PRICE T ROWE INTERNATIONAL FUNDS INC
497, 1994-02-01
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PAGE 1

Prospectus for the T. Rowe Price International Funds, Inc., dated December 29,
1993, should be inserted here.



International
Equity Funds
Prospectus
December 29, 1993
T. Rowe Price International Funds, Inc.

International Stock Fund seeks capital appreciation through investments
primarily in established, non-U.S. companies.

International Discovery Fund seeks capital appreciation through investments
primarily in rapidly growing small- and medium-sized companies.

European Stock Fund seeks capital appreciation through investments
primarily in companies domiciled in Europe.

Japan Fund seeks capital appreciation primarily through equity investments
in Japanese companies. Transactions will not be processed when either the
New York or Tokyo Stock Exchange is closed.

New Asia Fund seeks capital appreciation through investments primarily in
companies in Asia and the Pacific Basin-excluding Japan.

Latin America Fund seeks capital appreciation through investments primarily
in companies in Latin America.

T. Rowe Price

   
100% No Load. The Funds have no sales charges, no redemption fees (except
for the International Discovery and Latin America Funds), and no 12b-1
fees. A 2% redemption fee will be imposed by the: (i) International
Discovery Fund on shares purchased on or after February 28, 1994, and held
less than 12 months; and (ii) Latin America Fund on shares held less than
12 months. 100% of your investment is credited to your account.
    

   
Services. T. Rowe Price Associates, Inc. (T. Rowe Price) provides easy
access to your money through bank wires or telephone redemptions and offers
easy exchange to other T. Rowe Price Funds.
    

   
Rowe Price-Fleming International, Inc. (Price-Fleming), the Funds' manager,
was founded in 1979 as a joint venture between T. Rowe Price and Robert
Fleming Holdings Limited. Price-Fleming is one of America's largest
managers of no-load international mutual fund assets with approximately
$9.0 billion under management in its offices in Baltimore, London, Tokyo,
and Hong Kong.
    

This prospectus contains information you should know about the Funds before
you invest. Please keep it for future reference. A Statement of Additional
Information for the Funds (dated December 29, 1993) has been filed with the
Securities and Exchange Commission and is incorporated by reference in this
prospectus. It is available at no charge by calling: 1-800-638-5660.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION, OR ANY STATE SECURITIES COMMISSION,
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

Table of Contents
Fund Information

Introduction                            2
Summary of Funds' Fees and Expenses     3
Financial Highlights                    5
Investment Objectives                   6
Investment Programs                     7
Risk Factors                            10
Investment Policies                     12
Performance Information                 15
Capital Stock                           15
NAV, Pricing, and Effective Date        17
Receiving Your Proceeds                 18
Dividends and Distributions             18
Taxes                                   18
Management of the Funds                 20
Expenses and Management Fee             21

How to Invest

Shareholder Services                    21
Conditions of Your Purchase             23
Completing the New Account Form         24
Opening a New Account                   25
Purchasing Additional Shares            26
Exchanging and Redeeming Shares         26

INTRODUCTION

For more than three decades, the growth rate of many foreign economies has
outpaced that of the United States. This sustained growth overseas has
altered the once-dominant role of the United States in world finance and
trade, and has created new investment opportunities which offer U.S.
investors enhanced return potential, and a means to effectively diversify
their investments.

New Opportunities. Over time, a number of international equity markets have
outperformed their U.S. counterparts. Although there are no guarantees,
foreign markets could continue to provide attractive investment
opportunities.
     In Western Europe, for example, market deregulation, privatization,
and lowered barriers to international investment and trade have already
expanded the range of opportunities available. The fall of communism in
Eastern Europe and the rise of capitalist economies should, over the
long-term, open previously inaccessible markets and provide low-cost labor,
which may further stimulate European economies.
     Japan, whose GDP and market capitalization are among the world's
highest, also enjoys a favorable long-term outlook. Although the pace of
its economic growth has slowed, Japan's commitment to capital investment
and technological expertise, as well as a highly productive workforce,
continue to allow many Japanese companies to dominate their industries
world wide. New companies and emerging technologies could fuel future
growth. Japan's shift from an export-oriented to a more domestic-oriented
economy should further promote economic expansion and create new investment
opportunities. Long-noted for its high household savings rate, Japan's
economy is becoming more consumer-oriented as the Japanese begin to spend
more, spurring retailers and service companies to meet the growing demand
for consumer goods and services.
     Developments among the newly industrialized countries of Asia and the
Pacific Basin are creating special opportunities for investors in this
vibrant region. The shift to a more capitalist approach in China provides
enormous opportunities in the longer term for many companies in the region.
The relaxation of trade barriers and the freer movement of capital are
increasing the flow of commerce and facilitating economic independence.
Growing trade with Japan, the United States and Europe is promoting rapid
development. Finally, the relatively low-cost work force in Asia and the
Pacific Basin is attracting foreign capital and fueling the growth of
manufacturing industries.
   
     In Latin America, recent economic developments also suggest the
possibility of attractive opportunities for investors. By promoting
privatization, cutting back trade barriers, and restructuring debt burdens,
Latin American governments have freed their economies to grow after years
of stagnation. Inflation has fallen, consumer wealth has started to rise
and investment flows from overseas have grown rapidly and consumer wealth
has started to rise. This process is likely to be accelerated if NAFTA (the
North American Free Trade Agreement) realizes its full potential.
    

Portfolio Diversification. Today, nearly two-thirds of the world's stock
market value and over half of all fixed-income securities are traded
abroad. Investing overseas can help diversify a portfolio otherwise
invested solely in U.S. securities. Foreign stock and bond markets often do
not parallel the performance of U.S. markets, which means that, over time,
diversifying investments across several countries can help reduce portfolio
volatility.

   
Mutual Funds: A Sensible Way to Invest. For the individual investor, buying
foreign stocks and bonds can be difficult: access to international markets
is complicated; few individuals have the time or resources to evaluate
foreign companies and markets; and transaction costs are generally high.
The ease of investing, professional management, and broad diversification
offered by mutual funds-at a relatively low cost-make them an excellent
alternative.
    
Price-Fleming, the investment manager of all T. Rowe Price International
Funds makes use of on-site analysts to research opportunities overseas.
Price-Fleming manages the Funds' diversified portfolio of foreign
securities from its offices in Baltimore, London, Tokyo and Hong Kong,
which have access to the international research capabilities of
London-based Robert Fleming Holdings Limited, a 100-year-old investment
firm.

Equally important, all T. Rowe Price International Funds have no sales
charges of any kind, which means 100% of every dollar you invest goes to
work for you.

Risk Factors. Each Fund's share price will fluctuate with market, economic
and foreign exchange conditions, and your investment may be worth more or
less when redeemed than when purchased. The Funds should not be relied upon
as a complete investment program, nor used to play short-term swings in the
stock or foreign exchange markets. The Funds are subject to risks unique to
international investing. See extensive discussion under Risk Factors
beginning on page 10. Further, there is no assurance that the favorable
trends discussed above will continue, and the Funds cannot guarantee they
will achieve their investment pbjectives.
     The following pages detail the expenses, investment programs and risk
factors for each T. Rowe Price international equity fund. If you have any
questions, please call us at 1-800-638-5660.

SUMMARY OF FUNDS' FEES AND EXPENSES

The Funds are 100% no-load . . . you pay no fees to purchase or exchange
shares, nor any ongoing marketing (12b-1) expenses. Lower expenses benefit
you by increasing your investment return from a Fund.
     Shown below are all expenses and fees each Fund incurred during its
fiscal year. Where applicable, expenses were restated to reflect current
fees. Expenses are expressed as a percent of average Fund net assets. More
information about these expenses may be found below and under Expenses and
Management Fee and in the Statement of Additional Information under
Management Fee and Limitation on Fund Expenses.

<TABLE>
<CATION>
     International                          International    European                   New       Latin
     Stock                                    Discovery        Stock        Japan      Asia      America

   
<S>                                            <C>            <C>          <C>        <C>        <C>        <C>
Shareholder Transaction Expenses
Sales load "charge" on purchases                None           None         None       None       None       None
Sales load "charge" on reinvested dividends     None           None         None       None       None       None
Redemption fees                                 None           2.00%<F3>    None       None       None       2.00%<F4>
Exchange fees                                   None           None         None       None       None       None
Annual Fund Expenses
Management fee (after reduction)                0.70%          1.00%<F1>    0.85%      0.07%<F2>  0.85%      1.10%
Total other (Shareholder servicing, custodial,  0.35%          0.50%        0.63%      1.43%      0.60%      0.90%
     auditing, etc.)<F5>
Distribution fees (12b-1)                       None           None         None       None       None       None
     Total Fund Expenses                        1.05%          1.50%<F1>    1.48%      1.50%<F2>  1.45%      2.00%

<FN>
 <F1>   The Discovery Fund's management fee and total expense ratio would have been 1.10% and 1.60%, respectively, had
        Price-Fleming not agreed to reduce management fees as a result of the expense limitation.
 <F2>   The Japan Fund's management fee and total expense ratio would have been 0.85% and 2.28%, respectively, had
        Price-Fleming not agreed to reduce management fees as a result of the expense limitation.
 <F3>   On shares purchased on or after February 28, 1994 and held for less than 12 months (details on pages 17 and 18).
 <F4>   On shares purchased and held for less than 12 months (details on pages 17 and 18).
 <F5>   The Funds charge a $5.00 fee for wire redemptions under $5,000, subject to change without notice.
    
</FN>
</TABLE>

Example of Fund expenses.

     The following example illustrates the expenses you would incur on a
$1,000 investment, assuming a 5% annual rate of return and redemption at
the end of each period shown. For example, expenses for the first year in
the International Stock Fund would be $11. This is an illustration only.
Actual expenses and performance may be more or less than shown.

   
     Fund               1 Year      3 Years      5 Years    10 Years
International Stock      $11          $33         $58         $128
International Discovery  $15          $47         $82         $179
European Stock           $15          $47         $81         $177
Japan                    $15          $47         $82         $179
New Asia                 $15          $46         $79         $174
Latin America            $20          $62        $107         $231

Management Fee. Each Fund pays Price-Fleming an investment management fee
consisting of a flat Individual Fund Fee of each Fund's net assets, of
0.35% for the International Stock Fund, 0.50% each for the European Stock,
Japan and New Asia Funds, 0.75% each for the International Discovery and
Latin America Funds, and a Group Fee, defined on page 21 under Expenses and
Management Fee, of 0.35% as of December 31, 1992. Thus, the total combined
management fee as of December 31, 1992 based on net assets would be 0.70%
for the International Stock Fund, 0.85% each for the European Stock, Japan
and New Asia Funds, and 1.10% each for the International Discovery and
Latin America Funds. Because the investment programs of the International
Discovery, European Stock, Japan, New Asia, and Latin America Funds are
more costly to implement and maintain, the Individual Fund Fee is higher
than that paid by most U.S. investment companies.
    
     The following chart sets forth expense ratio limitations and the
periods for which they are effective. For each, Price-Fleming has agreed to
bear any Fund expenses which would cause the Fund's ratio of expenses to
average net assets to exceed the indicated percentage limitations. The
expenses borne by Price-Fleming are subject to reimbursement by the Fund
through the indicated reimbursement date, provided no reimbursement will be
made if it would result in the Fund's expense ratio exceeding its
applicable limitation.

<TABLE>
   
<CAPTION>
                                                                        Expense
                                                                         Ratio             Reimbursement
                                          Limitation Period           Limitation               Date

<S>                            <C>                                      <C>             <C>
International Discovery<F1>      January 1, 1993 - December 31, 1993     1.50%           December 31, 1995
Japan<F2>                        January 1, 1994 - October 31, 1995      1.50%           October 31, 1997
Latin America                   December 29, 1993 -  October 31, 1995    2.00%           October 31, 1997


<FN>
 <F1>   The International Discovery Fund previously operated under a 1.50% limitation that expired December 31, 1992.
        The reimbursement period for this limitation extends through December 31, 1994.
 <F2>   The Japan Fund previously operated under a 1.50% limitation that expired December 31, 1993. The reimbursement
        period for this limitation extends through December 31, 1995.
</FN>
</TABLE>
    

Transfer Agent, Shareholder Servicing, and Administrative Costs. The Funds 
paid fees to: (i) T. Rowe Price Services, Inc. (TRP Services) for transfer 
and dividend disbursing agent functions and shareholder services for all 
accounts; (ii) T. Rowe Price Retirement Plan Services, Inc. services for 
certain retirement accounts; and (iii) T. Rowe Price for calculating the 
daily share price and maintaining the portfolio and general accounting 
records of each Fund. For the year ended December 31, 1992, the approximate 
fees are set forth in the following chart:

                                            Subaccounting
                            Transfer Agent    Services      Accounting

International Stock           $2,190,000      $863,000       $110,000
International Discovery       $  347,000      $      0       $110,000
European Stock                $  353,000      $  9,000       $100,000
Japan                         $  190,000      $      0       $ 50,000
New Asia                      $  567,000      $ 12,000       $100,000
   
    
   
The Latin America Fund became effective on December 29, 1993, and is
expected to pay TRP Services transfer agent fees totaling approximately
$143,000 for the fiscal period ending October 31, 1994, and is also
expected to pay shareholder service and accounting fees totaling
approximately $133,000 and $83,000 respectively, for the same period to T.
Rowe Price Retirement Plan Services, Inc., and T. Rowe Price, respectively,
as described on page 20 under Management of the Funds.
    
FINANCIAL HIGHLIGHTS

The following table provides information about each Fund's financial
history. It is based on a single share outstanding throughout each fiscal
year (which ends on the last day of December). The respective table is part
of each Fund's financial statements which are included in each Fund's
annual report and incorporated by reference into the Statement of
Additional Information, which is available to shareholders. The financial
statements in the annual report have been audited by the Funds' independent
accountants whose respective unqualified reports cover the periods shown.


<TABLE>
<CAPTION>
                      Investment Activities             Distributions
                              Net                                                                              Ratio
            Net            Realized   Total                                      Total            Ratio of    of Net
           Asset              and     from                               Net    Return            Expenses    Invest-     Port-
          Value,    Net   Unrealized Invest-   Net                      Asset  (Includes             to      ment In-     folio
          Begin-  Invest- Gain(Loss)  ment   Invest-     Net    Total  Value,    Rein-     Net     Average    come to     Turn-
Yr Ended, ning of  ment       on     Activi-  ment    Realized Distri- End of   vested   Assets      Net     Avg. Net     over
Dec. 31   Period  Income   Invstmnts  ties   Income     Gain   butions Period Dividends)($ 000's)  Assets     Assets      Rate

<C>       <C>     <C>      <C>       <C>      <C>     <C>      <C>     <C>    <C>     <C>       <C>            <C>        <C>

Stock
Fund<F1>

1983      $ 5.67  $.08     $ 1.51    $ 1.59   $(.10)    -      $ (.10) $ 7.16  28.6%   $129,997 1.14%          1.24%      68.7%
1984        7.16   .15       (.56)     (.41)   (.08)  $ (.08)    (.16)   6.59  (5.9%)   180,705 1.11%          2.29%      37.7%
1985        6.59   .11       2.71      2.82    (.15)    (.22)    (.37)   9.04  45.3%    376,843 1.11%          1.54%      61.9%
1986        9.04   .11       5.23      5.34    (.11)   (1.38)   (1.49)  12.89  61.3%    790,020 1.10%          0.89%      56.4%
1987       12.89   .12        .74       .86    (.23)   (4.98)   (5.21)   8.54   8.0%    642,463 1.14%          0.93%      76.5%
1988        8.54   .16       1.36      1.52    (.16)    (.93)   (1.09)   8.97  17.9%    630,114 1.16%          1.78%      42.4%
1989        8.97   .16       1.94      2.10    (.16)    (.67)    (.83)  10.24  23.7%    970,214 1.10%          1.63%      47.8%
1990       10.24   .22      (1.13)     (.91)   (.16)    (.36)    (.52)   8.81  (8.9%) 1,030,848 1.09%          2.16%      47.1%
1991        8.81   .15       1.22      1.37    (.15)    (.49)    (.64)   9.54  15.9%  1,476,309 1.10%          1.51%      45.0%
1992        9.54   .14       (.47)     (.33)   (.16)    (.16)    (.32)   8.89  (3.5%) 1,949,631 1.05%          1.49%      37.8%

Discovery
Fund

1989<F2>  $10.00  $.14<F3>  $4.03    $ 4.17   $(.13)  $ (.10)  $ (.23) $13.94  41.8%  $  61,166 1.50%<F3>      0.76%      38.3%
1990       13.94   .14<F3>  (1.91)    (1.77)   (.15)    (.27)    (.42)  11.75 (12.8%)   136,660 1.50%<F3>      1.10%      44.0%
1991       11.75   .13<F3>   1.24      1.37    (.13)    -        (.13)  12.99  11.7%    166,819 1.50%<F3>      1.03%      56.3%
1992       12.99   .13<F3>  (1.31)    (1.18)   (.13)    -        (.13)  11.68  (9.1%)   166,362 1.50%<F3>      1.07%      38.0%

European
Stock

1990<F4>  $10.00  $.24<F5>  $(.56)    $(.32)  $(.20)    -      $ (.20) $ 9.48  (3.2%) $  99,447 1.75%<F5><F10> 2.30%<F10> 34.9%<F10>
1991        9.48   .10        .59       .69    (.08)    -        (.08)  10.09   7.3%    103,977 1.71%          1.04%      57.7%
1992       10.09   .14       (.70)     (.56)   (.17)    -        (.17)   9.36  (5.6%)   173,798 1.48%          1.23%      52.0%

Japan

1992<F6>  $10.00 $(.01)<F7>$(1.35)   $(1.36)   -        -        -     $ 8.64 (13.4%) $  45,792 1.50%<F7>      (.22)%     41.6%

New Asia

1990<F8>  $10.00 $ .09<F9>  $ .07     $ .16   $(.08)    -       $(.08) $10.08   1.6%  $  10,986 1.75%<F9><F10> 2.10%<F10>  3.2%<F10>
1991       10.08   .21<F9>   1.73      1.94    (.20)    -        (.20)  11.82  19.3%    102,922 1.75%<F9>      1.75%      49.0%
1992       11.82   .20       1.12      1.32    (.20)  $ (.26)    (.46)  12.68  11.2%    314,504 1.51%          1.64%      36.3%

<FN>
 <F1>   All share and per-share figures reflect the 2-for-1 stock split effective August 31, 1987.
 <F2>   For the period December 30, 1988 (commencement of operations) to December 31, 1989.
 <F3>   Excludes expenses in excess of a 1.50% voluntary expense limitation in effect through December 31, 1992.
 <F4>   For the period February 28, 1990 (commencement of operations) to December 31, 1990.
 <F5>   Excludes expenses in excess of a 1.75% voluntary expense limitation in effect through December 31, 1991.
 <F6>   For the period December 30, 1991 (commencement of operations) to December 31, 1992.
 <F7>   Excludes expenses in excess of a 1.50% voluntary expense limitation in effect through December 31, 1993.
 <F8>   For the period September 28, 1990 (commencement of operations) to December 31, 1990.
   
 <F9>   Excludes expenses in excess of a 1.75% voluntary expense limitation in effect through December 31, 1992.
<F10>   Annualized.
    
[/FN]
</TABLE>

INVESTMENT OBJECTIVES

International Stock Fund's investment objective is to seek a total return
on its assets from long-term growth of capital and income, principally
through investments in common stocks of established, non-U.S. companies.
Investments may be made solely for capital appreciation or solely for
income or any combination of both for the purpose of achieving a higher
overall return. Total return consists of capital appreciation or
depreciation, dividend income, and currency gains or losses.

International Discovery Fund's investment objective is to seek long-term
growth of capital through investment primarily in the common stocks of
rapidly growing, small- and medium-sized companies based outside the United
States.

European Stock Fund's investment objective is to seek long-term capital
appreciation by investing primarily in common stocks issued by both large-
and small-capitalization companies domiciled in Europe. Current income is a
secondary objective.

Japan Fund's investment objective is to seek long-term growth of capital by
investing in stocks of large- and small-capitalization companies domiciled,
or with primary operations, in Japan.

New Asia Fund's investment objective is to seek long-term growth of capital
by investing in both large- and small-capitalization companies domiciled,
or with primary operations, in Asia, excluding Japan. The Fund may also
invest in the common stocks of companies in the Pacific Basin, including
Australia and New Zealand.

Latin America Fund's investment objective is to seek long-term growth of
capital by investing in companies domiciled, or with primary operations, in
Latin America.

INVESTMENT PROGRAMS

International Stock Fund. The International Stock Fund invests primarily in
common stocks of established foreign companies which have the potential for
growth of capital or income or both. In order to increase total return, the
Fund may invest up to 35% of its assets in any other type of security,
including convertible securities; preferred stocks and warrants; bonds,
notes and other debt securities (including Eurodollar securities); and
obligations of domestic or foreign governments and their political
subdivisions.

INVESTING OVERSEAS FOR GROWTH AND INCOME.

     Under exceptional economic or market conditions abroad, the Fund may
temporarily invest all or a major portion of its assets in U.S. government
obligations or debt obligations of U.S. companies.
     The Fund intends to diversify investments broadly among countries and
to normally have at least three different countries represented in the
portfolio. The Fund may invest in countries of the Far East and Western
Europe as well as South Africa, Australia, Canada, and other areas
(including developing countries). Under unusual circumstances, however, the
Fund may invest substantially all of its assets in one or two countries.

INVESTING IN SMALLER FOREIGN COMPANIES WITH STRONG GROWTH POTENTIAL.

International Discovery Fund. Unlike funds which focus primarily on large,
established companies in the major foreign markets, the International
Discovery Fund invests primarily in common stocks of smaller (i.e., small-
to medium-sized) foreign companies. Smaller companies traditionally are
more dynamic and have greater growth potential than larger companies.
Because of their size, they are often overlooked or undervalued by
investors. Such companies involve higher risks, however, as they have
limited product lines, markets and financial or managerial resources. In
addition, their securities may trade less frequently and move more abruptly
than securities of larger companies. The Fund will seek to mitigate these
risks through broad diversification of its portfolio.
     The Fund will have 65% of its assets invested in at least three
countries outside the U.S. at all times. Depending on investment
considerations, the Fund will generally own securities of at least 100
different companies in at least ten countries. This includes investments
both in developed and selected emerging countries.
     The equity securities in which the Fund may invest include common and
preferred stocks and warrants or other similar rights and convertible
securities. The Fund may also invest in any other type of security
including, but not limited to, up to 5% (measured at the time of purchase)
of its total assets in investment grade corporate debt securities.

INVESTING FOR GROWTH IN EUROPEAN COMPANIES.

European Stock Fund. The European Stock Fund invests primarily in common
stocks of established large- and small-capitalization European companies
participating in markets and sectors which are believed to have attractive
long-term growth potential. The Fund will normally diversify its
investments in five or more different countries. It looks to take advantage
of the new growth opportunities expected to result from European economic
integration, and the potential growth of the emerging economies of Eastern
Europe. European markets in which the Fund may invest include:

           Primary                 Secondary             Developing

           France                  Austria               Czechoslovakia
           Germany                 Belgium               Greece
           Holland                 Denmark               Hungary
           Italy                   Finland               Poland
           Spain                   Ireland               Turkey
           Sweden                  Luxembourg            Russia
           Switzerland             Norway
           United Kingdom          Portugal

     The Fund will normally have at least 65% of its assets in European
equity securities, which include common and preferred stocks, warrants or
other similar rights, and convertible securities. The Fund may also invest
in any other type of security including, but not limited to, bonds, notes,
and other debt securities of foreign issuers. For temporary defensive
purposes, the Fund may invest up to 35% (measured at the time of purchase)
of its total assets in non-U.S. dollar-denominated, high-grade debt
securities.
     Individual stocks will be evaluated on various criteria, including
earnings, history and prospects, book value, degree of price leverage, and
price/earnings ratio.

INVESTING FOR GROWTH IN JAPANESE COMPANIES.

Japan Fund. The Japan Fund invests primarily in common stocks of
established Japanese companies participating in markets and sectors which
are believed to have attractive long-term growth potential. These may
include the export sector, where many Japanese companies are world leaders
in their industries. They may also include the consumer sector-the
fastest-growing segment of Japan's economy-where companies are working to
meet growing domestic demand for consumer goods and services.
     The Fund has the flexibility to invest in both large and small
companies, as deemed appropriate by Price-Fleming. This allows the Fund to
benefit from the proven growth potential of established companies, as well
as the enhanced growth potential of smaller companies. In making specific
stock selections, Price-Fleming takes into account, among other factors, a
company's size, financial condition, marketing and technical strengths, and
competitive position within its industry. Because Japan represents appr-
oximately one-third of the world's market capitalization, the Fund's
portfolio will normally be broadly diversified across industries and
companies. Such broad diversification should help reduce volatility.
     The Fund will ordinarily invest at least 80% of its assets in Japanese
securities. These will include securities issued by companies domiciled in
Japan or companies that have at least half their assets in Japan, or derive
at least half their revenues from Japan. Securities will be primarily
common stocks. Other equity securities may include preferred stocks,
warrants and convertible debentures. The Fund may also invest in government
and corporate debt securities, when Price-Fleming believes that the pote-
ntial for capital appreciation in debt securities equals or exceeds that
available in equity securities. For temporary defensive purposes, the Fund
may invest up to 25% (measured at the time of purchase) of its total assets
in high-quality Japanese debt securities.

INVESTING FOR GROWTH IN "THE NEW ASIA."

New Asia Fund. The New Asia Fund invests in common stocks of large- and
small-capitalization Asian and Pacific Basin companies in the countries
listed below. The Fund may invest in other Asian and Pacific Basin
countries and regions (other than Japan), such as China, Sri Lanka,
Pakistan and Indochina, as their markets become more accessible.

                 Australia                     Philippines
                 Hong Kong                     Singapore
                 India                         South Korea
                 Indonesia                     Taiwan
                 Malaysia                      Thailand
                 New Zealand

     In contrast to Japan's more developed economy, the newly
industrialized nations of this region are in an earlier, more dynamic
growth stage of their development. Price-Fleming believes that continued
growth opportunities exist throughout this region due to the structural
changes outlined in the Introduction to this Prospectus.

     The Fund's investment approach will primarily focus on identifying
companies with attractive long-term growth potential. The Fund will
normally have at least 65% of its assets in the equity securities of Asian
companies, excluding Japan, and may also invest in companies in the Pacific
Basin, including Australia and New Zealand. To help reduce investment risk,
the Fund will diversify its investments among a minimum of five different
countries. The Fund may also invest in any other type of security, includ-
ing, but not limited to, bonds, notes and other debt securities of foreign
issuers. For temporary defensive purposes, the Fund may invest up to 35%
(measured at the time of purchase) of its total assets in non-U.S.
dollar-denominated, high-quality debt securities.

   
Latin America Fund. The Latin America Fund invests in common stocks of both
large and small companies in Latin America. The Fund will seek investment
opportunities in companies that, in the opinion of Price-Fleming, are
expected to benefit from the dynamic changes that are taking place in Latin
America. Many Latin American countries are returning to democracy and
reducing government's role in their economies. They are shifting away from
protectionism towards integration of regional trade while lower inflation,
lower budget deficits and higher tax revenues have helped improve the
economic situation. However, as many Latin America securities markets are
in their early stages of development, they are expected to continue to be
highly volatile and subject to the effects of unpredictable political and
economic conditions. Only long-term equity investors aggressively pursuing
capital appreciation and willing to incur substantial share price
fluctuation should consider investing in this Fund.
    
   
     The Fund will normally be invested in at least four countries of Latin
America. Initially, the Fund will focus its investments in Mexico, Brazil,
Chile and Argentina. The Fund will invest in other Latin American countries
such as Colombia, Peru and Venezuela, as opportunities arise and as
conditions permit. The Fund will normally have at least 65% of its assets
in Latin America equity securities, which include common and preferred
stocks, warrants or other similar rights and convertible securities. It is
anticipated that, at least initially, many Latin American investments will
be made through ADRs, ADSs, GDSs or other securities traded in the United
States. A gradual shift will be made to greater direct investment in Latin
America as the mark et for the local shares becomes more liquid. The Fund
may also invest in any other type of security including, but not limited
to, bonds, notes, and other debt securities of foreign issuers. The Fund
will not purchase any debt security which at the time of purchase is rated
below investment grade (or, if unrated, is of equivalent quality). This
policy would not prohibit the Fund from retaining a debt security
downgraded to below investment grade after purchase. Under exceptional
economic or market conditions, the Latin America Fund may temporarily
invest all or a portion of its assets in U.S. government obligations or
high-quality debt obligations of U.S. companies.
    
     Latin America Fund. The Latin America Fund invests in common stocks of
both large and small companies in Latin America. The Fund will seek
investment opportunities in companies that will benefit from the dynamic
changes that are taking place in Latin America. Many Latin American
countries are returning to democracy and reducing the role of the state.
They are shifting away from protectionism towards integration of regional
trade while lower inflation, lower budget deficits and higher tax revenues
have helped improve the economic situation. However, as many of these
markets are in their early stages of development they are expected to
continue to be highly volatile and subject to the effects of unpredictable
political and economic conditions. Therefore, this Fund offers opportunity
for the aggressive long-term equity investor.
     Please see Investment Policies for a more complete description of each
Fund's investments.

RISK FACTORS

Investors should understand and consider carefully the special risks
involved in foreign investing.  These risks are often heightened for
investments in emerging or developing markets, such as the countries of
Southeast Asia, Latin America, the Middle East and Eastern Europe.

Foreign Currency. Investments in foreign companies will require the Funds
to hold securities and funds denominated in foreign currencies. As a
result, the value of the assets of the Funds as measured in U.S. dollars
may be affected significantly, favorably or unfavorably, by changes in
foreign currency exchange rates, currency restrictions, and exchange
control regulations, and the Funds may incur costs in connection with
conversions between various currencies. Exchange rate movements can be
large and endure for extended periods of time. For example, the Japanese
yen has been appreciating against the U.S. dollar since 1985. This has
increased the returns of persons purchasing Japanese securities with U.S.
dollars. However, there is no guarantee this trend will continue, and its
reversal would adversely affect such returns. By contrast, many Latin
American currencies have historically experienced a steady, and at times,
abrupt and major, devaluation against the U.S. dollar. Devaluations of a
currency relative to the dollar will adversely affect the returns to the
Funds invested in securities denominated in such currency.

Costs. The expenses to individual investors of investing directly in
foreign securities are higher than investing in U.S. securities. While the
Funds offer a very efficient way for individual investors to participate in
foreign markets, their expenses, including advisory and custodial fees, are
also higher than the typical domestic equity fund.

Economic and Trade Factors. The economies of the countries in which the
Funds may invest (portfolio countries) may differ favorably or unfavorably
from the U.S. economy and may be less developed or diverse. Certain of
these countries, for example Japan, as well as the countries of Southeast
Asia and Latin America, are heavily dependent upon international trade.
Accordingly, they have been, and may continue to be, adversely affected by
trade barriers and other protectionist or retaliatory measures of, as well
as economic conditions in, the U.S. and other countries with which they
trade. Certain countries may be heavily dependent on a limited number of
commodities, for example, oil, and thus vulnerable to weaknesses in world
prices for these commodities. In addition, the economies of certain
countries, including most of the countries of Latin America, have
experienced severe and persistent inflation and high interest rates. A
number of Latin American and other countries have very high levels of
sovereign debt. These conditions can undermine efforts to move toward
stable and sustained economic growth. Finally, there is no assurance that
the pattern of growth, economic liberalization, fiscal discipline and
political and social stability exhibited by certain of the portfolio
countries in the past will continue.

   
Political Factors. The internal politics of certain of the portfolio
countries are not as stable as in the United States. For example, several
Latin American countries have histories of significant political upheaval;
there is no guarantee that current democratic and free market governments
will remain in power. In addition, significant external political risks,
including war, currently affect some of the countries in which the funds
invest. Finally, governments in certain of the countries continue to
participate to a substantial degree, through ownership interests of
companies or regulation, in their respective economies and securities
markets. Action by these governments could include restrictions on foreign
investment, nationalization, expropriation of assets, or imposition of
taxes. Any of these actions could have a significant effect on market
prices of securities, the ability of the Funds to repatriate capital and
income, and result in a Fund losing all or a part of its investment in a
particular country or company.
    

Market Characteristics. Many of the securities markets of the portfolio
countries have substantially less volume than comparable U.S. markets, and
the securities of some companies in these countries may often be less
liquid and more volatile than securities of comparable U.S. companies. In
certain markets, for example in Japan, common stocks may trade at
considerably higher valuation levels than U.S. common stocks. Accordingly,
many of these markets may be subject to erratic and abrupt price movements
and be more influenced by adverse events generally affecting the market and
by large investors trading significant blocks of securities, than is usual
in the United States. The settlement practices of the portfolio countries
may include delays and otherwise differ from those customary in the U.S.
markets which could reduce the liquidity of securities held in the Fund and
increase the risk of loss due to a failed settlement.

Legal and Regulatory. Certain of the portfolio countries lack uniform
accounting, auditing, and financial reporting standards, may have less
governmental supervision of securities markets, brokers, and issuers of
securities, and less financial information available to investors than is
usual in the United States. For example, there have been revelations that
major broker-dealers in Japan have engaged in a variety of fraudulent and
manipulative practices. Finally, there may be difficulty in enforcing legal
rights outside the United States.

Eastern Europe. Each of the Funds (other than the Japan, Latin America and
New Asia Funds) may from time to time invest up to 5% of its assets in
securities of companies located in Eastern Europe and the former Soviet
block. Reforms away from centrally planned economies and state owned
industries are still in their infancy. As a result, investments in such
countries would be highly speculative and could result in losses to the
Funds. Although significant uncertainties for investment remain,
Price-Fleming considers the current outlook for certain countries in this
region to be positive and expects the Funds to be in a position to take
advantage of opportunities as they arise.

Single Country Concentration-Japan Fund. The Fund concentrates its
investments, and is normally expected to invest substantially all of its
assets, in Japanese equity securities. As a result, the Fund is expected to
be more volatile than a geographically diversified fund.

   
Regional Concentration-European Stock, Latin America and New Asia Funds.
The European Stock, Latin America and New Asia Funds concentrate their
investments in the countries of Europe, Latin America, Asia and the Pacific
Basin, excluding Japan, respectively. As a result, these Funds will be more
dependent on investment factors affecting these regions than a more
diversified fund.

Non-Diversified Status-Latin America Fund. The Fund is registered as a
non-diversified mutual fund. This means that the Fund may invest a greater
portion of its assets in, and own a greater amount of the voting securities
of, a single company than a diversified fund which may subject the Fund to
greater risk with respect to its portfolio securities. However, because the
Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code, it must invest so that, with respect to 50% of its
total assets, not more than 5% of its assets are invested in the securities
of a single issuer.

Telephone Companies-Latin America Fund. The Fund expects to invest a
substantial portion of its assets in the telephone companies of various
Latin America countries. At times, such companies could represent more than
25% of the Fund's total assests. Each telephone company is an essential
part of its country's infrastructure and has been a critical part in the
ability of the country to develop its economy. If the favorable trends in
Latin America toward privatization, relaxed regulatory climates, opening of
markets, or lower inflation were to reverse course, the share prices of
telephone company stocks could be expected to be adversely affected.
    

Foreign Exchanges and Markets. Each Fund's portfolio securities from time
to time may be listed on foreign exchanges or traded in foreign markets
which are open on days (such as Saturday) when the Funds do not compute
their prices or accept orders for the purchase, redemption or exchange of
their shares. As a result, the net asset values of the Funds may be
significantly affected by trading on days when shareholders cannot make
transactions.

   
Pricing-Japan Fund. The Fund will not process purchase, redemption or
exchange orders on any day when either the New York or Tokyo Stock Exchange
is closed. Orders received on such days will be priced on the next business
day the Fund computes its net asset value. As such, you may experience a
delay in purchasing or redeeming Fund shares on those days.
    

INVESTMENT POLICIES

Each Fund's investment program and policies are subject to further
restrictions and risks which are described in the Statement of Additional
Information. The Funds will not make a material change in their investment
objectives or a change in their fundamental policies without obtaining
shareholder approval. The International Stock Fund's investment objective
is a fundamental policy, however, the investment programs of all of the
Funds, unless otherwise specified, are not fundamental policies and may be
changed without shareholder approval. Shareholders will be notified of any
material change in the investment programs.
   
     In addition to the investments described below, each of the Fund's
investments may include, but are not limited to, American Depository
Receipts (ADRs), European Depository Receipts (EDRs), American Depository
Shares (ADSs), bonds, notes, other debt securities of foreign issuers,
securities of foreign investment funds or trusts (investment in such funds
or trusts will result in duplication of certain fees and could have
negative tax consequences-see "Passive Foreign Investment Companies"), and
the investments described under Investment Programs.
    

Cash Reserves. While each Fund will remain primarily invested in common
stocks, it may, for temporary defensive purposes, invest in reserves
without limitation. Each Fund may also establish and maintain reserves as
Price-Fleming believes is advisable to facilitate each Fund's cash flow
needs
(e.g., redemptions, expenses, and purchases of portfolio securities). Each
Fund's reserves will be invested in domestic and foreign money market
instruments rated within the top two credit categories by a national rating
organization or, if unrated, the T. Rowe Price equivalent.

Convertible Securities, Preferred Stocks, and Warrants. The Funds may
invest in debt or preferred equity securities convertible into or
exchangeable for equity securities. Preferred stocks are securities that
represent an ownership interest in a corporation providing the owner with
claims on the company's earnings and assets before common stock owners, but
after bond owners. Warrants are options to buy a stated number of shares of
common stock at a specified price any time during the life of the warrants
(generally, two or more years).

Foreign Currency Transactions. Each Fund will normally conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market, or through
entering into forward contracts to purchase or sell foreign currencies. The
Funds will generally not enter into a forward contract with a term of
greater than one year.

     The Funds will generally enter into forward foreign currency exchange
contracts only under two circumstances. First, when a Fund enters into a
contract for the purchase or sale of a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
Second, when Price-Fleming believes that the currency of a particular
foreign country may suffer or enjoy a substantial movement against another
currency, it may enter into a forward contract to sell or buy the former
foreign currency (or another currency which acts as a proxy for that
currency) approximating the value of some or all of a Fund's portfolio
securities denominated in such foreign currency. Under certain
circumstances, each Fund may commit a substantial portion or the entire
value of its portfolio to the consummation of these contracts.
Price-Fleming will consider the effect such a commitment of its portfolio
to forward contracts would have on the investment program of the Fund and
the flexibility of the Fund to purchase additional securities. Although
forward contracts will be used primarily to protect a Fund from adverse
currency movements, they also involve the risk that anticipated currency
movements will not be accurately predicted and the Fund's total return
could be adversely affected as a result.
     There are certain markets where it is not possible to engage in
effective foreign currency hedging. This may be true, for example, for the
currencies of various Latin American countries where the foreign exchange
markets are not sufficiently developed to permit hedging activity to take
place.

Futures Contracts and Options. The Funds may enter into stock index or
currency futures contracts (or options thereon) to hedge a portion of a
Fund's portfolio, to provide an efficient means of regulating the Fund's
exposure to the equity markets, or as a hedge against changes in prevailing
levels of currency exchange rates. The Funds will not use futures contracts
for speculation. The Funds will limit their use of futures contracts so
that no more than 5% of each Fund's total assets would be committed to
initial margin deposits or premiums on such contracts. Such contracts may
be traded on U.S. or foreign exchanges. The Funds may write covered call
options and purchase put and call options on foreign currencies,
securities, and stock indices. The aggregate market value of each Fund's
currencies or portfolio securities covering call or put options will not
exceed 25% of the Fund's net assets. Futures contracts and options can be
highly volatile and could reduce a Fund's total return, and a Fund's
attempt to use such investments for hedging purposes may not be successful.
Successful futures strategies require the ability to predict future
movements in securities prices, interest rates and other economic factors.
Each Fund's potential losses from the use of futures extends beyond its
initial investment in such contracts. Also, losses from options and futures
could be significant if a Fund is unable to close out its position due to
disruptions in the market or lack of liquidity.

   
Hybrid Investments. As part of its investment program and to maintain
greater flexibility, each Fund may invest in instruments which have the
characteristics of futures and securities. For example, the interest or
principal of a hybrid bond may be determined by the value of a designated
currency, commodity, or foreign or domestic securities index at a specified
future time. One type of hybrid instrument is a cross currency linked bond
whose coupon yield varies based on the relationship between two currencies.
Another type could pay a market rate of interest but have its principal at
maturity determined by a multiple of an index. Under certain conditions,
the redemption value of such an investment could be zero. Hybrids can have
volatile prices and limited liquidity.
    

   
Illiquid Securities. Each Fund will invest no more than 10% of its net
assets (15% for the Latin America Fund) in illiquid securities. Because an
active trading market does not exist for such securities, the sale of such
securities may be subject to delay and additional costs. Each Fund will not
invest more than 5% of its total assets in restricted securities (other
than securities eligible for resale under Rule 144A of the Securities Act
of 1933).
    

Lending of Portfolio Securities. As a fundamental policy, for the purpose
of realizing additional income, each Fund may lend securities with a value
of up to 30% (331/3 % for the Latin America Fund) of its total assets to
broker-dealers, institutional investors, or other persons. Any such loan
will be continuously secured by collateral at least equal to the value of
the security loaned. Such lending could result in delays in receiving
additional collateral or in the recovery of the securities or possible loss
of rights in the collateral should the borrower fail financially.

Repurchase Agreements. The Funds may enter into repurchase agreements with
a well-established securities dealer or a bank which is a member of the
Federal Reserve System. In the event of a bankruptcy or default of certain
sellers of repurchase agreements, the Funds could experience costs and
delays in liquidating the underlying security, which is held as collateral,
and the Funds might incur a loss if the value of the collateral held
declines during this period.

Portfolio Turnover. The Funds will not generally trade in securities for
short-term profits but, when circumstances warrant, securities may be
purchased and sold without regard to the length of time held. To the extent
that short-term trading results in the realization of short-term capital
gains, shareholders will be taxed on such gains at ordinary income tax
rates. The following chart sets forth each Fund's annualized portfolio
turnover rates for the last three years, if applicable. The portfolio
turnover rate for the Latin America Fund is not expected to exceed 100%.

                                     1992      1991      1990

International Stock Fund             37.8%     45.0%     47.1%
International Discovery Fund         38.0%     56.3%     44.0%
European Stock Fund                  52.0%     57.7%     34.9%
Japan Fund                           41.6%     <F1>      <F1>
New Asia Fund                        36.3%     49.0%     3.2%

<F1>  Prior to commencement of Fund operations.

   
Fundamental Investment Policies. As a matter of fundamental policy: (1) the
Funds will not, among other things, purchase a security of any issuer if,
as a result, it would, (a) cause the Fund to have more than 25% of its
total assets concentrated in any one industry or (b) (other than for the
Latin America Fund) with respect to 75% of its assets, cause the Fund's
holdings of that issuer to amount to more than 5% of the Fund's total
assets or cause the Fund to own more than 10% of the outstanding voting
securities of the issuer  provided that, as an operating policy, none of
the Funds (other than the Latin America Fund) will purchase a security if,
as a result, more than 10% of the outstanding voting securities of any
issuer would be held by the Fund; and (2) none of the Funds will (a) borrow
money except temporarily from banks to facilitate redemption requests (the
Latin America Fund may also engage in certain other transactions which may
involve borrowing) in amounts not exceeding 30% of its total assets valued
at market (331/3 % for the Latin America Fund); or (b) in any manner
transfer as collateral for indebtedness any security of the Fund except in
connection with permissible borrowings (the Latin America Fund may also
transfer securities in connection with permissible investments), which in
no event will exceed 30% of the Fund's total assets valued at market (
331/3 % for the Latin America Fund).
    

Other Investment Policies. As a matter of operating policy, each of the
Funds will not, among other things: (1) purchase a security of any issuer
if, as a result, more than 5% of the value of the Fund's total assets would
be invested in the securities of unseasoned issuers which at the time of
purchase have been in operation for less than three years, including
predecessors and unconditional guarantors; and (2) purchase additional
securities when money borrowed exceeds 5% of the Fund's total assets.

   
European, New Asia and Latin America Funds

Location of Company. In determing the domicile or nationality of a company,
the Funds would primarily consider the following factors: whether the
company is organized under the laws of a particular country; or, whether
the company derives a significant proportion (at least 50%) of its revenues
or profits from goods produced or sold, investments made, or services
performed in the country or has at least 50% of its assets situated in that
country.
    

PERFORMANCE INFORMATION

The Funds may advertise total return figures on both a cumulative and
compound average annual basis and compare them to various indices (e.g.,
the S&P 500), other mutual funds or other performance measures. (The total
return of a Fund consists of the change in its net asset value per share
and the net income it earns.) Cumulative total return compares the amount
invested at the beginning of a period with the amount redeemed at the end
of the period, assuming the reinvestment of all dividends and capital gain
distributions. The compound average annual total return indicates a yearly
compound average of a Fund's performance, derived from the cumulative total
return. The annual compound rate of return for a Fund may vary from any
average. Further information about a Fund's performance is contained in its
annual report which is available free of charge.

CAPITAL STOCK

The T. Rowe Price International Funds, Inc. (the Corporation) was
originally organized in 1979 as a Maryland corporation. Effective May 1,
1986, the Corporation converted from a Maryland corporation to a
Massachusetts business trust known as the T. Rowe Price International Trust
(Trust). On May 1, 1990, the Trust converted back to a Maryland
corporation. The Corporation is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 as a diversified,
open-end investment company, commonly known as a "mutual fund." Mutual
funds, such as these, enable shareholders to: (1) obtain professional
management of investments, including Price-Fleming's proprietary research;
(2) diversify their portfolio to a greater degree than would be generally
possible if they were investing as individuals and thereby reduce, but not
eliminate risks; and (3) simplify the recordkeeping and reduce transaction
costs associated with investments.
     Currently, the Corporation consists of nine series, each representing
a separate class of shares and having different objectives and investment
policies. The nine series and the years in which each was established are
as follows: International Stock Fund, 1979; International Bond Fund, 1986;
International Discovery Fund, 1988; European Stock Fund, New Asia Fund,
Global Government Bond Fund, 1990; Japan Fund, 1991; Short-Term Global
Income Fund, 1992; and Latin America Fund, 1993. The Short-Term Global
Income, Global Government Bond and International Bond Funds are described
in a separate prospectus. The Corporation's Charter provides that the Board
of Directors may issue additional series of shares and/or additional
classes of shares for each series. Although each Fund is offering only its
own shares, it is possible that a Fund might become liable for any
misstatement in the prospectus about another Fund. The Funds' Board has
considered this factor in approving the use of two combined prospectuses.

     Each Fund has an investment advisory group that has day-to-day
responsibility for managing the portfolio and developing and executing each
Fund's investment program. The members of each advisory group are listed
below.

International Stock and International Discovery Funds. Martin G. Wade,
Christopher Alderson, Peter Askew, David Boardman, Richard J. Bruce, Mark
J. T. Edwards, John R. Ford, Robert C. Howe, James B. M. Seddon, Benedict
R. F. Thomas, and David J. L. Warren.

European Stock Fund. Martin G. Wade, Richard J. Bruce, Mark J. T. Edwards,
John R. Ford, and James B. M. Seddon.

Japan Fund. Martin G. Wade, Christopher Alderson, and David J. L. Warren.

New Asia Fund. Martin G. Wade, Peter Askew, Robert C. Howe, and Benedict R.
F. Thomas.
Latin America Fund. Martin G. Wade, Mark J. T. Edwards, and John R. Ford.
     Martin Wade joined Price-Fleming in 1979 and has 25 years of
experience with Fleming Group (Fleming Group includes Robert Fleming
Holdings Ltd. and/or Jardine Fleming International Holdings Ltd.) in
research, client service and investment management, including assignments
in the Far East and the United States.
     Peter Askew joined Price-Fleming in 1988 and has 19 years of
experience managing multicurrency fixed income portfolios. Christopher
Alderson joined Price-Fleming in 1988, and has eight years of experience
with the Fleming Group in research and portfolio management, including an
assignment in Hong Kong. David Boardman joined Price-Fleming in 1988 and
has 19 years experience in managing multicurrency fixed income portfolios.
Richard J. Bruce joined Price-Fleming in 1991 and has six years of
experience in investment management with the Fleming Group in Tokyo. Mark
J. T. Edwards joined Price-Fleming in 1987 and has 13 years of experience
in financial analysis, including three years in Fleming European research.
John R. Ford joined Price-Fleming in 1982 and has 14 years of experience
with Fleming Group in research and portfolio management, including
assignments in the Far East and the United States. Robert C. Howe joined
Price-Fleming in 1986 and has 13 years of experience in economic research,
company research and portfolio management, including an assignment in
Japan. James B. M Seddon joined Price-Fleming in 1987 and has seven years
of experience in investment management. Benedict R. F. Thomas joined Pri
ce-Fleming in 1988 and has five years of portfolio management experience,
including assignments in London and Baltimore. David J. L. Warren joined
Price-Fleming in 1984 and has 14 years of experience in equity research,
fixed income research and portfolio management, including an assignment in
Japan.

Shareholder Rights. All shares of the Corporation have equal rights with
regard to voting, redemptions, dividends, distributions, and liquidations.
Fractional shares have voting rights and participate in any distributions
and dividends. Shareholders have no preemptive or conversion rights; nor do
they have cumulative voting rights. When a Fund's shares are issued, they
are fully paid and nonassessable. All shares of the Corporation may be
voted in the election or removal of directors and on other matters
submitted to the vote of shareholders of the Corporation. On matters
affecting an individual series of the Corporation, a separate vote of the
particular series is required. The individual series of the Corporation do
not routinely hold annual meetings of shareholders. However, if
shareholders representing at least 10% of all votes of the Corporation
entitled to be cast so desire, they may call a special meeting of
shareholders of the Corporation for the purpose of voting on the question
of the removal of any director(s). The total authorized capital stock of
the Corporation consists of 1,000,000,000 shares, each having a par value
of $.01. As of December 31, 1992, there were 207,360 shareholders in the
International Stock Fund, 20,403 shareholders in the International
Discovery Fund, 24,496 shareholders in the European Stock Fund, 5,855
shareholders in the Japan Fund, 37,629 shareholders in the New Asia Fund,
and a total of 2,200,958 shareholders in the other 39 T. Rowe Price Funds.

NAV, PRICING, AND EFFECTIVE DATE

Net Asset Value Per Share (NAV). The NAV per share, or share price, for
each Fund, other than the Japan Fund, is normally determined as of 4:00 pm
Eastern Time (ET) each day the New York Stock Exchange (NYSE) is open. The
NAV per share, or share price, for the Japan Fund is normally determined as
of 4:00 pm ET each day the NYSE and the Tokyo Stock Exchange (TSE) are both
open. Each Fund's share price is calculated by subtracting its liabilities
from its total assets and dividing the result by the total number of shares
outstanding. Among other things, each Fund's liabilities include accrued
expenses and dividends payable, and its total assets include portfolio
securities valued at market as well as income accrued but not yet received.

Pricing-Japan Fund. The Fund will not process orders for the purchase,
redemption or exchange of its shares on any day on which the NYSE is closed
or on any day the TSE is closed. Orders received on such days will be
priced on the next business day the Fund computes its NAV. The TSE is
scheduled to be closed on the following weekdays in 1993: January 1, 15;
February 11; April 29; May 3, 4, 5; September 15, 23; October 11; November
3, 23; and December 23, 31, as well as the following weekdays in 1994:
January 3; February 11; March 21; April 29; May 3, 4, 5; September 15, 23;
October 10; November 3, 23; and December 23. If the TSE closes on any
additional or different dates, the Fund will be closed on such dates.

If your order is received in good order before 4:00 pm ET, you will receive
that day's NAV.

     Purchased shares are priced at that day's NAV if your request is
received before 4:00 pm ET in good order. (See Completing the New Account
Form and Opening a New Account.) If received later than 4:00 pm ET, shares
will be priced at the next business day's NAV.
     Redemptions are priced at that day's NAV if your request is received
before 4:00 pm ET in good order at the transfer agent's offices at T. Rowe
Price Account Services, P.O. Box 89000, Baltimore, MD 21289-0220. If
received after 4:00 pm ET, shares will be priced at the next business day's
NAV.
     Also, we cannot accept requests which specify a particular date for a
purchase or redemption or which specify any special conditions. If your
redemption request cannot be accepted, you will be notified and given
further instructions.
   
     Contingent Redemption Fee (Latin America Fund and International
Discovery Fund). The Funds can experience substantial price fluctuations
and are intended for long-term investors. Short-term "market timers" who
engage in frequent purchases and redemptions can disrupt the Funds'
investment programs and create additional transaction costs that are borne
by all shareholders. For these reasons, each Fund assesses a 2% fee on
redemptions (including exchanges) of Fund shares held for less than twelve
months.
    
   
     International Discovery Fund will impose the redemption fee for shares
purchased on or after February 28, 1994. Shares owned in this Fund as of
February 27, 1994 are exempt from the fee. Redemption fees will be paid to
the Fund to help offset transaction costs.
    
   
     The Funds will use the "first-in, first-out" (FIFO) method to
determine the twelve month holding period. Under this method, the date of
the redemption or exchange will be compared with the earliest purchase date
of shares held in the account. If this holding period is less than twelve
months, the redemption fee will be assessed.
    
   
     The fee does not apply to any shares purchased through reinvestment of
dividends or capital gain distributions, or to shares held in retirement
plans such as 401(k), 403(b), 457, Keogh, profit sharing, and money
purchase pension accounts. The fee does apply to shares held in IRA and
SEP-IRA accounts and to shares purchased through automatic investment plans
(described under "Shareholder Services").
    
     Exchanges are normally priced in the same manner as purchases and
redemptions. However, if you are exchanging into a bond or money fund and
the release of your exchange proceeds is delayed for the allowable five
business days (see Receiving Your Proceeds), you will not begin to earn
dividends until the sixth business day after the exchange.
     Exchanges into or out of Japan Fund. If you are seeking to exchange
into the Japan Fund on a day when the NYSE is open but the TSE is closed,
the exchange out of the other T. Rowe Price Fund will be processed on that
day but the exchange into the Japan Fund will be delayed until the next
business day the Japan Fund is open. If you are seeking to exchange out of
the Japan Fund on a day when the NYSE is open but the TSE is closed, the
exchange out of the Japan Fund will be delayed until the next business day
the Japan Fund is open.

The Funds reserve the right to change the time at which purchases,
redemptions, and exchanges are priced if the NYSE closes at a time other
than 4:00 pm ET or an emergency exists.

RECEIVING YOUR PROCEEDS

Redemption proceeds are mailed to the address, or sent by wire or ACH
transfer to the bank account, designated on your New Account Form. They are
generally sent the next business day after your redemption request is
received in good order. Proceeds sent by bank wire will be credited to your
bank account the next business day and proceeds sent by ACH transfer will
be credited the second day after the sale. In addition, under unusual
conditions, or when deemed to be in the best interests of the Funds,
redemption proceeds may not be sent for up to five business days after your
request is received to allow for the orderly liquidation of securities.
Requests by mail for wire redemptions (unless previously authorized) must
have a signature guarantee.

DIVIDENDS AND DISTRIBUTIONS

The Funds distribute all net investment income and capital gains to
shareholders. Dividends from net investment income and distributions from
capital gains, if any, are normally declared and paid in December.
Dividends and distributions declared by the Funds will be reinvested unless
you choose an alternative payment option on the New Account Form. Dividends
not reinvested are paid by check or transmitted to your bank account via
ACH. If the U.S. Postal Service cannot deliver your check, or if your check
remains uncashed for six months, the Fund reserves the right to reinvest
your distribution check in your account at the then current NAV and to
reinvest all subsequent distributions in shares of the Fund.

TAXES Form 1099-DIV will be mailed to you in January.

Dividends and Distributions. In January, the Funds will mail you Form
1099-DIV indicating the federal tax status of your dividends and capital
gain distributions. Generally, dividends and distributions are taxable in
the year they are paid. However, any dividends and distributions paid in
January but declared during the prior three months are taxable in the year
they are declared. Dividends and distributions are taxable to you
regardless of whether they are taken in cash or reinvested. Dividends and
short-term capital gain distributions are taxable as ordinary income;
long-term capital gain distributions are taxable as long-term capital
gains. The capital gain holding period is determined by the length of time
a Fund has held the securities, not the length of time you have owned Fund
shares.

Foreign Transactions. Distributions resulting from the sale of foreign
currencies and debt securities, to the extent of foreign exchange gains,
are taxed as ordinary income or loss. If any Fund pays nonrefundable taxes
to foreign governments during the year, the taxes will reduce that Fund's
dividends but will still be included in your taxable income. However, you
may be able to claim an offsetting credit or deduction on your tax return
for your portion of foreign taxes paid by the Fund.

Shares Sold. A redemption or exchange of Fund shares is treated as a sale
for tax purposes which will result in a short or long-term capital gain or
loss, depending on how long you have owned the shares. In January, the
Funds will mail you Form 1099-B indicating the trade date and proceeds from
all sales and exchanges.
Undistributed Income and Gains. At the time of purchase, the share price of
each Fund may reflect undistributed income, capital gains or unrealized
appreciation of securities. Any income or capital gains from these amounts
which are later distributed to you are fully taxable.
Corporations. The dividends of each Fund will not be eligible for the 70%
deduction for dividends received by corporations if, as expected, none of
the Funds' income consists of dividends paid by U.S. corporations.

   
Passive Foreign Investment Companies. Each Fund may purchase the securities
of certain foreign investment funds or trusts called passive foreign
investment companies. Although the situation could change at any time, such
funds have been the only or primary means by which the International Stock,
International Discovery, Latin America and New Asia Funds could invest in
Korea, Taiwan, Chile, Colombia and India. In addition to bearing their
proportionate share of the fund's expenses (management fees and operating
expenses) shareholders will also indirectly bear similar expenses of such
funds. Capital gains on the sale of such holdings will be deemed to be
ordinary income regardless of how long the Fund holds its investment. In
addition, the Fund may be subject to corporate income tax and an interest
charge on certain dividends and capital gains earned from these
investments, regardless of whether such income and gains are distributed to
shareholders.
    
     In accordance with tax regulations, the Fund intends to treat these
securities as sold on the last day of the Fund's fiscal year and recognize
any gains for tax purposes at that time; losses will not be recognized.
Such gains will be considered ordinary income which the Fund will be
required to distribute even though it has not sold the security and
received cash to pay such distributions.
Tax-Qualified Retirement Plans. Tax-qualified retirement plans generally
will not be subject to federal tax liability on either distributions from
each Fund or redemption of shares of the Funds. Rather, participants in
such plans will be taxed when they begin taking distributions from the
plans.
Tax Consequences of Hedging. Under applicable tax law, the Funds may be
required to limit their gains from hedging in foreign currency forwards,
futures and options. Although it is anticipated the Funds will comply with
such limits, the extent to which these limits apply is subject to tax
regulations which have not yet been issued. Hedging may also result in the
application of the mark-to-market and straddle provisions of the Internal
Revenue Code. These provisions could result in an increase (or decrease) in
the amount of taxable dividends paid by the Funds as well as affect whether
dividends paid by the Funds are classified as capital gains or ordinary
income.

MANAGEMENT OF THE FUNDS

Investment Manager. Price-Fleming is responsible for selection and
management of each Fund's portfolio investments. Price-Fleming's U.S.
office is located at 100 East Pratt Street, Baltimore, Maryland 21202.

Price-Fleming has offices in Baltimore, London, Tokyo, and Hong Kong.

     Price-Fleming was incorporated in Maryland in 1979 as a joint venture
between T. Rowe Price and Robert Fleming Holdings Limited (Flemings).
Flemings is a diversified investment organization which participates in a
global network of regional investment offices in New York, London, Zurich,
Geneva, Tokyo, Hong Kong, Manila, Kuala Lumpur, South Korea, and Taiwan.
     T. Rowe Price was incorporated in Maryland in 1947 as successor to the
investment counseling business founded by the late Thomas Rowe Price, Jr.
in 1937. Flemings was incorporated in 1974 in the United Kingdom as
successor to the business founded by Robert Fleming in 1873. As of December
31, 1992, T. Rowe Price and its affiliates managed over $41.4 billion of
assets and Flemings managed the U.S. equivalent of approximately $45
billion.

Board of Directors. The management of each Fund's business and affairs is
the responsibility of the Funds' Board of Directors.

T. Rowe Price, Flemings, and Jardine Fleming are owners of Price-Fleming.
The common stock of Price-Fleming is 50% owned by a wholly-owned subsidiary
of T. Rowe Price, 25% by a subsidiary of Flemings and 25% by Jardine
Fleming Group Limited (Jardine Fleming). (Half of Jardine Fleming is owned
by Flemings and half by Jardine Matheson Holdings Limited.) T. Rowe Price
has the right to elect a majority of the board of directors of
Price-Fleming, and Flemings has the right to elect the remaining directors,
one of whom will be nominated by Jardine Fleming.

Research and Administration. Certain administrative support is provided by
T. Rowe Price which receives from Price-Fleming a fee of .15% of the market
value of all assets in equity accounts, .15% of the market value of all
assets in active fixed income accounts and .035% of the market value of all
assets in passive fixed income accounts under Price-Fleming's management.
Additional investment research and administrative support for equity
investments is provided to Price-Fleming by Fleming Investment Management
Limited (FIM) and Jardine Fleming Investment Holdings Limited (JFIH) for
which each receives from Price-Fleming a fee of .075% of the market value
of all assets in equal accounts under Price-Fleming's management. FIM and
JFIH are wholly-owned subsidiaries of Flemings and Jardine Fleming,
respectively.
     Fleming International Fixed Interest Management Limited (FIFIM)
provides Price-Fleming additional investment research and administrative
support on fixed income investments and receives from Price-Fleming a fee
of .075% of the market value of all assets in active fixed income accounts
and .0175% of such market value in passive fixed income accounts under
Price-Fleming's management. FIFIM is owned by Flemings. Certain officers of
Price-Fleming are directors of FIFIM. JFIH receives a fee of .075% of the
market value of all assets in active fixed income accounts and .0175% of
such market value in passive fixed income accounts under Price-Fleming's
management.

Portfolio Transactions. Decisions with respect to the purchase and sale of
a Fund's portfolio securities on behalf of each Fund are made by
Price-Fleming. The Funds' Board of Directors has authorized Price-Fleming
to utilize affiliates of Flemings and Jardine Fleming in the capacity of
broker in connection with the execution of a Fund's portfolio transactions
if Price-Fleming believes that doing so would result in an economic
advantage (in the form of lower execution costs or otherwise) being
obtained by the Fund.

Investment Services. T. Rowe Price Investment Services, Inc., a
wholly-owned subsidiary of T. Rowe Price, is the distributor for these
Funds as well as all other T. Rowe Price Funds.

Transfer and Dividend Disbursing Agent. TRP Services, a wholly-owned
subsidiary of T. Rowe Price, serves the Funds as transfer and dividend
disbursing agent. T. Rowe Price Retirement Plan Services, Inc., a
wholly-owned subsidiary of T. Rowe Price, performs subaccounting and
recordkeeping services for shareholder accounts in certain retirement plans
investing in the Price Funds. T. Rowe Price calculates the daily share
price and maintains the portfolio and general accounting records of each
Fund. The address for TRP Services and T. Rowe Price Retirement Plan
Services, Inc. is 100 East Pratt Street, Baltimore, Maryland 21202.

EXPENSES AND MANAGEMENT FEE

Each Fund bears all expenses of its operations other than those incurred by
Price-Fleming under its Investment Management Agreement with Price-Fleming.
Fund expenses include: the management fee; shareholder servicing fees and
expenses; custodian and accounting fees and expenses; legal and auditing
fees; expenses of preparing and printing prospectuses and shareholder
reports; registration fees and expenses; proxy and annual meeting expenses,
if any; and directors' fees and expenses.

Management Fee. Each Fund pays Price-Fleming an investment management fee
consisting of an Individual Fund Fee and a Group Fee. See Summary of Funds'
Fees and Expenses for the Individual Fund Fee. The Group Fee varies and is
based on the combined net assets of all mutual funds sponsored and managed
by Price-Fleming and T. Rowe Price, excluding T. Rowe Price Spectrum Fund,
Inc., and any institutional or private label mutual funds, and distributed
by T. Rowe Price Investment Services, Inc.
     Each Fund pays, as its portion of the Group Fee, an amount equal to
the ratio of its daily net assets to the daily net assets of all the Price
Funds. The table below shows the annual Group Fee rate at various asset
levels of the combined Price Funds:

       0.480% First $1 billion          0.350% Next $ 2 billion
       0.450% Next  $1 billion          0.340% Next $ 5 billion
       0.420% Next  $1 billion          0.330% Next $10 billion
       0.390% Next  $1 billion          0.320% Next $10 billion
       0.370% Next  $1 billion          0.310% Thereafter
       0.360% Next  $2 billion

Based on combined Price Funds' assets of approximately $26.2 billion at
December 31, 1992, the Group Fee was 0.35%.

SHAREHOLDER SERVICES

The following is a brief summary of services available to shareholders in
the T. Rowe Price Funds, some of which may be restricted or unavailable to
retirement plan accounts. You must authorize most of these services on a
New Account or Shareholders Services  Form. Services may be modified or
withdrawn at any time without notice. Please verify all transactions on
your confirmation statements promptly after receiving them. Any
discrepancies must be reported to Shareholder Services immediately.

Automatic Asset Builder. You can have us move $50 or more on the same day
each month from your bank account or invest $50 or more from your paycheck
into any T. Rowe Price Fund.

INVESTOR SERVICES
1-800-638-5660
1-410-547-2308

Discount Brokerage Service. You can trade stocks, bonds, options, CDs,
Treasury Bills, and precious metals at substantial savings through our
Discount Brokerage Service. Call Investor Services for more information.

   
Exchange Service. You can move money from one account to an existing
identically registered account or open a new identically registered
account. Remember that, for tax purposes, an exchange is treated as a
redemption and a new purchase. Exchanges into a state tax-free fund are
limited to investors residing in states where those funds are qualified for
sale. Some of the T. Rowe Price Funds may impose a redemption fee of 1-2%,
payable to such Funds, on shares held for less than 12 months.
    

Retirement Plans. For details on IRAs, please call Investor Services. For
details on all other retirement plans, please call our Trust Company at
1-800-492-7670.

SHAREHOLDER SERVICES
1-800-225-5132
1-410-625-6500

Telephone Services. The following services are explained fully in the
Services Guide, which is mailed to new T. Rowe Price investors. If you
don't have a copy, please call Shareholder Services. (All telephone calls
to Shareholder Services and Investor Services are recorded in order to
protect you, each Fund, and its agents.)

24-Hour Service. Tele*Access(R) provides information on yields, prices,
latest dividends, account balances, and last transaction as well as the
ability to initiate purchase, redemption and exchange orders (if you
have established Telephone Services). Just call 1-800-638-2587 and press
the appropriate codes into your touch-tone phone. PC*Access(R) provides
the same information as Tele*Access, but on a personal computer.

Electronic Transfers. We offer three free methods for purchasing or
redeeming Fund shares in amounts of $100 to $100,000 through ACH
transfers between your bank checking and fund accounts:
   - By calling Shareholder Services during business hours
       (Tele-Connect(R));
   - By touch-tone phone any day, any time (Tele*Access);
   - By personal computer any day, any time (PC*Access).

If your bank checking and fund account are not identically registered,
you will need a signature guarantee to establish this service.

   
ACH: (Automated Clearing House) is an automated method of initiating
payments from and receiving payments in your financial institution
account. ACH is a payment system supported by over 20,000 credit unions,
banks and savings banks which electronically exchange the transactions
primarily through the Federal Reserve Banks.
    

Wire Transfers. Wire transfers can be processed through bank wires (a $5
charge applies to redemption amounts under $5,000 and your bank may
charge you for receiving wires). While this is usually the quickest
transfer method, the Funds reserve the right to temporarily suspend
wires under unusual circumstances.

CONDITIONS OF YOUR PURCHASE

Account Balance. If your account drops below $1,000 for three months or
more, each Fund has the right to close your account, after giving 60 days'
notice, unless you make additional investments to bring your account value
to $1,000 or more.

Broker-Dealers. Purchases or redemptions through broker-dealers, banks, and
other institutions may be subject to service fees imposed by those
entities. No such fees are charged by T. Rowe Price Investment Services or
the Funds if shares are purchased or redeemed directly from the Funds.

Excessive Trading and Exchange Limitations. To protect Fund shareholders
against disruptions in portfolio management which might occur as a result
of too frequent buy and sell activity and to minimize Fund expenses
associated with such transaction activity, each Fund prohibits excessive
trading in any account (or group of accounts managed by the same person).
Within any 120 consecutive-day period, investors may not exchange between
Price Funds more than twice or buy and sell the Price Funds more than once,
if the transactions involve substantial assets or a substantial portion of
the assets in the account or accounts. This policy is applied on a
multi-fund basis. Any transactions above and beyond these guidelines will
be considered to be excessive trading, and the investor may be prohibited
from making additional purchases or exercising the exchange privilege.

This policy does not apply to exchanges solely between, or purchases and
sales solely of, the Price Money Funds, nor does it apply to simple
redemptions from any Fund.

Nonpayment. If your check, wire or ACH transfer does not clear, or if
payment is not received for any telephone purchase, the transaction will be
cancelled and you will be responsible for any loss the Funds or Investment
Services incurs. If you are already a shareholder, each Fund can redeem
shares from any identically registered account in each of these Funds or
any other T. Rowe Price Fund as reimbursement for any loss incurred. You
may be prohibited or restricted from making future purchases in any of the
T. Rowe Price Funds.

U.S. Dollars. All purchases must be paid for in U.S. dollars, and checks
must be drawn on U.S. banks.

Redemptions in Excess of $250,000. Redemption proceeds are normally paid in
cash. However, if you redeem more than $250,000, or 1% of a Fund's net
assets, in any 90-day period, the Fund may in its discretion: (1) pay the
difference between the redemption amount and the lesser of these two
figures with securities of the Fund or (2) delay the transmission of your
proceeds for up to five business days after your request is received.
Signature Guarantees. A signature guarantee is designed to protect you and
the Funds by verifying your signature. You will need one to:

  (1)  Establish certain services after the account is opened.
  (2)  Redeem over $50,000 by written request (unless you have
       authorized Telephone Services).
  (3)  Redeem or exchange shares when proceeds are: (i) being mailed
       to an address other than the address of record, (ii) made
       payable to other than the registered owner(s), or (iii) being
       sent to a bank account other than the bank account listed on
       your fund account.
  (4)  Transfer shares to another owner.
  (5)  Send us written instructions asking us to wire redemption
       proceeds (unless previously authorized).
  (6)  Establish Electronic Transfers when your bank checking and fund
       account are not identically registered.

These requirements may be waived or modified in certain instances.

     Acceptable guarantors are all eligible guarantor institutions as
defined by the Securities Exchange Act of 1934 such as: commercial banks
which are FDIC members, trust companies, firms which are members of a
domestic stock exchange, and foreign branches of any of the above. We
cannot accept guarantees from institutions or individuals who do not
provide reimbursement in the case of fraud, such as notaries public.

Telephone Exchange and Redemption. Telephone exchange and redemption are
established automatically when you sign the New Account Form unless you
check the box which states that you do not want these services. The Fund
uses reasonable procedures (including shareholder identity verification) to
confirm that instructions given by telephone are genuine. If these
procedures are not followed, it is the opinion of certain regulatory
agencies that the Fund may be liable for any losses that may result from
acting on the instructions given. All conversations are recorded, and a
confirmation is sent within five business days after the telephone
transaction.

Ten-Day Hold. The mailing of proceeds for redemption requests involving any
shares purchased by personal, corporate or government check, or ACH
transfer is generally subject to a 10-day delay to allow the check or
transfer to clear. The 10-day clearing period does not affect the trade
date on which your purchase or redemption order is priced, or any dividends
and capital gain distributions to which you may be entitled through the
date of redemption. If your redemption request was sent by mail or
mailgram, proceeds will be mailed no later than the seventh calendar day
following receipt unless the check or ACH transfer has not cleared. The
10-day hold does not apply to purchases made by wire, Automatic Asset
Builder-Paycheck, or cashier's, treasurer's, or certified checks.

Each Fund and its agents reserve the right to: (1) reject any purchase or
exchange, cancel any purchase due to nonpayment, or reject any exchange or
redemption where the Fund has not received payment; (2) waive or lower the
investment minimums; (3) accept initial purchases by telephone or mailgram;
(4) waive the limit on subsequent purchases by telephone; (5) reject any
purchase or exchange prior to receipt of the confirmation statement; (6)
redeem your account (see Tax Identification Number); (7) modify the
conditions of purchase at any time; and (8) reject any check not made
directly payable to the Fund or T. Rowe Price (call Shareholder Services
for more information).

COMPLETING THE NEW ACCOUNT FORM

Tax Identification Number. We must have your correct social security or
corporate tax identification number and a signed New Account Form or W-9
Form. Otherwise, federal law requires the Funds to withhold a percentage
(currently 31%) of your dividends, capital gain distributions, and
redemptions, and may subject you to a fine. You also will be prohibited
from opening another account by exchange. If this information is not
received within 60 days after your account is established, your account may
be redeemed, priced at the NAV on the date of redemption.

YOU MUST PROVIDE YOUR TAX ID NUMBER AND SIGN THE NEW ACCOUNT FORM.

     Unless you otherwise request, one shareholder report will be mailed to
multiple account owners with the same tax identification number and same
zip code and to those shareholders who have requested that their accounts
be combined with someone else's for financial reporting.

Account Registration. If you own other T. Rowe Price Funds, make certain
the registration (name and account type) is identical to your other funds
for easy exchange. Remember to sign the form exactly as the name appears in
the registration section.

Services. By signing up for services on the New Account Form, rather than
after the account is   opened, you will avoid having to complete a separate
form and obtain a signature guarantee (see Conditions of Your Purchase).

OPENING A NEW ACCOUNT

Minimum initial investment: $2,500 ($1,000 for retirement plans and gifts or
transfers to minors (UGMA/UTMA accounts); $50 per month for Automatic Asset
Builder Accounts -see Shareholder Services)

By Mail   Send your New Account Form and check to:

          Regular Mail                     Mailgram, Express, Registered,
                                           or Certified Mail

          T. Rowe Price Account Services   T. Rowe Price Account Services
          P.O. Box 17300                   10090 Red Run Boulevard
          Baltimore, MD 21298-9353         Owings Mills, MD 21117

CHECKS PAYABLE TO T. ROWE PRICE FUNDS.


INVESTOR SERVICES
1-800-638-5660
1-410-547-2308

By Wire   Call Investor Services for an account number and use Wire Address
          below.  Then, complete the New Account Form and mail it to one of
          the addresses above.  (Not applicable to retirement plans.)

          Wire Address             Morgan Guaranty Trust Company of New York
          (to give to your bank):  ABA #021000238
                                   T. Rowe Price (fund name)/ AC-00153938
                                   Account name(s) and account number

SHAREHOLDER SERVICES
1-800-225-5132
1-410-625-6500

By Exchange   Call Shareholder Services.  The new account will have the same
              registration as the account from which you are exchanging.
              Services for the new account may be carried over by telephone
              request if preauthorized on the existing account. See Excessive
              Trading and Exchange Limitations under Conditions of Your
              Purchase.

In Person     Drop off your New Account Form and obtain a receipt at a
              T. Rowe Price Investor Center:

           101 East Lombard Street  T. Rowe Price Financial Center
           First Floor              First Floor
           Baltimore, MD            10090 Red Run Boulevard
                                    Owings Mills, MD

           Farragut Square          ARCO Tower
           First Floor              31st Floor
           900 17th Street, NW      515 South Flower Street
           Washington, DC           Los Angeles, CA


PURCHASING ADDITIONAL SHARES

Minimum: $100 ($50 for retirement plans)

By Wire   Call Shareholder Services or use the Wire Address (see Opening
          a New Account).

By Mail   Indicate your account number and the Fund name on your check.
          Mail it to us at the address below with the stub from a statement
          confirming a prior transaction or a note stating that you want to
          purchase shares in that Fund and giving us the account number.

          T. Rowe Price Funds
          Account Services
          P.O. Box 89000
          Baltimore, MD 21289-1500

SHAREHOLDER SERVICES
1-800-225-5132
1-410-625-6500

By ACH    Use Tele*Access, PC*Access or call Shareholder Services (if you
          have established Telephone Services) for ACH Transfers.

By Automatic   Fill out the Automatic Asset Builder section on the New Account
Asset Builder  or Shareholder Services Form.

Minimum:  $5,000
By Phone  Call Shareholder Services.

EXCHANGING AND REDEEMING SHARES

By Phone  Call Shareholder Services.  If you find our phones busy during
          unusually volatile markets, please consider placing your order by
          express mail, mailgram, Tele*Access or PC*Access. For exchange
          policy, see Excessive Trading and Exchange Limitations under
          Conditions of Your Purchase.

          Redemptions proceeds can be mailed, sent by ACH Transfer,
          or wired to your bank. The Fund charges a $5.00 fee for wire
          redemptions under $5,000, subject to change without notice. Your
          bank may also charge you for receiving wires.

SHAREHOLDER SERVICES
1-800-225-5132
1-410-625-6500


By Mail   Indicate account name(s) and numbers, fund name(s), and exchange
          or redemption amount.  For exchanges, indicate the accounts
          you are changing from and to along with the amount.  We require the
          signature of all owners exactly as registered, and possibly a
          signature guarantee (see Signature Guarantees under Conditions of
          Your Purchase).

T. ROWE PRICE
TRUST COMPANY
1-800-492-7670
1-410-625-6585


Note:  Distributions from retirement accounts, including IRAs, must be in
writing. Please call Shareholder Services to obtain an IRA Distribution
Request Form. For employer-sponsored retirement accounts, call T. Rowe Price
Trust Company or your plan administrator for instructions. Shareholders
holding previously issued certificates must conduct transactions by mail. If
you lose a stock certificate, you may incur an expense to replace it. Call
Shareholder Services for further information.


Mailing addresses:
Regular Mail                            Mailgram, Express, Registered, or
                                        Certified Mail
Non-Retirement
and IRA Accounts                        All Accounts

T. Rowe Price Account Services          T. Rowe Price Account Services
P.O. Box 89000                          10090 Red Run Boulevard
Baltimore, MD 21289-0220                Owings Mills, MD 21117

Employer-Sponsored
Retirement Accounts

T. Rowe Price Trust Company
P.O. Box 89000
Baltimore, MD 21289-0300


Prospectus
T. Rowe Price
International Equity Funds
December 29, 1993

To Open an Account:

Investor Services
1-800-638-5660
547-2308 in Baltimore

Yields & Prices:

Tele*Access(R)
24 hours, 7 days a week
1-800-638-2587
625-7676 in Baltimore

Existing Account:

Shareholder Services
1-800-225-5132
625-6500 in Baltimore

Investor Centers:
101 East Lombard Street
First Floor
Baltimore, Maryland

Farragut Square
First Floor
900 17th Street, NW
Washington, DC

T. Rowe Price Financial Center
First Floor
10090 Red Run Boulevard
Owings Mills, Maryland

ARCO Tower
31st Floor
515 South Flower Street
Los Angeles, California

T. Rowe Price
Invest With Confidence(R)

DESCRIPTION OF SIGNIFICANT DIFFERENCES BETWEEN EDGAR FILING AND PRINTED
COPY

Information appearing in all capital letters before a paragraph in the
Edgar filing will appear, in the printed copy, as call-outs in the left
margin.





PAGE 2
                      STATEMENT OF ADDITIONAL INFORMATION

          T. Rowe Price International Funds, Inc. (the "Corporation")

                           International Stock Fund
                         International Discovery Fund
                              European Stock Fund
                                  Japan Fund
                                 New Asia Fund
                              Latin America Fund

                                 (the "Funds")


          This Statement of Additional Information is not a prospectus but
should be read in conjunction with the Funds' prospectus dated December 29,
1993 which may be obtained from T. Rowe Price Investment Services, Inc., 100
East Pratt Street, Baltimore, Maryland 21202.

          The date of this Statement of Additional Information is December
29, 1993.


PAGE 3
                               TABLE OF CONTENTS

                           Page                                    Page

Call and Put Options . . . . 15   Investment Objectives and           
Capital Stock. . . . . . . . 65    Policies. . . . . . . . . . . . . 2
Custodian. . . . . . . . . . 56   Investment Performance . . . . . .38
Dealer Options . . . . . . . 19   Investment Programs. . . . . . . . 4
Distributor for Funds. . . . 56    (pages 7-9 in Prospectus)
Dividends. . . . . . . . . . 63   Investment Restrictions. . . . . .32
Federal and State Registration                Legal Counsel. . . . .66
 of Shares . . . . . . . . . 66   Lending of Portfolio Securities. .26
Foreign Currency Transactions27   Management of Funds. . . . . . . .49
Foreign Futures and Options. 26   Net Asset Value Per Share. . . . .62
Futures Contracts. . . . . . 20   Portfolio Transactions . . . . . .57
Hybrid Instruments . . . . . 30   Pricing of Securities. . . . . . .62
Illiquid Securities. . . . . 31   Principal Holders of Securities. .51
Independent Accountants. . . 67   Repurchase Agreements. . . . . . .30
Investment Management Services51  Risk Factors of Foreign Investing.10
 (pages 20 and 21 in Prospectus)              Tax Status . . . . . .63
Investment Objectives. . . . 2     (pages 18 and 19 in Prospectus)
 (page 6 in Prospectus)                        Taxation of Foreign
                                               Shareholders. . . . .65



                      INVESTMENT OBJECTIVES AND POLICIES

          The following information supplements the discussion of each Fund's
investment objectives and policies discussed on pages 6, and 12 through 15 of
the prospectus.  Unless otherwise specified, the investment program and
restrictions of each Fund are not fundamental policies.  The operating
policies of each Fund are subject to change by its Board of Directors without
shareholder approval.  However, shareholders will be notified of a material
change in an operating policy.  The fundamental policies of each Fund may not
be changed without the approval of at least a majority of the outstanding
shares of each Fund or, if it is less, 67% of the shares represented at a
meeting of shareholders at which the holders of 50% or more of the shares are
represented.


                             INVESTMENT OBJECTIVES

International Stock Fund

          The Fund's investment objective is to seek a total return on its
assets from long-term growth of capital and income, principally through
investments in common stocks of established, non-U.S. companies.  Investments
may be made solely for capital appreciation or solely for income or any
combination of both for the purpose of achieving a higher overall return.

International Discovery Fund

          The Fund's investment objective is to seek long-term growth of
capital through investment primarily in the common stocks of rapidly growing,
small- and medium-sized companies based outside the United States.

PAGE 4
European Stock Fund

          The Fund's investment objective is to seek long-term capital
appreciation by investing primarily in common stocks issued by both large- and
small-capitalization companies domiciled in Europe.  Current income is a
secondary objective.

Japan Fund

          The Fund's investment objective is to seek long-term growth of
capital by investing in stocks of large- and small-capitalization companies
domiciled, or with primary operations, in Japan.

New Asia Fund

          The Fund's investment objective is to seek long-term growth of
capital by investing in both large- and small-capitalization companies
domiciled, or with primary operations, in Asia, excluding Japan.  The Fund may
also invest in the common stocks of companies in the Pacific Basin, including
Australia and New Zealand.

Latin America Fund

          The Fund's investment objective is to seek long-term growth of
capital by investing in companies domiciled, or with primary operations, in
Latin America.

All Funds

          The Funds' investment manager, Rowe Price-Fleming International,
Inc. ("Price-Fleming"), one of America's largest managers of no-load
international mutual fund assets, regularly analyzes a broad range of
international equity and fixed income markets in order to assess the degree of
risk and level of return that can be expected from each market.  Based upon
its current assessment, Price-Fleming believes long-term growth of capital may
be achieved by investing in marketable securities of non-United States
companies which have the potential for growth of capital.  Of course, there
can be no assurance that Price-Fleming's forecasts of expected return will be
reflected in the actual returns achieved by the Funds.

          Each Fund's share price will fluctuate with market, economic and
foreign exchange conditions, and your investment may be worth more or less
when redeemed than when purchased.  The Funds should not be relied upon as a
complete investment program, nor used to play short-term swings in the stock
or foreign exchange markets.  The Funds are subject to risks unique to
international investing.  See discussion under "Risk Factors of Foreign
Investing" beginning on page 10.  Further, there is no assurance that the
favorable trends discussed below will continue, and the Funds cannot guarantee
they will achieve their objectives.




PAGE 5
                              INVESTMENT PROGRAMS

International Stock Fund

          It is the present intention of Price-Fleming to invest in companies
based in (or governments of or within) the Far East (for example, Japan, Hong
Kong, Singapore, and Malaysia), Western Europe (for example, United Kingdom,
Germany, Netherlands, France, Spain, and Switzerland), South Africa,
Australia, Canada, Latin America, and such other areas and countries as Price-
Fleming may determine from time to time.

          In determining the appropriate distribution of investments among
various countries and geographic regions, Price-Fleming ordinarily considers
the following factors:  prospects for relative economic growth between foreign
countries; expected levels of inflation; government policies influencing
business conditions; the outlook for currency relationships; and the range of
individual investment opportunities available to international investors.

          In analyzing companies for investment, Price-Fleming ordinarily
looks for one or more of the following characteristics:  an above-average
earnings growth per share; high return on invested capital; healthy balance
sheet; sound financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their market place.  While current dividend income is not a
prerequisite in the selection of portfolio companies, the companies in which
the Fund invests normally will have a record of paying dividends, and will
generally be expected to increase the amounts of such dividends in future
years as earnings increase.

          It is expected that the Fund's investments will ordinarily be
traded on exchanges located at least in the respective countries in which the
various issuers of such securities are principally based.

          Today, more investment opportunities may exist abroad than in the
U.S.  In 1970, two-thirds of the world's equity capitalization (the total
market value of the world's equity securities traded on stock exchanges) was
attributable to U.S. securities.  Now practically the opposite is true.  And
over the last ten years, the EAFE Index, a widely accepted index of European,
Australian and Far Eastern equity securities, has outperformed the Standard &
Poor's 500 Index.  Although the EAFE Index may not be representative of the
Fund's portfolio, Price-Fleming believes it may be a useful indicator of the
opportunities in foreign equity investing.  

International Discovery Fund

          It is the present intention of Price-Fleming to invest primarily in
smaller (i.e. small to medium size) companies based in developed and selected
emerging countries located in the Pacific Basin, Western Europe, Latin America
and such other areas and countries as Price-Fleming may determine from time to
time.  Price-Fleming believes that such smaller companies may have the
potential for greater, more dynamic growth than larger firms, which may have
reached a period of maturity and more gradual growth.  It is generally easier
for a company to grow from a smaller base.  In addition, smaller companies are


PAGE 6
often more flexible and responsive to customers, and to changes in competitive
conditions.  Medium size companies also display such characteristics to a
certain extent.  However, there are also special risks associated with
investing in smaller companies.

          In selecting portfolio investments, Price-Fleming will consider:  a
company's growth prospects, including the potential for superior appreciation
due to growth in earnings, relative valuation of its securities, and any risk
associated with investment; the industry in which the company operates, with a
view to identification of global developments within industries, international
investment trends, and social, economic or political movements affecting a
particular industry; the country in which the company is based, as well as
historical and anticipated foreign currency exchange rate fluctuations; and
the feasibility of gaining access to the securities market in a country and of
implementing the necessary custodial arrangements.  The investment program of
the Fund has been developed in the belief that research-based investment in a
diversified portfolio of equity securities of companies in a number of foreign
countries will give shareholders a chance to participate on a global basis in
the opportunities available in the growing foreign securities markets.

          The countries in which the Fund will seek investments include those
listed below.  The Fund may not invest in all the countries listed, and it may
invest in other countries as well, when such investments are consistent with
the Fund's investment objective and policies.  Countries designated with a
number sign (#) are emerging, or less developed, countries which for purposes
of this prospectus are defined as countries with a low or middle-income
economy as determined by the World Bank.

   Pacific Basin                Western Europe                     Other

     Australia                      Austria                     Argentina#
     Hong Kong                      Belgium                       Brazil#
      Korea+                        Denmark                       Canada
       Japan                        Finland                       Chile#+
     Malaysia#                      France                       Hungary#
   Philippines#                     Germany                       India#+
    New Zealand                     Greece#                       Mexico#
    Singapore#                      Ireland                       Turkey#
     Taiwan#+                        Italy                      Colombia#+
     Thailand#                    Luxembourg                    Venezuela#
    Indonesia#                    Netherlands
                                    Norway
                                   Portugal
                                     Spain
                                    Sweden
                                  Switzerland
                                United Kingdom
______________________________________________________________________________
+         Indicates countries in which the Fund effectively may invest only
          or primarily through investment funds subject to the provisions of
          the Investment Company Act of 1940 relating to the purchase of
          securities of investment companies.  See "Investment Restrictions
          Operating Policy No. 3."

          The Fund also will seek to invest in leading companies in other
emerging countries as their securities markets and banking systems develop, 

PAGE 7
including People's Republic of China, Czechoslovakia, Israel, Jordan, Morocco,
Nigeria, Pakistan, Poland, Peru and Vietnam, at such time as investment in
these countries becomes feasible.  It may not be feasible for the Fund
currently to invest in all of these countries due to restricted access to
their securities markets or inability to implement satisfactory custodial
arrangements.

          Under exceptional economic or market conditions abroad, the Fund
may temporarily invest all or a major portion of its assets in United States
government obligations or debt obligations of companies incorporated in or
having their principal activities in the United States.

European Stock Fund

          Market deregulation, privatization, and lowered barriers to foreign
investment have led to greater investment opportunities in Western Europe and
the potential for greater investment in Eastern Europe.  Economic and
political reforms in Eastern Europe may increase the investment and growth
possibilities for all of Europe.  European markets for investment include:

   Primary                         Secondary                 Developing

   France                         Austria                 Czechoslovakia
   Germany                        Belgium                 Greece
   Holland                        Denmark                 Hungary
   Italy                          Finland                 Poland
   Spain                          Ireland                 Turkey
   Sweden                         Luxembourg
   Switzerland                    Norway
   United Kingdom                 Portugal
______________________________________________________________________________

          Other Eastern European markets may become available at any time.

          Western Europe now represents more than 20% of the world's stock
market value.  Moreover, Price-Fleming believes a number of European stock
markets are undervalued in relation to the size and potential growth of their
economies.

          Diversifying among foreign economies and currencies also can help
to reduce investment risk compared to investing in a single country.  The Fund
intends to invest in companies based in any Western or Eastern European
country, as well as Russia and the countries of the former Soviet Union.  The
Fund will normally have at least 65% of its assets in European equity
securities and be invested in a minimum of five different countries.

          In seeking its objectives, the Fund will invest primarily in
established European companies participating in markets and sectors which have
superior long-term growth potential.  Individual stocks will be evaluated on
various criteria, including earnings history and prospects, book value, degree
of price leverage, and price/earnings ratio.  Both large and small
capitalization companies will be candidates for the portfolio.  

          In determining the domicile or nationality of a company, the Fund
would primarily consider the following factors: whether the company is 

PAGE 8
organized under the laws of a particular country; or, whether the company
derives a significant proportion (at least 50%) of its revenues or profits 
from goods produced or sold, investments made, or services performed in the
country or has at least 50% of its assets situated in that country.    

          The Fund will invest primarily in equity securities which include
common and preferred stocks, warrants or other similar rights, and convertible
securities.  The Fund may also invest up to 35% of its total assets in any
other type of security including, but not limited to, bonds, notes, and other
debt securities of foreign issuers.  

Japan Fund

          The Japan Fund invests primarily in common stocks of Japanese
companies participating in markets and sectors which are believed to have
attractive long-term growth potential.  These may include the export sector,
where many Japanese companies are world leaders in their industries.  They may
also include the consumer sector -- the fastest-growing segment of Japan's
economy -- where companies are working to meet growing domestic demand for
consumer goods and services.

          The Fund has the flexibility to invest in both large and small
companies, as deemed appropriate by Price-Fleming.  This allows the Fund to
benefit from the proven growth potential of established companies, as well as
the enhanced growth potential of smaller companies.  In making specific stock
selections, Price-Fleming takes into account, among other factors, a company's
size, financial condition, marketing and technical strengths, and competitive
position within its industry.  Because Japan represents approximately one-
third of the world's market capitalization, the Fund's portfolio will normally
be broadly diversified across industries and companies.  Such broad
diversification should help reduce volatility.

          The Fund will ordinarily invest at least 80% of its assets in
Japanese securities.  These will include securities issued by companies
domiciled in Japan or companies that have at least half their assets in Japan,
or derive at least half their revenues from Japan.  Securities will be
primarily common stocks.  Other equity securities may include preferred stock,
warrants and convertible debentures.  The Fund may also invest in government
and corporate debt securities, when Price-Fleming believes that the potential
for capital appreciation in debt securities equals or exceeds that available
in equity securities.  For temporary defensive purposes, the Fund may invest
up to 25% (measured at the time of purchase) of its total assets in high-grade
Japanese debt securities.

New Asia Fund

          Price-Fleming believes the rapidly growing economies in Asia and
the Pacific Basin, including Australia and New Zealand, offer attractive
opportunities for investment.  

          In contrast to Japan's more developed economy, the newly
industrialized nations of this region are in an earlier, more dynamic growth
stage of their development.  Price-Fleming believes that the continued growth
opportunities exist due to structural changes taking place throughout the
region.

PAGE 9
          o    The relaxation of trade barriers and the freer movement of
               capital are increasing the flow of commerce within the region
               and fostering economic independence.  At the same time,
               growing trade with Japan, the United States and Europe is
               fueling rapid economic development.

          o    Rising labor costs in more developed countries are making the
               large, lower-cost work force of Asia and the Pacific Basin
               increasingly attractive, resulting in the dramatic growth of
               manufacturing industries.

          o    As capital investment increases, many of the Asian and Pacific
               Basin countries are developing more efficient capital markets,
               for investment.

          The Fund may invest in the countries listed below, as well as other
Asian and Pacific Basin countries and regions, such as China, Sri Lanka,
Pakistan and Indochina, as their markets become more accessible.

                       Australia                  Philippines#
                       Hong Kong                  Singapore#
                       India+#                    South Korea
                       Indonesia#                 Taiwan+#
                       Malaysia#                  Thailand#
                       New Zealand
______________________________________________________________________________
+         Indicates countries in which the Fund effectively may invest only
          or primarily through investment funds subject to the provisions of
          the Investment Company Act of 1940 relating to the purchase of
          securities of investment companies.  See "Investment Restrictions
          Operating Policy No. 3."

#         Countries designated with a number sign (#) are emerging or less
          developed countries.

          Other Asian and Pacific Basin markets may become available at any
time.

          The investment approach will primarily focus on identifying
companies with attractive long-term growth potential.  The Fund will normally
have at least 65% of its assets in the equity securities of Asian companies,
excluding Japan, and may also invest in companies in the Pacific Basin,
including Australia and New Zealand.  To help reduce investment risk, the Fund
will diversify its investments among a minimum of five different countries. 
The Fund may also invest in any other type of security including, but not
limited to, bonds, notes and other debt securities of foreign issuers.

          In determining the domicile or nationality of a company, the Fund
would primarily consider the following factors: whether the company is
organized under the laws of a particular country; or, whether the company
derives a significant proportion (at least 50%) of its revenues or profits
from goods produced or sold, investments made, or services performed in the
country or has at least 50% of its assets situated in that country.    

          In 1992, Asian and Pacific Basin countries, excluding Japan,
represented over $730 billion of the world's market capitalization which was 

PAGE 10
approximately one-fourth the size of the Japanese market and one-fifth the
size of the U.S. market.  Real Gross Domestic Product (GDP) growth for
secondary and emerging Asian and Pacific countries was equal to that of Japan
and seven times that of the U.S.

          A number of Asian and Pacific Basin countries are becoming
increasingly important manufacturing centers.  For example, Korea is now one
of the world's largest producers of semiconductors, Hong Kong boasts one of
the world's busiest apparel industries, and Thailand has tripled its export
rate in the 1980s.

Latin America Fund

          Price-Fleming believes that the economic revitalization of the
Latin American region will provide attractive investment opportunities.

          After the "lost years" of the 1970's and early 80's when economic
stagnation and hyperinflation became commonplace, the governments of the
region have embarked on a process of transformation:

          o    rolling back the dominance of the state in favor of the
               private sector, encouraging privatizations of state owned
               companies, removing price controls and controlling public
               expenditure; and

          o    lowering tariff barriers, promoting trade and encouraging both
               free trade blocks and investment by foreigners.

          As economies have been stabilized, capital flows into the country
have picked up leading to increased investment and a revival of growth. 
Although countries such as Chile, Mexico and Argentina have made considerable
progress, this economic catch-up is still at an early stage, while in
countries such as Brazil and Peru the process is just beginning.

          The Fund may invest in the countries listed below, together with
other countries in the region as their markets become accessible.  The Latin
America region includes Mexico, Central America, South America and the islands
of the Caribbean.

                    Argentina#                 Mexico#
                    Brazil#                    Peru#
                    Chile+#                    Venezuela#
                    Colombia+#
______________________________________________________________________________
+         Indicates countries in which the Fund effectively may invest only
          or primarily through investment funds subject to the provisions of
          the Investment Company Act of 1940 relating to the purchase of
          securities of investment companies.  See "Investment Restrictions
          Operating Policy No. 3."

#         Countries designated with a number sign (#) are emerging or less
          developed countries.

          The investment approach is to focus on companies that have long
term growth potential and including sectors such as telecommunications,
retailers, energy and beverages.  The fund will normally have at least 65% of 

PAGE 11
its assets in the equity securities of Latin American companies, and to help
diversify its investments, the Fund will normally invest among a minimum of
four different countries.  The Fund may also invest in any other type of
security including but not limited to bonds, notes and other debt securities
of foreign issuers.

   European, New Asia and Latin America Funds

          In determining the domicile or nationality of a company, the Fund
would primarily consider the following factors: whether the company is
organized under the laws of a particular country; or, whether the company
derives a significant proportion (at least 50%) of its revenues or profits
from goods produced or sold, investments made, or services performed in the
country or has at least 50% of its assets situated in that country.    

                       Risk Factors of Foreign Investing

          There are special risks in investing in the Funds.  Certain of
these risks are inherent in any international mutual fund while others relate
more to the countries in which the Funds will invest.  Many of the risks are
more pronounced for investments in developing or emerging countries, such as
many of the countries of Southeast Asia, Latin America, Eastern Europe and the
Middle East.  Although there is no universally accepted definition, a
developing country is generally considered to be a country which is in the
initial stages of its industrialization cycle with a per capita gross national
product of less than $8,000.

          General.  Investors should understand that all investments have a
risk factor.  There can be no guarantee against loss resulting from an
investment in the Funds, and there can be no assurance that the Funds'
investment policies will be successful, or that its investment objectives will
be attained.  The Funds are designed for individual and institutional
investors seeking to diversify beyond the United States in actively researched
and managed portfolios, and are intended for long-term investors who can
accept the risks entailed in investment in foreign securities.

          Political and Economic Factors.  Individual foreign economies of
certain countries may differ favorably or unfavorably from the United States'
economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.  The internal politics of certain foreign countries are not
as stable as in the United States.  For example, in 1991, the existing
government in Thailand was overthrown in a military coup.  In 1992, there were
two military coup attempts in Venezuela and in 1992 the President of Brazil
was impeached.  In addition, significant external political risks currently
affect some foreign countries.  Both Taiwan and China still claim sovereignty
of one another and there is a demilitarized border between North and South
Korea.

          Governments in certain foreign countries continue to participate to
a significant degree, through ownership interest or regulation, in their
respective economies.  Action by these governments could have a significant
effect on market prices of securities and payment of dividends.  The economies
of many foreign countries are heavily dependent upon international trade and
are accordingly affected by protective trade barriers and economic conditions
of their trading partners.  The enactment by these trading partners of 

PAGE 12
protectionist trade legislation could have a significant adverse effect upon
the securities markets of such countries.

          Currency Fluctuations.  The Funds will invest in securities
denominated in the currencies specified elsewhere herein.  Accordingly, a
change in the value of any such currency against the U.S. dollar will result
in a corresponding change in the U.S. dollar value of the Funds' assets
denominated in that currency.  Such changes will also affect the Funds'
income.  Generally, when a given currency appreciates against the dollar (the
dollar weakens) the value of the Fund's securities denominated in that
currency will rise.  When a given currency depreciates against the dollar (the
dollar strengthens) the value of the Funds' securities denominated in that
currency would be expected to decline.

          Investment and Repatriation of Restrictions.  Foreign investment in
the securities markets of certain foreign countries is restricted or
controlled in varying degrees.  These restrictions may limit at times and
preclude investment in certain of such countries and may increase the cost and
expenses of the Funds.  Investments by foreign investors are subject to a
variety of restrictions in many developing countries.  These restrictions may
take the form of prior governmental approval, limits on the amount or type of
securities held by foreigners, and limits on the types of companies in which
foreigners may invest.  Additional or different restrictions may be imposed at
any time by these or other countries in which the Funds invest.  In addition,
the repatriation of both investment income and capital from several foreign
countries is restricted and controlled under certain regulations, including in
some cases the need for certain government consents.  For example, capital
invested in Chile normally cannot be repatriated for one year.

          Market Characteristics.  It is contemplated that most foreign
securities, other than Latin American securities, will be purchased in
over-the-counter markets or on stock exchanges located in the countries in
which the respective principal offices of the issuers of the various
securities are located, if that is the best available market.  Currently, it
is anticipated that many Latin American investments will be made through ADRs
traded in the United States.  Foreign stock markets are generally not as
developed or efficient as, and may be more volatile than, those in the United
States.  While growing in volume, they usually have substantially less volume
than U.S. markets and the Funds' portfolio securities may be less liquid and
subject to more rapid and erratic price movements than securities of
comparable U.S. companies.  Equity securities may trade at price/earnings
multiples higher than comparable United States securities and such levels may
not be sustainable.  Fixed commissions on foreign stock exchanges are
generally higher than negotiated commissions on United States exchanges,
although the Funds will endeavor to achieve the most favorable net results on
their portfolio transactions.  There is generally less government supervision
and regulation of foreign stock exchanges, brokers and listed companies than
in the United States.  Moreover, settlement practices for transactions in
foreign markets may differ from those in United States markets.  Such
differences may include delays beyond periods customary in the United States
and practices, such as delivery of securities prior to receipt of payment,
which increase the likelihood of a "failed settlement."  Failed settlements
can result in losses to a Fund.

          Investment Funds.  The Funds may invest in investment funds which
have been authorized by the governments of certain countries specifically to 

PAGE 13
permit foreign investment in securities of companies listed and traded on the
stock exchanges in these respective countries.  The Funds' investment in these
funds is subject to the provisions of the 1940 Act discussed on pages 37 and
38.  If the Funds invest in such investment funds, the Funds' shareholders
will bear not only their proportionate share of the expenses of the Funds
(including operating expenses and the fees of the investment manager), but
also will bear indirectly similar expenses of the underlying investment funds. 
In addition, the securities of these investment funds may trade at a premium
over their net asset value.

          Information and Supervision.  There is generally less publicly
available information about foreign companies comparable to reports and
ratings that are published about companies in the United States.  Foreign
companies are also generally not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to United States companies.  It also may be more difficult to keep
currently informed of corporate actions which affect the prices of portfolio
securities.

          Taxes.  The dividends and interest payable on certain of the Funds'
foreign portfolio securities may be subject to foreign withholding taxes, thus
reducing the net amount of income available for distribution to the Funds'
shareholders.  A shareholder otherwise subject to United States federal income
taxes may, subject to certain limitations, be entitled to claim a credit or
deduction for U.S. federal income tax purposes for his or her proportionate
share of such foreign taxes paid by the Funds.  (See "Tax Status," page 63.)

          Costs.  Investors should understand that the expense ratios of the
Funds can be expected to be higher than investment companies investing in
domestic securities since the cost of maintaining the custody of foreign
securities and the rate of advisory fees paid by the Funds are higher.  

          Small Companies.  Small companies may have less experienced
management and fewer management resources than larger firms.  A smaller
company may have greater difficulty obtaining access to capital markets, and
may pay more for the capital it obtains.  In addition, smaller companies are
more likely to be involved in fewer market segments, making them more
vulnerable to any downturn in a given segment.  Some of these factors may also
apply, to a lesser extent, to medium size companies.  Some of the smaller
companies in which the Funds will invest may be in major foreign markets;
others may be leading companies in emerging countries outside the major
foreign markets.  Securities analysts generally do not follow such securities,
which are seldom held outside of their respective countries and which may have
prospects for long-term investment returns superior to the securities of well-
established and well-known companies.  Direct investment in such securities
may be difficult for United States investors because, among other things,
information relating to such securities is often not readily available.  Of
course, there are also risks associated with such investments, and there is no
assurance that such prospects will be realized.  

          Other.  With respect to certain foreign countries, especially
developing and emerging ones, there is the possibility of adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitations on the removal of funds or other assets of the Funds,
political or social instability, or diplomatic developments which could affect
investments by U.S. persons in those countries.
PAGE 14

International Stock, International Discovery and European Stock Funds

          Eastern Europe and Russia.  Changes occurring in Eastern Europe and
Russia today could have long-term potential consequences.  As restrictions
fall, this could result in rising standards of living, lower manufacturing
costs, growing consumer spending, and substantial economic growth.  However,
investment in the countries of Eastern Europe and Russia is highly speculative
at this time.  Political and economic reforms are too recent to establish a
definite trend away from centrally-planned economies and state owned
industries.  In many of the countries of Eastern Europe and Russia, there is
no stock exchange or formal market for securities.  Such countries may also
have government exchange controls, currencies with no recognizable market
value relative to the established currencies of western market economies,
little or no experience in trading in securities, no financial reporting
standards, a lack of a banking and securities infrastructure to handle such
trading, and a legal tradition which does not recognize rights in private
property.  In addition, these countries may have national policies which
restrict investments in companies deemed sensitive to the country's national
interest.  Further, the governments in such countries may require governmental
or quasi-governmental authorities to act as custodian of a Fund's assets
invested in such countries and these authorities may not qualify as a foreign
custodian under the Investment Company Act of 1940 and exemptive relief from
such Act may be required.  All of these considerations are among the factors
which could cause significant risks and uncertainties to investment in Eastern
Europe and Russia.  Each Fund will only invest in a company located in, or a
government of, Eastern Europe and Russia, if it believes the potential return
justifies the risk.  To the extent any securities issued by companies in
Eastern Europe and Russia are considered illiquid, each Fund will be required
to include such securities within its 10% restriction on investing in illiquid
securities.

Japan Fund

          The Fund's concentration of its investments in Japan means the Fund
will be more dependent on the investment considerations discussed above and
may be more volatile than a fund which is broadly diversified geographically. 
Additional factors relating to Japan include the following:

          In the past, Japan has experienced earthquakes and tidal waves of
varying degrees of severity, and the risks of such phenomena, and damage
resulting therefrom, continue to exist.  Japan also has one of the world's
highest population densities.  Approximately 45% of the total population of
Japan is concentrated in the metropolitan areas of Tokyo, Osaka and Nagoya.

          Since the end of World War II, Japan has experienced significant
economic development and among the free industrial nations of the world is
second only to the U.S. in terms of GNP.  During the years of high economic
growth in the 1960's and early 1970's, the expansion was based on the
development of heavy industries such as steel and shipbuilding.  In the 1970's
Japan moved into assembly industries which employ high levels of technology
and consume relatively low quantities of resources, and since then has become
a major producer of electrical and electronic products and automobiles.  Since
the mid-1980's Japan has become a major creditor nation, with major trade
surpluses.  With the exception of periods associated with the oil crises of 

PAGE 15
1974 and 1978, Japan has generally experienced very low levels of inflation. 
There is, of course, no guarantee these favorable trends will continue.

          The Government of Japan has called for a transformation of the
economy away from its high dependency on export-led growth towards greater
stimulation of the domestic economy.  This shift has already begun to take
place.

          Japan's economy is a market economy in which industry and commerce
are predominantly privately owned and operated.  However, the Government is
involved in establishing and meeting objectives for developing the economy and
improving the standard of living of the Japanese people.

          Energy.  Japan has historically depended on oil for most of its
energy requirements.  Almost all of its oil is imported, the majority from the
Middle East.  In the past, oil prices have had a major impact on the domestic
economy, but more recently Japan has worked to reduce its dependence on oil by
encouraging energy conservation and use of alternative fuels.  In addition, a
restructuring of industry, with emphasis shifting from basic industries to
processing and assembly type industries, has contributed to the reduction of
oil consumption.  However, there is no guarantee this favorable trend will
continue. 

          Foreign Trade.  Overseas trade is important to Japan's economy. 
Japan has few natural resources and must export to pay for its imports of
these basic requirements.  Japan's principal export markets are the U.S.,
Canada, the United Kingdom, the Federal Republic of Germany, Australia, Korea,
Taiwan, Hong Kong and the People's Republic of China.  The principal sources
of its imports are the U.S., South East Asia and the Middle East.  Because of
the concentration of Japanese exports in highly visible products such as
automobiles, machine tools and semiconductors and the large trade surpluses
ensuing therefrom, Japan has had difficult relations with its trading
partners, particularly the U.S., where the trade imbalance is the greatest. 
It is possible trade sanctions or other protectionist measures could impact
Japan adversely in both the short- and long-term.

Latin America Fund

          The Fund's concentration of its investments in Latin America means
the Fund will be more dependent on the investment considerations described
above and can be expected to be more volatile than a fund which is more
broadly diversified geographically.  Additional factors relating to Latin
America include the following:

          Inflation.  Most Latin American countries have experienced, at one
time or another, severe and persistent levels of inflation, including, in some
cases, hyperinflation.  This has, in turn, led to high interest rates, extreme
measures by governments to keep inflation in check and a generally
debilitating effect on economic growth.  Although inflation in many countries
has lessened, there is no guarantee it will remain at lower levels.

          Political Instability.  The political history of certain Latin
American countries has been characterized by political uncertainty,
intervention by the military in civilian and economic spheres, and political
corruption.  Such developments, if they were to reoccur, could reverse 

PAGE 16
favorable trends toward market and economic reform, privatization and removal
of trade barriers and result in significant disruption in securities markets.

          Foreign Currency.  Certain Latin American countries may have
managed currencies which are maintained at artificial levels to the U.S.
dollar rather than at levels determined by the market.  This type of system
can lead to sudden and large adjustments in the currency which, in turn, can
have a disruptive and negative effect on foreign investors.  Certain Latin
American countries also may restrict the free conversion of their currency
into foreign currencies, including the U.S. dollar.  There is no significant
foreign exchange market for certain currencies and it would, as a result, be
difficult for the Fund to engage in foreign currency transactions designed to
protect the value of the Fund's interests in securities denominated in such
currencies.

          Sovereign Debt.  A number of Latin American countries are among the
largest debtors of developing countries.  There have been moratoria on, and
reschedulings of, repayment with respect to these debts.  Such events can
restrict the flexibility of these debtor nations in the international markets
and result in the imposition of onerous conditions on their economies.

          In addition to the investments described in the Fund's prospectus,
the Fund may invest in the following:

                         Writing Covered Call Options

          Each Fund may write (sell) "covered" call options and purchase
options to close out options previously written by a Fund.  In writing covered
call options, a Fund expects to generate additional premium income which
should serve to enhance the Fund's total return and reduce the effect of any
price decline of the security or currency involved in the option.  Covered
call options will generally be written on securities or currencies which, in
Price-Fleming's opinion, are not expected to make any major price increases or
moves in the near future but which, over the long term, are deemed to be
attractive investments for a Fund.

          A call option gives the holder (buyer) the "right to purchase" a
security or currency at a specified price (the exercise price), at expiration
of the option (European style) or at any time until a certain date (the
expiration date) (American style).  So long as the obligation of the writer of
a call option continues, he may be assigned an exercise notice by the broker-
dealer through whom such option was sold, requiring him to deliver the
underlying security or currency against payment of the exercise price.  This
obligation terminates upon the expiration of the call option, or such earlier
time at which the writer effects a closing purchase transaction by
repurchasing an option identical to that previously sold.  To secure his 
obligation to deliver the underlying security or currency in the case of a
call option, a writer is required to deposit in escrow the underlying security
or currency or other assets in accordance with the rules of a clearing
corporation.  Each Fund will write only covered call options.  This means that
a Fund will own the security or currency subject to the option or an option to
purchase the same underlying security or currency, having an exercise price
equal to or less than the exercise price of the "covered" option, or will
establish and maintain with its custodian for the term of the option, an
account consisting of cash, U.S. government securities or other liquid high-

PAGE 17
grade debt obligations having a value equal to the fluctuating market value of
the optioned securities or currencies.  In order to comply with the
requirements of the securities or currencies laws in several states, each Fund
will not write a covered call option if, as a result, the aggregate market
value of all portfolio securities or currencies covering call or put options
exceeds 25% of the market value of the Fund's net assets.  Should these state
laws change or should a Fund obtain a waiver of their application, each Fund
reserves the right to increase this percentage.  In calculating the 25% limit,
each Fund will offset, against the value of assets covering written calls and
puts, the value of purchased calls and puts on identical securities or
currencies with identical maturity dates.

          Portfolio securities or currencies on which call options may be
written will be purchased solely on the basis of investment considerations
consistent with each Fund's investment objectives.  The writing of covered
call options is a conservative investment technique believed to involve
relatively little risk (in contrast to the writing of naked or uncovered
options, which the Funds will not do), but capable of enhancing a Fund's total
return.  When writing a covered call option, a Fund, in return for the
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, but conversely
retains the risk of loss should the price of the security or currency decline. 
Unlike one who owns securities or currencies not subject to an option, a Fund
has no control over when it may be required to sell the underlying securities
or currencies, since it may be assigned an exercise notice at any time prior
to the expiration of its obligation as a writer.  If a call option which a
Fund has written expires, the Fund will realize a gain in the amount of the
premium; however, such gain may be offset by a decline in the market value of
the underlying security or currency during the option period.  If the call
option is exercised, the Fund will realize a gain or loss from the sale of the
underlying security or currency.  The Funds do not consider a security or
currency covered by a call to be "pledged" as that term is used in the Funds'
policy which limits the pledging or mortgaging of its assets.

          The premium received is the market value of an option.  The premium
a Fund will receive from writing a call option will reflect, among other
things, the current market price of the underlying security or currency, the
relationship of the exercise price to such market price, the historical price
volatility of the underlying security or currency, and the length of the
option period.  Once the decision to write a call option has been made, Price-
Fleming, in determining whether a particular call option should be written on
a particular security or currency, will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will
exist for those options.  The premium received by a Fund for writing covered
call options will be recorded as a liability of the Fund.  This liability will
be adjusted daily to the option's current market value, which will be the
latest sale price at the time at which the net asset value per share of the
Fund is computed (close of the New York Stock Exchange), or, in the absence of
such sale, the latest asked price.  The option will be terminated upon
expiration of the option, the purchase of an identical option in a closing
transaction, or delivery of the underlying security or currency upon the
exercise of the option.

          Closing transactions will be effected in order to realize a profit
on an outstanding call option, to prevent an underlying security or currency
from being called, or, to permit the sale of the underlying security or 

PAGE 18
currency.  Furthermore, effecting a closing transaction will permit a Fund to
write another call option on the underlying security or currency with either a
different exercise price or expiration date or both.  If a Fund desires to
sell a particular security or currency from its portfolio on which it has
written a call option, or purchased a put option, it will seek to effect a
closing transaction prior to, or concurrently with, the sale of the security
or currency.  There is, of course, no assurance that the Fund will be able to
effect such closing transactions at a favorable price.  If the Fund cannot
enter into such a transaction, it may be required to hold a security or
currency that it might otherwise have sold.  When a Fund writes a covered call
option, it runs the risk of not being able to participate in the appreciation
of the underlying securities or currencies above the exercise price, as well
as the risk of being required to hold on to securities or currencies that are
depreciating in value. This could result in higher transaction costs.  Each
Fund will pay transaction costs in connection with the writing of options to
close out previously written options.  Such transaction costs are normally
higher than those applicable to purchases and sales of portfolio securities.

          Call options written by a Fund will normally have expiration dates
of less than nine months from the date written.  The exercise price of the
options may be below, equal to, or above the current market values of the
underlying securities or currencies at the time the options are written.  From
time to time, each Fund may purchase an underlying security or currency for
delivery in accordance with an exercise notice of a call option assigned to
it, rather than delivering such security or currency from its portfolio.  In
such cases, additional costs may be incurred.

          A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option.  Because increases in the market
price of a call option will generally reflect increases in the market price of
the underlying security or currency, any loss resulting from the repurchase of
a call option is likely to be offset in whole or in part by appreciation of
the underlying security or currency owned by the Fund.  

                          Writing Covered Put Options

          Although the Funds have no current intention in the foreseeable
future of writing American or European style covered put options and
purchasing put options to close out options previously written by each Fund,
each Fund reserves the right to do so.  A put option gives the purchaser of
the option the right to sell, and the writer (seller) has the obligation to
buy, the underlying security or currency at the exercise price during the
option period (American style) or at the expiration of the option (European
style).  So long as the obligation of the writer continues, he may be assigned
an exercise notice by the broker-dealer through whom such option was sold,
requiring him to make payment of the exercise price against delivery of the
underlying security or currency.  The operation of put options in other
respects, including their related risks and rewards, is substantially
identical to that of call options.

          Each Fund would write put options only on a covered basis, which
means that the Fund would maintain in a segregated account cash, U.S.
government securities or other liquid high-grade debt obligations in an amount
not less than the exercise price or each Fund will own an option to sell the 

PAGE 19
underlying security or currency subject to the option having an exercise price
equal to or greater than the exercise price of the "covered" options at all
times while the put option is outstanding.  (The rules of a clearing
corporation currently require that such assets be deposited in escrow to
secure payment of the exercise price.)  A Fund would generally write covered
put options in circumstances where Price-Fleming wishes to purchase the
underlying security or currency for the Fund's portfolio at a price lower than
the current market price of the security or currency.  In such event a Fund
would write a put option at an exercise price which, reduced by the premium
received on the option, reflects the lower price it is willing to pay.  Since
the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty.  The risk
in such a transaction would be that the market price of the underlying
security or currency would decline below the exercise price less the premiums
received.  Such a decline could be substantial and result in a significant
loss to the Fund.  In addition, the Fund, because it does not own the specific
securities or currencies which it may be required to purchase in exercise of
the put, cannot benefit from appreciation, if any, with respect to such
specific securities or currencies.  In order to comply with the requirements
of several states, the Fund will not write a covered put option if, as a
result, the aggregate market value of all portfolio securities or currencies
covering put or call options exceeds 25% of the market value of the Fund's net
assets.  Should these state laws change or should the Fund obtain a waiver of
their application, the Fund reserves the right to increase this percentage. 
In calculating the 25% limit, the Fund will offset, against the value of
assets covering written puts and calls, the value of purchased puts and calls
on identical securities or currencies with identical maturity dates.

                            Purchasing Put Options

          Each Fund may purchase American or European style put options.  As
the holder of a put option, a Fund has the right to sell the underlying
security or currency at the exercise price at any time during the option
period.  Each Fund may enter into closing sale transactions with respect to
such options, exercise them or permit them to expire.  Each Fund may purchase
put options for defensive purposes in order to protect against an anticipated
decline in the value of its securities or currencies.  An example of such use
of put options is provided below.  

          A Fund may purchase a put option on an underlying security or
currency (a "protective put") owned by the Fund as a defensive technique in
order to protect against an anticipated decline in the value of the security
or currency.  Such hedge protection is provided only during the life of the
put option when a Fund, as the holder of the put option, is able to sell the
underlying security or currency at the put exercise price regardless of any
decline in the underlying security's market price or currency's exchange
value.  For example, a put option may be purchased in order to protect
unrealized appreciation of a security or currency where Price-Fleming deems it
desirable to continue to hold the security or currency because of tax
considerations.  The premium paid for the put option and any transaction costs
would reduce any capital gain otherwise available for distribution when the
security or currency is eventually sold.

          Each Fund may also purchase put options at a time when the Fund
does not own the underlying security or currency.  By purchasing put options 

PAGE 20
on a security or currency it does not own, a Fund seeks to benefit from a
decline in the market price of the underlying security or currency.  If the
put option is not sold when it has remaining value, and if the market price of
the underlying security or currency remains equal to or greater than the
exercise price during the life of the put option, the Fund will lose its
entire investment in the put option.  In order for the purchase of a put
option to be profitable, the market price of the underlying security or
currency must decline sufficiently below the exercise price to cover the
premium and transaction costs, unless the put option is sold in a closing sale
transaction.

          To the extent required by the laws of certain states, each Fund may
not be permitted to commit more than 5% of its assets to premiums when
purchasing call and put options.  Should these state laws change or should a
Fund obtain a waiver of their application, that Fund may commit more than 5%
of its assets to premiums when purchasing call and put options.  The premium
paid by a Fund when purchasing a put option will be recorded as an asset of
the Fund.  This asset will be adjusted daily to the option's current market
value, which will be the latest sale price at the time at which the net asset
value per share of the Fund is computed (close of New York Stock Exchange),
or, in the absence of such sale, the latest bid price.  This asset will be
terminated upon expiration of the option, the selling (writing) of an
identical option in a closing transaction, or the delivery of the underlying
security or currency upon the exercise of the option.

                            Purchasing Call Options

          Each Fund may purchase American or European style call options.  As
the holder of a call option, a Fund has the right to purchase the underlying
security or currency at the exercise price at any time during the option
period (American style) or at the expiration of the option (European style). 
Each Fund may enter into closing sale transactions with respect to such
options, exercise them or permit them to expire.  Each Fund may purchase call
options for the purpose of increasing its current return or avoiding tax
consequences which could reduce its current return.  Each Fund may also
purchase call options in order to acquire the underlying securities or
currencies.  Examples of such uses of call options are provided below.  

          Call options may be purchased by a Fund for the purpose of
acquiring the underlying securities or currencies for its portfolio.  Utilized
in this fashion, the purchase of call options enables a Fund to acquire the
securities or currencies at the exercise price of the call option plus the
premium paid.  At times the net cost of acquiring securities or currencies in
this manner may be less than the cost of acquiring the securities or
currencies directly.  This technique may also be useful to a Fund in
purchasing a large block of securities or currencies that would be more
difficult to acquire by direct market purchases.  So long as it holds such a
call option rather than the underlying security or currency itself, a Fund is
partially protected from any unexpected decline in the market price of the
underlying security or currency and in such event could allow the call option
to expire, incurring a loss only to the extent of the premium paid for the
option.

          To the extent required by the laws of certain states, each Fund may
not be permitted to commit more than 5% of its assets to premiums when
purchasing call and put options.  Should these state laws change or should a 

PAGE 21
Fund obtain a waiver of their application, that Fund may commit more than 5%
of its assets to premiums when purchasing call and put options.  Each Fund may
also purchase call options on underlying securities or currencies it owns in
order to protect unrealized gains on call options previously written by it.  A
call option would be purchased for this purpose where tax considerations make
it inadvisable to realize such gains through a closing purchase transaction. 
Call options may also be purchased at times to avoid realizing losses.

                       Dealer (Over-the-Counter) Options

          Each Fund may engage in transactions involving dealer options. 
Certain risks are specific to dealer options.  While a Fund would look to a
clearing corporation to exercise exchange-traded options, if the Fund were to
purchase a dealer option, it would rely on the dealer from whom it purchased
the option to perform if the option were exercised.  Failure by the dealer to
do so would result in the loss of the premium paid by the Fund as well as loss
of the expected benefit of the transaction.

          Exchange-traded options generally have a continuous liquid market
while dealer options have none.  Consequently, each Fund will generally be
able to realize the value of a dealer option it has purchased only by
exercising it or reselling it to the dealer who issued it.  Similarly, when a
Fund writes a dealer option, it generally will be able to close out the option
prior to its expiration only by entering into a closing purchase transaction
with the dealer to which the Fund originally wrote the option.  While each
Fund will seek to enter into dealer options only with dealers who will agree
to and which are expected to be capable of entering into closing transactions
with the Fund, there can be no assurance that the Fund will be able to
liquidate a dealer option at a favorable price at any time prior to
expiration.  Until the Fund, as a covered dealer call option writer, is able
to effect a closing purchase transaction, it will not be able to liquidate
securities (or other assets) used as cover until the option expires or is
exercised.  In the event of insolvency of the contra party, the Fund may be
unable to liquidate a dealer option.  With respect to options written by a
Fund, the inability to enter into a closing transaction may result in material
losses to the Fund.  For example, since a Fund must maintain a secured
position with respect to any call option on a security it writes, a Fund may
not sell the assets which it has segregated to secure the position while it is
obligated under the option.  This requirement may impair the Fund's ability to
sell portfolio securities at a time when such sale might be advantageous.

          The Staff of the SEC has taken the position that purchased dealer
options and the assets used to secure the written dealer options are illiquid
securities.  The Fund may treat the cover used for written OTC options as
liquid if the dealer agrees that the Fund may repurchase the OTC option it has
written for a maximum price to be calculated by a predetermined formula.  In
such cases, the OTC option would be considered illiquid only to the extent the
maximum repurchase price under the formula exceeds the intrinsic value of the
option.  Accordingly, each Fund will treat dealer options as subject to the
Funds' limitation on unmarketable securities.  If the SEC changes its position
on the liquidity of dealer options, each Fund will change its treatment of
such instrument accordingly.



PAGE 22
                               Futures Contracts

Transactions in Futures

          Each Fund may enter into financial futures contracts, including
stock index, interest rate and currency futures ("futures or futures
contracts"); however, the Funds have no current intention of entering into
interest rate futures.  The Funds, however, reserve the right to trade in
financial futures of any kind.

          Stock index futures contracts may be used to provide a hedge for a
portion of a Fund's portfolio, as a cash management tool, or as an efficient
way for Price-Fleming to implement either an increase or decrease in portfolio
market exposure in response to changing market conditions.  Stock index
futures contracts are currently traded with respect to the S&P 500 Index and
other broad stock market indices, such as the New York Stock Exchange
Composite Stock Index and the Value Line Composite Stock Index.  The Funds
may, however, purchase or sell futures contracts with respect to indices or
subindices whose movements will have significant correlation with movements in
the prices of the Funds' portfolio securities.

          Interest rate or currency futures contracts may be used as a hedge
against changes in prevailing levels of interest rates or currency exchange
rates in order to establish more definitely the effective return on securities
or currencies held or intended to be acquired by a Fund.  In this regard, a
Fund could sell interest rate or currency futures as an offset against the
effect of expected increases in interest rates or currency exchange rates and
purchase such futures as an offset against the effect of expected declines in
interest rates or currency exchange rates.

          The Funds will enter into futures contracts which are traded on
national or foreign futures exchanges and are standardized as to maturity date
and underlying financial instrument.  The principal financial futures
exchanges in the United States are the Board of Trade of the City of Chicago,
the Chicago Mercantile Exchange, the New York Futures Exchange, and the Kansas
City Board of Trade.  Futures exchanges and trading in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC").  Futures are traded in London at the London International
Financial Futures Exchange, in Paris at the MATIF and in Tokyo at the Tokyo
Stock Exchange.  Although techniques other than the sale and purchase of
futures contracts could be used for the above-referenced purposes, futures
contracts offer an effective and relatively low cost means of implementing
each Fund's objectives in these areas.

Regulatory Limitations

          The Funds will engage in transactions in futures contracts and
options thereon only for bona fide hedging, yield enhancement and risk
management purposes, in each case in accordance with the rules and regulations
of the CFTC, and not for speculation.

          The Funds may not enter into futures contracts or options thereon
if, with respect to positions which do not qualify as bona fide hedging under
applicable CFTC rules, the sum of the amounts of initial margin deposits on
the Fund's existing futures and premiums paid for options on futures would
exceed 5% of the net asset value of the Fund after taking into account 

PAGE 23
unrealized profits and unrealized losses on any such contracts it has entered
into; provided, however, that in the case of an option that is in-the-money at
the time of purchase, the in-the-money amount may be excluded in calculating
the 5% limitation.

          The Funds use of futures contracts will not result to leverage. 
Therefore, to the extent necessary, in instances involving the purchase of
futures contracts or call options thereon or the writing of put options
thereon by a Fund, an amount of cash, U.S. government securities or other
liquid, high-grade debt obligations, equal to the market value of the futures
contracts and options thereon (less any related margin deposits), will be
deposited in an account with the Fund's custodian to cover the position, or
alternative cover will be employed.

          In addition, CFTC regulations may impose limitations on each Fund's
ability to engage in certain yield enhancement and risk management strategies. 
If the CFTC or other regulatory authorities adopt different (including less
stringent) or additional restrictions, the Funds would comply with such new
restrictions.

Trading in Futures

          A futures contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument (e.g., units of a stock index) for a specified price, date, time
and place designated at the time the contract is made.  Brokerage fees are
incurred when a futures contract is bought or sold and margin deposits must be
maintained.  Entering into a contract to buy is commonly referred to as buying
or purchasing a contract or holding a long position.  Entering into a contract
to sell is commonly referred to as selling a contract or holding a short
position.

          Unlike when a Fund purchases or sells a security, no price would be
paid or received by the Fund upon the purchase or sale of a futures contract. 
Upon entering into a futures contract, and to maintain the Fund's open
positions in futures contracts, the Fund would be required to deposit with its
custodian in a segregated account in the name of the futures broker an amount
of cash, U.S. government securities, suitable money market instruments, or
liquid, high-grade debt securities, known as "initial margin."  The margin
required for a particular futures contract is set by the exchange on which the
contract is traded, and may be significantly modified from time to time by the
exchange during the term of the contract.  Futures contracts are customarily
purchased and sold on margins that may range upward from less than 5% of the
value of the contract being traded.

          If the price of an open futures contract changes (by increase in
the case of a sale or by decrease in the case of a purchase) so that the loss
on the futures contract reaches a point at which the margin on deposit does
not satisfy margin requirements, the broker will require an increase in the
margin.  However, if the value of a position increases because of favorable
price changes in the futures contract so that the margin deposit exceeds the
required margin, the broker will pay the excess to the Fund.

          These subsequent payments, called "variation margin," to and from
the futures broker, are made on a daily basis as the price of the underlying
assets fluctuate making the long and short positions in the futures contract 

PAGE 24
more or less valuable, a process known as "marking to the market."  The Funds
expect to earn interest income on its margin deposits.

          Although certain futures contracts, by their terms, require actual
future delivery of and payment for the underlying instruments, in practice
most futures contracts are usually closed out before the delivery date. 
Closing out an open futures contract purchase or sale is effected by entering
into an offsetting futures contract purchase or sale, respectively, for the
same aggregate amount of the identical securities and the same delivery date. 
If the offsetting purchase price is less than the original sale price, the
Fund realizes a gain; if it is more, the Fund realizes a loss.  Conversely, if
the offsetting sale price is more than the original purchase price, the Fund
realizes a gain; if it is less, the Fund realizes a loss.  The transaction
costs must also be included in these calculations.  There can be no assurance,
however, that each Fund will be able to enter into an offsetting transaction
with respect to a particular futures contract at a particular time.  If the
Fund is not able to enter into an offsetting transaction, the Fund will
continue to be required to maintain the margin deposits on the futures
contract.

          For example, one contract in the Financial Times Stock Exchange 100
Index future is a contract to buy 25 pounds sterling multiplied by the level
of the UK Financial Times 100 Share Index on a given future date.  Settlement
of a stock index futures contract may or may not be in the underlying
security.  If not in the underlying security, then settlement will be made in
cash, equivalent over time to the difference between the contract price and
the actual price of the underlying asset at the time the stock index futures
contract expires.

Special Risks of Transactions in Futures Contracts

          Volatility and Leverage.  The prices of futures contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in the market and interest rates, which in turn are affected by fiscal
and monetary policies and national and international policies and economic
events.

          Most United States futures exchanges limit the amount of
fluctuation permitted in futures contract prices during a single trading day. 
The daily limit establishes the maximum amount that the price of a futures
contract may vary either up or down from the previous day's settlement price
at the end of a trading session.  Once the daily limit has been reached in a
particular type of futures contract, no trades may be made on that day at a
price beyond that limit. The daily limit governs only price movement during a
particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions.  Futures
contract prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some futures traders to
substantial losses.  

          Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage.  As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss, as well as gain, to the investor.  For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as 

PAGE 25
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out.  A 15% decrease would
result in a loss equal to 150% of the original margin deposit, if the contract
were closed out.  Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the futures contract.  However, a
Fund would presumably have sustained comparable losses if, instead of the
futures contract, it had invested in the underlying instrument and sold it
after the decline.  Furthermore, in the case of a futures contract purchase,
in order to be certain that a Fund has sufficient assets to satisfy its
obligations under a futures contract, the Fund earmarks to the futures
contract money market instruments equal in value to the current value of the
underlying instrument less the margin deposit.

          Liquidity.  Each Fund may elect to close some or all of its futures
positions at any time prior to their expiration.  A Fund would do so to reduce
exposure represented by long futures positions or increase exposure
represented by short futures positions.  Each Fund may close its positions by
taking opposite positions which would operate to terminate the Fund's position
in the futures contracts.  Final determinations of variation margin would then
be made, additional cash would be required to be paid by or released to the
Fund, and the Fund would realize a loss or a gain.

          Futures contracts may be closed out only on the exchange or board
of trade where the contracts were initially traded.  Although the Funds intend
to purchase or sell futures contracts only on exchanges or boards of trade
where there appears to be an active market, there is no assurance that a
liquid market on an exchange or board of trade will exist for any particular
contract at any particular time.  In such event, it might not be possible to
close a futures contract, and in the event of adverse price movements, the
Fund would continue to be required to make daily cash payments of variation
margin.  However, in the event futures contracts have been used to hedge the
underlying instruments, a Fund would continue to hold the underlying
instruments subject to the hedge until the futures contracts could be
terminated.  In such circumstances, an increase in the price of the underlying
instruments, if any, might partially or completely offset losses on the
futures contract.  However, as described below, there is no guarantee that the
price of the underlying instruments will, in fact, correlate with the price
movements in the futures contract and thus provide an offset to losses on a
futures contract.

          Hedging Risk.  A decision of whether, when, and how to hedge
involves skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior, market or
interest rate trends.  There are several risks in connection with the use by
the Funds of futures contracts as a hedging device.  One risk arises because
of the imperfect correlation between movements in the prices of the futures
contracts and movements in the prices of the underlying instruments which are
the subject of the hedge.  Price-Fleming will, however, attempt to reduce this
risk by entering into futures contracts whose movements, in its judgment, will
have a significant correlation with movements in the prices of the Fund's
underlying instruments sought to be hedged.

          Successful use of futures contracts by the Funds for hedging
purposes is also subject to Price-Fleming's ability to correctly predict
movements in the direction of the market.  It is possible that, when a Fund 

PAGE 26
has sold futures to hedge its portfolio against a decline in the market, the
index, indices, or underlying instruments on which the futures are written
might advance and the value of the underlying instruments held in the Fund's
portfolio might decline.  If this were to occur, the Fund would lose money on
the futures and also would experience a decline in value in its underlying
instruments.  However, while this might occur to a certain degree, Price-
Fleming believes that over time the value of a Fund's portfolio will tend to
move in the same direction as the market indices which are intended to
correlate to the price movements of the underlying instruments sought to be
hedged.  It is also possible that if a Fund were to hedge against the
possibility of a decline in the market (adversely affecting the underlying
instruments held in its portfolio) and prices instead increased, the Fund
would lose part or all of the benefit of increased value of those underlying
instruments that it has hedged, because it would have offsetting losses in its
futures positions. In addition, in such situations, if a Fund had insufficient
cash, it might have to sell underlying instruments to meet daily variation
margin requirements.  Such sales of underlying instruments might be, but would
not necessarily be, at increased prices (which would reflect the rising
market).  A Fund might have to sell underlying instruments at a time when it
would be disadvantageous to do so.

          In addition to the possibility that there might be an imperfect
correlation, or no correlation at all, between price movements in the futures
contracts and the portion of the portfolio being hedged, the price movements
of futures contracts might not correlate perfectly with price movements in the
underlying instruments due to certain market distortions.  First, all
participants in the futures market are subject to margin deposit and
maintenance requirements.  Rather than meeting additional margin deposit
requirements, investors might close futures contracts through offsetting
transactions which could distort the normal relationship between the
underlying instruments and futures markets.  Second, the margin requirements
in the futures market are less onerous than margin requirements in the
securities markets, and as a result the futures market might attract more
speculators than the securities markets do.  Increased participation by
speculators in the futures market might also cause temporary price
distortions.  Due to the possibility of price distortion in the futures market
and also because of the imperfect correlation between price movements in the
underlying instruments and movements in the prices of futures contracts, even
a correct forecast of general market trends by Price-Fleming might not result
in a successful hedging transaction over a very short time period.

Options on Futures Contracts

          Options on futures are similar to options on underlying instruments
except that options on futures give the purchaser the right, in return for the
premium paid, to assume a position in a futures contract (a long position if
the option is a call and a short position if the option is a put), rather than
to purchase or sell the futures contract, at a specified exercise price at any
time during the period of the option.  Upon exercise of the option, the
delivery of the futures position by the writer of the option to the holder of
the option will be accompanied by the delivery of the accumulated balance in
the writer's futures margin account which represents the amount by which the
market price of the futures contract, at exercise, exceeds (in the case of a
call) or is less than  (in the case of a put) the exercise price of the option
on the futures contract.  Alternatively, settlement may be made totally in 

PAGE 27
cash.  Purchasers of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.

          As an alternative to writing or purchasing call and put options on
stock index futures, the Funds may write or purchase call and put options on
stock indices.  Such options would be used in a manner similar to the use of
options on futures contracts.  From time to time, a single order to purchase
or sell futures contracts (or options thereon) may be made on behalf of the
Funds and other T. Rowe Price Funds.  Such aggregated orders would be
allocated among the Funds and the other T. Rowe Price Funds in a fair and non-
discriminatory manner.

Special Risks of Transactions in Options on Futures Contracts

          Each Fund may seek to close out an option position by writing or
buying an offsetting option covering the same index, underlying instruments,
or contract and having the same exercise price and expiration date.  The
ability to establish and close out positions on such options will be subject
to the maintenance of a liquid secondary market.  Reasons for the absence of a
liquid secondary market on an exchange include the following:  (i) there may
be insufficient trading interest in certain options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing transactions or
both; (iii) trading halts, suspensions or other restrictions may be imposed
with respect to particular classes or series of options, or underlying
instruments; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current trading volume;
or (vi) one or more exchanges could, for economic or other reasons, decide or
be compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that exchange (or in the class or series of options) would cease to exist,
although outstanding options on the exchange that had been issued by a
clearing corporation as a result of trades on that exchange would continue to
be exercisable in accordance with their terms.  There is no assurance that
higher than anticipated trading activity or other unforeseen events might not,
at times, render certain of the facilities of any of the clearing corporations
inadequate, and thereby result in the institution by an exchange of special
procedures which may interfere with the timely execution of customers' orders.

Additional Futures and Options Contracts

          Although each Fund has no current intention of engaging in
financial futures or option transactions other than those described above, it
reserves the right to do so.  Such futures or options trading might involve
risks which differ from those involved in the futures and options described
above.

                          Foreign Futures and Options

          Participation in foreign futures and foreign options transactions
involves the execution and clearing of trades on or subject to the rules of a
foreign board of trade.  Neither the National Futures Association nor any
domestic exchange regulates activities of any foreign boards of trade,
including the execution, delivery and clearing of transactions, or has the
power to compel enforcement of the rules of a foreign board of trade or any
applicable foreign law.  This is true even if the exchange is formally linked 

PAGE 28
to a domestic market so that a position taken on the market may be liquidated
by a transaction on another market.  Moreover, such laws or regulations will
vary depending on the foreign country in which the foreign futures or foreign
options transaction occurs.  For these reasons, customers who trade foreign
futures or foreign options contracts may not be afforded certain of the
protective measures provided by the Commodity Exchange Act, the CFTC's
regulations and the rules of the National Futures Association and any domestic
exchange, including the right to use reparations proceedings before the
Commission and arbitration proceedings provided by the National Futures
Association or any domestic futures exchange.  In particular, funds received
from customers for foreign futures or foreign options transactions may not be
provided the same protections as funds received in respect of transactions on
United States futures exchanges.  In addition, the price of any foreign
futures or foreign options contract and, therefore, the potential profit and
loss thereon may be affected by any variance in the foreign exchange rate
between the time your order is placed and the time it is liquidated, offset or
exercised.

                        Lending of Portfolio Securities

          For the purpose of realizing additional income, each Fund may make
secured loans of portfolio securities amounting to not more than 30% (33 1/3%
for the Latin America Fund) of its total assets.  This policy is a fundamental
policy.  Securities loans are made to broker-dealers, institutional investors,
or other persons pursuant to agreements requiring that the loans be
continuously secured by collateral at least equal at all times to the value of
the securities lent marked to market on a daily basis.  The collateral
received will consist of cash, U.S. government securities, letters of credit
or such other collateral as may be permitted under its investment program. 
While the securities are being lent, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities,
as well as interest on the investment of the collateral or a fee from the
borrower.  A Fund has a right to call each loan and obtain the securities on
five business days' notice or, in connection with securities trading on
foreign markets, within such longer period of time which coincides with the
normal settlement period for purchases and sales of such securities in such
foreign markets.  Each Fund will not have the right to vote securities while
they are being lent, but it will call a loan in anticipation of any important
vote.  The risks in lending portfolio securities, as with other extensions of
secured credit, consist of possible delay in receiving additional collateral
or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.  Loans will only be made to
persons deemed by Price-Fleming to be of good standing and will not be made
unless, in the judgment of Price-Fleming, the consideration to be earned from
such loans would justify the risk.

Other Lending/Borrowing

          Subject to approval by the Securities and Exchange Commission and
certain state regulatory agencies, each Fund may make loans to, or borrow
funds from, other mutual funds sponsored or advised by Price-Fleming or T.
Rowe Price Associates, Inc. (collectively, "Price Funds").  The Funds have no
current intention of engaging in these practices at this time.    



PAGE 29
                         Foreign Currency Transactions

          A forward foreign currency contract ("forward contract") involves
an obligation to purchase or sell a specific currency at a future date, which
may be any fixed number of days from the date of the contract agreed upon by
the parties, at a price set at the time of the contract.  These contracts are
principally traded in the interbank market conducted directly between currency
traders (usually large, commercial banks) and their customers.  A forward
contract generally has no deposit requirement, and no commissions are charged
at any stage for trades.  

          A Fund will generally enter into a forward contract under two
circumstances.  First, when a Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock
in" the U.S. dollar price of the security.  By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars, of the
amount of foreign currency involved in the underlying security transactions,
the Fund will be able to protect itself against a possible loss resulting from
an adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date the security is purchased
or sold and the date on which payment is made or received. 

          Second, when Price-Fleming believes that one currency may
experience a substantial movement against another currency, including the U.S.
dollar, it may enter into a forward contract to sell or buy the amount of the
former foreign currency, approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency.  Alternatively,
where appropriate, a Fund may hedge all or part of its foreign currency
exposure through the use of a basket of currencies or a proxy currency where
such currencies or currency act as an effective proxy for other currencies. 
In such a case, a Fund may enter into a forward contract where the amount of
the foreign currency to be sold exceeds the value of the securities
denominated in such currency.  The use of this basket hedging technique may be
more efficient and economical than entering into separate forward contracts
for each currency held in the Fund.  The precise matching of the forward
contract amounts and the value of the securities involved will not generally
be possible since the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date
it matures.  The projection of short-term currency market movement is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain.  Under certain circumstances, each Fund may
commit a substantial portion or the entire value of its assets to the
consummation of these contracts.  Price-Fleming will consider the effect a
substantial commitment of its assets to forward contracts would have on the
investment program of the Fund and the flexibility of the Fund to purchase
additional securities.  Other than as set forth above, and immediately below,
each Fund will also not enter into such forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's portfolio securities or other assets denominated in that
currency.  Each Fund, however, in order to avoid excess transactions and
transaction costs, may maintain a net exposure to forward contracts in excess
of the value of the Fund's portfolio securities or other assets to which the
forward contracts relate (including accrued interest to the maturity of the 

PAGE 30
forwards on such securities provided the excess amount is "covered" by liquid,
high-grade debt securities, denominated in any currency, at least equal at all
times to the amount of such excess.  For these purposes, "the securities or
other assets to which the forward contracts relate" may be securities or
assets denominated in a single currency, or where proxy forwards are used,
securities denominated in more than one currency.)  Under normal
circumstances, consideration of the prospect for currency parities will be
incorporated into the longer term investment decisions made with regard to
overall diversification strategies.  However, Price-Fleming believes that it
is important to have the flexibility to enter into such forward contracts when
it determines that the best interests of the Funds will be served.

          At the maturity of a forward contract, a Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.

          As indicated above, it is impossible to forecast with absolute
precision the market value of portfolio securities at the expiration of the
forward contract.  Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver and if a decision is made to
sell the security and make delivery of the foreign currency.  Conversely, it
may be necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security if its market value exceeds
the amount of foreign currency the Fund is obligated to deliver.  However, as
noted, in order to avoid excessive transactions and transaction costs, a Fund
may use liquid, high-grade debt securities, denominated in any currency, to
cover the amount by which the value of a forward contract exceeds the value of
the securities to which it relates.

          If a Fund retains the portfolio security and engages in an
offsetting transaction, the Fund will incur a gain or a loss (as described
below) to the extent that there has been movement in forward contract prices. 
If the Fund engages in an offsetting transaction, it may subsequently enter
into a new forward contract to sell the foreign currency.  Should forward
prices decline during the period between a Fund's entering into a forward
contract for the sale of a foreign currency and the date it enters into an
offsetting contract for the purchase of the foreign currency, the Fund will
realize a gain to the extent the price of the currency it has agreed to sell
exceeds the price of the currency it has agreed to purchase.  Should forward
prices increase, the Fund will suffer a loss to the extent of the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell.

          Each Fund's dealing in forward foreign currency exchange contracts
will generally be limited to the transactions described above.  However, the
Fund reserves the right to enter into forward foreign currency contracts for
different purposes and under different circumstances.  Of course, the Fund is
not required to enter into forward contracts with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate
by Price-Fleming.  It also should be realized that this method of hedging
against a decline in the value of a currency does not eliminate fluctuations
in the underlying prices of the securities.  It simply establishes a rate of 

PAGE 31
exchange at a future date.  Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential gain which might
result from an increase in the value of that currency.

          Although each Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign currencies into
U.S. dollars on a daily basis.  It will do so from time to time, and investors
should be aware of the costs of currency conversion.  Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies.  Thus, a dealer may offer to sell a
foreign currency to a Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer.

Federal Tax Treatment of Options, Futures Contracts and Forward Foreign
Exchange Contracts

          The Funds may enter into certain option, futures, and forward
foreign exchange contracts, including options and futures on currencies, which
will be treated as Section 1256 contracts or straddles.

          Transactions which are considered Section 1256 contracts will be
considered to have been closed at the end of a Fund's fiscal year and any
gains or losses will be recognized for tax purposes at that time.  Such gains
or losses from the normal closing or settlement of such transactions will be
characterized as 60% long-term capital gain or loss and 40% short-term capital
gain or loss regardless of the holding period of the instrument.  Each Fund
will be required to distribute net gains on such transactions to shareholders
even though it may not have closed the transaction and received cash to pay
such distributions.

          Options, futures and forward foreign exchange contracts, including
options and futures on currencies, which offset a foreign dollar denominated
bond or currency position may be considered straddles for tax purposes in
which case a loss on any position in a straddle will be subject to deferral to
the extent of unrealized gain in an offsetting position.  The holding period
of the securities or currencies comprising the straddle will be deemed not to
begin until the straddle is terminated.  For securities offsetting a purchased
put, this adjustment of the holding period may increase the gain from sales of
securities held less than three months.  The holding period of the security
offsetting an "in-the-money qualified covered call" option on an equity
security will not include the period of time the option is outstanding.

          Losses on written covered calls and purchased puts on securities,
excluding certain "qualified covered call" options on equity securities, may
be long-term capital loss, if the security covering the option was held for
more than twelve months prior to the writing of the option.

          In order for the Funds to continue to qualify for federal income
tax treatment as regulated investment companies, at least 90% of their gross
income for a taxable year must be derived from qualifying income; i.e.,
dividends, interest, income derived from loans of securities, and gains from
the sale of securities or currencies.  Pending tax regulations could limit the
extent that net gain realized from option, futures or foreign forward exchange
contracts on currencies is qualifying income for purposes of the 90% 

PAGE 32
requirement.  In addition, gains realized on the sale or other disposition of
securities, including option, futures or foreign forward exchange contracts on
securities or securities indexes and, in some cases, currencies, held for less
than three months, must be limited to less than 30% of a Fund's annual gross
income.  In order to avoid realizing excessive gains on securities or
currencies held less than three months, each Fund may be required to defer the
closing out of option, futures or foreign forward exchange contracts beyond
the time when it would otherwise be advantageous to do so.  It is anticipated
that unrealized gains on Section 1256 option, futures and foreign forward
exchange contracts, which have been open for less than three months as of the
end of a Fund's fiscal year and which are recognized for tax purposes, will
not be considered gains on securities or currencies held less than three
months for purposes of the 30% test.

Hybrid Instruments

          The Funds may invest up to 10% of their total assets in hybrid
instruments.

          Hybrid instruments have recently been developed and combine the
elements of futures contracts or options with those of debt, preferred equity
or a depository instrument.  Often these Hybrid Instruments are indexed to the
price of a commodity, a particular currency or a domestic or foreign debt or
equity securities index.  Hybrid Instruments may take a variety of forms,
including, but not limited to, debt instruments with interest or principal
payments or redemption terms determined by reference to the value of a
currency or commodity at a future point in time, preferred stock with dividend
rates determined by reference to the value of a currency, or convertible
securities with the conversion terms related to a particular commodity.

          The risks of investing in Hybrid Instruments reflect a combination
of the risks from investing in securities, options, futures and currencies,
including volatility and lack of liquidity.  Reference is made to the
discussion of futures, forward contracts, and options herein for a discussion
of these risks.  Further, the prices of the Hybrid Instrument and the related
commodity or currency may not move in the same direction or at the same time. 
Hybrid Instruments may bear interest or pay preferred dividends at below
market (or even relatively nominal) rates.  Alternatively, Hybrid Instruments
may bear interest at above market rates but bear an increased risk of
principal loss (or gain).  In addition, because the purchase and sale of
Hybrid Instruments could take place in an over-the-counter market or in a
private transaction between the Fund and the seller of the Hybrid Instrument,
the creditworthiness of the contra party to the transaction would be a risk
factor which the Fund would have to consider.  Hybrid Instruments also may not
be subject to regulation of the CFTC, which generally regulates the trading of
commodity futures by U.S. persons, the SEC, which regulates the offer and sale
of securities by and to U.S. persons, or any other governmental regulatory
authority.

                             Repurchase Agreements

          Each Fund may enter into repurchase agreements through which an
investor (such as the Fund) purchases a security (known as the "underlying
security") from a well-established securities dealer or a bank that is a
member of the Federal Reserve System.  Any such dealer or bank will be on T.
Rowe Price Associates, Inc. ("T. Rowe Price") approved list and have a credit 

PAGE 33
rating with respect to its short-term debt of at least A1 by Standard & Poor's
Corporation, P1 by Moody's Investors Service, Inc. or the equivalent rating by
T. Rowe Price.  At that time, the bank or securities dealer agrees to
repurchase the underlying security at the same price, plus specified interest. 
Repurchase agreements are generally for a short period of time, often less
than a week.  Repurchase agreements which do not provide for payment within
seven days will be treated as illiquid securities.  Each Fund will only enter
into repurchase agreements where (i) the underlying securities are of the type
(excluding maturity limitations) which the Fund's investment guidelines would
allow it to purchase directly, (ii) the market value of the underlying
security, including interest accrued, will be at all times equal to or exceed
the value of the repurchase agreement, and (iii) payment for the underlying
security is made only upon physical delivery or evidence of book-entry
transfer to the account of the custodian or a bank acting as agent.  In the
event of a bankruptcy or other default of a seller of a repurchase agreement,
a Fund could experience both delays in liquidating the underlying securities
and losses, including: (a) possible decline in the value of the underlying
security during the period while the Fund seeks to enforce its rights thereto;
(b) possible subnormal levels of income and lack of access to income during
this period; and (c) expenses of enforcing its rights.

                              Illiquid Securities

          The Funds may not invest in illiquid securities including
repurchase agreements which do not provide for payment within seven days, if
as a result, they would comprise more than 10% of the value of the Fund's net
assets.  The Latin America Fund may not invest in illiquid securities and
securities of unseasoned issuers if, as a result, more than 15% of its net
assets would be invested in such securities.

          Restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 (the "1933 Act"). 
Where registration is required, a Fund may be obligated to pay all or part of
the registration expenses and a considerable period may elapse between the
time of the decision to sell and the time the Fund may be permitted to sell a
security under an effective registration statement.  If, during such a period,
adverse market conditions were to develop, a Fund might obtain a less
favorable price than prevailed when it decided to sell.  Restricted securities
will be priced at fair value as determined in accordance with procedures
prescribed by the Board of Directors.  If through the appreciation of illiquid
securities or the depreciation of liquid securities, a Fund should be in a
position where more than 10% (15% for the Latin America Fund) of the value of
its net assets are invested in illiquid assets, including restricted
securities, the Fund will take appropriate steps to protect liquidity.

          Notwithstanding the above, the Funds may purchase securities which
while privately placed, are eligible for purchase and sale under Rule 144A
under the 1933 Act.  This rule permits certain qualified institutional buyers,
such as the Funds, to trade in privately placed securities even though such
securities are not registered under the 1933 Act.  Price-Fleming, under the
supervision of the Funds' Board of Directors, will consider whether securities
purchased under Rule 144A are illiquid and thus subject to each Fund's
restriction of investing no more than 10% (15% for the Latin America Fund) of
its assets in illiquid securities.  A determination of whether a Rule 144A 

PAGE 34
security is liquid or not is a question of fact.  In making this determination
Price-Fleming will consider the trading markets for the specific security
taking into account the unregistered nature of a Rule 144A security.  In
addition, Price-Fleming could consider the (1) frequency of trades and quotes,
(2) number of dealers and potential purchasers, (3) dealer undertakings to
make a market, (4) and the nature of the security and of market place trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer).  The liquidity of Rule 144A securities
would be monitored and, if as a result of changed conditions, it is determined
that a Rule 144A security is no longer liquid, the Fund's holdings of illiquid
securities would be reviewed to determine what, if any, steps are required to
assure that the Fund does not invest more than 10% (15% for the Latin America
Fund) of its assets in illiquid securities.  Investing in Rule 144A securities
could have the effect of increasing the amount of a Fund's assets invested in
illiquid securities if qualified institutional buyers are unwilling to
purchase such securities.


                            INVESTMENT RESTRICTIONS

          Fundamental policies of each Fund other than Latin America Fund may
not be changed without the approval of the lesser of (1) 67% of a Fund's
shares present at a meeting of shareholders if the holders of more than 50% of
the outstanding shares are present in person or by proxy or (2) more than 50%
of a Fund's outstanding shares.  Other restrictions, in the form of operating
policies, are subject to change by the Funds' Board of Directors without
shareholder approval.  Any investment restriction which involves a maximum
percentage of securities or assets shall not be considered to be violated
unless an excess over the percentage occurs immediately after, and is caused
by, an acquisition of securities or assets of, or borrowings by, the Fund.

          International Stock, International Discovery, European Stock, Japan
and New Asia Funds

                             Fundamental Policies

          As a matter of fundamental policy, the Funds may not:  

          (1)    Borrowing.  Borrow money, except each Fund may borrow from
                 banks or other Price Funds as a temporary measure for 
                 extraordinary or emergency purposes, and then only in
                 amounts not exceeding 30% of its total assets valued at
                 market.  Each Fund will not borrow in order to increase
                 income (leveraging), but only to facilitate redemption
                 requests which might otherwise require untimely disposition
                 of portfolio securities (see page 14 of the prospectus). 
                 Interest paid on any such borrowings will reduce net
                 investment income.  Each Fund may enter into futures
                 contracts as set forth in (3) below;

          (2)    Commodities.  Purchase or sell commodities or commodity
                 contracts; except that each Fund may (i) enter into futures
                 contracts and options on futures contracts, subject to (3)
                 below; (ii) enter into forward foreign currency exchange
                 contracts (although the Funds do not consider such contracts
                 to be commodities); and (iii) invest in instruments which

PAGE 35
                 have the characteristics of both futures contracts and
                 securities;

          (3)    Futures Contracts.  Enter into a futures contract or an
                 option thereon, although each Fund may enter into financial
                 and currency futures contracts or options on financial and
                 currency futures contracts;

          (4)    Industry Concentration.  Purchase the securities of any
                 issuer if, as a result, more than 25% of the value of a
                 Fund's total assets would be invested in the securities of
                 issuers having their principal business activities in the
                 same industry other than obligations issued or guaranteed by
                 the U.S. Government or any foreign government, their
                 agencies or instrumentalities.  The Japan and New Asia
                 Funds, as a matter of fundamental policy, and each of the
                 other funds, as matter of operating policy, will not invest
                 more than 25% of its total assets in securities issued by
                 any one foreign government;

          (5)    Loans.  Make loans, although each Fund may (i) purchase
                 money market securities and enter into repurchase
                 agreements; (ii) acquire publicly-distributed bonds,
                 debentures, notes and other debt securities and purchase
                 debt securities at private placement; (iii) lend portfolio
                 securities; and (iv) participate in an interfund lending
                 program with other Price Funds provided that no such loan
                 may be made if, as a result, the aggregate of such loans
                 would exceed 30% of the value of a Fund's total assets;

          (6)    Margin.  Purchase securities on margin, except for use of
                 short-term credit necessary for clearance of purchases of
                 portfolio securities; except that it may make margin
                 deposits in connection with futures contracts, subject to
                 (3) above; 

          (7)    Mortgaging.  Mortgage, pledge, hypothecate or, in any
                 manner, transfer any security owned by a Fund as security
                 for indebtedness except as may be necessary in connection
                 with permissible borrowings and then such mortgaging,
                 pledging or hypothecating may not exceed 30% of the Fund's
                 total assets valued at market at the time of the borrowing;

          (8)    Percent Limit on Assets Invested in Any One Issuer. 
                 Purchase a security if, as a result, with respect to 75% of
                 the value of a Fund's total assets, more than 5% of the
                 value of its total assets would be invested in the
                 securities of any one issuer (other than obligations issued
                 or guaranteed by the U.S. Government, its agencies or
                 instrumentalities);

          (9)    Percent Limit on Share Ownership of Any One Issuer. 
                 Purchase a security if, as a result, with respect to 75% of
                 the value of a Fund's total assets, more than 10% of the
                 outstanding voting securities of any issuer would be held by
                 the Fund (other than obligations issued or guaranteed by the

PAGE 36
                 U.S. Government, its agencies or instrumentalities) provided
                 that, as an operating policy, the Fund will not purchase a
                 security if, as a result, more than 10% of the outstanding
                 voting securities of any issuer would be held by the Fund;

          (10)   Real Estate.  Purchase or sell real estate or real estate
                 limited partnerships (although it may purchase securities
                 secured by real estate or interests therein, or issued by
                 companies or investment trusts which invest in real estate
                 or interests therein); 

          (11)   Senior Securities.  Issue senior securities; 

          (12)   Short Sales.  Effect short sales of securities; and

          (13)   Underwriting.  Underwrite securities issued by other
                 persons, except to the extent that a Fund may be deemed to
                 be an underwriter within the meaning of the Securities Act
                 of 1933 in connection with the purchase and sale of its
                 portfolio securities in the ordinary course of pursuing its
                 investment program.

                              Operating Policies

          As a matter of operating policy, the Funds may not: 

          (1)    Control of Portfolio Companies.  Invest in companies for the
                 purpose of exercising management or control; 

          (2)    Illiquid Securities.  Purchase a security if, as a result,
                 more than 10% of a Fund's net assets would be invested in
                 illiquid securities, including repurchase agreements which
                 do not provide for payment within seven days, provided that
                 the Fund will not invest more than 5% of its total assets in
                 restricted securities (other than securities eligible for
                 resale under Rule 144A under the Securities Act of 1933);

          (3)    Investment Companies.  Purchase securities of open-end or
                 closed-end investment companies except in compliance with
                 the Investment Company Act of 1940 and applicable state law. 
                 Duplicate fees may result from such purchases;

          (4)    Oil and Gas Programs.  Purchase participations or other
                 direct interests or enter into leases with respect to oil,
                 gas, other mineral exploration or development programs; 

          (5)    Options, Etc.  Invest in puts, calls, straddles, spreads, or
                 any combination thereof, except that each Fund may invest in
                 or commit its assets to purchasing and selling call and put
                 options to the extent permitted by the prospectus and
                 Statement of Additional Information; 

          (6)    Ownership of Portfolio Securities by Officers and Directors. 
                 Purchase or retain the securities of any issuer if, to the
                 knowledge of a Fund's management, those officers and
                 directors of the Fund, and of its investment manager, who

PAGE 37
                 each owns beneficially more than .5% of the outstanding
                 securities of such issuer, together own beneficially more
                 than 5% of such securities; 

          (7)    Unseasoned Issuers.  Purchase a security (other than
                 obligations issued or guaranteed by the U.S. Government or
                 any foreign government, their agencies or instrumentalities)
                 if, as a result, more than 5% of the value of a Fund's total
                 assets would be invested in the securities of issuers which
                 at the time of purchase had been in operation for less than
                 three years (for this purpose, the period of operation of
                 any issuer shall include the period of operation of any
                 predecessor or unconditional guarantor of such issuer); and

          (8)    Warrants.  Invest in warrants, except that each Fund may
                 invest, hold, or sell warrants or other rights ("warrants")
                 where the grantor of the warrants is the issuer of the
                 underlying securities, provided that a Fund will not
                 purchase a warrant if, as a result thereof, more than 2% of
                 the value of the total assets of the Fund would be invested
                 in warrants which are not listed on the New York Stock
                 Exchange, the American Stock Exchange, or a recognized
                 foreign exchange, or more than 5% of the value of the total
                 assets of the Fund would be invested in warrants whether or
                 not so listed.  For purposes of these percentage
                 limitations, the warrants will be valued at the lower of
                 cost or market.

Latin America Fund

                             Fundamental Policies

          As a matter of fundamental policy, the Fund may not:

          (1)    Borrowing. Borrow money except that the Fund may (i) borrow
                 for non-leveraging, temporary or emergency purposes and (ii)
                 engage in reverse repurchase agreements and make other
                 investments or engage in other transactions, which may
                 involve a borrowing, in a manner consistent with the Fund's
                 investment objective and program, provided that the
                 combination of (i) and (ii) shall not exceed 33 1/3% of the
                 value of the Fund's total assets (including the amount
                 borrowed) less liabilities (other than borrowings) or such
                 other percentage permitted by law.  Any borrowings which
                 come to exceed this amount will be reduced in accordance
                 with applicable law.  The Fund may borrow from banks, other
                 Price Funds or other persons to the extent permitted by
                 applicable law. 

          (2)    Commodities.  Purchase or sell physical commodities; except
                 that it may enter into futures contracts and options
                 thereon;    

          (3)    Industry Concentration.  Purchase the securities of any
                 issuer if, as a result, more than 25% of the value of the
                 Fund's total assets would be invested in the securities of

PAGE 38
                 issuers having their principal business activities in the
                 same industry;

          (4)    Loans.  Make loans, although the Fund may (i) lend portfolio
                 securities and participate in an interfund lending program
                 with other Price Funds provided that no such loan may be
                 made if, as a result, the aggregate of such loans would
                 exceed 33 1/3% of the value of the Fund's total assets;
                 (ii) purchase money market securities and enter into
                 repurchase agreements; and (iii) acquire publicly-
                 distributed or privately-placed debt securities and purchase
                 debt;    

          (5)    Real Estate.  Purchase or sell real estate unless acquired
                 as a result of ownership of securities or other instruments
                 (but this shall not prevent the Fund from investing in
                 securities or other instruments backed by real estate or
                 securities of companies engaged in the real estate
                 business;    

          (6)    Senior Securities.  Issue senior securities except in
                 compliance with the Investment Company Act of 1940; or

          (7)    Underwriting.  Underwrite securities issued by other
                 persons, except to the extent that the Fund may be deemed to
                 be an underwriter within the meaning of the Securities Act
                 of 1933 in connection with the purchase and sale of its
                 portfolio securities in the ordinary course of pursuing its
                 investment program.

                 With respect to investment restrictions (1) and (4), the
                 Fund will not borrow from or lend to any other T. Rowe Price
                 Fund unless it applies for and receives an exemptive order
                 from the SEC or the SEC issues rules permitting such
                 transactions.  The Fund has no current intention of engaging
                 in any such activity and there is no assurance the SEC would
                 grant any order requested by the Fund or promulgate any
                 rules allowing the transactions.

                 For purposes of investment restriction (3), U.S., state or
                 local governments, or related agencies or instrumentalities,
                 are not considered an industry.

                              Operating Policies

          As a matter of operating policy, the Fund may not: 

          (1)    Borrowing.  The Fund will not purchase additional securities
                 when money borrowed exceeds 5% of its total assets.

          (2)    Control of Portfolio Companies.  Invest in companies for the
                 purpose of exercising management or control;

          (3)    Futures Contracts.  Purchase a futures contract or an option
                 thereon if, with respect to positions in futures or options
                 on futures which do not represent bona fide hedging, the

PAGE 39
                 aggregate initial margin and premiums on such positions
                 would exceed 5% of the Fund's net asset value.

          (4)    Illiquid Securities.  Purchase illiquid securities and
                 securities of unseasoned issuers if, as a result, more than
                 15% of its net assets would be invested in such securities,
                 provided that the Fund will not invest more than 5% of its
                 total assets in restricted securities and not more than 5%
                 in securities of unseasoned issuers.  Securities eligible
                 for resale under Rule 144A of the Securities Act of 1933 are
                 not included in the 5% limitation but are subject to the 15%
                 limitation;

          (4)    Investment Companies.  Purchase securities of open-end or
                 closed-end investment companies except in compliance with
                 the Investment Company Act of 1940 and applicable state law. 
                 Duplicate fees may result from such purchases;

          (5)    Margin.  Purchase securities on margin, except (i) for use
                 of short-term credit necessary for clearance of purchases of
                 portfolio securities and (ii) it may make margin deposits in
                 connection with futures contracts or other permissible
                 investments; 

          (6)    Mortgaging.  Mortgage, pledge, hypothecate or, in any
                 manner, transfer any security owned by the Fund as security
                 for indebtedness except as may be necessary in connection
                 with permissible borrowings or investments and then such
                 mortgaging, pledging or hypothecating may not exceed 33 1/3%
                 of the Fund's total assets at the time of borrowing or
                 investment;

          (7)    Oil and Gas Programs.  Purchase participations or other
                 direct interests or enter into leases with respect to, oil,
                 gas, or other mineral exploration or development programs;

          (8)    Options, Etc.  Invest in puts, calls, straddles, spreads, or
                 any combination thereof, except to the extent permitted by
                 the prospectus and Statement of Additional Information; 

          (9)    Ownership of Portfolio Securities by Officers and Directors. 
                 Purchase or retain the securities of any issuer if, to the
                 knowledge of the Fund's management, those officers and
                 directors of the Fund, and of its investment manager, who
                 each own beneficially more than .5% of the outstanding
                 securities of such issuer, together own beneficially more
                 than 5% of such securities;
    
   

          (10)   Short Sales.  Effect short sales of securities;

          (11)   Unseasoned Issuers.  Purchase a security (other than
                 obligations issued or guaranteed by the U.S., any state or
                 local government, or any foreign government, their agencies
                 or instrumentalities) if, as a result, more than 5% of the
                 value of the Fund's total assets would be invested in the 

PAGE 40
                 securities issuers which at the time of purchase had been in
                 operation for less than three years (for this purpose, the
                 period of operation of any issuer shall include the period
                 of operation of any predecessor or unconditional guarantor
                 of such issuer).  This restriction does not apply to
                 securities of pooled investment vehicles or mortgage or
                 asset-backed securities; or

          (12)   Warrants.  Invest in warrants if, as a result thereof, more
                 than 2% of the value of the total assets of the Fund would
                 be invested in warrants which are not listed on the New York
                 Stock Exchange, the American Stock Exchange, or a recognized
                 foreign exchange, or more than 5% of the value of the total
                 assets of the Fund would be invested in warrants whether or
                 not so listed.  For purposes of these percentage
                 limitations, the warrants will be valued at the lower of
                 cost or market and warrants acquired by the Funds in units
                 or attached to securities may be deemed to be without value.

          In addition to the restrictions described above, some foreign
countries limit, or prohibit, all direct foreign investment in the securities
of their companies.  However, the governments of some countries have
authorized the organization of investment funds to permit indirect foreign
investment in such securities.  For tax purposes these funds may be known as
Passive Foreign Investment Companies.  Each Fund is subject to certain
percentage limitations under the 1940 Act and certain states relating to the
purchase of securities of investment companies, and may be subject to the
limitation that no more than 10% of the value of the Fund's total assets may
be invested in such securities.


                            INVESTMENT PERFORMANCE

Total Return Performance

          Each Fund's calculation of total return performance includes the
reinvestment of all capital gain distributions and income dividends for the
period or periods indicated, without regard to tax consequences to a
shareholder in each Fund.  Total return is calculated as the percentage change
between the beginning value of a static account in each Fund and the ending
value of that account measured by the then current net asset value, including
all shares acquired through reinvestment of income and capital gains
dividends.  The results shown are historical and should not be considered
indicative of the future performance of each Fund.  Each average annual
compound rate of return is derived from the cumulative performance of each
Fund over the time period specified.  The annual compound rate of return for
each Fund over any other period of time will vary from the average.


PAGE 41
International Stock Fund

                   Cumulative Performance Percentage Change


                                                          Since
                    1 Year      5 Years    10 Years     Inception
                     Ended       Ended       Ended      5/9/80 to
                   12/31/92+   12/31/92    12/31/92    12/31/92++
                   _________   ________   ___________  __________

International Stock -3.47%       48.68%     355.50%      455.85%
 Fund
S&P 500              7.61       109.02      347.36       591.81
Dow Jones Industrial 7.37       103.85      367.48       611.94
 Average
Lipper International-5.05        34.74      274.95       326.84+++
 Funds Average
EAFE Index         -11.85         8.51      385.31       420.82+++
CPI                  2.90        22.96       45.39        75.19
Financial Times     -5.13        37.70      N/A          N/A
 Actuaries World
  Index++++

                    Average Annual Compound Rates of Return

                                                            Since
                       1 Year     5 Years    10 Years     Inception
                        Ended      Ended       Ended      5/9/80 to
                      12/31/92+  12/31/92    12/31/92    12/31/92++
                      _________  ________  ____________  __________

International Stock     -3.47%      8.26%      16.37%      14.53%
   Fund
S&P 500                  7.61      15.89       16.16       16.52
Dow Jones Industrial     7.37      15.31       16.67       16.79
   Average
Lipper International    -5.05       5.90       13.83       12.05+++
   Funds Average
EAFE Index             -11.85       1.65       17.11       14.10+++
CPI                      2.90       4.22        3.81        4.53
Financial Times         -5.13       6.61         N/A         N/A
   Actuaries World
   Index++++

+      If you invested $1,000 at the beginning of 1992, the total return on
       December 31, 1992 would be $965.30 ($1,000 x 0.9653).
++     Assumes purchase of one share of International Stock Fund at the
       public offering price of $5.00 on May 9, 1980.  Over this time, stock
       prices in general have risen.
+++    06/30/80-12/31/92
++++   The inception date of this index is 12/31/85.


PAGE 42
International Discovery Fund

                   Cumulative Performance Percentage Change

                                                             Since
                                  1 Year       3 Years     Inception
                                   Ended        Ended     12/30/88 to
                                 12/31/92+    12/31/92    12/31/92++
                                __________   __________  ____________

International Discovery Fund      -9.08%      -11.48%        25.45%
S&P 500                            7.61        36.43         79.28+++
Dow Jones Industrial               7.37        32.74         75.44+++
  Average
Lipper International              -5.05        -4.23         15.89+++
  Funds Average
EAFE Index                       -11.85       -23.84        -15.61+++
CPI                                2.90        12.53         17.76+++

                    Average Annual Compound Rates of Return

                                                             Since
                                  1 Year        3 Years    Inception
                                   Ended         Ended    12/30/88 to
                                 12/31/92+     12/31/92   12/31/92++
                                __________    __________ ____________

International Discovery Fund      -9.08%         -3.99%       5.83%
S&P 500                            7.61          10.91       15.71+++
Dow Jones Industrial               7.37           9.90       15.09+++
  Average
Lipper International              -5.05          -1.60        3.53+++
  Funds Average
EAFE Index                       -11.85          -8.68       -4.15+++
CPI                                2.90           4.01        4.17+++
Morgan Stanley Capital            -4.66          -1.80        2.64+++
  International World Index

+     If you invested $1,000 at the beginning of 1992, the total return on
      December 31, 1992 would be $909.20 ($1,000 x .9092).
++    Assumes purchase of one share of International Discovery Fund at the
      public offering price of $10.00 on December 30, 1988.  Over this time,
      stock prices in general have risen.
+++   12/31/88 - 12/31/92

      Small company stocks achieved higher total annualized returns than
large-cap stocks and long-term bonds for the 25 and 50-year periods ending
December 31, 1992, as shown in the following table.  The table shows the
dramatic reversal of these trends during the past ten years.

                      SMALL COMPANIES VS. LARGE COMPANIES
                            AVERAGE ANNUAL RETURNS
                                  1973 - 1992


                                    Chart 1


PAGE 43
Sources: Japan and Large U.K., Data Stream; Small U.K. Hoare Govette Small
Cap. Index; Large U.S., S&P 500; Small U.S., Ibbotson Associates.  Returns
represent past performance and should not be considered indicative of an
investment in the Fund.

European Stock Fund

                   Cumulative Performance Percentage Change

                                           Since
                           1 Year        Inception
                            Ended       2/28/90+ to
                          12/31/92      12/31/92++
                         __________     __________

European Stock Fund        -5.56%          -1.88%
S&P 500                     7.61           44.39
Dow Jones Industrial        7.37           38.20
  Average
Lipper European Region     -8.02           -5.62
  Funds Average
EAFE Index                -11.85          -14.99
CPI                         2.90           10.86

                    Average Annual Compound Rates of Return

                                           Since
                           1 Year        Inception
                            Ended       2/28/90+ to
                          12/31/92      12/31/92++
                         __________     __________

European Stock Fund        -5.56%          -0.67%
S&P 500                     7.61           13.81
Dow Jones Industrial        7.37           12.07
  Average
Lipper European Region     -8.02           -2.20
  Funds Average              
EAFE Index                -11.85           -5.56
CPI                         2.90            3.70
Morgan Stanley Capital     -4.25            2.73
  International Europe       
  Index

+       If you invested $1,000 at the beginning of 1992, the total return on
        December 31, 1992 would be $944.40 ($1,000 x .9444).
++      Assumes purchase of one share of European Stock Fund at the public
        offering price of $10.00 on February 28, 1990.  Over this time, stock
        prices in general have risen.
+++     03/01/90-12/31/92


PAGE 44
Japan Fund

                   Cumulative Performance Percentage Change

                                           Since
                           1 Year        Inception
                            Ended      12/27/91+ to
                          12/31/92      12/31/92++
                         __________     __________

Japan Fund                -13.40%         -13.40%
Morgan Stanley Pacific    -18.20          -18.20+++
  Basin Index
Morgan Stanley Capital     -4.66           -4.66+++
  International World
  Index
EAFE Index                -11.85          -11.85+++
S&P 500                     7.61           10.46
Topix Index               -23.74          -23.74+++
Nikkei Average            -26.36          -26.36+++

                    Average Annual Compound Rates of Return

                                           Since
                           1 Year        Inception
                            Ended      12/27/91+ to
                          12/31/92      12/31/92++
                         __________     __________

Japan Fund                -13.40%         -13.60%
Morgan Stanley Pacific    -18.20          -18.20+++
  Basin Index
Morgan Stanley Capital     -4.66           -4.66+++
  International World
  Index
EAFE Index                -11.85          -11.85+++
S&P 500                     7.61           10.34
Topix Index               -23.74          -23.74+++
Nikkei Average            -26.36          -26.36+++

+       If you invested $1,000 at the beginning of 1992, the total return on
        December 31, 1992 would be $866.00 ($1,000 x .866).
++      Assumes purchase of one share of Japan Fund at the public offering
        price of $10.00 on December 27, 1991.  Over this time, stock prices in
        general have risen.
+++     12/31/91-12/31/92

        One reason investors may find the Japanese market attractive is the
proven competitiveness of Japanese companies within their industries.  Due to
a commitment to capital investment, technological expertise, and a highly
productive workforce, Japanese companies dominate many of the world's key
industries.  Shown below are the number of Japanese companies within the top
ten largest companies of the world+ for the industries indicated:


PAGE 45
        ---        9 of the top 10 banks 
        ---        7 of the top 10 appliance/household durable companies 
        ---        8 of the top 10 financial service companies 
        ---        7 of the top 10 steel companies
        ---        4 of the top 10 automobile companies

+  Based on total market capitalization in U.S. dollars.
Source: Morgan Stanley Capital International


                               TOPIX VS. S&P 500

                                 1980 -- 1992


                                    Chart 2


Sources:  Nikkei Needs; Bridge Information Systems
Returns are measured in U.S. currency.  Topix Index reflects the first section
of the Tokyo Stock Exchange.

        The chart is for illustrative purposes only and should not be
considered representative of an investment in the Fund or of the Fund's
performance.  Returns are measured in U.S. currency.  Topix Index reflects the
first section of the Tokyo Stock Exchange.

Sources:  Nikkei Needs; Bridge Information Systems

                     Growth of Real GNP in the OECD area!

                    Percentage changes from previous period

                  1971 1972   1973  1974 1975  1976   1977 1978  1979  1980
                  ____ ____   ____  ____ ____  ____   ____ ____  ____  ____

United States    2.8    5.0   5.2  -0.5  -1.3  4.9    4.7   5.3   2.5 -0.2
Japan            4.3    8.4   7.6  -0.8   2.9  4.2    4.8   5.0   5.6  3.5


                  1981 1982   1983  1984 1985  1986   1987 1988  1989  1990
                  ____ ____   ____  ____ ____  ____   ____ ____  ____  ____

United States    1.9   -2.5   3.6   6.8  3.4   2.7    3.4   4.5  2.5   0.9
Japan            3.4    3.4   2.8   4.3  5.2   2.6    4.3   6.2  4.7   5.6



!     Aggregates were computed on the basis of 1987 GNP/GDP weights expressed
      in 1987 U.S. dollars.

Source:  OECD Economic Outlook, July 1991


PAGE 46
New Asia Fund

                   Cumulative Performance Percentage Change

                                           Since
                           1 Year        Inception
                            Ended       9/28/90+ to
                          12/31/92      12/31/92++
                         __________     __________

New Asia Fund              11.24%          34.85%
S&P 500                     7.61           53.21+++
Dow Jones Industrial        7.37           44.76+++
  Average
Lipper Pacific Region       0.40           19.03+++
  Funds Average
EAFE Index                -11.85            9.71
CPI                         2.90            6.93+++

                    Average Annual Compound Rates of Return

                                           Since
                           1 Year        Inception
                            Ended       9/28/90+ to
                          12/31/92      12/31/92++
                         __________     __________

New Asia Fund              11.24%          14.16%
S&P 500                     7.61           20.86+++
Dow Jones Industrial        7.37           17.86+++
  Average
Lipper Pacific Region       0.40            7.68+++
  Funds Average
EAFE Index                -11.85            4.20+++
CPI                         2.90            3.02+++
Financial Times             7.68           16.89+++
  Actuaries Pacific
  Excluding Japan

+     If you invested $1,000 at the beginning of 1992, the total return on
      December 31, 1992 would be $1,112.40 ($1,000 x 1.1124).
++    Assumes purchase of one share of New Asia Fund at the public offering
      price of $10.00 on September 28, 1990.  Over this time, stock prices in
      general have risen.
+++   09/30/90 - 12/31/92

          Price-Fleming believes that foreign economies have performed well,
and emerging economies are significantly better than the world average, as
shown in the chart below.



PAGE 47
                            GDP Growth Rates
                            ________________
                  1979  1980     1981  1982   1983   1984   1985   1986
                  ____  ____     ____  ____   ____   ____   ____   ____

World             3.70   2.20   1.70   0.30   2.40   4.90  3.80    2.80
Industrialized    3.30   1.30   1.50  -0.20   2.70   4.90  3.60    2.80
Developing (Asia) 3.80   5.90   6.10   5.70   8.00   7.50  7.30    5.80
DEV/WLD            103%   268%   359%   +++     333%  153%   192%   207%
DEV/IND            115%   454%   407%   +++     296%  153%   203%   207%

                                            10 Years
                    1987    1988  1989   Sample Average
                    ____    ____  ____      _________

World               3.60   4.40    +++        2.98
Industrialized      3.50   4.50   3.50        2.79
Developing (Asia)   6.90   8.60    +++        6.56
DEV/WLD             194%      0%   +++         220%
DEV/IND             206%      0%   +++         235%

Source:  International Monetary Fund 1990 Yearbook
+++   1989 figures for developing Asia (and therefore the World) are not yet
      available.

          From time to time, in reports and promotional literature: (1) each
Fund's total return performance or P/E ratio may be compared to any one or
combination of the following: (i) the Standard & Poor's 500 Stock Index and
Dow Jones Industrial Average so that you may compare the Fund's results with
those of a group of unmanaged securities widely regarded by investors as
representative of the U.S. stock market in general; (ii) other groups of
mutual funds, including T. Rowe Price Funds, tracked by:  (A) Lipper
Analytical Services, Inc., a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and assets which
includes the Lipper Pacific Region Average which tracks the average
performance of funds which concentrate investments in equity securities whose
primary trading markets or operations are in the Western Pacific basin region,
or a single country within this region; (B) Morningstar, Inc., another widely
used independent research firm which rates mutual funds; or (C) other
financial or business publications, such as Business Week, Money Magazine,
Forbes and Barron's, which provide similar information; (iii) The Financial
Times (a London based international financial newspaper)-Actuaries World
Indices, including Europe and sub indices comprising this Index (a wide range
of comprehensive measures of stock price performance for the major stock
markets as well as for regional areas, broad economic sectors and industry
groups); (iv) Morgan Stanley Capital International Indices, including the EAFE
Index, Pacific Basin Index, Japan Index and Pacific Ex Japan Index which is a
widely-recognized series of indices in international market performance; (v)
Baring International Investment Management Limited (an international
securities trading, research, and investment management firm), as a source for
market capitalization, GDP and GNP; (vi) the International Finance Corporation
(an affiliate of the World Bank established to encourage economic development
in less developed countries), World Bank, OECD (Organization for Economic Co-
Operation and Development) and IMF (International Monetary Fund) as a source
of economic statistics; (vii) the Nikkei Average, a generally accepted
benchmark for performance of the Japanese stock market; (viii) indices of
stocks comparable to those in which each Fund invests including the Topix 

PAGE 48
Index, which reflects the performance of the First Section of the Tokyo Stock
Exchange; and (ix) the performance of U.S. government and corporate bonds,
notes and bills.  (The purpose of these comparisons would be to illustrate
historical trends in different market sectors so as to allow potential
investors to compare different investment strategies.); (2) the Consumer Price
Index (measure for inflation) may be used to assess the real rate of return
from an investment in each Fund; (3) other U.S. or foreign government
statistics such as GNP, and net import and export figures derived from
governmental publications, e.g. The Survey of Current Business, may be used to
illustrate investment attributes of the Fund or the general economic,
business, investment, or financial environment in which the Fund operates; (4)
the effect of tax-deferred compounding on each Fund's investment returns, or
on returns in general, may be illustrated by graphs, charts, etc. where such
graphs or charts would compare, at various points in time, the return from an
investment in each Fund (or returns in general) on a tax-deferred basis
(assuming reinvestment of capital gains and dividends and assuming one or more
tax rates) with the return on a taxable basis; and (5) the sectors or
industries in which each Fund invests may be compared to relevant indices or
surveys (e.g. S&P Industry Surveys) in order to evaluate each Fund's
historical performance or current or potential value with respect to the
particular industry or sector.  In connection with (4) above, information
derived from the following chart may be used:

                           IRA Versus Taxable Return

          Assuming 9% annual rate of return, $2,000 annual contribution and
28% tax bracket.

            Year                 Taxable              Tax Deferred
            ____                 _______              ____________

             10                $ 28,700                $ 33,100
             15                  51,400                  64,000
             20                  82,500                 111,500
             25                 125,100                 184,600
             30                 183,300                 297,200

IRAs

             An IRA is a long-term investment whose objective is to
accumulate personal savings for retirement.  Due to the long-term nature of
the investment, even slight differences in performance will result in
significantly different assets at retirement.  Mutual funds, with their
diversity of choice, can be used for IRA investments.  Generally, individuals
may need to adjust their underlying IRA investments as their time to
retirement and tolerance for risk changes.

Other Features and Benefits

             Each Fund is a member of the T. Rowe Price Family of Funds and
may help investors achieve various long-term investment goals, such as
investing money for retirement, saving for a down payment on a home, or paying
college costs.  To explain how the Fund could be used to assist investors in
planning for these goals and to illustrate basic principles of investing,
various worksheets and guides prepared by T. Rowe Price Associates, Inc.
and/or T. Rowe Price Investment Services, Inc. may be made available.  These
currently include: the Asset Mix Worksheet which is designed to show 

PAGE 49
shareholders how to reduce their investment risk by developing a diversified
investment plan: the College Planning Guide which discusses various aspects of
financial planning to meet college expenses and assists parents in projecting
the costs of a college education for their children; the Retirement Planning
Kit (also available in a PC version) which includes a detailed workbook to
determine how much money you may need for retirement and suggests how you
might invest to reach your goal; and the Retirees Financial Guide which
includes a detailed workbook to determine how much money you can afford to
spend and still preserve your purchasing power and suggest how you might
invest to reach your goal.  From time to time, other worksheets and guides may
be made available as well.  Of course, an investment in the Fund cannot
guarantee that such goals will be met. 

             To assist investors in understanding the different returns and
risk characteristics of various investments, the aforementioned guides will
include presentation of historical returns of various investments using
published indices.  An example of this is shown below.

                 Historical Returns for Different Investments
                 Annualized Returns for Periods Ended 12/31/92


                            50 Years     25 Years   10 Years   5 Years
Small company stocks          16.3%        12.4%      11.6%     13.6%
Large company stocks          12.6         10.6       16.2      15.9
Foreign stocks               N/A          N/A         17.1       1.6
Long-term corporate bonds      5.4          8.8       13.1      12.5
Intermediate-Term U.S. Gov't. bonds         5.6        9.0      11.0 10.3
Treasury bills                 4.6          7.2        6.9       6.3
U.S. inflation                 4.3          5.9        3.8       4.2
Sources:  Ibbotson Associates.  Foreign stocks reflect performance of The
Morgan Stanley Capital International EAFE Index, which includes some 1,000
companies representing the stock markets of Europe, Australia, New Zealand,
and the Far East.  This chart is for illustrative purposes only and should not
be considered as performance for any T. Rowe Price Fund.  Past performance
does not guarantee future results.

Also included will be various portfolios demonstrating how these historical
indices would have performed in various combinations over a specified time
period in terms of return.  An example of this is shown below.


PAGE 50
                     Performance of Retirement Portfolios*


                   Asset Mix         Annualized Returns   Number of  Value of
                                          20 Years       Years with   $10,000
                                       Ending 12/31/92    Negative  Investment
                                                           Returns     After
                                                                      Period
             _____________________ _______________________________   ________

                                                 Best   Worst
  Portfolio   Growth  Income   Safety  Average   Year   Year

  I. Low
     Risk      15%      35%    50%       9.0%    19.0%  -0.2%    1  $ 56,451

 II. Moderate
     Risk      55%      30%    15%      10.4%    25.7%  -7.5%    2  $ 72,918

III. High
     Risk      85%      15%     0%      11.2%    34.5% -16.2%    5  $ 83,382


Source: T. Rowe Price Associates; data supplied by Ibbotson Associates.

*    Based on actual performance of stocks (Wilshire 5000), Lehman Brothers
     Government/Corporate Bond Index, and Treasury bills from January 1973
     through December 1992.  Past performance does not guarantee future
     results.  Figures include changes in principal value and reinvested
     dividends.  This Exhibit is for illustrative purposes only and is not
     representative of the performance of any T. Rowe Price Fund.

          From time to time, Insights, a T. Rowe Price publication of reports
on specific investment topics and strategies, may be included in the Fund's
fulfillment kit.  Such reports may include information concerning: 
calculating taxable gains and losses on mutual fund transactions, coping with
stock market volatility, benefiting from dollar cost averaging, understanding
international markets, investing in high-yield "junk" bonds, growth stock
investing, conservative stock investing, value investing, investing in small
companies, tax-free investing, fixed income investing, investing in mortgage-
backed securities, as well as other topics and strategies. 

Redemptions in Kind

          In the unlikely event a shareholder in any of the International
Funds were to receive an in kind redemption of portfolio securities of a Fund,
brokerage fees could be incurred by the shareholder in subsequent sale of such
securities.

Issuance of Fund Shares for Securities

          Transactions involving issuance of a Fund's shares for securities
or assets other than cash will be limited to (1) bona fide reorganizations;
(2) statutory mergers; or (3) other acquisitions of portfolio securities that:
(a) meet the investment objectives and policies of the Fund; (b) are acquired
for investment and not for resale except in accordance with applicable law; 

PAGE 51
(c) have a value that is readily ascertainable via listing on or trading in a
recognized United States or international exchange or market; and (d) are not
illiquid.


                              MANAGEMENT OF FUNDS

          The officers and directors of the Funds are listed below.  Unless
otherwise noted, the address of each is 100 East Pratt Street, Baltimore,
Maryland 21202.  Except as indicated, each has been an employee of T. Rowe
Price for more than five years.  In the list below, the Funds' directors who
are considered "interested persons" of T. Rowe Price or the Fund as defined
under Section 2(a)(19) of the Investment Company Act of 1940 are noted with an
asterisk (*).  These directors are referred to as inside directors by virtue
of their officership, directorship, and/or employment with T. Rowe Price.

*M. DAVID TESTA, Chairman of the Board--Chairman of the Board, Price-Fleming; 
   Managing Director, T. Rowe Price; Vice President and Director, T. Rowe
   Price Trust Company; Chartered Financial Analyst
*MARTIN G. WADE, President and Director--President, Price-Fleming; Director, 
   Robert Fleming Holdings Limited; Address: 25 Copthall Avenue, London, EC2R
   7DR, England
LEO C. BAILEY, Director--Retired; Address: 3396 South Placita Fabula, Green 
   Valley, Arizona 85614
ANTHONY W. DEERING, Director--Director, President and Chief Operating Officer,
   The Rouse Company, real estate developers, Columbia, Maryland; Advisory
   Director, Kleinwort, Benson (North America) Corporation, a registered
   broker-dealer; Address: 10275 Little Patuxent Parkway, Columbia, Maryland
   21044
DONALD W. DICK, JR., Director--Partner, Overseas Partners, Inc., a financial 
   investment firm; formerly (6/65-3/89) Director and Vice President-Consumer
   Products Division, McCormick & Company, Inc., international food
   processors; Director, Waverly Press, Inc., Baltimore, Maryland; Address:
   375 Park Avenue, Suite 3505, New York, New York 10152
ADDISON LANIER, Director--Financial management; President and Director, Thomas
   Emery's Sons, Inc., and Emery Group, Inc.; Director, Scinet Development
   and Holdings, Inc.; Address: 441 Vine Street, #2310, Cincinnati, Ohio
   45202-2913
DAVID P. BOARDMAN, Executive Vice President--Executive Vice President, Price-
   Fleming
CHRISTOPHER D. ALDERSON, Vice President--Vice President, Price-Fleming
PETER B. ASKEW, Vice President--Vice President, Price-Fleming
RICHARD J. BRUCE, Vice President--Vice President of Price-Fleming; formerly 
   (1985-1990) Investment Manager, Jardine Fleming Advisers, Tokyo
ROBERT P. CAMPBELL, Vice President--Vice President, T. Rowe Price and Rowe 
   Price-Fleming International Inc.; formerly (4/80-5/90) Vice President and
   Director, Private Finance, New York Life Insurance Company, New York, New
   York
MARK J. T. EDWARDS, Vice President--Vice President, Price-Fleming
JOHN R. FORD, Vice President--Executive Vice President, Price-Fleming 
HENRY H. HOPKINS, Vice President--Vice President, Price-Fleming and T. Rowe 
   Price Retirement Plan Services, Inc.; Managing Director, T. Rowe Price;
   Vice President and Director, T. Rowe Price Investment Services, Inc.,
   T. Rowe Price Services, Inc. and T. Rowe Price Trust Company
ROBERT C. HOWE, Vice President--Vice President, Price-Fleming and T. Rowe 
   Price
PAGE 52
STEPHEN ILOTT, Vice President--Employee, Price-Fleming; formerly (1988-1991) 
   portfolio management, Fixed Income Portfolios Group, Robert Fleming
   Holdings Limited, London
GEORGE A. MURNAGHAN, Vice President--Vice President, Price-Fleming, T. Rowe 
   Price, T. Rowe Price Trust Company, and T. Rowe Price Investment Services,
   Inc.
JAMES S. RIEPE, Vice President--Managing Director, T. Rowe Price; Chairman of 
   the Board, T. Rowe Price Services, Inc., T. Rowe Price Retirement Plan
   Services, Inc. and T. Rowe Price Trust Company; President and Director, T.
   Rowe Price Investment Services, Inc.; Director, Rhone-Poulenc Rorer, Inc.
CHRISTOPHER ROTHERY, Vice President--Employee, Price-Fleming; formerly 
   (1987-1989) employee of Robert Fleming Holdings Limited, London
CHARLES H. SALISBURY, JR., Vice President--Vice President and Director, 
   Price-Fleming; Managing Director, T. Rowe Price; President, Trust Officer
   and Director, T. Rowe Price Trust Company; Director, T. Rowe Price
   Retirement Plan Services, Inc.
JAMES B. M. SEDDON, Vice President--Vice President, Price-Fleming
CHARLES P. SMITH, Vice President--Managing Director, T. Rowe Price; Vice 
   President, Rowe Price-Fleming International, Inc.
BENEDICT R. F. THOMAS, Vice President--Vice President, Price-Fleming
PETER VAN DYKE, Vice President--Managing Director, T. Rowe Price; Vice 
   President, Rowe Price-Fleming International, Inc.
DAVID J. L. WARREN, Vice President--Executive Vice President, Price-Fleming
WILLIAM F. WENDLER, II, Vice President--Vice President, Price-Fleming, T. Rowe
   Price and T. Rowe Price Investment Services, Inc.
EDWARD A. WIESE, Vice President--Vice President, T. Rowe Price, Rowe Price-
   Fleming International, Inc. and T. Rowe Price Trust Company
LENORA V. HORNUNG, Secretary--Vice President, T. Rowe Price
CARMEN F. DEYESU, Treasurer--Vice President, T. Rowe Price, T. Rowe Price 
   Services, Inc., and T. Rowe Price Trust Company
DAVID S. MIDDLETON, Controller--Vice President, T. Rowe Price, T. Rowe Price 
   Services, Inc., and T. Rowe Price Trust Company
ANN B. CRANMER, Assistant Vice President--Vice President, Price-Fleming
ROGER L. FIERY, Assistant Vice President--Vice President, Rowe Price-Fleming 
   International, Inc.
EDWARD T. SCHNEIDER, Assistant Vice President--Vice President, T. Rowe Price 
   Services, Inc.
INGRID I. VORDEMBERGE, Assistant Vice President--Employee, T. Rowe Price 

   The Funds' Executive Committee, comprised of Messrs. Testa and Wade, has
been authorized by the Board of Directors to exercise all of the powers of the
Board to manage the Funds in the intervals between meetings of the Board,
except the powers prohibited by statute from being delegated.


                        PRINCIPAL HOLDERS OF SECURITIES

          As of the date of the prospectus, the officers and directors of the
Funds, as a group, owned less than 1% of the outstanding shares of each Fund.

          As of December 31, 1992, each of the following shareholders
beneficially owned more than 5% of the outstanding shares of the New Asia and
European Stock Funds, respectively: Charles Scwab & Co. Inc., Reinvestment
Account, Attn.: Mutual Fund Dept., 101 Montgomery Street, San Francisco,
California 94104-4122; and United States Fidelity Guaranty Company, 100 Light
Street, Baltimore, Maryland 21202-1004.
PAGE 53
                        INVESTMENT MANAGEMENT SERVICES

Services

          Under the Management Agreement, Price-Fleming provides each Fund
with discretionary investment services.  Specifically, Price-Fleming is
responsible for supervising and directing the investments of each Fund in
accordance with the Fund's investment objective, program, and restrictions as
provided in its prospectus and this Statement of Additional Information. 
Price-Fleming is also responsible for effecting all security transactions on
behalf of each Fund, including the negotiation of commissions and the
allocation of principal business and portfolio brokerage.  In addition to
these services, Price-Fleming provides the Funds with certain corporate
administrative services, including: maintaining the Funds' corporate
existence, corporate records, and registering and qualifying Fund shares under
federal and state laws; monitoring the financial, accounting, and
administrative functions of each Fund; maintaining liaison with the agents
employed by each Fund such as the Fund's custodian and transfer agent;
assisting each Fund in the coordination of such agents' activities; and
permitting Price-Fleming's employees to serve as officers, directors, and
committee members of each Fund without cost to the Fund.  

          The Management Agreement also provides that Price-Fleming, its
directors, officers, employees, and certain other persons performing specific
functions for each Fund will only be liable to the Fund for losses resulting
from willful misfeasance, bad faith, gross negligence, or reckless disregard
of duty.

          Under the Management Agreement, Price-Fleming is permitted to
utilize the services or facilities of others to provide it or the Funds with
statistical and other factual information, advice regarding economic factors
and trends, advice as to occasional transactions in specific securities, and
such other information, advice or assistance as Price-Fleming may deem
necessary, appropriate, or convenient for the discharge of its obligations
under the Management Agreement or otherwise helpful to the Funds.

          Certain administrative support is provided by T. Rowe Price which
receives from Price-Fleming a fee of .15% of the market value of all assets in
equity accounts, .15% of the market value of all assets in active fixed income
accounts and .035% of the market value of all assets in passive fixed income
accounts under Price-Fleming's management.

          Price-Fleming has entered into separate letters of agreement with
Fleming Investment Management Limited ("FIM"), Fleming International Fixed
Interest Management Limited ("FIFIM"), and Jardine Fleming Investment Holdings
Limited ("JFIH"), wherein FIM, FIFIM, and JFIH have agreed to render
investment research and administrative support to Price-Fleming.  FIM and
FIFIM are wholly-owned subsidiaries of Robert Fleming Asset Management Limited
which is a wholly-owned subsidiary of Robert Fleming Holdings Limited ("Robert
Fleming Holdings").  JFIH is an indirect wholly-owned subsidiary of Jardine
Fleming Group Limited.  Under the letters of agreement, these companies will
provide Price-Fleming with research material containing statistical and other
factual information, advice regarding economic factors and trends, advice on
the allocation of investments among countries and as between debt and equity
classes of securities, and research and occasional advice with respect to
specific companies.  For these services, FIM and JFIH each receives a fee of 

PAGE 54
.075% of the market value of all assets in equity accounts under
Price-Fleming's management.  FIFIM and JFIH each receives a fee of .075% of
the market value of all assets in active fixed income accounts and .0175% of
such market value in passive fixed income accounts under Price-Fleming's
management.

          Robert Fleming personnel have extensive research resources
throughout the world.  A strong emphasis is placed on direct contact with
companies in the research universe.  Robert Fleming personnel, who frequently
speak the local language, have access to the full range of research products
available in the market place and are encouraged to produce independent work
dedicated solely to portfolio investment management, which adds value to that
generally available.

Management Fee

          Each Fund pays Price-Fleming a fee ("Fee") which consists of two
components:  a Group Management Fee ("Group Fee") and an Individual Fund Fee
("Fund Fee").  The Fee is paid monthly to Price-Fleming on the first business
day of the next succeeding calendar month and is calculated as described
below.

          The monthly Group Fee ("Monthly Group Fee") is the sum of the daily
Group Fee accruals ("Daily Group Fee Accruals") for each month.  The Daily
Group Fee Accrual for any particular day is computed by multiplying the Price
Funds' group fee accrual as determined below ("Daily Price Funds' Group Fee
Accrual") by the ratio of each Fund's net assets for that day to the sum of
the aggregate net assets of the Price Funds for that day.  The Daily Price
Funds' Group Fee Accrual for any particular day is calculated by multiplying
the fraction of one (1) over the number of calendar days in the year by the
annualized Daily Price Funds' Group Fee Accrual for that day as determined in
accordance with the following schedule:

                                 Price Funds'
                             Annual Group Base Fee
                         Rate for Each Level of Assets
                       _________________________________

                           0.480%     First $1 billion
                           0.450%     Next $1 billion
                           0.420%     Next $1 billion
                           0.390%     Next $1 billion
                           0.370%     Next $1 billion
                           0.360%     Next $2 billion
                           0.350%     Next $2 billion
                           0.340%     Next $5 billion
                           0.330%     Next $10 billion
                           0.320%     Next $10 billion
                           0.310%     Thereafter

          For the purpose of calculating the Group Fee, the Price Funds
include all the mutual funds distributed by T. Rowe Price Investment Services,
Inc. (excluding T. Rowe Price Spectrum Fund, Inc. and any institutional or
private label mutual funds).  For the purpose of calculating the Daily Price
Funds' Group Fee Accrual for any particular day, the net assets of each Price
Fund are determined in accordance with the Funds' prospectus as of the close 

PAGE 55
of business on the previous business day on which the Fund was open for
business.

          The monthly Fund Fee ("Monthly Fund Fee") is the sum of the daily
Fund Fee accruals ("Daily Fund Fee Accruals") for each month.  The Daily Fund
Fee Accrual for any particular day is computed by multiplying the fraction of
one (1) over the number of calendar days in the year by the Fund Fee Rate of
0.35% for the International Stock Fund, 0.50% each for the European Stock,
Japan and New Asia Funds, 0.75% each for the International Discovery and Latin
America Funds, and multiplying this product by the net assets of the Fund for
that day, as determined in accordance with the Funds' prospectus as of the
close of business on the previous business day on which the Fund was open for
business.

          The following chart sets forth the total management fees if any,
paid to Price-Fleming by the Funds, during the last three years:

     International Stock     International Discovery Japan

     1992    $12,522,000     1992     $1,798,000     1992    $19,000
     1991    $ 9,233,000     1991     $1,549,000     1991    *
     1990    $ 7,645,000     1990     $  777,000     1990    *

     European Stock          New Asia                *Prior to commencement
     1992    $1,198,000      1992     $1,954,000      of Fund operations.
     1991    $  976,000      1991     $  449,000
     1990    $  510,000      1990        -0-

Limitation on Fund Expenses

          The Management Agreement between each Fund and Price-Fleming
provides that each Fund will bear all expenses of its operations not
specifically assumed by Price-Fleming.  However, in compliance with certain
state regulations, Price-Fleming will reimburse each Fund for certain expenses
which in any year exceed the limits prescribed by any state in which the
Fund's shares are qualified for sale.  Presently, the most restrictive expense
ratio limitation imposed by any state is 2.5% of the first $30 million of a
Fund's average daily net assets, 2% of the next $70 million of the average
daily net assets, and 1.5% of net assets in excess of $100 million.  For the
purpose of determining whether a Fund is entitled to reimbursement, the
expenses of each Fund are calculated on a monthly basis.  If the Fund is
entitled to reimbursement, that month's management fee will be reduced or
postponed, with any adjustment made after the end of the year.

International Discovery Fund

          In the interest of limiting the expenses of the Fund, Price-Fleming
agreed to bear any expenses through December 31, 1990, which would cause the
Fund's ratio of expenses to average net assets to exceed 1.50%.  Effective
January 1, 1991, Price-Fleming agreed to extend the Fund's expense ratio for a
period of two years through December 31, 1992.  Effective January 1, 1993
Price-Fleming agreed to extend the 1.50% expense limitation through December
31, 1993.  Expenses paid or assumed by Price-Fleming under each agreement, are
subject to reimbursement to Price-Fleming the Fund whenever the Fund's expense
ratio is below 1.50%; however, no reimbursement will be made after December
31, 1992 (for the initial agreement), December 31, 1994 (for the first 

PAGE 56
extension), December 31, 1995 (for the second extension), or if it would
result in the expense ratio exceeding 1.50%.  The Management Agreement also
provides that one or more additional expense limitation periods may be
implemented after the expiration of the one on December 31, 1990, and that
with respect to any additional limitation period (of the same or different
time periods), the Fund may reimburse Price-Fleming, provided the
reimbursement does not result in the Fund's aggregate expenses exceeding the
additional expense limitation or any applicable state expense limitation.

          Pursuant to the first extension $185,000 of management fees were
not accrued by the Fund for the year ended December 31, 1992.  Additionally,
$360,000 of unaccrued fees from 1991 are subject to reimbursement through
December 31, 1994.  Unpaid fees and expenses aggregating $1,312,000 from 1989
and 1990 were permanently waived by Price-Fleming at December 31, 1992.


Japan Fund

          In the interest of limiting the expenses of the Fund during its
initial period of operations, Price-Fleming agreed to bear any expenses
through December 31, 1993, which would cause the Fund's ratio of expenses to
average net assets to exceed 1.50%.  Effective January 1, 1994 Price-Fleming
agreed to extend the 1.50% expense limitation through October 31, 1995. 
Expenses paid or assumed by Price-Fleming under each agreement are subject to
reimbursement to Price-Fleming by the Fund whenever the Fund's expense ratio
is below 1.50%; however, no reimbursement will be made after December 31, 1995
(for the initial agreement), October 31, 1997 (for the second agreement), or
if it would result in the expense ratio exceeding 1.50%.  The Management
Agreement also provides that one or more additional expense limitation periods
(of the same or different time periods) may be implemented after the
expiration of the one on December 31, 1993, and that with respect to any such
additional limitation period, the Fund may reimburse Price-Fleming, provided
the reimbursement does not result in the Fund's aggregate expenses exceeding
the additional expense limitation.  Pursuant to the initial agreement,
$211,000 of management fees were not accrued by the Fund for the period ended
December 31, 1992.

Latin America Fund

          In the interest of limiting the expenses of the Fund during its
initial period of operations, Price-Fleming agreed to bear any expenses
through October 31, 1995, which would cause the Fund's ratio of expenses to
average net assets to exceed 2.00%.  Expenses paid or assumed under this
agreement are subject to reimbursement to Price-Fleming by the Fund whenever
the Fund's expense ratio is below 2.00%; however, no reimbursement will be
made after October 31, 1997, or if it would result in the expense ratio
exceeding 2.00%.  The Management Agreement also provides that one or more
additional expense limitation periods (of the same or different time periods)
may be implemented after the expiration of the current one on October 31,
1995, and that with respect to any such additional limitation period, the
Fund's may reimburse Price-Fleming, provided the reimbursement does not result
in the Fund's aggregate expenses exceeding the additional expense limitation
or any applicable state expense limitation.


PAGE 57
T. Rowe Price Spectrum Fund, Inc. (International Stock Fund)

          The Fund is a party to a Special Servicing Agreement ("Agreement")
between and among T. Rowe Price Spectrum Fund, Inc. ("Spectrum Fund"), T. Rowe
Price, T. Rowe Price Services, Inc. and various other T. Rowe Price funds
which, along with the Fund, are funds in which Spectrum Fund invests
(collectively all such funds "Underlying Price Funds").

          The Agreement provides that, if the Board of Directors/Trustees of
any Underlying Price Fund determines that such Underlying Fund's share of the
aggregate expenses of Spectrum Fund is less than the estimated savings to the
Underlying Price Fund from the operation of Spectrum Fund, the Underlying
Price Fund will bear those expenses in proportion to the average daily value
of its shares owned by Spectrum Fund, provided further that no Underlying
Price Fund will bear such expenses in excess of the estimated savings to it. 
Such savings are expected to result primarily from the elimination of numerous
separate shareholder accounts which are or would have been invested directly
in the Underlying Price Funds and the resulting reduction in shareholder
servicing costs.  Although such cost savings are not certain, the estimated
savings to the Underlying Price Funds generated by the operation of Spectrum
Fund are expected to be sufficient to offset most, if not all, of the expenses
incurred by Spectrum Fund.


                             DISTRIBUTOR FOR FUNDS

          T. Rowe Price Investment Services, Inc. ("Investment Services"), a
Maryland corporation formed in 1980 as a wholly-owned subsidiary of T. Rowe
Price, serves as the Funds' distributor.  Investment Services is registered as
a broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc.  The offering of each
Fund's shares is continuous.

          Investment Services is located at the same address as the Funds and
T. Rowe Price -- 100 East Pratt Street, Baltimore, Maryland 21202.

          Investment Services serves as distributor to the Funds pursuant to
an Underwriting Agreement ("Underwriting Agreement"), which provides that each
Fund will pay all fees and expenses in connection with: registering and
qualifying its shares under the various state "blue sky" laws; preparing,
setting in type, printing, and mailing its prospectuses and reports to
shareholders; and issuing its shares, including expenses of confirming
purchase orders.

          The Underwriting Agreement provides that Investment Services will
pay all fees and expenses in connection with: printing and distributing
prospectuses and reports for use in offering and selling Fund shares;
preparing, setting in type, printing, and mailing all sales literature and
advertising; Investment Services' federal and state registrations as a
broker-dealer; and offering and selling Fund shares, except for those fees and
expenses specifically assumed by each Fund.  Investment Services' expenses are
paid by T. Rowe Price.

          Investment Services acts as the agent of each Fund in connection
with the sale of its shares in all states in which the shares are qualified
and in which Investment Services is qualified as a broker-dealer.  Under the 

PAGE 58
Underwriting Agreement, Investment Services accepts orders for Fund shares at
net asset value.  No sales charges are paid by investors or the Funds.


                                   CUSTODIAN

          State Street Bank and Trust Company (the "Bank") is the custodian
for the Funds' securities and cash, but it does not participate in the Funds'
investment decisions.  Portfolio securities purchased in the U.S. are
maintained in the custody of the Bank and may be entered into the Federal
Reserve Book Entry System, or the security depository system of the Depository
Trust Corporation.  The Funds have entered into a Custodian Agreement with The
Chase Manhattan Bank, N.A., London, pursuant to which portfolio securities
which are purchased outside the United States are maintained in the custody of
various foreign branches of The Chase Manhattan Bank and such other
custodians, including foreign banks and foreign securities depositories in
accordance with regulations under the Investment Company Act of 1940.  The
Bank's main office is at 225 Franklin Street, Boston, Massachusetts 02110. 
The address for The Chase Manhattan Bank, N.A., London is Woolgate House,
Coleman Street, London, EC2P 2HD, England.


                            PORTFOLIO TRANSACTIONS

Investment or Brokerage Discretion

          Decisions with respect to the purchase and sale of portfolio
securities on behalf of the Funds are made by Price-Fleming.  Price-Fleming is
also responsible for implementing these decisions, including the allocation of
portfolio brokerage and principal business and the negotiation of commissions.

How Brokers and Dealers are Selected

          Equity Securities

          In purchasing and selling each Fund's portfolio securities, it is
Price-Fleming's policy to obtain quality execution at the most favorable
prices through responsible broker-dealers and, in the case of agency
transactions, at competitive commission rates where such rates are 
negotiable.  However, under certain conditions, a Fund may pay higher
brokerage commissions in return for brokerage and research services.  In
selecting broker-dealers to execute a Fund's portfolio transactions,
consideration is given to such factors as the price of the security, the rate
of the commission, the size and difficulty of the order, the reliability,
integrity, financial condition, general execution and operational capabilities
of competing brokers and dealers, their expertise in particular markets and
the brokerage and research services they provide to Price-Fleming or the
Funds.  It is not the policy of Price-Fleming to seek the lowest available
commission rate where it is believed that a broker or dealer charging a higher
commission rate would offer greater reliability or provide better price or
execution.

          Transactions on stock exchanges involve the payment of brokerage
commissions.  In transactions on stock exchanges in the United States, these
commissions are negotiated.  Traditionally, commission rates have generally
not been negotiated on stock markets outside the United States.  In recent 

PAGE 59
years, however, an increasing number of overseas stock markets have adopted a
system of negotiated rates, although a number of markets continue to be
subject to an established schedule of minimum commission rates.  It is
expected that equity securities will ordinarily be purchased in the primary
markets, whether over-the-counter or listed, and that listed securities may be
purchased in the over-the-counter market if such market is deemed the primary
market.  In the case of securities traded on the over-the-counter markets,
there is generally no stated commission, but the price usually includes an
undisclosed commission or markup.  In underwritten offerings, the price
includes a disclosed, fixed commission or discount.

          Fixed Income Securities

          For fixed income securities, it is expected that purchases and
sales will ordinarily be transacted with the issuer, the issuer's underwriter,
or with a primary market maker acting as principal on a net basis, with no
brokerage commission being paid by the Fund.  However, the price of the 
securities generally includes compensation which is not disclosed separately. 
Transactions placed though dealers who are serving as primary market makers
reflect the spread between the bid and asked prices.

          With respect to equity and fixed income securities, Price-Fleming
may effect principal transactions on behalf of the Funds with a broker or
dealer who furnishes brokerage and/or research services, designate any such
broker or dealer to receive selling concessions, discounts or other allowances
or otherwise deal with any such broker or dealer in connection with the
acquisition of securities in underwritings.  The prices the Fund pays to
underwriters of newly-issued securities usually include a concession paid by
the issuer to the underwriter.

          Price-Fleming may cause a Fund to pay a broker-dealer who furnishes
brokerage and/or research services a commission for executing a transaction
that is in excess of the commission another broker-dealer would have received
for executing the transaction if it is determined that such commission is
reasonable in relation to the value of the brokerage and/or research services
which have been provided.  In some cases, research services are generated by
third parties but are provided to Price-Fleming by or through broker-dealers.

Descriptions of Research Services Received from Brokers and Dealers

          Price-Fleming receives a wide range of research services from
brokers and dealers covering investment opportunities throughout the world,
including information on the economies, industries, groups of securities,
individual companies, statistics, political developments, technical market
action, pricing and appraisal services, and performance analyses of all the
countries in which a Fund's portfolio is likely to be invested.  Price-Fleming
cannot readily determine the extent to which commissions charged by brokers
reflect the value of their research services, but brokers occasionally suggest
a level of business they would like to receive in return for the brokerage and
research services they provide.  To the extent that research services of value
are provided by brokers, Price-Fleming may be relieved of expenses which it
might otherwise bear.  In some cases, research services are generated by third
parties but are provided to Price-Fleming by or through brokers.


PAGE 60
Commissions to Brokers who Furnish Research Services

          Certain broker-dealers which provide quality execution services
also furnish research services to Price-Fleming.  Price-Fleming has adopted a
brokerage allocation policy embodying the concepts of Section 28(e) of the
Securities Exchange Act of 1934, which permits an investment adviser to cause
its clients to pay a broker which furnishes brokerage or research services a
higher commission than that which might be charged by another broker which
does not furnish brokerage or research services, or which furnishes brokerage
or research services deemed to be of lesser value, if such commission is
deemed reasonable in relation to the brokerage and research services provided
by the broker, viewed in terms of either that particular transaction or the
overall responsibilities of the adviser with respect to the accounts as to
which it exercises investment discretion.  Accordingly, Price-Fleming may
assess the reasonableness of commissions in light of the total brokerage and
research services provided by each particular broker.

Miscellaneous

          Research services furnished by brokers through which Price-Fleming
effects securities transactions may be used in servicing all accounts managed
by Price-Fleming,  Conversely, research services received from brokers which
execute transactions for a particular Fund will not necessarily be used by
Price-Fleming exclusively in connection with the management of that Fund.

          Some of Price-Fleming's other clients have investment objectives
and programs similar to those of the Funds.  Price-Fleming may occasionally
make recommendations to other clients which result in their purchasing or
selling securities simultaneously with the Funds.  As a result, the demand for
securities being purchased or the supply of securities being sold may
increase, and this could have an adverse effect on the price of those
securities.  It is Price-Fleming's policy not to favor one client over another
in making recommendations or in placing orders.  Price-Fleming frequently
follows the practice of grouping orders of various clients for execution which
generally results in lower commission rates being attained.  In certain cases,
where the aggregate order is executed in a series of transactions at various
prices on a given day, each participating client's proportionate share of such
order reflects the average price paid or received with respect to the total
order.  Price-Fleming has established a general investment policy that it will
ordinarily not make additional purchases of a common stock of a company for
its clients (including the T. Rowe Price Funds) if, as a result of such
purchases, 10% or more of the outstanding common stock of such company would
be held by its clients in the aggregate.

          None of the Funds allocates business to any broker-dealer on the
basis of its sales of the Fund's shares.  However, this does not mean that
broker-dealers who purchase Fund shares for their clients will not receive
business from the Fund.

Transactions with Related Brokers and Dealers

          As provided in the Investment Management Agreement between each
Fund and Price-Fleming, Price-Fleming is responsible not only for making
decisions with respect to the purchase and sale of the Fund's portfolio
securities, but also for implementing these decisions, including the
negotiation of commissions and the allocation of portfolio brokerage and 

PAGE 61
principal business.  It is expected that Price-Fleming will often place orders
for a Fund's portfolio transactions with broker-dealers through the trading
desks of certain affiliates of Robert Fleming Holdings Limited ("Robert
Fleming"), an affiliate of Price-Fleming.  Robert Fleming, through Copthall
Overseas Limited, a wholly-owned subsidiary, owns 25% of the common stock of
Price-Fleming.  Fifty percent of the common stock of Price-Fleming is owned by
TRP Finance, Inc., a wholly-owned subsidiary of T. Rowe Price, and the
remaining 25% is owned by Jardine Fleming Holdings Limited, a subsidiary of
Jardine Fleming Group Limited ("JFG").  JFG is 50% owned by Robert Fleming and
50% owned by Jardine Matheson Holdings Limited.  The affiliates through whose
trading desks such orders may be placed include Fleming Investment Management
Limited ("FIM"), Fleming International Fixed Interest Management Limited
("FIFIM"), and Robert Fleming & Co. Limited ("RF&Co.").  FIM, FIFIM and RF&Co.
are wholly-owned subsidiaries of Robert Fleming.  These trading desks will
operate under strict instructions from the Fund's portfolio manager with
respect to the terms of such transactions.  Neither Robert Fleming, JFG, nor
their affiliates will receive any commission, fee, or other remuneration for
the use of their trading desks, although orders for a Fund's portfolio
transactions may be placed with affiliates of Robert Fleming and JFG who may
receive a commission.

          The Board of Directors of the Funds has authorized Price-Fleming to
utilize certain affiliates of Robert Fleming and JFG in the capacity of broker
in connection with the execution of each Fund's portfolio transactions,
provided that Price-Fleming believes that doing so will result in an economic
advantage (in the form of lower execution costs or otherwise) being obtained
for each Fund.  These affiliates include Jardine Fleming Securities Limited
("JFS"), a wholly-owned subsidiary of JFG, RF&Co., Jardine Fleming Australia
Securities Limited, and Robert Fleming, Inc. (a New York brokerage firm).

          The above-referenced authorization was made in accordance with
Section 17(e) of the Investment Company Act of 1940 (the "1940 Act") and
Rule 17e-1 thereunder which require the Funds' independent directors to
approve the procedures under which brokerage allocation to affiliates is to be
made and to monitor such allocations on a continuing basis.  Except with
respect to tender offers, it is not expected that any portion of the
commissions, fees, brokerage, or similar payments received by the affiliates
of Robert Fleming in such transactions will be recaptured by the Funds.  The
directors have reviewed and from time to time may continue to review whether
other recapture opportunities are legally permissible and available and, if
they appear to be, determine whether it would be advisable for a Fund to seek
to take advantage of them.

          During the year 1992, the International Stock, International
Discovery, New Asia and Japan Funds paid $601,000, $89,000, $631,000, and
$25,000, respectively, in total brokerage commissions in connection with their
portfolio transactions.  The brokerage commissions paid to JFS represented
14%, 19%, 36%, and 8%, respectively, of the Funds' aggregate brokerage
commissions paid during 1992.  The aggregate dollar amount of transactions
effected through JFS, involving the payment of commissions represented 10%,
15%, 35%, and 8%, respectively, of the aggregate dollar amount of all
transactions involving the payment of commissions during 1992.  International
Stock Fund paid to RF&Co., $2,000 in total brokerage commissions in connection
with their portfolio transactions.  The brokerage commissions paid to RF&Co.
represented 1%, of the Funds' aggregate brokerage commissions paid during
1992.  The aggregate dollar amount of transactions effected through RF&Co., 

PAGE 62
involving the payment of commissions represented 1%, of the aggregate dollar
amount of all transactions involving the payment of commissions during 1992. 
Japan Fund paid to Robert Fleming, Inc. (a New York brokerage firm), $1,000 in
total brokerage commissions in connection with their portfolio transactions. 
The brokerage commissions paid to Robert Fleming, Inc. (a New York brokerage
firm) represented 1%, of the Funds' aggregate brokerage commissions paid
during 1992.  The aggregate dollar amount of transactions effected through
RF&Co., involving the payment of commissions represented 1%, of the aggregate
dollar amount of all transactions involving the payment of commissions during
1992.  In accordance with the written procedures adopted pursuant to Rule 17e-
1, the independent directors of each Fund reviewed the 1992 transactions with
affiliated brokers and determined that such transactions resulted in an
economic advantage to the Funds either in the form of lower execution costs or
otherwise.

Other

          For the years 1992, 1991, and 1990, the total brokerage commissions
paid by International Stock Fund, including the discounts received by
securities dealers in connection with underwritings, were $4,052,000,
$3,119,000, and $2,169,000, respectively.  Of these commissions, approximately
85%, 90%, and 87%, respectively, were paid to firms which provided research,
statistical, or other services to Price-Fleming in connection with the
management of the Fund or, in some cases, to the Fund.

          The portfolio turnover rate of the International Stock Fund for
each of the last three years has been as follows:  1992--37.8%, 1991--45.0%,
and 1990--47.1%.

          For the years 1992, 1991, and 1990, the total brokerage commissions
paid by the International Discovery Fund, including the discounts received by
securities dealers in connection with underwritings, were $458,000, $778,000,
and $943,000, respectively.  Of these commissions, approximately 81%, 78%, and
25%, respectively, were paid to firms which provided research, statistical, or
other services to Price-Fleming in connection with the management of the Fund
or, in some cases, to the Fund.

          The portfolio turnover rate of the International Discovery Fund for
each of the last three years has been as follows:  1992--38.0%, 1991--56.3%,
and 1990--44.0%.

          For the years 1992, and 1991, the total brokerage commissions paid
by the European Stock Fund, including the discounts received by securities
dealers in connection with underwritings, were $328,000 and $214,000,
respectively.  All of these commissions were paid to firms which provided
research, statistical, or other services to Price-Fleming in connection with
the management of the Fund or, in some cases, to the Fund.

          The portfolio turnover rate of the European Stock Fund for the
years 1992 and 1991 and for the fiscal period ended 1990 has been as follows: 
1992--52.0%, 1991--57.7%, and 1990--34.9%, respectively.

          For the year 1992, the total brokerage commissions paid by the
Japan Fund, including the discounts received by securities dealers in
connection with underwritings, were $277,000.  Of these commissions,
approximately 91% were paid to firms which provided research, statistical, or 

PAGE 63
other services to Price-Fleming in connection with the management of the Fund
or, in some cases, to the Fund.

          The portfolio turnover rate of the Japan Fund for the year 1992,
was 41.6%.

          For the years 1992 and 1991, the total brokerage commissions paid
by the New Asia Fund, including the discounts received by securities dealers
in connection with underwritings, were $1,757,000 and $794,000, respectively. 
Of these commissions, approximately 64% and 64%, respectively, were paid to
firms which provided research, statistical, or other services to Price-Fleming
in connection with the management of the Fund or, in some cases, to the Fund.

          The portfolio turnover rate of the New Asia Fund for the years 1992
and 1991 and for the fiscal period ended 1990 has been as follows:  1992--
36.3%, 1991--49.0%, and 1990--3.2%, respectively.


                             PRICING OF SECURITIES

          Equity securities listed or regularly traded on a securities
exchange (including NASDAQ) are valued at the last quoted sales price at the
time the valuations are made.  A security which is listed or traded on more
than one exchange is valued at the quotation on the exchange determined to be
the primary market for such security.  Other equity securities and those
listed securities that are not traded on a particular day are valued at a
price within the limits of the latest bid and asked prices deemed by the Board
of Directors or by persons delegated by the Board, best to reflect fair value.

          Debt securities are generally traded in the over-the-counter market
and are valued at a price deemed best to reflect fair value as quoted by
dealers who make markets in these securities or by an independent pricing
service.  Short-term debt securities are valued at their cost in local
currency which, when combined with accrued interest, approximates fair value.

          For purposes of determining each Fund's net asset value per share,
all assets and liabilities initially expressed in foreign currencies are
converted into U.S. dollars at the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.

          Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
Funds, as authorized by the Board of Directors.

          Trading in the portfolio securities of each Fund may take place in
various foreign markets on certain days (such as Saturday) when the Funds are
not open for business and do not calculate their net asset values.  In
addition, trading in a Fund's portfolio securities may not occur on days when
the Fund is open.  The calculation of each Fund's net asset value normally
will not take place contemporaneously with the determination of the value of
the Fund's portfolio securities.  Events affecting the values of portfolio
securities that occur between the time their prices are determined and the
time each Fund's net asset value is calculated will not be reflected in the
Fund's net asset value unless Price-Fleming, under the supervision of the 

PAGE 64
Fund's Board of Directors, determines that the particular event should be
taken into account in computing the Fund's net asset value.


                           NET ASSET VALUE PER SHARE

          The purchase and redemption price of each Fund's shares is equal to
that Fund's net asset value per share or share price.  Each Fund determines
its net asset value per share by subtracting its liabilities (including
accrued expenses and dividends payable) from its total assets (the market
value of the securities the Fund holds plus cash and other assets, including
income accrued but not yet received) and dividing the result by the total
number of shares outstanding.  The net asset value per share of each Fund,
other than the Japan Fund, is calculated as of the close of trading on the New
York Stock Exchange ("NYSE") every day the NYSE is open for trading.  The net
asset value per share of the Japan Fund is calculated as of the close of
trading on the NYSE each day the NYSE and the Tokyo Stock Exchange ("TSE") are
both open.  The NYSE is closed on the following days: New Year's Day,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.  The TSE is scheduled to be closed on the
following week days in 1993: January 1, 15; February 11; April 29; May 3, 4,
5; September 15, 23; October 11; November 3, 23; and December 23, 31, as well
as the following week days in 1994: January 3; February 11; March 21; April
29; May 3, 4, 5; September 15, 23; October 10; November 3, 23; and December
23.  If the TSE closes on any additional or different dates, the Japan Fund
will be closed on such dates.

          Determination of net asset value (and the offering, sale,
redemption and repurchase of shares) for a Fund may be suspended at times (a)
during which the NYSE is closed, other than customary weekend and holiday
closings, or in the case of the Japan Fund, either the NYSE or TSE is closed,
(b) during which trading on any of such Exchanges is restricted (c) during
which an emergency exists as a result of which disposal by a Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or
(d) during which a governmental body having jurisdiction over the Fund may by
order permit such a suspension for the protection of the Fund's shareholders;
provided that applicable rules and regulations of the Securities and Exchange
Commission (or any succeeding governmental authority) shall govern as to
whether the conditions prescribed in (b), (c) or (d) exist.


                                   DIVIDENDS

          Unless you elect otherwise, dividends and capital gain
distributions will be reinvested on the reinvestment date using the NAV per
share of that date.  The reinvestment date normally precedes the payment date
by about 10 days although the exact timing is subject to change.


                                  TAX STATUS

          Each Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986, as amended ("Code").


PAGE 65
          Dividends and distributions paid by the Funds are not eligible for
the dividends-received deduction for corporate shareholders, if as expected,
none of the Fund's income consists of dividends paid by United States
corporations.  Capital gain distributions paid from these Funds are never
eligible for this deduction.  For tax purposes, it does not make any
difference whether dividends and capital gain distributions are paid in cash
or in additional shares.  Each Fund must declare dividends equal to at least
98% of ordinary income (as of December 31) and capital gains (as of October
31) in order to avoid a federal excise tax and distribute 100% of ordinary
income and capital gains as of December 31 to avoid federal income tax.

          Foreign currency gains and losses, including the portion of gain or
loss on the sale of debt securities attributable to foreign exchange rate
fluctuations are taxable as ordinary income.  If the net effect of these
transactions is a gain, the dividend paid by the fund will be increased; if
the result is a loss, the income dividend paid by the Funds will be decreased. 
Adjustments, to reflect these gains and losses will be made at the end of each
Fund's taxable year.

          At the time of your purchase, each Fund's net asset value may
reflect undistributed income, capital gains or net unrealized appreciation or
depreciation of securities held by each Fund.  A subsequent distribution to
you of such amounts, although constituting a return of your investment, would
be taxable either as dividends or capital gain distributions.  For federal
income tax purposes, each Fund is permitted to carry forward its net realized
capital losses, if any, for eight years, and realize net capital gains up to
the amount of such losses without being required to pay taxes on, or
distribute such gains.  On March 31, 1993, the books of the International
Stock Fund indicated that the Fund's aggregate net assets included
undistributed net income of $15,857,420, net realized capital losses of
$2,492,666 and unrealized appreciation of $143,012,343.  On March 31, 1993,
the books of the International Discovery Fund's aggregate net assets included
undistributed net income of $466,504, net realized capital losses of
$20,633,544, and unrealized appreciation of $4,708,743.  On March 31, 1993,
the books of the European Stock Fund indicated that the Fund's aggregate net
assets included undistributed net income of $1,053,849, net realized capital
losses of $12,197,310, and unrealized depreciation of $2,287,113.  On March
31, 1993, the books of the Japan Fund indicated that the Fund's aggregate net
assets included undistributed net income of $31,593, net realized capital
losses of $81,076, and unrealized appreciation of $5,802,771.  On March 31,
1993, the books of the New Asia Fund indicated that the Fund's aggregate net
assets included undistributed net income of $1,383,345, net realized capital
losses of $2,134,707, and unrealized appreciation of $35,045,594.

          Income received by each Fund from sources within various foreign
countries may be subject to foreign income taxes withheld at the source. 
Under the Code, if more than 50% of the value of a Fund's total assets at the
close of its taxable year comprise securities issued by foreign corporations,
the Fund may file an election with the Internal Revenue Service to "pass
through" to the Fund's shareholders the amount of any foreign income taxes
paid by the Fund.  Pursuant to this election, shareholders will be required
to:  (i) include in gross income, even though not actually received, their
respective pro rata share of foreign taxes paid by the Fund; (ii) treat their
pro rata share of foreign taxes as paid by them; and (iii) either deduct their
pro rata share of foreign taxes in computing their taxable income, or use it
as a foreign tax credit against U.S. income taxes (but not both).  No 

PAGE 66
deduction for foreign taxes may be claimed by a shareholder who does not
itemize deductions.

          Each Fund intends to meet the requirements of the Code to "pass
through" to its shareholders foreign income taxes paid, but there can be no
assurance that a Fund will be able to do so.  Each shareholder will be
notified within 60 days after the close of each taxable year of a Fund, if
that Fund will "pass through" foreign taxes paid for that year, and, if so,
the amount of each shareholder's pro rata share (by country) of (i) the
foreign taxes paid, and (ii) the Fund's gross income from foreign sources.  Of
course, shareholders who are not liable for federal income taxes, such as
retirement plans qualified under Section 401 of the Code, will not be affected
by any such "pass through" of foreign tax credits.

          If, in any taxable year, a Fund should not qualify as a regulated
investment company under the Code:  (i) the Fund would be taxed at normal
corporate rates on the entire amount of its taxable income without deduction
for dividends or other distributions to shareholders; (ii) the Fund's
distributions to the extent made out of the Fund's current or accumulated
earnings and profits would be taxable to shareholders as ordinary dividends
(regardless of whether they would otherwise have been considered capital gain
dividends), and the Funds may qualify for the 70% deduction for dividends
received by corporations; and (iii) foreign tax credits would not "pass
through" to shareholders.

Taxation of Foreign Shareholders

          The Code provides that dividends from net income (which are deemed
to include for this purpose each shareholder's pro rata share of foreign taxes
paid by each Fund - see discussion of "pass through" of the foreign tax credit
to U.S. shareholders), will be subject to U.S. tax.  For shareholders who are
not engaged in a business in the U.S., this tax would be imposed at the rate
of 30% upon the gross amount of the dividend in the absence of a Tax Treaty
providing for a reduced rate or exemption from U.S. taxation.  Distributions
of net long-term capital gains realized by each Fund are not subject to tax
unless the foreign shareholder is a nonresident alien individual who was
physically present in the U.S. during the tax year for more than 182 days.


                                 CAPITAL STOCK

          The T. Rowe Price International Funds, Inc. (the "Corporation") was
originally organized in 1979 as a Maryland corporation under the name T. Rowe
Price International Fund, Inc. ("the Old Corporation").  Pursuant to the
Annual Meeting of Shareholders held on April 22, 1986, an Agreement and Plan
of Reorganization and Liquidation was adopted in order to convert the Old
Corporation from a Maryland corporation to a Massachusetts Business Trust, 
named the T. Rowe Price International Trust ("the Trust").  This conversion
became effective on May 1, 1986.  Pursuant to the Annual Meeting of
Shareholders held on April 19, 1990, an Agreement and Plan of Reorganization
and Liquidation was adopted in order to convert the Trust from a Massachusetts
Business Trust to a Maryland corporation.  This conversion become effective
May 1, 1990.  The Corporation is registered with the Securities and Exchange
Commission under the 1940 Act as a diversified, open-end investment company,
commonly known as a "mutual fund."

PAGE 67
          Currently, the Corporation consists of nine series, each of which
represents a separate class of the Corporation's shares and has different
objectives and investment policies.  The International Bond Fund was added as
a separate series of the Trust in 1986, and the designation of the existing
series of the Trust was, at that time, changed to the International Stock
Fund.  In 1988 and 1990, respectively, the International Discovery and
European Stock Funds were added as separate series of the Trust.  Effective
May 1, 1990, all series of the Trust became series of the Corporation.  In the
same year, after the May 1, 1990 reorganization, the New Asia and Global
Government Bond Funds were added as separate series of the Corporation. The
Japan, Short-Term Global Income and Latin America Funds were added as separate
series of the Corporation in 1991, 1992, and 1993, respectively.  The Short-
Term Global Income, Global Government Bond and International Bond Funds are
described in a separate Statement of Additional Information.  The Charter also
provides that the Board of Directors may issue additional series of shares.

          The Funds' Charter authorizes the Board of Directors to classify
and reclassify any and all shares which are then unissued, including unissued
shares of capital stock into any number of classes or series, each class or
series consisting of such number of shares and having such designations, such
powers, preferences, rights, qualifications, limitations, and restrictions, as
shall be determined by the Board subject to the Investment Company Act and
other applicable law.  The shares of any such additional classes or series
might therefore differ from the shares of the present class and series of
capital stock and from each other as to preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption, subject to applicable
law, and might thus be superior or inferior to the capital stock or to other
classes or series in various characteristics.  The Board of Directors may
increase or decrease the aggregate number of shares of stock or the number of
shares of stock of any class or series that each Fund has authorized to issue
without shareholder approval.

          Each share of each series has equal voting rights with every other
share of every other series, and all shares of all series vote as a single
group except where a separate vote of any class or series is required by the
1940 Act, the laws of the State of Maryland, the Corporation's Articles of
Incorporation, the By-Laws of the Corporation, or as the Board of Directors
may determine in its sole discretion.  Where a separate vote is required with
respect to one or more classes or series, then the shares of all other classes
or series vote as a single class or series, provided that, as to any matter
which does not affect the interest of a particular class or series, only the
holders of shares of the one or more affected classes or series is entitled to
vote.  The preferences, rights, and other characteristics attaching to any
series of shares, including the present series of capital stock, might be
altered or eliminated, or the series might be combined with another series, by
action approved by the vote of the holders of a majority of all the shares of
all series entitled to be voted on the proposal, without any additional right
to vote as a series by the holders of the capital stock or of another affected
series.

          Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares held) and will vote in the election of
or removal of directors (to the extent hereinafter provided) and on other
matters submitted to the vote of shareholders.  There will normally be no
meetings of shareholders for the purpose of electing directors unless and 

PAGE 68
until such time as less than a majority of the directors holding office have
been elected by shareholders, at which time the directors then in office will
call a shareholders' meeting for the election of directors.  Except as set
forth above, the directors shall continue to hold office and may appoint
successor directors.  Voting rights are not cumulative, so that the holders of
more than 50% of the shares voting in the election of directors can, if they
choose to do so, elect all the directors of the Fund, in which event the
holders of the remaining shares will be unable to elect any person as a
director.  As set forth in the By-Laws of the Corporation, a special meeting
of shareholders of the Corporation shall be called by the Secretary of the
Corporation on the written request of shareholders entitled to cast at least
10% of all the votes of the Corporation, entitled to be cast at such meeting. 
Shareholders requesting such a meeting must pay to the Corporation the
reasonably estimated costs of preparing and mailing the notice of the meeting. 
The Corporation, however, will otherwise assist the shareholders seeking to
hold the special meeting in communicating to the other shareholders of the
Corporation to the extent required by Section 16(c) of the 1940 Act.


                   FEDERAL AND STATE REGISTRATION OF SHARES

          Each Fund's shares are registered for sale under the Securities Act
of 1933, and the Funds or their shares are registered under the laws of all
states which require registration, as well as the District of Columbia and
Puerto Rico.


                                 LEGAL COUNSEL

          Shereff, Friedman, Hoffman, & Goodman, whose address is 919 Third
Avenue, New York, New York 10022, is legal counsel to the Funds.


                            INDEPENDENT ACCOUNTANTS


    
   International Stock, International Discovery, European Stock, Japan and
Latin America Funds    

          Price Waterhouse, 7 St. Paul Street, Suite 1700, Baltimore,
Maryland 21202, are independent accountants to each Fund.  The financial
statements of the International Stock, International Discovery, European
Stock, and Japan Funds for the year ended December 31, 1992, and the report of
independent accountants are included in each Fund's Annual Report for the year
ended December 31, 1992, on pages 7-17, 8-19, 5-15, and 4-11, respectively. 
Also included are the unaudited financial statements of the International
Stock, International Discovery, European Stock, and Japan Funds dated June 30,
1993, on pages 6-15, 6-17, 5-14, and 4-10, respectively.  A copy of each
Annual and Semi-Annual Report accompanies this Statement of Additional
Information.  The following financial statements and the report of independent
accountants appearing in each Annual Report for the year ended December 31,
1992, and the unaudited financial statements for each Fund's Semi-Annual
Report dated June 30, 1993, are incorporated into this Statement of Additional
Information by reference:


PAGE 69
                                                International  International
                                                    Stock        Discovery
                                                    Fund           Fund
                                                Annual Report  Annual Report
                                                    Page           Page
                                                 ___________   _____________

   Report of Independent Accountants                 17             19
   Statement of Net Assets, December 31, 1992       7-11           8-13
   Statement of Operations, year ended
     December 31, 1992                               12             14
   Statement of Changes in Net Assets, years ended
     December 31, 1992 and December 31, 1991         13             15
   Notes to Financial Statements
     December 31, 1992                              14-15          16-17
   Per Share and Other Information                   16             18


                                                International  International
                                                    Stock        Discovery
                                                    Fund           Fund
                                                 Semi-Annual    Semi-Annual
                                                   Report         Report
                                                    Page           Page
                                                 ___________   _____________

   Statement of Net Assets,
     June 30, 1993 (Unaudited)                      6-10           6-12
   Statement of Operations, six months ended
     June 30, 1993 (Unaudited)                       11             13
   Statement of Changes in Net Assets, year ended
     December 31, 1992 and six months ended
     June 30, 1993 (Unaudited)                       12             14
   Notes to Financial Statements
     June 30, 1993 (Unaudited)                      13-14          15-16
   Financial Highlights (Unaudited)                  15             17


                                                       European
                                                      Stock Fund
                                                        Annual
                                                      Report Page
                                                     _____________

   Report of Independent Accountants                      15
   Statement of Net Assets, December 31, 1992             5-9
   Statement of Operations, year ended December 31, 1992  10
   Statement of Changes in Net Assets, years ended
     December 31, 1992 and December 31, 1991              11
   Per Share and Other Information                        12
   Notes to Financial Statements, December 31, 1992      13-14





PAGE 70
                                                       European
                                                      Stock Fund
                                                      Semi-Annual
                                                      Report Page
                                                     _____________

   Statement of Net Assets, June 30, 1993 (Unaudited)     5-9
   Statement of Operations, six months ended
     June 30, 1993 (Unaudited)                            10
   Statement of Changes in Net Assets, year ended
     December 31, 1992 and six months ended
     June 30, 1993 (Unaudited)                            11
   Notes to Financial Statements
     June 30, 1993 (Unaudited)                           12-13
   Financial Highlights (Unaudited)                       14


                                                      Japan Fund
                                                        Annual
                                                      Report Page
                                                     _____________

   Report of Independent Accountants                      11
   Statement of Net Assets, December 31, 1992             4-5
   Statement of Operations, December 30, 1991
     (Commencement of Operations) to December 31, 1992     6
   Statement of Changes in Net Assets, December 30, 1991
     (Commencement of Operations) to December 31, 1992     7
   Notes to Financial Statements, December 31, 1992       8-9
   Per Share and Other Information, December 30, 1991
     (Commencement of Operations) to December 31, 1992    10


                                                      Japan Fund
                                                      Semi-Annual
                                                      Report Page
                                                     _____________

   Statement of Net Assets, June 30, 1993 (Unaudited)     4-5
   Statement of Operations, six months ended
     June 30, 1993 (Unaudited)                             6
   Statement of Changes in Net Assets, year ended
     December 31, 1992 and six months ended
     June 30, 1993 (Unaudited)                             7
   Notes to Financial Statements
     June 30, 1993 (Unaudited)                            8-9
   Financial Highlights (Unaudited)                       10


New Asia Fund

   Coopers & Lybrand, 217 East Redwood Street, Baltimore, Maryland 21202, are
independent accountants to the Fund.  The financial statements of the New Asia
Fund for the year ended December 31, 1992 and the report of independent
accountants are included in the Fund's Annual Report on pages 6-14.  Also
included are the unaudited financial statements of the Fund dated June 30,
1993, on pages 4-11.  A copy of the Annual and Semi-Annual Reports accompany
this Statement of Additional Information.  The following financial statements
and the report of independent accountants appearing in the Annual Report for 

PAGE 71
the year ended December 31, 1992 and June 30, 1993, respectively, are
incorporated into this Statement of Additional Information by reference:


                                                      New Asia Fund
                                                         Annual
                                                       Report Page
                                                       ___________

   Report of Independent Accountants                       14
   Statement of Net Assets, December 31, 1992              6-8
   Statement of Operations, year ended December 31, 1992    9
   Statement of Changes in Net Assets, years ended
     December 31, 1992 and December 31, 1991               10
   Notes to Financial Statements, December 31, 1992       11-12
   Per Share and Other Information                         13

                                                      New Asia Fund
                                                       Semi-Annual
                                                       Report Page
                                                       ___________

   Statement of Net Assets, June 30, 1993 (Unaudited)      4-6
   Statement of Operations, six months ended
     June 30, 1993 (Unaudited)                              7
   Statement of Changes in Net Assets, year ended
     December 31, 1992 and six months ended
     June 30, 1993 (Unaudited)                              8
   Notes to Financial Statements
     June 30, 1993 (Unaudited)                            9-10
   Financial Highlights (Unaudited)                        11


PAGE 72
                                  APPENDIX A

Chart 1

    Bar graph appears here comparing small companies of the U.S., Japan, U.K.,
and the U.S. to large companies in the same countries for the years 12-31-72
to 12/31/92.

    8.5           6.0         17.0        15.0        15.0        12.0

 Japan-Small  Japan-Large  U.K.-Small  U.K.-Large   U.S.-Small  U.S.-Large


Chart 2

     A line graph with the vertical axis representing percent return+ ranging
from - 0% to 1,000% and the horizontal axis indicating periods ended December
31 from 1980 to 1992.  The Topix Index hovers around 0% from 1/1980 to
12/31/82, followed by increases to approximately 975% during 1989, and then
declines to 450% during 1992.  The chart is for illustrative purposes only and
should not be considered representative of an investment in the Fund or of the
Fund's performance.






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