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Foreign Fund Insight: T. Rowe Price's Charms

T. Rowe Price's international funds have many attractions.

William Samuel Rocco, 04/10/2002

<P>Many investors are nervous about venturing abroad these days, and it's easy to see why. Most international funds remain mired in a multiyear slump, and many of these offerings remain too expensive. </P> <P>However, it's a mistake to give up on overseas offerings. They will outperform domestic-equity offerings at some point, and some international exposure is essential to a well-diversified portfolio. What's more, there are many affordable overseas funds out there that have weathered the past few years well and prospered in more hospitable times, including most of the international offerings from T. Rowe Price. </P> <P>Conservative-growth fans will like the way the international funds from T. Rowe Price are run. The funds, which share a deep-management and analyst team but have their own day-to-day managers, all follow the same reserved-growth strategy. The managers are wary of overpaying for companies with strong earnings growth, and they're leery of making big sector or country bets. What's more, they prefer to move at a measured pace. The typical overseas fund from T. Rowe Price has an annual turnover rate of just 45%, while the average international offering has an annual turnover rate of 100%. </P> <P>Not surprisingly, this restraint abroad has helped contain risk. Despite their growth bias, most international funds from T. Rowe Price look decent or better from a volatility perspective. It's important to note that T. Rowe Price International Discovery <?XML:NAMESPACE PREFIX = MSTR /?><MSTR:SECURITY>PRIDX</MSTR:SECURITY>, the boldest one of the lot and the only one that has been a lot more unstable than the average offering in its category, focuses on small caps, and its performance looks somewhat smoother relative to its true peers. </P> <P> <TABLE cellSpacing="0" cellPadding="0" width=422 border="0" > <TD vAlign="bottom" align="left" bgColor="#999999" colSpan=5><FONT face="Trebuchet MS, Arial, Helvetica" color="#ffffff" size="-2" ><B>These International Funds Have Attractive Risk / Reward Profiles </B></FONT></TD> <TD vAlign="bottom" align=right><IMG height=5 src="http://im.morningstar.com/im/dot_clear.gif" width=155></TD> <TD vAlign="bottom" align=right><IMG height="1" src="http://im.morningstar.com/im/dot_clear.gif" width=62></TD> <TD vAlign="bottom" align=right><IMG height="1" src="http://im.morningstar.com/im/dot_clear.gif" width=73></TD> <TD vAlign="bottom" align=right><IMG height="1" src="http://im.morningstar.com/im/dot_clear.gif" width=69></TD> <TD vAlign="bottom" align=right><IMG height="1" src="http://im.morningstar.com/im/dot_clear.gif" width=63></TD> <TD vAlign="top" align="left" > <P><FONT face="Trebuchet MS, Arial, Helvetica" color=#999999 size="-2" ><B>T. Rowe Price Fund</B></FONT></P></TD> <TD vAlign="top" align=right> <P><FONT face="Trebuchet MS, Arial, Helvetica" color=#999999 size="-2" ><B>5-Yr Standard<BR>Deviation<BR>3-31-02</B></FONT></P></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#999999 size="-2" ><B>Category<BR>Average<BR>3-31-02</B></FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#999999 size="-2" ><B>5-Yr Return<BR>4-05-02<BR>( % )</B></FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#999999 size="-2" ><B>Category<BR>Rank<BR>4-05-02</B></FONT></TD> <TD vAlign="top" align=right colSpan=5><IMG height=5 src="http://im.morningstar.com/im/dot_clear.gif" width=422></TD> <TD vAlign="top" align="left" ><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >Emerging Markets Stock <A href="http://quote.morningstar.com/switch.html?ticker=PRMSX" >PRMSX</A> </FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >32.5</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >29.7</FONT></TD> <TD vAlign="bottom" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >-0.30</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >9</FONT></TD> <TD vAlign="top" align=right colSpan=5><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></TD> <TD vAlign="top" align="left" ><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >European Stock <A href="http://quote.morningstar.com/switch.html?ticker=PRESX" >PRESX</A></FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >17.8</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >22.2</FONT></TD> <TD vAlign="bottom" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >5.50</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >36</FONT></TD> <TD vAlign="top" align=right colSpan=5><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></TD> <TD vAlign="top" align="left" ><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >Global Stock <A href="http://quote.morningstar.com/switch.html?ticker=PRGSX" >PRGSX</A></FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >18.7</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >21.9</FONT></TD> <TD vAlign="bottom" align=right><FONT face="Trebuchet MS, Arial, Helvetica" color=#000000 size="-2" >6.60</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >47</FONT></TD> <TD vAlign="top" align=right colSpan=5><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></TD> <TD vAlign="top" align="left" ><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >International Discovery <A href="http://quote.morningstar.com/switch.html?ticker=PRIDX" >PRIDX</A></FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >29.0</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >19.9</FONT></TD> <TD vAlign="bottom" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >9.90</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >6</FONT></TD> <TD vAlign="top" align=right colSpan=5><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></TD> <TD vAlign="top" align="left" ><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >International Stock <A href="http://quote.morningstar.com/switch.html?ticker=PRITX" >PRITX</A></FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >18.8</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >19.9</FONT></TD> <TD vAlign="bottom" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >0.90</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >49</FONT></TD> <TD vAlign="top" align=right colSpan=5><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></TD> <TD vAlign="top" align="left" ><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >Japan Stock <A href="http://quote.morningstar.com/switch.html?ticker=PRJPX" >PRJPX</A></FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >24.1</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >28.6</FONT></TD> <TD vAlign="bottom" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >-3.40</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >57</FONT></TD> <TD vAlign="top" align=right colSpan=5><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></TD> <TD vAlign="top" align="left" ><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >Latin America Stock <A href="http://quote.morningstar.com/switch.html?ticker=PRLAX" >PRLAX</A></FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >40.2</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >38.4</FONT></TD> <TD vAlign="bottom" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >2.30</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >9</FONT></TD> <TD vAlign="top" align=right colSpan=5><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></TD> <TD vAlign="top" align="left" ><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >New Asia <A href="http://quote.morningstar.com/switch.html?ticker=PRASX" >PRASX</A></FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >31.1</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >34.7</FONT></TD> <TD vAlign="bottom" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >-4.00</FONT></TD> <TD vAlign="top" align=right><FONT face="Trebuchet MS, Arial, Helvetica" size="-2" >37</FONT></TD></TABLE></P> <P>The international side of the T. Rowe Price family also looks fairly fetching from a returns perspective. All of the firm's established overseas offerings have posted competitive or better results over the past five years. T. Rowe Price International Discovery has gained 10% annually over the past five years and outpaced 94% of foreign-stock offerings (as well as the vast majority of smaller-cap foreign-stock offerings). T. Rowe Price Latin America <MSTR:SECURITY>PRLAX</MSTR:SECURITY> and T Rowe Price Emerging Markets <MSTR:SECURITY>PRMSX</MSTR:SECURITY> are similarly impressive in relative terms, albeit not in absolute terms. </P> <P>The allure of the firm's international offerings doesn't end with their risk/reward profiles. Most of these funds, in fact, are much cheaper than the typical no-load offering in their category, which, in turn, is much less expensive than the category norm. </P> <P> <TABLE cellSpacing="0" cellPadding="0" width=422 border="0" > <TR bgColor="#999999" > <TD vAlign="top" align="left" colSpan=4 height="1"1><FONT face="Trebuchet MS" color="#ffffff" size="-2" ><B>These Funds Are Cheap</B></FONT></TD> <IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=172></TD> <TD align=right height=3><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=70></TD> <TD align=right height=3><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=90></TD> <TD align=right height=3><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=80></TD> <FONT face="Trebuchet MS" color=#999999 size="-2" ><B>T. Rowe Price Fund </B></FONT></TD> <TD align=right> <DIV align=right><FONT face="Trebuchet MS" color=#999999 size="-2" ><B>Expense Ratio</B></FONT></DIV></TD> <TD align=right><FONT face="Trebuchet MS" color=#999999 size="-2" ><B>Avg. No-Load<BR>Expense Ratio<BR>in Category</B></FONT></TD> <TD align=right><FONT face="Trebuchet MS" color=#999999 size="-2" ><B>Avg. Expense<BR>Ratio in<BR>Category</B></FONT></TD> <DIV align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.50</FONT></DIV></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.58</FONT></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >2.08</FONT></TD> <FONT size="-2" ><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></FONT></TD> <DIV align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.09</FONT></DIV></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.34</FONT></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.83</FONT></TD> <FONT size="-2" ><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></FONT></TD> <DIV align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.20</FONT></DIV></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.33</FONT></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.78</FONT></TD> <FONT size="-2" ><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></FONT></TD> <DIV align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.38</FONT></DIV></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.11</FONT></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.64</FONT></TD> <TD colSpan=4><FONT size="-2" ><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></FONT></TD> <DIV align=right><FONT face="Trebuchet MS" color=#0 size="-2" >0.90</FONT></DIV></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.11</FONT></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.64</FONT></TD> <FONT size="-2" ><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></FONT></TD> <DIV align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.25</FONT></DIV></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.20</FONT></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.69</FONT></TD> <FONT size="-2" ><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></FONT></TD> <DIV align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.49</FONT></DIV></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.73</FONT></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >2.08</FONT></TD> <FONT size="-2" ><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></FONT></TD> <DIV align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.22</FONT></DIV></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >1.73</FONT></TD> <TD align=right><FONT face="Trebuchet MS" color=#0 size="-2" >2.15</FONT></TD> <FONT size=-1><IMG height=3 src="http://im.morningstar.com/im/dot_clear.gif" width=422></FONT></TD> <TD colSpan=5><IMG height=9 src="http://im.morningstar.com/im/422x9rule.gif" width=422></TD> <TD vAlign="bottom" align="left" colSpan=4><FONT face="Trebuchet MS, Arial, Helvetica" color=#999999 size="-2" >Data as of 03-31-02.</FONT></TD></TABLE> <P>For all these reasons, we think these funds are well worth a look from investors who are in the market for international offerings that will let them sleep at night and don't cost too much.</P>

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