N-CSR 1 ixf.txt T. ROWE PRICE INTERNATIONAL EQUITY INDEX FUND Item 1. Report to Shareholders OCTOBER 31, 2004 INTERNATIONAL EQUITY INDEX FUND Annual Report T. ROWE PRICE -------------------------------------------------------------------------------- The views and opinions in this report were current as of October 31, 2004. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of the fund's future investment intent. The report is certified under the Sarbanes-Oxley Act of 2002, which requires mutual funds and other public companies to affirm that, to the best of their knowledge, the information in their financial reports is fairly and accurately stated in all material respects. -------------------------------------------------------------------------------- REPORTS ON THE WEB Sign up for our E-mail Program, and you can begin to receive updated fund reports and prospectuses online rather than through the mail. Log in to your account at troweprice.com for more information. T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- FELLOW SHAREHOLDERS International stocks rose during the six and 12 months ended October 31, 2004. Among the developed markets in which the fund invests, Japan was weakest, posting a loss during the past six months but gaining over the year. European stocks produced steady returns, bolstered by the strength of the euro versus the sagging dollar, which enhanced results for U.S. investors. PERFORMANCE COMPARISON -------------------------------------------------------------------------------- Periods Ended 10/31/04 6 Months 12 Months -------------------------------------------------------------------------------- International Equity Index Fund 6.23% 17.86% FTSE Developed ex North America Index 6.10 19.05 Please see the fund's quarter-end returns following this letter. The fund returned 6.23% over the six months ended October 31, 2004, versus 6.10% for its benchmark index. Fund results relative to the benchmark primarily reflect the fund's operating and management expenses and technical factors as we approached full replication of the underlying index. The fund seeks to match the performance of the FTSE Developed ex North America Index, a broadly diversified stock market index based on the investable market capitalization of more than 1,000 predominantly larger companies listed in 21 countries (the index's performance reflects no operational costs or management fees). The index's major markets include the U.K., Japan, and developed countries in Europe and the Pacific Rim. It is constructed by selecting the countries it covers, sorting the market in each country by industry groups, and targeting a significant portion of the stocks in these groups for inclusion. The fund attempts to replicate the index by investing in the stocks included in the index in proportion to their weighting. At the end of October, Europe represented 68.6% of net assets, with Japan and the Pacific Rim representing the balance. The U.K. was the largest country allocation at 24%, followed closely by Japan at 21%. Financial stocks were the largest sector weighting at 27.5% of assets, followed by consumer discretionary stocks (12.1%), industrials and business services (8.8%), energy (8.0%), consumer staples and telecommunication services (7.8%), health care (7.5%), materials (6.7%), information technology (5.7%), utilities (5.1%), and trusts (3.1%). MARKET AND PORTFOLIO REVIEW Non-U.S. stocks fared well over the 12-month period, with a little over half of the gain occurring in the first six months. The last six months were a bit subdued in comparison. European markets performed reasonably well. However, while stock valuations are attractive, economic growth in the region has been lackluster. European stock market returns were less volatile during the period compared with other markets, largely because they are less affected by China's powerful economic growth. Among the markets in the region, Italy, Spain, and Norway were particularly strong. MARKET PERFORMANCE -------------------------------------------------------------------------------- Six Months Local Local Currency U.S. Ended 10/31/04 Currency vs. U.S. Dollars Dollars -------------------------------------------------------------------------------- France 3.34% 6.11% 9.65% Germany -0.36 6.11 5.73 Hong Kong 10.22 0.21 10.45 Italy 7.14 6.11 13.69 Japan -7.06 3.92 -3.42 Mexico 15.95 -1.12 14.66 Netherlands -0.37 6.12 5.72 Singapore 8.25 2.17 10.60 Sweden 3.75 7.40 11.43 Switzerland -6.81 7.92 0.57 United Kingdom 4.13 3.32 7.60 Source: RIMES Online, using MSCI indices. Japan was the only market to register negative results over the past six months, but the Japanese market was positive during the 12 months ended October 31. Japan's fortunes were influenced by the progress of its economic recovery and the transparency of banking sector reforms, but high oil prices had a negative impact due to the country's heavy manufacturing bias. Stocks here are also sensitive to developments in China, since exports to that vast market are essential to Japan's recovery. Over the year, all major market sectors, with the exception of information technology, performed well. This positive sector performance was led by energy and utilities. Information technology's poor performance can be attributed to losses among semiconductor, IT services, and computer/peripheral companies. U.S. investors continued to benefit from a strong euro, which rallied sharply over the past six months. The Japanese yen was marginally stronger over both the 6- and 12-month periods, therefore reducing the impact of the lackluster Japanese market. Europe Spanish stocks did well over the past six months, with Banco Bilbao Vizcaya Argentaria (BBVA) and Telefonica, which is sensitive to Spain's high GDP growth rate, both adding value. Altadis contributed to Spain's attractive returns as well. Other major European holdings, which benefited portfolio returns, include the U.K.'s GlaxoSmithKline and Vodafone, France's Total and Sanofi-Aventis, and Switzerland's UBS and Nestle. The German market underperformed the majority of European markets, but some individual holdings did well, such as Hypo Real Estate, which sold a large amount of its nonperforming real estate loans, thereby boosting the overall quality of its loan portfolio. (Please refer to our detailed list of holdings and the amount each represents of the portfolio.) GEOGRAPHIC DIVERSIFICATION -------------------------------------------------------------------------------- Percent of Percent of Net Assets Net Assets Periods Ended 4/30/04 10/31/04 -------------------------------------------------------------------------------- Europe 66.6% 68.6% Japan 22.5 20.8 Pacific Rim 8.7 9.3 Europe/Pacific Rim 2.0 1.4 Other and Reserves 0.2 -0.1 -------------------------------------------------------------------------------- Total 100.0% 100.0% Japan Soft economic data in Japan induced a round of profit-taking. Nomura Holdings greatly detracted from performance over both periods. Sectors leading the decline included financials, technology, and basic materials. UFJ Holdings performed poorly after it unexpectedly announced $5 billion worth of bad loans, inciting fears that reforms in the industry were not as transparent as investors had hoped. Our largest holdings in Japan had a mixed performance during the six-month period, with Toyota Motor outperforming while Canon and Mizuho Finance underperformed. Both stocks posted positive returns over the 12-month period. Asia ex-Japan and Pacific Rim Australia was strong, mainly due to the country's bias toward commodities and basic resources industries and its geographical proximity to Asia. Inflation picked up across much of the region as commodity prices rose. A position in BHP Billiton (mining and metals) helped results as second-half profits more than doubled, thanks to Chinese demand, which accounted for 9% of sales in the period. Within the region, stocks from Singapore (Singapore Telecommunications, United Overseas Bank), and Hong Kong (Hutchison Whampoa, Sun Hung Kai Properties) were also represented in the portfolio and contributed to its favorable results. Sectors Financial stocks were good contributors to performance. Commercial banks led the way, with BBVA, BNP Paribas, and HSBC among the highest contributors. Banks are sensitive to interest rates, which affect net interest margin. The relatively benign outlook for European interest rates, along with the attractive valuations for financial stocks, has helped boost results in the sector during both the 6- and 12-month periods. Japanese financials, however, struggled recently after performing well earlier in the year. Nomura Holdings did poorly compared with other Japanese financials because of falling fixed-income revenue and potential competition from new entrants in the securities business. SECTOR DIVERSIFICATION -------------------------------------------------------------------------------- Percent of Net Assets 4/30/04 10/31/04 -------------------------------------------------------------------------------- Financials 26.5 27.5% Consumer Discretionary 12.1 12.1 Industrials and Business Services 8.1 8.8 Energy 7.3 8.0 Consumer Staples 8.1 7.8 Telecommunication Services 7.4 7.8 Health Care 7.6 7.5 Materials 6.0 6.7 Information Technology 6.3 5.7 Utilities 4.3 5.1 Trusts 6.1 3.1 Other and Reserves 0.2 -0.1 -------------------------------------------------------------------------------- Total 100.0% 100.0% Energy stocks were among the best contributors to performance during both the 6- and 12-month periods as rising oil prices drove share prices higher. The U.K.'s BP, Shell T&T/Royal Dutch, and French oil giant Total are among our largest positions in the sector, and all added much value. Additional top performers in this sector include Italy's ENI, Norway's Norsk Hydro, and the U.K.'s BG Group. Consumer discretionary stocks were a bright area over both periods, particularly the auto makers, with strong contributions from Toyota and Honda. The hotel and leisure industry had a mixed performance, with good returns from Carnival and Intercontinental Hotels but poor returns from U.K. catering stock Compass, which issued a profit warning following financial problems at a leading distributor. Household durables were weak with Philips Electronics of the Netherlands struggling in the face of a potential glut in LCDs and decelerating growth in semiconductors. The results from media companies were mixed over the period. Vivendi Universal posted a favorable contribution to performance, whereas British Sky Broadcast was weighed down by speculation that its chairman Rupert Murdoch might pursue growth at the expense of profitability. Information technology stocks were among the worst performers during the past year, reflecting a somewhat mundane economic outlook and cyclical weakness in the semiconductor cycle. In addition, the rise in prices for thin steel sheet and cobalt hurt electronics makers who could not pass on costs to consumers used to prices falling over time. Japanese tech company NEC detracted from results due to its exposure to China. Other holdings that performed poorly over both periods include France's ST Microelectronics and Japan's Murata Manufacturing, Rohm, and Sumisho Computer Systems. INVESTMENT OUTLOOK Valuation multiples have consolidated since 2000, and quality international growth companies that have generated respectable results have been unduly punished. The economic environment going forward should be more supportive for quality growth stocks if global GDP levels off and earnings growth decelerates in 2005, as we expect. Europe is currently the most attractive region in terms of stock valuation as investors await an upswing in domestic growth. Global interest rates are expected to rise in 2005, but the environment in Europe is comparatively benign as growth has been more tempered. The direction and pace of interest rates can have a significant impact on the prospects for banks and capital market companies. Japan should continue to enjoy positive economic growth and is currently experiencing its first sustained recovery in 15 years. Government deregulation, accommodative monetary policy, corporate restructuring, a healthier financial system, and the global (and Chinese) economic cycle have revived the Japanese economy. The diversification provided in a passive portfolio of international stocks is a prudent, low-cost approach for investors seeking exposure to these developed foreign equities markets. Respectfully submitted, Richard T. Whitney President and chairman of the Investment Advisory Committee November 19, 2004 The committee chairman has day-to-day responsibility for managing the portfolio and works with committee members in developing and executing the fund's investment program. -------------------------------------------------------------------------------- RISKS OF INTERNATIONAL INVESTING Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. Funds investing in a single country or in a limited geographic region tend to be riskier than more diversified funds. Risks can result from varying stages of economic and political development, differing regulatory environments, trading days, and accounting standards, and higher transaction costs of non-U.S. markets. Non-U.S. investments are also subject to currency risk, or a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency. GLOSSARY FTSE Developed ex North America Index: A broadly diversified stock market index based on the investable market capitalization of more than 1,000 predominantly larger companies listed in 21 countries. The index's major markets include the U.K., Japan, and developed countries in Europe and the Pacific Rim. T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- PORTFOLIO HIGHLIGHTS -------------------------------------------------------------------------------- TWENTY-FIVE LARGEST HOLDINGS Percent of Net Assets 10/31/04 -------------------------------------------------------------------------------- BP, United Kingdom 2.3% Shell T&T/Royal Dutch, United Kingdom/Netherlands 2.1 HSBC, United Kingdom 2.0 Vodafone, United Kingdom 1.9 Total, France 1.5 -------------------------------------------------------------------------------- Novartis, Switzerland 1.5 iShares MSCI EAFE, Europe/Far East 1.4 GlaxoSmithKline, United Kingdom 1.4 Toyota Motor, Japan 1.1 Nestle, Switzerland 1.0 -------------------------------------------------------------------------------- Royal Bank of Scotland, United Kingdom 1.0 UBS, Switzerland 1.0 Telefonica, Spain 0.9 Sanofi-Aventis, France 0.8 Roche Holding, Switzerland 0.8 -------------------------------------------------------------------------------- Nokia, Finland 0.8 ENI S.p.A., Italy 0.7 AstraZeneca, United Kingdom 0.7 Siemens, Germany 0.7 BHP Billiton, United Kingdom/Australia 0.7 -------------------------------------------------------------------------------- Barclays, United Kingdom 0.7 Deutsche Telekom, Germany 0.7 BNP Paribas, France 0.6 ING Groep GDS, Netherlands 0.6 Unilever, United Kingdom/Netherlands 0.6 -------------------------------------------------------------------------------- Total 27.5% Note: Table excludes investments in the T. Rowe Price Reserve Investment Fund and securities lending collateral. T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- GROWTH OF $10,000 -------------------------------------------------------------------------------- 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 benchmarks, which may include a broad-based market index and a peer group average or index. Market indexes do not include expenses, which are deducted from fund returns as well as mutual fund averages and indexes. [Graphic Omitted] INTERNATIONAL EQUITY INDEX FUND -------------------------------------------------------------------------------- As of 10/31/04 International Equity Index Fund $10,117 FTSE Developed ex North America Index $10,445 FTSE Developed ex International Equity North America Index Index Fund 11/00 $10,000 $10,000 04/01 9,565 9,540 10/01 7,831 7,780 04/02 8,263 8,182 10/02 6,843 6,739 04/03 7,009 6,904 10/03 8,774 8,584 04/04 9,845 9,523 10/04 10,445 10,117 AVERAGE ANNUAL COMPOUND TOTAL RETURN -------------------------------------------------------------------------------- This table shows how the fund and its benchmarks would have performed if their actual (or cumulative) returns for the periods shown had been earned at a constant rate. Since Inception Periods Ended 10/31/04 1 Year 11/30/00 -------------------------------------------------------------------------------- International Equity Index Fund 17.86% 0.30% FTSE Developed ex North America Index 19.05 1.12 Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results. T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- FUND EXPENSE EXAMPLE -------------------------------------------------------------------------------- As a mutual fund shareholder, you may incur two types of costs: (1) transaction costs such as redemption fees or sales loads and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the entire period. Actual Expenses The first line of the following table ("Actual") provides information about actual account values and actual expenses. You may use the information in this line, together with your account balance, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The information on the second line of the table ("Hypothetical") is based on hypothetical account values and expenses derived from the fund's actual expense ratio and an assumed 5% per year rate of return before expenses (not the fund's actual return). You may compare the ongoing costs of investing in the fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Note: T. Rowe Price charges an account maintenance fee that is not included in the accompanying table. The account maintenance fee is charged on a quarterly basis, usually during the last week of a calendar quarter, and applies to accounts with balances below $10,000 on the day of the assessment. The fee is charged to accounts that fall below $10,000 for any reason, including market fluctuations, redemptions, or exchanges. When an account with less than $10,000 is closed either through redemption or exchange, the fee is charged and deducted from the proceeds. The fee applies to IRA accounts, but not to retirement plans directly registered with T. Rowe Price Services, or accounts maintained by intermediaries through NSCC(R) Networking. If you are subject to the fee, keep it in mind when you are estimating the ongoing expenses of investing in the fund and when comparing the expenses of this fund with other funds. You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs, such as redemption fees or sales loads. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. To the extent a fund charges transaction costs, however, the total cost of owning that fund is higher. FUND EXPENSE EXAMPLE (CONTINUED) -------------------------------------------------------------------------------- T. ROWE PRICE INTERNATIONAL EQUITY INDEX FUND -------------------------------------------------------------------------------- Beginning Ending Expenses Paid Account Value Account Value During Period* 5/1/04 10/31/04 5/1/04 to 10/31/04 -------------------------------------------------------------------------------- Actual $ 1,000 $ 1,062.30 $ 2.59 Hypothetical (assumes 5% return before expenses) $ 1,000 $ 1,022.62 $ 2.54 *Expenses are equal to the fund's annualized expense ratio for the six-month period (0.50%), multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half year (184) by the days in the year (366) to reflect the half-year period. QUARTER-END RETURNS -------------------------------------------------------------------------------- Since Inception Periods Ended 9/30/04 1 Year 11/30/00 -------------------------------------------------------------------------------- International Equity Index Fund 20.91% -0.57% FTSE Developed ex North America Index 22.43 0.27 Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end performance information, please visit our Web site (troweprice.com) or contact a T. Rowe Price representative at 1-800-225-5132. This table provides returns through the most recent calendar quarter-end rather than through the end of the fund's fiscal period. It 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. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. When assessing performance, investors should consider both short- and long-term returns. FINANCIAL HIGHLIGHTS For a share outstanding throughout each period -------------------------------------------------------------------------------- Year 11/30/00 Ended Through 10/31/04 10/31/03 10/31/02 10/31/01 NET ASSET VALUE Beginning of period $ 8.38 $ 6.68 $ 7.78 $ 10.00 Investment activities Net investment income (loss) 0.14 0.13 0.09 0.10 Net realized and unrealized gain (loss) 1.34 1.67 (1.12) (2.32) Total from investment activities 1.48 1.80 (1.03) (2.22) Distributions Net investment income (0.13) (0.10) (0.07) - Net realized gain (0.01) - - - Total distributions (0.14) (0.10) (0.07) - NET ASSET VALUE End of period $ 9.72 $ 8.38 $ 6.68 $ 7.78 ------- -------- -------- --------- Ratios/Supplemental Data Total return^ 17.86% 27.37% (13.38)% (22.20)% Ratio of total expenses to average net assets 0.50% 0.50% 0.50% 0.50%! Ratio of net investment income (loss) to average net assets 1.97% 2.09% 1.59% 1.51%! Portfolio turnover rate 58.2% 39.4% 49.0% 63.1%! Net assets, end of period (in thousands) $ 48,340 $ 20,622 $ 12,031 $ 7,502 ^Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions and payments of no redemption or account fees. ! Annualized The accompanying notes are an integral part of these financial statements. T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- October 31, 2004 PORTFOLIO OF INVESTMENTS (1) Shares Value -------------------------------------------------------------------------------- (Cost and value in $ 000s) EUROPE/FAR EAST 1.4% Common Stocks 1.4% iShares MSCI EAFE (USD) 4,756 696 Total Europe/Far East (Cost $652) 696 EUROPE/FOREIGN 0.5% Common Stocks 0.5% iShares MSCI EMU (USD) 3,800 250 Total Europe/Foreign (Cost $224) 250 AUSTRALIA 5.5% Common Stocks 5.2% Adelaide Bank 482 3 Adelaide Brighton 521 1 Alinta (ss.) 1,708 10 Alumina 6,484 27 Amcor 4,755 27 AMP Limited 9,474 45 Ansell Limited 1,118 7 APN News & Media 664 2 Aristocrat Leisure 2,446 16 Austereo Group 1,422 2 Australand Property Group 3,157 4 Australia & New Zealand Banking 9,553 146 Australian Foundation Investment 4,818 12 Australian Gas Light 2,414 24 Australian Leisure and Hospitality Group 1,367 4 Australian Pharmaceutical Industries 883 2 Australian Stock Exchange 544 8 AWB 1,817 6 AXA Asia Pacific (ss.) 7,189 21 Bank of Queensland 353 3 Bendigo Bank 742 6 BHP Billiton 19,910 206 Billabong International 664 5 Bluescope Steel 3,926 23 Boral 3,012 15 Brambles Industries LTD (ss.) 5,038 27 Brickworks 406 3 Burns, Philip & Company * 5,903 4 Caltex Australia 618 4 Centro Properties Group * 3,690 13 CFS Gandel Retail Trust, Equity Units 7,589 9 Challenger Financial Services Group * 7,175 3 Coca Cola Amatil 2,691 15 Cochlear Limited 278 5 Coles Myer 6,542 47 Commonwealth Bank of Australia 6,688 160 Computershare 2,861 11 Corporate Express Australia 886 4 CSL Limited 1,005 22 CSR 4,729 10 Downer EDI 1,133 4 Envestra 2,638 2 Flight Centre 467 7 Foodland Associated 777 11 Foster's Group 10,318 39 Futuris 3,462 5 General Property Trust, Equity Units (ss.) 10,724 30 Gunns 450 1 Gunns (Stock split shares) * 903 3 GWA International 1,182 3 Harvey Norman 4,066 9 Hills Motorway Group 1,043 6 Iluka Resources (ss.) 1,120 4 Incitec Pivot 68 1 Insurance Australia Group (ss.) 8,394 34 iShares MSCI Australia (USD) 2,900 45 James Hardie Industries 2,570 12 John Fairfax (ss.) 1,397 4 Leighton Holdings (ss.) 696 6 Lend Lease (ss.) 2,061 18 Lion Nathan (ss.) 2,059 12 Macquarie Airports 2,548 5 Macquarie Bank 1,128 33 Macquarie Goodman Management 527 1 Macquarie Infrastructure Group (ss.) 9,892 27 Mayne Group 3,986 13 Metcash Trading 1,101 2 Minara Resources * 1,346 2 Mirvac (ss.) 3,681 12 National Australia Bank 8,049 170 National Foods 1,928 8 Newcrest Mining 1,674 21 News Corporation 6,536 53 Novogen Limited * 374 1 Nufarm 890 5 OneSteel (ss.) 2,950 6 Orica 1,451 18 Origin Energy (ss.) 3,750 19 Oxiana Limited * 4,625 3 Pacifica Group 329 1 Paperlinx 2,360 9 Patrick Corporation 3,565 15 Perpetual Trust Australia (ss.) 196 8 Promina Group 5,427 18 Publishing & Broadcasting 699 8 Qantas Airways 4,642 12 QBE Insurance (ss.) 3,541 36 Rinker Group 4,976 32 Rio Tinto 1,979 54 Rural Press 140 1 Santos 4,453 28 SFE Corporation (ss.) 514 3 Sigma 529 3 Simsmetal Group 486 6 Smorgon Steel Group 2,081 2 Sonic Healthcare 1,669 13 Southcorp *B176(ss.) 3,821 10 Southern Cross Broadcasting 318 3 Spotless Group 1,074 4 St. George Bank 2,685 47 Stockland 6,654 29 Suncorp Metway 2,738 35 Tabcorp 2,734 31 Telstra 11,258 39 Ten Network Holdings 2,623 8 Toll Holdings (ss.) 1,703 15 Transurban 2,735 13 UNiTAB 527 4 Virgin Blue Holdings * 1,194 2 Washington H. Soul Pattinson & Company 503 3 Wesfarmers 1,995 52 West Australian Newspapers 151 1 Westfield Group 8,929 100 Westpac Banking 9,478 134 WMC Resorces 5,768 29 Woodside Petroleum 2,672 39 Woolworths 5,512 55 2,519 Preferred Stocks 0.3% News Corporation 16,504 130 Rural Press 297 2 132 Total Australia (Cost $2,091) 2,651 AUSTRIA 0.3% Common Stocks 0.3% Bank Austria Creditanstalt 227 17 Dest Electrizitas, Class A * 23 5 Erste Bank 946 42 EVN 58 3 Immofinanz Immobilien Anlagen * 1,321 11 OMV 71 17 Telekom Austria 1,981 30 Wienerberger 407 16 Total Austria (Cost $97) 141 BELGIUM 1.2% Common Stocks 1.2% Agfa Gevaert 520 16 Almancora * 52 3 Almanij 285 21 Belgacom * 1,024 38 CNP 17 3 Colruyt 62 9 Colruyt, Rights * 62 0 Delhaize Group 487 31 Dexia 4,402 88 Electrabel 214 80 Fortis 3,727 95 Groupe Bruxelles Lambert 340 26 Interbrew 899 32 KBC Bank 465 34 Mobistar * 170 13 RTL Group 161 11 SES Global GDR 893 9 Solvay 194 20 UCB 562 30 Umicore 122 9 Total Belgium (Cost $437) 568 CHINA 0.4% Common Stocks 0.4% Brilliance China Automotive (HKD) (ss.) 6,000 1 China Insurance (HKD) 2,000 1 China Mobile (Hong Kong) (HKD) 28,000 81 China Overseas Land (HKD) 6,000 1 China Resources Enterprise (HKD) 10,000 14 China Unicom (HKD) 12,000 9 Citic Pacific (HKD) 4,000 10 Cnooc (HKD) 50,000 26 Global Bio-chem Technology (HKD) 6,000 5 Guangzhou Investment Company (HKD) 10,000 1 Semiconductor Manufacturing International (HKD) *(ss.) 21,000 4 Shanghai Industrial Holdings (HKD) (ss.) 14,000 27 TCL (HKD) 4,000 1 TPV Technology (HKD) 2,000 1 Total China (Cost $195) 182 DENMARK 0.8% Common Stocks 0.8% A P Moller-Maersk, Series B 7 52 A P Moller-Maersk * 5 36 Carlsberg, Series B 203 9 Coloplast, Series B 58 6 Danisco 267 15 Danske Bank 3,470 97 Falck A/S * 187 2 H. Lundbeck 553 10 ISS 209 11 Jyske Bank A/S * 406 13 Novo Nordisk, Series B 1,183 59 Novozymes, Series B 320 14 TDC 1,120 41 Vestas Wind Systems * 973 12 William Demant * 113 5 Total Denmark (Cost $325) 382 FINLAND 1.2% Common Stocks 1.2% Fortum 2,018 31 Kone, Class B 208 13 Metso 490 7 Nokia 24,456 377 Outokumpu Oyj 717 13 Sampo, Series A (ss.) 2,195 26 SanomaWSOY Oyj, Series B * 183 4 Stora Enso, Series R 3,459 49 TietoEnator 429 12 UPM-Kymmene 2,739 54 Total Finland (Cost $677) 586 FRANCE 9.3% Common Stocks 9.3% Accor 1,045 43 Air France 709 12 Alcatel *(ss.) 6,596 96 Arcelor 2,501 47 Assurances Generales de France 298 20 Atos Origin * 176 11 Autoroutes du Sud de la France 364 17 AXA 9,911 213 BNP Paribas 4,603 313 Bouygues 1,320 52 Cap Gemini * 688 17 Carrefour 3,747 164 Casino Guichard-Perrachon (ss.) 197 14 Christian Dior 384 23 Ciments Francais 64 6 CNP Assurances 218 15 Compagnie de Saint-Gobain (ss.) 1,828 100 Credit Agricole (ss.) 3,101 91 Dassault Systemes 298 15 Essilor International 542 37 Eurazeo 123 9 France Telecom * 9,728 278 Gecina (ss.) 182 16 Groupe Danone 1,410 118 Imerys 168 12 JC Decaux * 350 9 Klepierre 108 8 L'Air Liquide 576 93 L'Oreal (ss.) 1,771 121 Lafarge 898 82 Lagardere S.C.A. 739 48 LVMH (ss.) 1,933 132 Michelin 560 30 Natexis Banques Populaires 51 6 Pernod-Ricard 381 53 Peugeot 960 59 Pinault Printemps Redoute 483 45 Publicis (ss.) 775 23 Renault 1,125 94 Rexel 107 5 Sagem (ss.) 86 8 Sanofi-Aventis 5,403 395 Schneider Electric, Series A 1,238 82 Snecma * 570 12 Societe BIC (ss.) 214 10 Societe Generale 2,339 217 Societe Television Francaise 1 (ss.) 848 26 Sodexho Alliance (ss.) 628 16 Suez 5,284 123 Technip 104 16 Thales 416 15 Thomson (ss.) 1,476 33 Total (ss.) 3,435 714 Unibail 237 31 Valeo 437 16 Veolia Environnement 1,597 48 Vinci 455 54 Vivendi Universal * 5,593 153 Total France (Cost $4,047) 4,516 GERMANY 6.9% Common Stocks 6.7% Adidas-Salomon 239 33 Allianz 1,971 209 Altana 398 20 AMB 53 4 BASF 3,076 192 Bayer 3,803 108 Bayerische Hypo-und Vereinsbank * 2,851 56 Beiersdorf, Series A 89 8 BMW 1,553 66 Celesio 208 15 Commerzbank * 2,361 43 Continental 695 38 DaimlerChrysler 5,285 218 Degussa (ss.) 182 7 Depfa Bank 1,815 27 Deutsche Bank 2,987 227 Deutsche Boerse 606 30 Deutsche Lufthansa * 1,417 19 Deutsche Post 2,348 46 Deutsche Postbank * 346 14 Deutsche Telekom * 16,589 318 E.On 3,654 297 Fresenius 38 3 Fresenius Medical Care 180 14 Hannover Rueckversicherung (ss.) 291 9 Heidelberger Druckmaschinen * 446 13 Heidelberger Zement 245 12 Henkel 213 15 Hypo Real Estate * 669 25 Infineon Technologies * 3,940 43 Karstadt (ss.) 344 4 Linde 471 28 MAN 543 19 Merck 70 4 METRO 854 41 MLP 436 7 Munich Re 1,198 117 Puma 64 16 RWE 2,102 111 SAP 1,216 207 Schering 1,056 68 Siemens 4,701 350 Suedzucker 435 8 T-Online International * 1,443 17 ThyssenKrupp 1,982 37 TUI (ss.) 703 15 Volkswagen 1,262 56 3,234 Preferred Stocks 0.2% Fresenius 114 10 Fresenius Medical Care 122 7 Henkel (Non-voting shares) 327 24 Porsche 46 29 Wella AG 82 9 79 Total Germany (Cost $3,094) 3,313 GREECE 0.5% Common Stocks 0.5% Alpha Bank 1,204 34 Bank of Piraeus 1,292 17 Coca-Cola Hellenic Bottling 419 9 Commercial Bank of Greece 367 10 Cosmote 680 12 EFG Eurobank Ergasias 1,203 33 Greek Organization of Football Prognostics 820 17 Hellenic Petroleum 522 5 Hellenic Telecommunications Organization 1,943 30 National Bank of Greece 1,406 39 Public Power 560 14 Titan Cement * 300 8 Total Greece (Cost $175) 28 HONG KONG 2.3% Common Stocks 2.3% Asia Aluminum Holdings 8,000 1 Asia Satellite Telecommunications 500 1 ASM Pacific Technology 1,500 5 Bank of East Asia 7,600 22 Beijing Enterprises Holdings 2,000 2 BOC Hong Kong 22,500 41 Cafe De Coral 2,000 2 Cathay Pacific Airways 7,000 12 Chaoda Modern Agriculture (ss.) 2,100 1 Cheung Kong Holdings 9,000 75 Cheung Kong Infrastructure Holdings 4,000 11 China Everbright (ss.) 2,000 1 China Merchants Holdings 6,000 9 China National Aviation 4,000 1 China Resources Power Holdings 4,000 2 China Travel International Investment 10,000 3 CITIC International Financial 12,000 5 CLP 9,700 56 CNPC Hong Kong 10,000 2 COFCO International 2,000 1 Cosco Pacific 6,000 10 Dah Sing Financial 400 3 Dairy Farm International (USD) 4,500 11 Denway Motors 22,000 7 Esprit Holdings 4,500 24 First Pacific * 12,000 3 Fountain Set Holdings 2,000 1 Giordano 8,000 4 Great Eagle 1,000 2 Guangdong Investment 4,000 1 Guoco Group 1,000 8 Hang Lung Development (ss.) 5,000 8 Hang Lung Properties 7,000 10 Hang Seng Bank 4,000 53 Henderson Investor 5,000 7 Henderson Land Development 4,000 19 Hengan International Group 4,000 2 Hong Kong & China Gas 21,930 42 Hong Kong & Shanghai Hotels 5,000 4 Hong Kong Aircraft Engineering 400 2 Hong Kong Electric 8,500 38 Hong Kong Exchanges & Clearing 6,000 14 Hong Kong Land (USD) 10,000 21 Hopewell Highway Infrastructure 3,500 2 Hopewell Holdings 4,000 9 Hung Hing Printing Group 2,000 2 Hutchison Harbour Ring 6,000 1 Hutchison Whampoa 17,000 131 Hysan Development 4,000 7 i-Cable Communication 2,200 1 Industrial & Commercial Bank of China 3,000 4 Interchina Holdings * 10,000 0 International Bank of Asia 2,000 1 iShares MSCI Hong Kong (USD) 2,100 23 Jardine Matheson (USD) 2,000 30 Jardine Strategic (USD) 1,500 10 JCG Holdings 2,000 2 Johnson Electric 10,500 10 Kerry Properties 1,500 3 Kingboard Chemical Holdings, Warrants, 12/31/06 * 200 0 Kingboard Chemical Holdings (ss.) 2,000 4 Kowloon Motor Bus Holdings 2,000 9 Lee & Man Paper Manufacturing 2,000 1 Legend 16,000 6 Li & Fung 10,000 15 Liu Chong Hing Bank 1,000 1 Mandarin Oriental International (USD) * 6,000 4 MTR 9,000 13 New World Development 12,000 10 Next Media * 2,000 1 NWS Holdings 5,000 7 Oriental Press Group 2,000 1 PCCW Limited * 21,200 13 SCMP Group 6,000 2 Shangri-La Asia (ss.) 6,000 7 Shenzhen International 22,500 1 Shenzhen Investment 2,000 0 Shun Tak Holdings (ss.) 8,000 5 Sino Land (ss.) 12,000 10 Skyworth Digital Holdings 6,000 2 Smartone Telecommunications 1,000 1 Sun Hung Kai Properties 10,000 92 Swire Pacific, Series A 4,500 32 Swire Pacific, Series B 7,500 9 TCL Communication Technology * 1,600 0 Techtronic Industries (ss.) 6,000 12 Television Broadcast 2,000 9 Texwinca Holdings 2,000 2 Tingyi Holding 6,000 1 Wharf 6,000 20 Wheelock 4,000 6 Wing Hang Bank 1,500 10 Wing Lung Bank 600 5 Yue Yuen Industrial 5,500 14 Total Hong Kong (Cost $1,003) 1,108 IRELAND 0.7% Common Stocks 0.7% Allied Irish Banks 4,755 83 Anglo Irish Bank 1,783 34 Bank of Ireland (Dublin Listing) 5,289 72 CRH 2,826 68 Elan * 2,026 52 Irish Life & Permanent 1,441 24 Kerry Group 811 18 Total Ireland (Cost $290) 351 ITALY 4.4% Common Stocks 4.4% AEM 3,698 8 Alleanza Assicurazioni 2,303 27 Assicurazioni Generali 6,723 199 Autogrill * 653 10 Autostrade * 1,510 33 Banca Antonveneta * 1,486 31 Banca Carige 2,465 10 Banca Fideuram (ss.) 1,594 8 Banca Intesa 23,390 96 Banca Lombarda 1,670 21 Banca Monte dei Paschi di Siena 6,414 19 Banca Nazionale Lavoro (ss.) 8,289 19 Banca Popol Emilia Romagna * 389 17 Banca Popolare di Lodi 1,476 16 Banche Poplari Unite 1,766 31 Banco Popolare di Verona e Novara 1,954 35 Benetton 429 5 Bulgari 760 8 Capitalia 8,460 32 Edison * 6,357 13 Enel (ss.) 23,845 216 ENI S.p.A. 15,826 359 Fiat * 3,089 22 FinecoGroup * 1,548 11 Finmeccanica 33,135 26 Fondiaria-Sai 509 12 Gruppo Editoriale L'Espresso 1,134 6 Ifil 2,665 10 Italcementi 561 9 Italcementi-RNC 382 4 Luxottica Group 698 13 Mediaset 3,113 35 Mediobanca 2,153 30 Mediolanum (ss.) 1,145 7 Pirelli (ss.) 13,151 15 RAS 1,768 37 RCS MediaGroup 2,890 14 Saipem 2,550 29 San Paolo IMI 5,535 70 Seat Pagine Gialle 21,372 7 Snam Rete Gas 5,020 25 Telecom Italia 56,997 190 TIM SpA 21,702 128 Telecom Italia-RNC 25,539 64 Terna 5,290 13 UniCredito Italiano 24,028 129 Unipol 811 3 2,122 Preferred Stocks 0.0% Unipol * 1,920 5 5 Total Italy (Cost $1,871) 2,127 JAPAN 20.8% Common Stocks 20.8% ABC-Mart 100 2 ACOM 400 25 Advantest 400 28 AEON 2,600 42 AEON Credit Service (ss.) 100 7 AIFUL 200 20 Aioi Insurance 2,000 8 Aisin Seiki 1,000 22 Ajinomoto 4,000 44 Alfresa Holdings (ss.) 100 4 All Nippon Airways (ss.) 9,000 28 Alps Electric 1,000 12 Amada 1,000 5 Aoyama Trading 200 4 Arisawa Manufacturing 100 4 Asahi Breweries 2,000 21 Asahi Glass 5,000 46 Asahi Kasei 6,000 26 Asatsu-DK (ss.) 100 3 Awa Bank 2,000 12 Bandai 400 9 Bank of Fukuoka (ss.) 2,000 11 Bank of Kyoto (ss.) 1,000 7 Bank of Nagoya 2,000 10 Bank of Yokohama 5,000 30 Benesse (ss.) 300 8 Bosch Automotives 1,000 5 Bridgestone 3,000 54 Brother Industries 1,000 9 Canon 5,000 247 Casio Computer 1,000 12 Central Glass (ss.) 1,000 7 Central Japan Railway (ss.) 5 40 Chiba Bank (ss.) 3,000 19 Chiyoda * 1,000 8 Chubu Electric (ss.) 2,900 63 Chugai Pharmaceutical 1,900 30 Chugoku Electric Power 1,500 26 Circle K Sunkus * 100 2 Citizen Watch 1,000 9 Coca-Cola West Japan 100 2 Cosmo Oil (ss.) 2,000 6 Credit Saison 800 26 CSK (ss.) 300 12 Dai Nippon Printing 3,000 41 Daicel Chemical Industries 1,000 5 Daido Steel 1,000 3 Daiei * 1,500 3 Daihatsu Motor (ss.) 1,000 7 Daiichi Pharmaceutical 1,200 23 Daikin Industries 1,000 24 Daimaru (ss.) 1,000 7 Dainippon Ink & Chemicals 9,000 20 Dainippon Pharmaceutical (ss.) 1,000 9 Dainippon Screen 1,000 5 Daishi Bank 1,000 3 Daito Trust Construction (ss.) 600 25 Daiwa House Industry 2,000 20 Daiwa Securities 7,000 43 Denki Kagaku Kogyo Kabushiki Kaisha 3,000 9 Denso 2,300 55 Dentsu 7 19 Don Quijote 100 6 Dowa Mining (ss.) 1,000 6 East Japan Railway 16 84 Ebara Section 1,000 5 Eisai 1,200 35 FamilyMart 400 11 Fanuc (ss.) 900 54 Fast Retailing 300 19 Fuji Electric 5,000 13 Fuji Heavy Industries 4,000 19 Fuji Photo Film 2,000 68 Fuji Soft ABC 200 6 Fuji Television Network 2 5 Fujikura (ss.) 2,000 9 Fujisawa Pharmaceutical 1,000 26 Fujitsu 8,000 48 Fukuyama Transporting 1,000 4 Funai Electric 100 13 Furukawa Electric (ss.) 2,000 8 Futaba (ss.) 100 2 Global Media Online * 100 2 Goodwill Group 2 4 Gunma Bank 2,000 10 Gunze Limited 1,000 5 Hachijuni Bank 2,000 12 Hamamatsu Photonics (ss.) 100 2 Hankyu *(ss.) 4,000 14 Hankyu Department Stores 1,000 7 Hanshin Electric Railway 1,000 3 Heiwa 700 11 Hikari Tsushin 100 6 Hino Motors 1,000 7 Hirose Electric (ss.) 200 20 Hiroshima Bank (ss.) 2,000 9 Hitachi 13,000 82 Hitachi Cable 1,000 4 Hitachi Capital (ss.) 100 2 Hitachi Chemical 300 5 Hitachi Construction Machinery 400 5 Hokkaido Electric Power 800 15 Hokkoku Bank 1,000 4 Hokugin Financial Group 15,000 34 Hokuriku Electric Power 800 14 Honda 3,700 179 Hoya 400 41 Hyakujushi Bank 1,000 6 Ibiden 500 8 Invoice * 19 3 Invoice, Warrants, 9/30/05 * 19 0 Isetan (ss.) 700 7 iShares MSCI Japan (USD) 16,800 167 Ishikawajima Harima Heavy Industries (ss.) 6,000 8 Isuzu Motors *B692 (ss.) 4,000 11 Ito (ss.) 100 5 Ito-Yokado 2,000 72 Itochu *(ss.) 6,000 26 Itochu Techno-Science (ss.) 100 4 Iyo Bank 1,000 7 Izumi 100 2 Jafco (ss.) 200 10 Japan Airlines System * 4,000 11 Japan Petroleum Exploration 100 4 Japan Tobacco 5 44 JFE Holdings 2,200 59 JGC (ss.) 1,000 11 Joyo Bank 3,000 13 JSAT 1 3 JSR 1,000 18 Juroku Bank 1,000 4 Kagoshima Bank 1,000 6 Kajima 11,000 42 Kamigumi 1,000 7 Kaneka 1,000 10 Kansai Electric Power 3,800 71 Kansai Paint (ss.) 1,000 6 Kao (ss.) 3,000 69 Katokichi 100 2 Kawasaki Heavy Industries 6,000 10 Kawasaki Kisen Kaisha 5,000 33 KDDI 17 82 Keihin Electric Express Railway (ss.) 2,000 12 Keio Electric Railway 2,000 11 Keyence 200 45 Kikkoman (ss.) 1,000 9 Kinden (ss.) 1,000 7 Kinki Nippon Railways (ss.) 7,000 22 Kirin Beverage * 100 2 Kirin Brewery 4,000 36 Kobe Steel 10,000 14 Koei 1,300 30 Kokuyo (ss.) 500 5 Komatsu 5,000 33 Komeri (ss.) 100 2 Konami 500 11 Konica Minolta Holdings 2,000 27 Kose 100 4 Kubota 3,000 14 Kuraray 2,000 16 Kuraya Sanseido (ss.) 500 5 Kurita Water Industries 500 7 Kyocera 1,000 73 Kyowa Hakko Kogyo 2,000 14 Kyushu Electric Power 1,700 34 Lawson 400 13 Leopalace21 500 9 Lion Corp (ss.) 1,000 5 Mabuchi Motor 200 15 Makita (ss.) 1,000 14 Marubeni 6,000 16 Marui 2,000 25 Maruichi Steel Tube (ss.) 2,000 32 Matsui Securities 200 5 Matsumotokiyoshi 200 5 Matsushita Electric Industrial 13,000 188 Matsushita Electric Works (ss.) 671 6 Mazda Motor 3,000 9 Meiji Dairies 1,000 6 Meiji Seika Kaisha (ss.) 1,000 4 Meitec (ss.) 200 8 Millea 7 92 Minebea 2,000 8 Misumi (ss.) 100 3 Mitsubishi 6,000 66 Mitsubishi Chemical 9,000 26 Mitsubishi Electric 8,000 37 Mitsubishi Estate (ss.) 5,000 53 Mitsubishi Gas Chemical (ss.) 1,000 4 Mitsubishi Heavy Industries 17,000 48 Mitsubishi Logistics 1,000 9 Mitsubishi Materials 4,000 8 Mitsubishi Rayon 2,000 6 Mitsubishi Securities (ss.) 1,000 9 Mitsubishi Tokyo Financial 17 144 Mitsui 6,000 50 Mitsui Chemical 3,000 15 Mitsui Engineering & Shipbuilding (ss.) 3,000 5 Mitsui Fudosan (ss.) 4,000 42 Mitsui Mining & Smelting 4,000 16 Mitsui O.S.K. Lines 5,000 30 Mitsui Sumitomo Insurance 8,000 66 Mitsui Trust 3,000 21 Mitsukoshi 2,000 9 Mitsumi Electric 400 5 Mizuho Financial Group 46 177 Mizuho Investors Securities * 2,000 4 Mizuho Trust & Banking (ss.) 14,000 23 Murata Manufacturing 1,200 57 Musashino Bank 100 4 Nagoya Railroad (ss.) 3,000 10 Namco 200 2 Namco, Warrants, 11/23/04 * 200 2 NEC 7,000 39 NEC Electronics 100 5 Net One Systems 2 8 NGK Insulators 1,000 8 NGK Spark Plug (ss.) 1,000 10 NHK Spring 1,000 7 Nichicon 200 2 Nichirei Corp. 1,000 3 Nidec 100 11 Nikko Cordial 8,000 36 Nikon 1,000 10 Nintendo 500 56 Nippon Broadcasting System 30 1 Nippon Express 4,000 19 Nippon Light Metal 2,000 5 Nippon Meat Packer 1,000 12 Nippon Mining Holdings 3,500 17 Nippon Oil 6,000 38 Nippon Paint 1,000 4 Nippon Sheet Glass 1,000 3 Nippon Shokubai 1,000 7 Nippon Steel 27,000 63 Nippon Telegraph & Telephone 27 115 Nippon Television Network 10 1 Nippon Unipac (ss.) 4 18 Nippon Yusen 4,000 20 Nipponkoa Insurance 3,000 17 Nishi-Nippon Bank 3,000 13 Nishi-Nippon Railroad 1,000 3 Nissan Chemical Industries 1,000 8 Nissan Motor 11,700 132 Nissay Dowa General Insurance 1,000 5 Nisshin Seifun Group 1,000 10 Nisshin Steel 5,000 11 Nisshinbo Industries 1,000 7 Nissin Food Products 400 10 Nitori (ss.) 50 3 Nitto Denko 700 33 NOK (ss.) 1,000 30 Nomura 10,000 123 Nomura Research Institute 200 17 NSK (ss.) 2,000 9 NTN (ss.) 2,000 11 NTT Data 6 16 NTT DoCoMo 104 183 Obayashi 3,000 16 Odakyu Electric Railway (ss.) 3,000 16 Ogaki Kyoritsu Bank 1,000 5 Oji Paper (ss.) 5,000 29 Oki Electric Industry *(ss.) 3,000 10 Olympus Optical (ss.) 1,000 19 Omron 1,000 23 Ono Pharmaceutical 300 14 Onward Kashiyama 1,000 13 Oracle Japan (ss.) 100 5 Orient * 2,000 5 Oriental Land (ss.) 300 18 Orix (ss.) 400 47 Osaka Gas 9,000 26 Otsuka * 100 5 Park24 (ss.) 100 1 Park24, Warrants, 12/22/04 * 100 2 Pasona * 1 3 Pioneer 700 13 Promise 550 35 Q.P. Corporation (ss.) 300 3 Resona Holdings * 22,000 36 Ricoh 3,000 56 Rinnai (ss.) 100 3 Rohm 600 62 Ryohin Keikaku 100 4 Sagami Railway 1,000 3 San In Godo Bank 1,000 8 Sanken Electric (ss.) 1,000 12 Sankyo 1,600 33 Sankyo/Gunma 300 12 Sankyo Seiki Manufacturer * 1,000 10 Santen Pharmaceutical 300 5 Sanyo Electric (ss.) 7,000 22 Sanyo Shinpan Finance 100 6 Sapporo Breweries 1,000 4 Sapporo Hokuyo 1 7 Secom 1,000 36 Sega Sammy Holdings *(ss.) 312 14 Seibu Railway (ss.) 1,000 5 Seiko Epson 800 33 Seino Transportation (ss.) 1,000 9 Seiyu *(ss.) 1,000 2 Sekisui Chemical 2,000 13 Sekisui House 3,000 31 Seven-Eleven Japan 2,000 58 SFCG 30 6 Sharp (ss.) 4,000 55 Shiga Bank 1,000 5 Shikoku Bank 1,000 6 Shikoku Electric Power (ss.) 1,000 18 Shima Seiki Manufacturing (ss.) 100 3 Shimachu 100 2 Shimadzu 1,000 6 Shimamura (ss.) 100 7 Shimano 1,500 37 Shimizu (ss.) 3,000 13 Shin-Etsu Chemical 1,800 68 Shinko Electric Industries (ss.) 100 3 Shinko Securities (ss.) 4,000 11 Shinsei Bank (ss.) 4,000 26 Shionogi & Co. 1,000 16 Shiseido (ss.) 2,000 26 Shizuoka Bank 3,000 25 Showa Denko 5,000 12 Showa Shell Sekiyu 600 5 Sky Perfect Communications 2 2 Skylark (ss.) 400 7 SMBS Friend Securities * 500 3 SMC 300 32 Softbank 900 41 Softbank Investment 9 3 Sohgo Security Services (ss.) 2,100 29 Sompo Japan Insurance 4,000 35 Sony 4,800 167 Square Enix (ss.) 100 3 Stanley Electric 300 5 Sumisho Computer Systems (ss.) 1,100 23 Sumisho Lease 100 4 Sumitomo 5,000 37 Sumitomo Bakelite (ss.) 2,000 12 Sumitomo Chemicals 6,000 29 Sumitomo Electric Industries (ss.) 3,000 28 Sumitomo Forestry 1,000 9 Sumitomo Heavy Industries *(ss.) 2,000 6 Sumitomo Metal Industries 18,000 22 Sumitomo Metal Mining 3,000 20 Sumitomo Mitsui Financial 23 149 Sumitomo Osaka Cement 3,000 7 Sumitomo Realty & Development 2,000 22 Sumitomo Rubber Industries 2,000 17 Sumitomo Trust & Banking (ss.) 6,000 35 Suruga Bank 1,000 8 Suzuken 100 2 Suzuki Motor 2,000 35 T&D Holdings * 950 42 Taiheiyo Cement 6,000 14 Taisei 3,000 11 Taisho Pharmaceutical 1,000 18 Taiyo Nippon Sanso (ss.) 1,000 5 Taiyo Yuden 1,000 10 Takara Holdings (ss.) 1,000 6 Takashimaya 1,000 9 Takeda Chemical Industries 3,500 169 Takefuji (ss.) 300 19 Tanabe Seiyaku 1,000 9 TDK 500 35 Teijin 3,000 12 Teikoku Oil (ss.) 1,000 6 TEPCO 5,400 122 Terumo 700 17 The 77 Bank 1,000 6 The Chugoku Bank 1,000 10 The Higo Bank 1,000 6 The Hyakugo Bank 2,000 11 The Yokohama Rubber Company 1,000 4 THK (ss.) 600 10 Tobu Railway 3,000 11 Toda Corp. 1,000 4 Toho 600 9 Toho Gas 2,000 6 Tohoku Electric Power 1,900 32 Tokuyama Corp. 1,000 5 Tokyo Electron 700 38 Tokyo Gas 11,000 41 Tokyo Steel Manufacturing 500 8 Tokyo Style 1,000 11 Tokyo Tatemono * 1,000 6 Tokyu 4,000 18 Tokyu Land 1,000 3 Tomen *(ss.) 3,000 4 Tonen General Sekiyu (ss.) 2,000 17 Toppan Forms (ss.) 100 1 Toppan Printing (ss.) 3,000 29 Toray Industries 5,000 23 Toshiba (ss.) 12,000 48 Tosoh 2,000 8 Tostem Inax Holding (ss.) 1,000 18 Toto (ss.) 1,000 9 Toyo Information 200 7 Toyo Seikan Kaisha 1,000 16 Toyobo 3,000 7 Toyoda Gosei 1,100 21 Toyota Industries 600 14 Toyota Motor (ss.) 14,200 553 Toyota Tsusho (ss.) 1,000 13 Trend Micro (ss.) 500 24 TV Asahi 1 2 Ube Industries 3,000 4 UFJ *(ss.) 20 93 UFJ Tsubasa Securities 2,000 8 ULVAC * 100 2 Uni-Charm (ss.) 200 10 UNY 1,000 10 Ushio 1,000 17 USS (ss.) 120 10 Wacoal 1,000 11 West Japan Railway 8 32 World Company 100 3 Yahoo Japan * 7 32 Yahoo Japan (Bonus shares) * 5 22 Yakult Honsha (ss.) 1,000 16 Yamada Denki (ss.) 400 14 Yamaguchi Bank 1,000 10 Yamaha 700 11 Yamaha Motor 1,000 15 Yamanouchi Pharmaceutical 1,900 70 Yamato Transport 2,000 27 Yamazaki Baking 2,000 18 Yaskawa Electric 1,000 5 Yokogawa Electric (ss.) 1,000 13 Yoshinoya D&C 1 2 Zeon 1,000 8 Total Japan (Cost $9,554) 10,072 NETHERLANDS 4.9% Common Stocks 4.9% ABN Amro Holdings 8,641 207 Aegon 8,021 88 Akzo Nobel 1,508 57 ASML Holding * 2,547 36 Corio 274 14 DSM 429 23 Euronext 657 19 European Aeronautic Defense & Space (ss.) 1,704 49 Fortis (Unified shares) 2,916 74 Heineken 1,440 45 Heineken Holding 513 14 ING Groep GDS 11,406 302 Koninklijke Numico * 877 29 Philips Electronics 6,911 163 Randstad Holding * 470 16 Reed Elsevier 3,935 52 Rodamco Europe 396 27 Royal Ahold * 8,369 58 Royal Dutch Petroleum 11,075 601 Royal KPN 13,393 107 STMicroelectronics 3,625 67 TPG 2,450 59 Unilever GDS (ss.) 3,015 175 VNU 1,332 36 Wolters Kluwer GDS 1,579 29 Total Netherlands (Cost $2,367) 2,347 NEW ZEALAND 0.2% Common Stocks 0.2% Air New Zealand * 395 0 Auckland International Airport 892 4 Briscoe Group 95 0 Carter Holt Harvey 3,779 6 Contact Energy 1,048 4 Fisher & Paykel Appliances 1,226 3 Fisher & Paykel Healthcare 985 2 Fletcher Building 1,900 7 Independent Newspapers 3,598 13 Infratil Limited 1,016 2 Infratil Limited, Warrants, 7/10/09 * 203 0 Kiwi Income Property Trust, Equity Units 6,039 5 NGC Holdings 1,302 3 Port of Tauranga 94 0 Ports of Auckland 30 0 Sanford 733 2 Sky City 2,054 6 Sky Network Television * 136 1 Telecom Corporation of New Zealand 9,865 39 Tower * 2,200 4 Warehouse Group 1,391 4 Westpac Trust Investments 165 2 107 Preferred Stocks 0.0% Tenon Limited * 877 1 1 Total New Zealand (Cost $81) 108 NORWAY 0.5% Common Stocks 0.5% DNB Holding 5,147 44 Norsk Hydro 1,050 77 Norske Skogsindustrier 684 12 Orkla, Series A 1,095 31 Statoil ASA 2,297 33 Storebrand ASA 1,817 14 Telenor 4,601 37 Yara International * 1,152 12 Total Norway (Cost $191) 260 PORTUGAL 0.4% Common Stocks 0.4% Banco BPI (ss.) 2,741 11 Banco Comercial Portugues 12,766 30 Banco Espirito Santo 374 6 Brisa-Auto Estradas de Portugal 2,239 18 CIMPOR 907 5 Electricidade de Portugal (ss.) 11,555 34 Portugal Telecom 6,621 75 PT Multimedia-Servicos de Telecomunicacoes e Multimedia 255 6 Total Portugal (Cost $157) 185 SINGAPORE 0.9% Common Stocks 0.9% Allgreen Properties 1,000 1 BIL International * 9,500 6 Capitacommercial, REIT * 400 0 CapitaLand 4,000 4 Capitamall Trust, REIT 4,000 4 Chartered Semiconductor Manufacturing * 3,000 2 China Aviation Oil Singapore Corporation 1,400 1 City Developments 3,000 11 ComfortDelGro Corporation 10,012 9 Creative Technology 350 4 Cycle & Carriage 1,000 5 Datacraft Asia (USD) * 3,000 2 DBS Group 6,000 56 Elec & Eltek (USD) 1,400 4 Fortune, REIT (HKD) 2,000 2 Fraser & Neave 1,000 8 Haw Par 1,103 3 Hong Leong Finance 1,000 2 iShares MSCI Singapore (USD) 1,100 8 Keppel 4,000 19 MobileOne Limited 5,000 5 NatSteel 4,000 5 Neptune Orient Lines 3,000 5 Noble Group 4,000 3 Overseas Chinese Banking 5,000 41 Pacific Century Regional Developments * 3,600 1 Parkway 2,000 2 People's Food Holdings 2,000 1 Sembcorp 3,000 3 Sembcorp Logistics 2,000 3 Sembcorp Marine 7,000 4 Singapore Airlines 3,000 19 Singapore Exchange 4,000 4 Singapore Land 1,000 3 Singapore Post 6,000 3 Singapore Press 8,500 24 Singapore Technologies Engineering 6,000 7 Singapore Telecommunications 33,642 49 Singapore Telecommunications CUFS GDR (AUD) 1,237 2 SMRT 2,000 1 ST Assembly Test Services * 4,000 2 United Industrial 5,000 3 United Overseas Bank 6,520 53 United Overseas Land * 2,000 3 Venture Manufacturing 1,000 9 Want Want Holdings (USD) 8,000 8 Wing Tai Holdings * 1,000 1 Total Singapore (Cost $372) 415 SPAIN 3.9% Common Stocks 3.9% Abertis Infraestructuras (ss.) 1,951 36 Abertis Infraestructuras, Series A * 85 2 Acciona (ss.) 136 10 Acerinox (ss.) 1,387 19 ACS Actividades 1,876 36 Alba (ss.) 159 5 Altadis, Series A 1,533 56 Amadeus Global Travel Distribution (ss.) 1,866 15 Antena 3 Television * 104 7 Banco Bilbao Vizcaya Argentaria (ss.) 17,806 279 Banco de Sabadell (ss.) 1,617 35 Banco Popular Espanol 1,062 60 Banco Santander Central Hispano (ss.) 24,657 275 Bankinter (ss.) 397 18 Cia Espanola de Petroleos 347 13 Corporacion Mapfre (ss.) 560 7 Endesa (ss.) 5,572 113 FCC 281 11 Gamesa 570 8 Gas Natural (ss.) 1,168 32 Gestevision Telecino * 520 10 Grupo Ferrovial (ss.) 360 16 Iberdrola 4,756 104 Inditex (ss.) 1,280 32 Promotora de Informaciones 410 8 Repsol 6,436 139 Sacyr Vallehermoso (ss.) 703 11 Sogecable * 497 20 Telefonica 26,022 429 Terra Networks *(ss.) 1,811 7 Union Electrica Fenosa 1,608 39 Zardoya Otis 460 10 Total Spain (Cost $1,533) 1,862 SWEDEN 2.4% Common Stocks 2.4% Ainax AB *(ss.) 122 4 Assa Abloy (ss.) 1,788 24 Atlas Copco, Series A (ss.) 671 28 Atlas Copco, Series B 244 9 Electrolux, Series B 1,493 28 ForeningsSparbanken, Series A 2,088 44 Gambro, Series A 1,314 15 Gambro, Series B (ss.) 455 5 Hennes & Mauritz, Series B 1,539 45 Holmen, Series B (ss.) 302 9 Industrivarden, Series A 834 18 Industrivarden, Series C 174 3 Investor, Series A 915 10 Investor, Series B 3,103 34 iShares MSCI Sweden (USD) 800 15 LM Ericsson, Series B * 81,005 235 NORDEA 15,369 133 Sandvik, Series A 1,388 52 Scania, Series B 527 19 SEB, Series A 3,556 59 Securitas, Series B 1,787 24 Skandia Forsakrings 5,377 20 Skanska 2,045 22 SKF, Series A 101 4 SKF, Series B 496 19 SSAB Svenskt Stal, Series A 292 6 SSAB Svenskt Stal, Series B 203 4 Svenska Cellulosa, Series B 1,027 38 Svenska Handelsbanken, Series A 3,427 74 Swedish Match 1,791 20 Tele2, Series B (ss.) 710 24 TeliaSonera (ss.) 6,066 33 TeliaSonera (EUR) 1,303 7 Volvo, Series A 645 24 Volvo, Series B 1,676 63 Total Sweden (Cost $971) 1,171 SWITZERLAND 6.6% Common Stocks 6.6% ABB * 10,745 62 Adecco 731 35 Baloise 291 12 Ciba Specialty Chemicals * 380 26 Clariant 1,209 16 Compagnie Financiere Richemont, Equity Units, Class A 2,747 78 Converium Holding 751 6 Credit Suisse Group * 6,154 210 Givaudan 44 27 Holcim 909 49 iShares MSCI Switzerland (USD) 3,900 60 Julius Baer 41 11 Keuhne & Nagel * 34 6 Lonza Group 250 12 Nestle 2,078 491 Nobel Biocare Holding 133 22 Novartis 14,883 709 Pargesa Holdings 11 35 Roche Holding (Bearer shares) 115 14 Roche Holding (Participation certificates) 3,668 375 Schindler Holding 16 6 Schindler Holding (Participation certificates) 20 6 Serono 30 19 Societe Generale de Surveillance 31 20 Straumann * 36 7 Swatch (Bearer shares) 194 26 Swatch (Registered shares) 455 13 Swiss Life Holding * 141 18 Swiss Re 1,692 104 Swisscom 136 49 Syngenta * 578 55 Synthes 220 23 UBS 6,606 476 Zurich Financial Services * 755 107 Total Switzerland (Cost $2,964) 3,185 THAILAND 0.0% Common Stocks 0.0% Total Access Communications (USD) * 400 1 Total Thailand (Cost $1) 1 UNITED KINGDOM 24.1% Common Stocks 24.1% 3i Group 3,226 34 Abbey National 7,787 90 Aegis 6,766 13 Alliance & Leicester 2,412 38 Alliance Trust 186 9 Alliance UniChem 1,408 17 Allied Domecq 5,830 52 Amvescap 4,254 23 Anglo American 7,614 167 Antofagasta 442 8 Associated British Foods 2,097 27 Associated British Ports 1,742 15 AstraZeneca 8,755 359 Aviva 11,550 115 AWG * 776 10 BAA 5,593 59 BAE Systems 16,008 70 Barclays 34,074 333 BBA 2,423 12 BG Group 18,001 117 BHP Billiton PLC 12,997 132 BOC 2,619 42 Boots Group 4,018 49 BP 114,587 1,109 BPB 2,610 20 Bradford & Bingley 3,409 17 Brambles Industries PLC 3,817 18 British Airways * 2,898 11 British America Tobacco 8,547 129 British Land 2,592 35 British Sky Broadcasting 7,651 71 BT Group 45,155 154 Bunzl 2,398 18 Burberry Group 810 6 Cable & Wireless 12,528 24 Cadbury Schweppes 10,851 90 Cairn Energy * 841 23 Capita 3,510 23 Carnival 1,108 59 Centrica 20,303 90 Cobham 586 15 Compass 11,334 47 Corus * 23,353 21 Daily Mail & General Trust 1,511 20 Diageo 15,732 210 Dixons 10,223 32 Electrocomponents 2,335 12 EMAP 1,352 19 EMI 4,207 16 Enterprise Inns 1,844 21 Exel 1,690 22 Foreign and Colonial Investment Trust 5,403 18 Friends Provident 10,301 26 Gallaher 3,435 43 GKN 3,961 16 GlaxoSmithKline 31,027 653 Group 4 Securicor * 7,533 16 GUS 5,297 87 Hammerson 1,534 21 Hanson 3,876 29 Hays 9,577 23 HBOS 20,474 274 HHG * 14,619 12 Hilton Group 8,305 39 HSBC 58,634 946 ICAP 2,429 10 Imperial Chemical 6,262 24 Imperial Tobacco Group 3,844 90 InterContinental Hotels 3,726 46 International Power * 7,830 23 Invensys * 33,576 9 iShares MSCI United Kingdom (USD) 11,300 190 ITV 21,450 42 J Sainsbury 6,689 32 Jardine Lloyd Thomson Group 813 7 Johnson Matthey 1,157 20 Johnston Press 1,500 15 Kelda Group 1,996 20 Kesa Electricals 2,920 15 Kingfisher 12,192 68 Land Securities 2,448 54 Legal & General Group 34,136 62 Liberty International 1,700 27 Lloyds TSB 29,324 232 Logica CMG 4,189 14 Lonmin 746 14 Man Group 1,621 39 Marks & Spencer 10,094 66 Matalan 1,523 6 Misys 2,863 11 Mitchells & Butlers 2,797 15 mmO2 * 45,658 88 National Grid Group 15,876 138 Next Group 1,392 43 Northern Rock 2,219 30 Old Mutual 20,203 43 Pearson 4,197 46 Peninsular & Oriental Steam Navigation 3,889 19 Persimmon 1,516 17 Premier Farnell 1,971 7 Provident Financial 1,412 15 Prudential 12,073 88 Prudential, Rights * 1,613 3 Rank 3,206 17 Reckitt Benckiser 3,667 101 Reed Elsevier 6,648 59 Rentokil Initial 9,549 27 Reuters 7,509 51 Rexam 2,884 23 Rio Tinto 5,466 143 RMC 1,407 22 Rolls-Royce Group * 8,879 42 Rolls-Royce Group, Class B * 273,193 1 Royal & Sun Alliance 15,987 22 Royal Bank of Scotland 16,464 485 SABMiller 5,268 76 Sage Group 6,749 23 Schroders 868 10 Schroders (Non-Voting Shares) 434 5 Scottish & Newcastle 4,692 35 Scottish & Southern Energy 4,507 69 Scottish Mortgage Investment Trust 2,117 12 Scottish Power 9,748 79 Severn Trent 1,805 30 Shell Transport & Trading 50,773 399 Shire Pharmaceuticals 2,510 24 Signet Group 9,213 18 Slough Estates 2,200 18 Smith & Nephew 4,881 41 Smiths 2,958 40 Standard Chartered 6,160 110 Tate & Lyle 2,542 20 Tesco 40,484 213 TI Automotive *@ 270 0 Tomkins 4,127 19 Travis Perkins 680 17 Trinity Mirror 1,547 18 Unilever N.V. 14,637 123 United Business Media 2,023 18 United Utilities 3,382 36 United Utilities, Class A 984 7 Vodafone 352,165 902 WH Smith 1,003 6 Whitbread 1,558 23 William Hill 2,144 19 William Morrison Supermarkets 13,993 58 Witan Investment Trust 1,844 10 Wolseley 3,060 53 WPP Group 6,214 62 Xstrata 2,497 39 Yell Group 3,657 25 11,664 Preferred Stocks 0.0% ITV (Convertible shares) * 370 0 0 Total United Kingdom (Cost $10,634) 11,664 SHORT-TERM INVESTMENTS 2.7% Money Market Funds 2.7% T. Rowe Price Reserve Investment Fund, 1.81% # ! 1,288,308 1,288 Total Short-Term Investments (Cost $1,288) 1,288 SECURITIES LENDING COLLATERAL 8.2% Money Market Pooled Account 8.2% Investment in money market pooled account managed by JP Morgan Chase Bank, London, 1.788% # 3,967,482 3,967 Total Securities Lending Collateral (Cost $3,967) 3,967 Total Investments in Securities 111% of Net Assets (Cost $49,258) $53,624 ------- (1) Denominated in currency of country of incorporation unless otherwise noted # Seven-day yield * Non-income producing (ss.) All or a portion of this security is on loan at October 31, 2004 - See Note 2 ! Affiliated company - See Note 5. @ Valued by the T. Rowe Price Valuation Committee, established by the fund's Board of Directors AUD Australian dollar EUR Euro GDR Global Depository Receipts GDS Global Depository Shares HKD Hong Kong dollar REIT Real Estate Investment Trust USD U.S. dollar The accompanying notes are an integral part of these financial statements. T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- October 31, 2004 STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------------------------------------------- (Amounts in $000s except shares and per share amounts) Assets Investments in securities, at value Affiliated companies (cost $1,288) $ 1,288 Other companies (cost $47,970) 52,336 Total investments in securities 53,624 Other assets 3,029 Total assets 56,653 Liabilities Obligation to return securities lending collateral 3,967 Other liabilities 4,346 Total liabilities 8,313 NET ASSETS $ 48,340 ------------ Net Assets Consist of: Undistributed net investment income (loss) $ 630 Undistributed net realized gain (loss) (479) Net unrealized gain (loss) 4,367 Paid-in-capital applicable to 4,972,493 shares of $0.01 par value capital stock outstanding; 1,000,000,000 shares of the Corporation authorized 43,822 NET ASSETS $ 48,340 ------------ NET ASSET VALUE PER SHARE $ 9.72 ------------ The accompanying notes are an integral part of these financial statements. STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- ($ 000s) Year Ended 10/31/04 Investment Income (Loss) Income Dividend (net of foreign taxes of $80) $ 829 Securities lending 16 Total income 845 Investment management and administrative expense 171 Net investment income (loss) 674 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities 57 Foreign currency transactions (15) Net realized gain (loss) 42 Change in net unrealized gain (loss) Securities 4,063 Other assets and liabilities denominated in foreign currencies (1) Change in net unrealized gain (loss) 4,062 Net realized and unrealized gain (loss) 4,104 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 4,778 ----------- The accompanying notes are an integral part of these financial statements. STATEMENT OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- ($ 000s) Year Ended 10/31/04 10/31/03 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ 674 $ 306 Net realized gain (loss) 42 (79) Change in net unrealized gain (loss) 4,062 3,692 Increase (decrease) in net assets from operations 4,778 3,919 Distributions to shareholders Net investment income (338) (174) Net realized gain (26) - Decrease in net assets from distributions (364) (174) Capital share transactions * Shares sold 28,624 7,951 Distributions reinvested 310 133 Shares redeemed (5,635) (3,239) Redemption fees 5 1 Increase (decrease) in net assets from capital share transactions 23,304 4,846 Net Assets Increase (decrease) during period 27,718 8,591 Beginning of period 20,622 12,031 End of period $ 48,340 $ 20,622 --------- ---------- (Including undistributed net investment income of $630 at 10/31/04 and $294 at 10/31/03) *Share information Shares sold 3,090 1,104 Distributions reinvested 36 20 Shares redeemed (616) (462) Increase (decrease) in shares outstanding 2,510 662 The accompanying notes are an integral part of these financial statements. T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- October 31, 2004 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES T. Rowe Price International Index Fund, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act). The International Equity Index Fund, a diversified, open-end management investment company is one portfolio established by the Corporation. The fund commenced operations on November 30, 2000. The fund seeks to provide long-term capital growth, using the FTSE(TM) International Limited Developed ex North America Index. The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates made by fund management. Valuation The fund values its investments and computes its net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made, except for OTC Bulletin Board securities, which are valued at the mean of the latest bid and asked prices. A security that 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. Listed securities not traded on a particular day are valued at the mean of the latest bid and asked prices for domestic securities and the last quoted sale price for international securities. Investments in mutual funds are valued at the mutual fund's closing net asset value per share on the day of valuation. Other investments and those 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 the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. Most foreign markets close before the close of trading on the NYSE. If the fund determines that developments between the close of a foreign market and the close of the NYSE will, in its judgment, materially affect the value of some or all of its portfolio securities, which in turn will affect the fund's share price, the fund will adjust the previous closing prices to reflect the fair value of the securities as of the close of the NYSE, as determined in good faith by the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. A fund may also fair value securities in other situations, such as when a particular foreign market is closed but the fund is open. In deciding whether to make fair value adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U. S. markets that represent foreign securities and baskets of foreign securities. The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day's opening prices in the same markets, and adjusted prices. Currency Translation Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses. Redemption Fees A 2% fee is assessed on redemptions of fund shares held less than 90 days to deter short-term trading and protect the interests of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund, and have the primary effect of increasing paid-in capital. The fees may cause the redemption price per share to differ from the net asset value per share. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared and paid on an annual basis. Capital gain distributions, if any, are declared and paid by the fund, typically on an annual basis. Other In the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is dependent on claims that may be made against the fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote. 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. Securities Lending The fund lends its securities to approved brokers to earn additional income. It receives as collateral cash and U.S. government securities valued at 102% to 105% of the value of the securities on loan. Cash collateral is invested in a money market pooled account managed by the fund's lending agent in accordance with investment guidelines approved by fund management. Collateral is maintained over the life of the loan in an amount not less than the value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the fund the next business day. Although 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 the securities. Securities lending revenue recognized by the fund consists of earnings on invested collateral and borrowing fees, net of any rebates to the borrower and compensation to the lending agent. At October 31, 2004, the value of loaned securities was $3,767,000; aggregate collateral consisted of $3,967,000 in the money market pooled account. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $43,590,000 and $19,918,000, respectively, for the year ended October 31, 2004. 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 under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. Distributions during the year ended October 31, 2004 totaled $364,000 and were characterized as ordinary income for tax purposes. At October 31, 2004, the tax-basis components of net assets were as follows: -------------------------------------------------------------------------------- Unrealized appreciation $ 5,985,000 Unrealized depreciation (1,679,000) Net unrealized appreciation (depreciation) 4,306,000 Undistributed ordinary income 661,000 Capital loss carryforwards (449,000) Paid-in capital 43,822,000 Net assets $ 48,340,000 ------------------ Federal income tax regulations require the fund to treat the gain/loss on passive foreign investment companies as realized on the last day of the tax year; accordingly, $61,000 of unrealized gains reflected in the accompanying financial statements were realized for tax purposes as of October 31, 2004. The fund intends to retain realized gains to the extent of available capital loss carryforwards for federal income tax purposes. During the fiscal year ended October 31, 2004, the fund utilized $45,000 of capital loss carryforwards. As of October 31, 2004, the fund had $80,000 of capital loss carryforwards that expire in fiscal 2009, $285,000 that expire in fiscal 2010, and $84,000 that expire in fiscal 2011. At October 31, 2004, the cost of investments for federal income tax purposes was $49,319,000. NOTE 4 - FOREIGN TAXES The fund is subject to foreign income taxes imposed by certain countries in which it invests. Foreign income taxes are accrued by the fund as a reduction of income. NOTE 5 - RELATED PARTY TRANSACTIONS The fund is managed by T. Rowe Price International, Inc. (the manager), a wholly owned subsidiary of T. Rowe Price Associates, Inc. (Price Associates), which is wholly owned by T. Rowe Price Group, Inc. The investment management and administrative agreement between the fund and the manager provides for an all-inclusive annual fee equal to 0.50% of the fund's average daily net assets. The fee is computed daily and paid monthly. The agreement provides that investment management, shareholder servicing, transfer agency, accounting, and custody services are provided to the fund, and interest, taxes, brokerage commissions, directors' fees and expenses, and extraordinary expenses are paid directly by the fund. At October 31, 2004, $36,000 was payable under the agreement. The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the Reserve Funds), open-end management investment companies managed by Price Associates and affiliates of the fund. The Reserve Funds are offered as cash management options to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates, and are not available for direct purchase by members of the public. The Reserve Funds pay no investment management fees. During the year ended October 31, 2004, dividend income from the Reserve Funds totaled $2,000, and the value of shares of the Reserve Funds held at October 31, 2004 and October 31, 2003 was $1,288,000 and $66,000, respectively. T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------------------------------- To the Board of Directors of T. Rowe Price International Index Fund, Inc. and Shareholders of T. Rowe Price International Equity Index Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, 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 T. Rowe Price International Equity Index Fund (the portfolio comprising T. Rowe Price International Index Fund, Inc., hereafter referred to as the "Fund") at October 31, 2004, 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 accounting principles generally accepted in the United States of America. 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 the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards 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 October 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland November 22, 2004 T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 10/31/04 -------------------------------------------------------------------------------- We are providing this information as required by the Internal Revenue Code. The amounts shown may differ from those elsewhere in this report because of differences between tax and financial reporting requirements. The fund's distributions to shareholders included $26,000 from short-term capital gains. For taxable non-corporate shareholders, $650,000 of the fund's income and short-term capital gains represents qualified dividend income subject to the 15% rate category. The fund will pass through foreign source income of $743,000 and foreign taxes paid of $55,000. INFORMATION ON PROXY VOTING POLICIES, PROCEDURES, AND RECORDS -------------------------------------------------------------------------------- A description of the policies and procedures used by T. Rowe Price funds and portfolios to determine how to vote proxies relating to portfolio securities is available in each fund's Statement of Additional Information, which you may request by calling 1-800-225-5132 or by accessing the SEC's Web site, www.sec.gov. The description of our proxy voting policies and procedures is also available on our Web site, www.troweprice.com. To access it, click on the words "Company Info" at the top of our homepage for individual investors. Then, in the window that appears, click on the "Proxy Voting Policy" navigation button in the top left corner. Each fund's most recent annual proxy voting record is available on our Web site and through the SEC's Web site. To access it through our Web site, follow the directions above, then click on the words "Proxy Voting Record" at the bottom of the Proxy Voting Policy page. HOW TO OBTAIN QUARTERLY PORTFOLIO HOLDINGS -------------------------------------------------------------------------------- The fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available electronically on the SEC's Web site (www.sec.gov); hard copies may be reviewed and copied at the SEC's Public Reference Room, 450 Fifth St. N.W., Washington, DC 20549. For more information on the Public Reference Room, call 1-800-SEC-0330. T. Rowe Price International Equity Index Fund -------------------------------------------------------------------------------- ABOUT THE FUND'S DIRECTORS AND OFFICERS -------------------------------------------------------------------------------- Your fund is governed by a Board of Directors that meets regularly to review investments, performance, compliance matters, advisory fees and expenses, and other business affairs, and is responsible for protecting the interests of shareholders. The majority of the fund's directors are independent of T. Rowe Price Associates, Inc. (T. Rowe Price); "inside" directors are officers of T. Rowe Price. The Board of Directors elects the fund's officers, who are listed in the final table. The business address of each director and officer is 100 East Pratt Street, Baltimore, MD 21202. The Statement of Additional Information includes additional information about the fund directors and is available without charge by calling a T. Rowe Price representative at 1-800-225-5132. INDEPENDENT DIRECTORS Name (Year of Birth) Principal Occupation(s) During Past 5 Years Year Elected * and Directorships of Other Public Companies Anthony W. Deering Director, Chairman of the Board, and Chief (1945) Executive Officer, The Rouse Company, real estate 2000 developers; Director, Mercantile Bank (4/03 to present) Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, an (1943) acquisition and management advisory firm 2000 David K. Fagin Director, Golden Star Resources Ltd., Canyon (1938) Resources Corp. (5/00 to present), and Pacific 2001 Rim Mining Corp. (2/02 to present); Chairman and President, Nye Corporation Karen N. Horn Managing Director and President, Global Private (1943) Client Services, Marsh, Inc. (1999-2003); 2003 Managing Director and Head of International Private Banking, Bankers Trust (1996-1999) F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates, (1934) Inc., consulting environmental and civil engineers 2001 John G. Schreiber Owner/President, Centaur Capital Partners, Inc., (1946) a real estate investment company; Partner, 2001 Blackstone Real Estate Advisors, L.P. *Each independent director oversees 111 T. Rowe Price portfolios and serves until retirement, resignation, or election of a successor. INSIDE DIRECTORS Name (Year of Birth) Year Elected * [Number of T. Rowe Price Principal Occupation(s) During Past 5 Years Portfolios Overseen] and Directorships of Other Public Companies James S. Riepe Director and Vice President, T. Rowe Price; (1943) Vice Chairman of the Board, Director, and 2002 Vice President, T. Rowe Price Group, Inc.; [111] Chairman of the Board and Director, T. Rowe Price Global Asset Management Limited, T. Rowe Price Global Investment Services Limited, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of the Board, Director, President, and Trust Officer, T. Rowe Price Trust Company; Director, T. Rowe Price International, Inc.; Chairman of the Board, International Index Fund *Each inside director serves until retirement, resignation, or election of a successor. OFFICERS Name (Year of Birth) Title and Fund(s) Served Principal Occupation(s) Regina M. Aldave (1971) Assistant Vice President, T. Rowe Vice President, International Index Fund Price E. Frederick Bair, CPA, CFA (1969) Vice President, T. Rowe Price and Vice President, International Index Fund T. Rowe Price Trust Company Stephen V. Booth, CPA (1961) Vice President, T. Rowe Price, T. Vice President, International Index Fund Rowe Price Group, Inc., and T. Rowe Price Trust Company Joseph A. Carrier (1960) Vice President, T. Rowe Price, T. Treasurer, International Index Fund Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Trust Company Stephanie C. Clancy (1964) Vice President, T. Rowe Price and Vice President, International Index Fund T. Rowe Price Group, Inc. Wendy R. Diffenbaugh (1953) Vice President, T. Rowe Price Assistant Vice President, International Index Fund Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. Roger L. Fiery III, CPA (1959) Vice President, T. Rowe Price, T. Vice President, International Index Fund Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company Gregory S. Golczewski (1966) Vice President, T. Rowe Price Vice President, International Index Fund and T. Rowe Price Trust Company Henry H. Hopkins (1942) Director and Vice President, T. Vice President, International Index Fund Rowe Price Investment Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Retirement Plan Services, Inc. Patricia B. Lippert (1953) Assistant Vice President, T. Rowe Secretary, International Index Fund Price and T. Rowe Price Investment Services, Inc. Neil Smith (1972) Vice President, T. Rowe Price Vice President, International Index Fund International, Inc. Ken D. Uematsu, CFA (1966) Employee, T. Rowe Price Assistant Vice President, International Index Fund Julie L. Waples (1970) Vice President, T. Rowe Price Vice President, International Index Fund Richard T. Whitney, CFA (1958) Vice President, T. Rowe Price, T. President, International Index Fund Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company Mary C. Wojciechowski, CFA (1962) Vice President, T. Rowe Price and Vice President, International Index Fund T. Rowe Price Trust Company Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. Item 2. Code of Ethics. The registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report. Item 3. Audit Committee Financial Expert. The registrant's Board of Directors/Trustees has determined that Mr. David K. Fagin qualifies as an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form N-CSR. Item 4. Principal Accountant Fees and Services. (a) - (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant's principal accountant were as follows: 2004 2003 Audit Fees $10,003 $9,551 Audit-Related Fees 965 672 Tax Fees 2,753 2,510 All Other Fees 124 -- Audit fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant's financial statements, specifically the issuance of a report on internal controls. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other fees include the registrant's pro-rata share of amounts for agreed-upon procedures in conjunction with service contract approvals by the registrant's Board of Directors/Trustees. (e)(1) The registrant's audit committee has adopted a policy whereby audit and non-audit services performed by the registrant's principal accountant for the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant require pre-approval in advance at regularly scheduled audit committee meetings. If such a service is required between regularly scheduled audit committee meetings, pre-approval may be authorized by one audit committee member with ratification at the next scheduled audit committee meeting. Waiver of pre-approval for audit or non-audit services requiring fees of a de minimis amount is not permitted. (2) No services included in (b) - (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Less than 50 percent of the hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. (g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant's principal accountant for non-audit services rendered to the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $849,000 and $819,000, respectively, and were less than the aggregate fees billed for those same periods by the registrant's principal accountant for audit services rendered to the T. Rowe Price Funds. (h) All non-audit services rendered in (g) above were pre-approved by the registrant's audit committee. Accordingly, these services were considered by the registrant's audit committee in maintaining the principal accountant's independence. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedule of Investments. Not applicable. The complete schedule of investments is included in Item 1 of this Form N-CSR. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. Not applicable. Item 11. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The registrant's principal executive officer and principal financial officer are aware of no change in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is attached. (2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (3) Written solicitation to repurchase securities issued by closed-end companies: not applicable. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. T. Rowe Price International Index Fund, Inc. By /s/ James S. Riepe ----------------------------------- James S. Riepe Principal Executive Officer Date December 17, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James S. Riepe ----------------------------------- James S. Riepe Principal Executive Officer Date December 17, 2004 By /s/ Joseph A. Carrier ----------------------------------- Joseph A. Carrier Principal Financial Officer Date December 17, 2004