment to the fund's policies
and practices? Page 17
PROPOSAL NO. 3 AMENDMENT OF THE NEW ASIA FUND'S FUNDAMENTAL POLICY TO
CHANGE ITS STATUS FROM DIVERSIFIED TO NON-DIVERSIFIED: PAGES 17 - 18
What vote is required to approve this amendment to the fund's policies
and practices? Page 18
PROPOSAL NO. 4 ELECTION OF DIRECTORS:
All Funds (other than Spectrum International Pages 18 - 22
Who are the nominees for directors? Page 18
Background and share position of nominees. Pages 18 - 20
Do the nominees have a stake in the funds? Page 20
What are the primary responsibilities of each fund's Board
members? Page 20
How often does each fund's Board meet? Pages 20 - 21
What are the directors paid for their services to the funds? Page
21 - 22
What vote is required to elect the directors? Page 22
PROPOSAL NO. 5 SELECTION OF INDEPENDENT ACCOUNTANTS: PAGES 23 - 24
All funds Page 23
What vote is required to ratify the funds' independent
accountants? Page 23
FURTHER INFORMATION ABOUT VOTING AND THE SHAREHOLDER MEETING: PAGES 24 - 27
What is the required quorum? Page 24
How are the votes counted? Page 24
Can additional matters be acted upon at the annual meeting? Page
25
How can proxies be recorded? Page 25
How can proxies be solicited, and who pays for the costs
involved? Page 26
Can I change my vote after I mail my proxy? Page 26
Are the funds required to hold annual meetings? Page 26
GENERAL INFORMATION ABOUT THE FUNDS: PAGES 27 - 31
Who are the funds' executive officers? Page 27
What is the share ownership of each fund? Pages 27 - 28
Who are the principal holders of each fund's shares? Pages 28 -
31
INFORMATION ABOUT PRICE INTERNATIONAL: PAGES 31 - 32
Who are the directors of Price International? Page 31
Transactions in T. Rowe Price Stock Pages 31 - 32
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INFORMATION ABOUT T. ROWE PRICE: PAGE 32
Who are the directors of T. Rowe Price? Page 32
EXHIBIT 1: PRO FORM INVESTMENT MANAGEMENT AGREEMENT PAGES 33 - 45
INTERNATIONAL FUND SHAREHOLDERS HAVE THREE METHODS OF VOTING:
1. BY INTERNET
Go to the Web site: www.proxyweb.com. Shareholders will need their
proxy cards
Enter the control number (12 - 14 digits) found in the upper left
corner of the proxy card.
Follow instructions. (Shareholders should use their proxy cards as a
guide.)
2. BY TELEPHONE
Call toll free 1-888-221-0697 (automated service) Shareholders will need
their proxy cards
Enter the control number (12 - 14 digits) found in the upper left corner of
the proxy card.
Follow instructions on the recorded information.
3. BY MAIL
Date, sign, and return the proxy card in the envelope provided. (Envelope is
postage-paid if mailed in the United States.)
If shareholders lost their envelope and cannot (or choose not to) vote by
telephone or internet, they can mail their proxy card to:
Management Information Services
61 Accord Park Drive
Norwell, MA 02061
INTERNATIONAL STOCK PORTFOLIO CONTRACT HOLDERS HAVE ONLY ONE METHOD OF VOTING:
1. BY MAIL
Date, sign, and return the proxy card in the envelope provided. (Envelope is
postage-paid if mailed in the United States.)
If contract holders lost their envelope, they can mail their proxy card to:
Management Information Services
61 Accord Park Drive
Norwell, MA 02061
MISCELLANEOUS INFORMATION
Any proxy, including those voted via the Internet or by telephone, may be
revoked at any time before it is voted by filing a written notice of revocation
with the funds, by delivering a
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properly executed proxy bearing a later date, or by attending the meeting and
voting in person.
The proxy materials reference a toll free number (1-800-541-5910) that
shareholders could call if they need additional information about the meeting or
matters proposed for action.
If International Fund shareholders of record as of close of business August 25,
2000 did not receive their proxy information or need additional proxy materials,
get their name, fund, account number, and address. Forward the information via
e-mail to Pat Butcher-Lippert in Legal.
PROXY:
A written authorization by a stockholder allowing a representative or someone
else to vote for or against directors and business proposals at the annual
meeting. The results of these votes are usually announced at the meeting and in
the fund's next report.
INDIVIDUALS NOMINATED TO SERVE AS DIRECTORS:
M. David Testa
Martin G. Wade
Anthony W. Deering
Donald W. Dick, Jr.
Paul M. Wythes
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