<PAGE>
Annual Report
- --------------------------------------------------------------------------------
For yield, price, last transaction, and current balance, 24 hours, 7 days a
week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price International
Discovery Fund.
T. ROWE PRICE
Invest With Confidence(R)
IDF
T. ROWE PRICE
- -------------
INTERNATIONAL DISCOVERY FUND
October 31, 1994
[ART WORK APPEARS HERE]
<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
Your Fund ended the fiscal year on a strong note, up 9.7% from October 31, 1993,
and 2.6% over the past three months. The final quarter saw a reversal of the
market movements recorded in the first half of the year. Japan ended the quarter
as one of the worst performers among the major markets, with concern over new
equity supply weighing heavily on local sentiment. European markets, which
account for 32% of Fund assets, rose a little in local terms as investors
focused on growing signs of economic recovery rather than continued bond market
weakness. In the Pacific, smaller markets recovered strongly after the declines
seen earlier in the year; Thailand and Malaysia were both good performers. Latin
American markets were mostly strong with Brazil rising an extraordinary 99% in
dollar terms for the year, helped by optimism about the economic reform package
and the outcome of the presidential election.
- --------------------------------------------------------------------------------
Total Return Performance
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 10/31/94
3 Months 12 Months
----------------------
<S> <C> <C>
International Discovery Fund 2.6% 9.7%
- ---------------------------------------------------------
</TABLE>
MARKET REVIEW
JAPAN
Japan represents approximately 18% of portfolio assets. The Japanese equity
market ended the fiscal year on a dull note. As in 1993, the market's strength
in the first half faded when concern about the strong yen and increased equity
supply served to hold the main market to a gain of 0.9%. Small companies fared
worse with the Tokyo Second Section Index down 0.8% and the OTC down 0.2% in
dollar terms. However, we do not believe that last year's performance, when the
market declined sharply in the final calendar quarter, will reoccur this year.
The main difference is that in 1993 the economy slowed in the second
half, leading to sharp downgrades in corporate earnings estimates.
This year, the economy has continued to improve and, despite the
negative impact on exports of the stronger yen, corporate results should show an
improvement for the first time in five years. With bond yields reversing and
industrial production likely to turn positive soon, the environment for
investment in smaller Japanese companies relative to their larger brethren has
not looked better since 1986.
Always an important sector for the economy, auto sales rose 12% year-
over-year in August, the first rise in over three years. Looking more broadly at
consumer expenditure, retail sales rose 1.2% year-over-year in July, as the
effects of the hot summer and an income tax cut offset the impact of further
retail price deflation. This price deflation seems to be slowing in recent
months -- encouraging for the corporate sector if not for the consumer.
Economic expansion is likely to continue until 1997, supported by a
healthy world economic environment. However, we believe that Japan is likely to
experience subnormal rates of recovery due to the persistent problems of
overcapacity, the high cost of exports due to the strength of the yen, and a
risk-averse central bank, which has restricted monetary growth to a mere 2% over
the quarter.
Against this backdrop, the thrust of the portfolio has become
economically sensitive. The portfolio now has no holdings in food,
pharmaceutical, public works or utility stocks, and our weighting in housing
stocks has been reduced as the rate of growth slows. The funds have been
redeployed into basic material sectors, machinery, and a modest increase in
medium-sized stockbrokers. In the materials sector, with worldwide prices of
chemicals, steels and paper rising, Japan has become the marginal producer
despite the dubious long-term health of some of its companies. Many machinery
stocks sell close to book value and, with capital expenditure likely to rise for
the
<PAGE>
next four years, the stocks look attractive. Of particular note, we added IDEC
IZUMI, the control machinery manufacturer.
SOUTHEAST ASIA
MALAYSIA rose 9% over the quarter, powered by surprisingly good inflation
numbers. Economic growth continued above 8% this year, concentrated in the
export and investment sectors. Consumption is still restrained, which has
delayed the usual end-of-cycle inflation and trade deficits. We sold our holding
in KELANAMAS when it broke to new highs. We also sold shares in lottery manager
BERJAYA SPORTS TOTO since gambling has become an election issue for the Muslim
majority, but we are otherwise happy with our 4% weighting in this market.
HONG KONG also improved over the quarter, rising 2%. All of last year's
strengths are in reverse in 1994. Fiscal policy, set in Beijing, is becoming
restrictive as China overheats. Monetary policy, effectively set by the Federal
Reserve because of the Hong Kong dollar's link to the U.S. currency, has also
turned restrictive. Real estate prices, traditionally closely correlated with
stock prices, are no longer a one-way street to wealth. Government cooling
measures and buyer/tenant resistance have brought what is for now a mild
correction in office and residential prices. Finally, the supply of stock from
eager investment bankers helping China finance its growth plans is meeting lower
demand from foreign mutual funds and institutions.
The AUSTRALIAN market was slightly disappointed by industrial sector
earnings growth of 18% in the 12 months ended June 30, 1994. Investors were more
excited by the potential for huge resource sector earnings growth over the next
two to three years. After a two-year period of significant small-company
outperformance, we have been taking profits and will look to reduce holdings
further over the course of the year.
INDONESIA also recovered over the quarter, although this market has
disappointed year-to-date. It appears that some of the 1993 demand for real
estate development was more speculative than previously thought. With interest
rates rising in line with the U.S., demand forecasts for certain projects in
Jakarta and especially in Surabaya will have to be scaled back. Furthermore, a
sudden glut of apartments in Jakarta has forced developers to sell projects at
lower prices, and property stocks have been savaged. We added to our consumer
play HANJAYA MANDALA SAMPOERNA, whose earnings have been helped by robust
overall economic growth.
After another good quarter, the INDIAN market is now the region's top
performer year-to-date. Freed from the shackles of extreme government
intervention following the radical deregulation process initiated in 1991,
industrial production is picking up strongly and corporate earnings are surging.
Unfortunately, custodial arrangements in Bombay are as yet unsatisfactory, and
we will confine our Indian exposure for the time being to offshore Euro-issues.
In any case, these tend to be higher quality and better values than the overall
market.
THAILAND'S stock market also recovered over the quarter. After a three-
year period of adjustment, the outlook for the economy is brighter than ever.
Exports are growing at rates not seen since the boom years of the late 1980s and
are now concentrated in higher value-added areas such as electronics, plastics
and packaging. Even more encouraging, there has been a sudden surge in foreign
direct investment. Smaller companies continued to disappoint as foreign
portfolio managers focused their firepower on the larger, more liquid stocks.
After three years of small-cap underperformance, we will be looking to re-
establish higher weightings as earnings of the smaller industrials recover from
cyclical lows.
SINGAPORE performed relatively well over the quarter, rising 15%. The
economy continues to deliver, with strength in electronics again the driving
force. Non-oil exports rose a remarkable 38% in August, the fastest monthly
growth to date. As a result, corporate profits again surprised on the upside,
enjoying particular strength at manufacturers and banks. However, with interest
rates clearly on the rise and some valuations looking high, we have slightly
reduced our overall weighting.
With all of the cyclical attractions of Japan but few of the
valuation constraints, KOREA
2
<PAGE>
rose 22%. Corporate net profits up a stunning 78% obviously helped, as did a
supportive monetary stance from the Bank of Korea. Despite signs that the trade
account is worsening due to a redirection of production to the booming domestic
economy, we remain optimistic. We continue to add positions wherever possible,
although it is difficult since foreign ownership limits have largely been
reached.
EUROPE
The UK enjoys a favourable mix of low inflation and reasonable growth driven by
manufacturing exports rather than by consumers. Considering the UK's propensity
to inflate, the authorities made a preemptive move in September to lift base
rates half a percentage point to 5.75%, despite weak data from the housing and
retail sectors. Small companies continued the underperformance that started in
the second quarter, and valuations no longer stand at a premium to the main
market. During the quarter, we took profits in BRITISH BIOTECHNOLOGY and have
added a position in MATTHEW CLARK, the drinks wholesaler, which is benefiting
from fragmentation in the industry.
[GEOGRAPHIC DIVERSIFICATION GRAPH APPEARS HERE]
In GERMANY a nervous bond market combined with a cautious consumer (car
sales have been falling sharply) produced widespread weakness in cyclical
stocks, revealing an exaggerated fear of slowing growth among investors. During
the quarter we added an overall beneficiary of long-term recovery, the window
frame producer WERU, boosted an existing holding in the scaffolding manufacturer
PLETTAC and sold the outstanding performer SAP, a richly priced software
manufacturer. Among DUTCH companies, we have started to buy FRANS MAAS KON, the
distribution specialist, and excellent results were reported by the holding
company INTERNATIONAL MUELLER.
Non-Germanic Europe has particular worries, offering extensive
opportunities for investors willing to look beyond the present moment. Two
countries, Italy and Sweden, stand out. For the commentators convinced that the
arrival of Prime Minister Berlusconi in ITALY was fascism in disguise, the train
strikes in late summer were a sobering event. Rather than exercising excessive
control, Berlusconi struggled to maintain authority. Ongoing investigations into
his business interests sparked concerns of a delay in his plans to put national
finances in order. Berlusconi's surprisingly tough budget, which plans to cut
the deficit from 9.5% to 8% of GNP, was almost overlooked. We have added to
holdings in SAES GETTERS, an electrical component manufacturer, and SAFILO, a
producer of spectacles.
In SWEDEN there has been much concern that the new Social Democrat
government would put its Keynesian ideology into practice at a time when
government spending was pressuring the national debt. Sweden needs to bring its
finances under tighter control because the rate of debt accumulation is
unsustainable. We are relatively optimistic about the future and have continued
to accumulate holdings of perhaps the cheapest small companies in Europe, adding
to GETINGE INDUSTRIAL (medical equipment), HOGANAS (iron oxide), KALMAR
INDUSTRIES (large scale transportation equipment) and BPA (construction).
LATIN AMERICA
The BRAZILIAN roller coaster ended this quarter with a strong 35% gain in
dollar terms. The introduction of the real in July, the new currency
effectively linked to the dollar, brought monthly inflation down from over
40% in June
3
<PAGE>
to 3% in September. The prospect of economic stability, for perhaps the first
time in a generation, gave a boost to former Finance Minister Fernando Henrique
Cardoso. His election as president should spur a programme of privatisations,
reform of the constitution, and changes in the tax and social security systems.
During the quarter, we added to CAPCO, the automotive component manufacturer,
and the building materials group EUCATEX. We also took profits in holdings that
had performed well such as the white goods manufacturer REFRIGERACAO
PARANAPANEMA, and WEG, which makes small electric motors. We remain enthusiastic
about the Brazilian market.
In MEXICO PRI candidate Ernesto Zedillo won the presidential election.
Prospects for an unchanged economic policy were reinforced by the renewal of the
Pacto agreement on wage increases and growth targets among government, business
and the unions. A recent visit to Mexico confirmed the contrast between the
booming construction sector and the lacklustre levels of consumer demand. As
interest rates ease, growth in the economy should become more widespread. We
remain overweighted in the construction sector with stocks such as GRUPO
MEXICANO DE DESARROLLO and GRUPO TRIBASA, and we have also added to INTER-
NATIONAL DE CERAMICA, the tile producer. During the quarter we took profits in
DESC, the conglomerate, and the steel company GRUPO SIMEC.
Elsewhere in the region, the markets of ARGENTINA, CHILE and COLOMBIA
made steady progress in sectors such as cement, banking and beverages. In PERU,
the Fujimori government continued its aggressive programme of privatisation; in
the past two years over $2 billion was raised from public sector sales. The
programme should be completed by June 1995, which will leave the government as
guardian of health and national security, but free up the rest of the economy to
the private sector. With Peruvian GDP forecast to grow 9% this year, the stock
market offers great potential. During the quarter, we added holdings of CEMENTOS
LIMA and SOUTHERN PERU COPPER.
INVESTMENT POLICY AND OUTLOOK
At the end of the second quarter, we wrote that we felt pessimism was overdone
and international markets generally represented good value. Despite the rises
seen over this quarter, we continue to believe this is the case. The economic
cycle outside the U.S. is only just beginning to turn up, and our analysis
suggests that growth in such areas as Continental Europe and Japan should not
peak until late 1996 at the earliest. In this light, we think corporate profits
are likely to be stronger for longer than the consensus opinion -- a scenario in
which smaller companies should flourish.
The major concern of international equity investors remains the local
bond markets, which continue to take their lead from the U.S. We believe
long-term interest rates are now near peak levels given subdued inflationary
expectations and moderate to high real yields worldwide. Equities should be
helped by more resilient bond markets over the next year. Finally, valuations
continue to look reasonable in most markets, supported by comparisons with
bonds.
This relatively sanguine overview encourages us to emphasise areas where
we believe growth will be strongest and valuations most acceptable. In
particular, we still like the smaller markets of the Pacific and Latin America,
although we are taking profits in the former. In Europe we are increasing
exposure to laggard markets such as Sweden at the expense of the UK, Belgium and
Norway. In Japan we are adding to reasonably valued stocks in economically
sensitive areas, and we believe smaller companies are at relatively attractive
valuation levels.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
November 18, 1994
4
<PAGE>
- --------------------------------------------------------------------------------
REVIEWING YOUR INTERNATIONAL INVESTING STRATEGY
- --------------------------------------------------------------------------------
Not so very long ago, we probably would not have addressed this issue, because
relatively few U.S. investors had an international investing strategy to review.
In recent years, however, investor focus has broadened appreciably, and now
global investing seems finally to be catching up with "global consuming."
The merits of placing a portion of your financial assets in overseas
investments have become widely recognized, as evidenced by the dramatic growth
of international mutual fund assets. Amid all the investment uncertainties
generated by rising interest rates this year -- both in the U.S. and a number of
other countries -- our international equity funds continued to expand
impressively.
The historic evidence is clear that a prudent equity diversification
strategy that includes foreign stocks can reduce the year-to-year volatility of
an equity portfolio and, over time, enhance overall returns. Volatility may be
reduced because foreign stocks often move in divergent directions from the U.S.
market. With over half of all stocks in the world originating and trading
outside the U.S. -- many in countries growing faster than the U.S. -- it can be
argued that the investor who restricts his or her portfolio entirely to U.S.
securities is less prudent than the one who diversifies more widely.
Since you are an international investor, we do not want to preach to
the converted. Rather, we want to suggest you take a minute to review your
T. Rowe Price international investments to ensure they are in line with your
financial strategy and your overall portfolio.
AN INTERNATIONAL ALLOCATION
Except in unusual circumstances, we believe a majority of an investor's
international equity exposure should be in a core fund that has a broadly
diversified portfolio of well-established companies around the world. Our
International Stock Fund is designed to be such a core holding. If you have a
particular interest in a certain region, you may want to put some assets in a
more specialized fund. The New Asia, Europe, Latin America, and Japan Funds have
narrow geographic focuses, while our International Discovery Fund emphasizes
rapidly growing smaller companies in all of those areas. Without the conviction
to stick through potentially tough periods, you should be cautious about
investing in regional funds, which may have greater price volatility.
Don't base your allocation decisions solely on the past performance of
any stock market, and keep in mind the risks of foreign investing, including the
possibility of unfavorable currency exchange rates. You may want to consider
shifting a portion of your investment dollars into a particular international
asset over a period of time, instead of all at once. By focusing on your
particular financial objectives, the length of time in which you hope to achieve
them, and your willingness to accept risks represented by various investments,
you should be in a good position to structure your international investment
portfolio.
This report has been preceded or is accompanied by a prospectus.
5
<PAGE>
- --------------------------------------------------------------------------------
Industry Diversification
- --------------------------------------------------------------------------------
October 31, 1994
<TABLE>
<CAPTION>
% of Net Assets
---------------
<S> <C>
Consumer Goods 33.8%
- -----------------------------------------------------------
Capital Goods 20.7
- -----------------------------------------------------------
Basic Industry 19.3
- -----------------------------------------------------------
Financial/Insurance 14.1
- -----------------------------------------------------------
Transport/Storage 4.4
- -----------------------------------------------------------
Utilities 1.0
- -----------------------------------------------------------
Energy 0.9
- -----------------------------------------------------------
Miscellaneous 2.4
- -----------------------------------------------------------
Reserves 3.4
- -----------------------------------------------------------
Total Net Assets 100.0%
- -----------------------------------------------------------
</TABLE>
[PERFORMANCE COMPARISON GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
Twenty-Five Largest Holdings
- --------------------------------------------------------------------------------
October 31, 1994
<TABLE>
<CAPTION>
% of Net Assets
---------------
<S> <C>
Republic Hotels & Resorts, Singapore 1.0%
- -----------------------------------------------------------
Land & General, Malaysia 0.7
- -----------------------------------------------------------
Embotelladores del Valle Anahuac, Mexico 0.6
- -----------------------------------------------------------
Siam City Bank, Thailand 0.6
- -----------------------------------------------------------
Apollo Electronics, Japan 0.6
- -----------------------------------------------------------
Skellerup Group, New Zealand 0.6
- -----------------------------------------------------------
Multibras Eletrodomesticos, Brazil 0.5
- -----------------------------------------------------------
Samsung Engineering & Construction,
South Korea 0.5
- -----------------------------------------------------------
Grupo Mexicano de Desarrollo ADS
(USD), Mexico 0.5
- -----------------------------------------------------------
MTD Capital, Malaysia 0.5
- -----------------------------------------------------------
Ashtead Group, United Kingdom 0.5
- -----------------------------------------------------------
Xebio, Japan 0.5
- -----------------------------------------------------------
Sahaviriya Steel, Thailand 0.5
- -----------------------------------------------------------
Nichicon, Japan 0.5
- -----------------------------------------------------------
Affin Holdings, Malaysia 0.5
- -----------------------------------------------------------
Marco Polo Development, Singapore 0.5
- -----------------------------------------------------------
Nippon Kakoh Seishi, Japan 0.4
- -----------------------------------------------------------
Chile Fund (USD), Chile 0.4
- -----------------------------------------------------------
Stanilite Pacific, Australia 0.4
- -----------------------------------------------------------
Coteminas, Brazil 0.4
- -----------------------------------------------------------
Refrigeracao Paranapanema, Brazil 0.4
- -----------------------------------------------------------
Duratex, Brazil 0.4
- -----------------------------------------------------------
Precious Shipping, Thailand 0.4
- -----------------------------------------------------------
Acesita, Brazil 0.4
- -----------------------------------------------------------
Whitcoulls Group, New Zealand 0.4
- -----------------------------------------------------------
Total 12.7%
- -----------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Fiscal-Year Performance
- --------------------------------------------------------------------------------
Periods Ended 10/31/94
<TABLE>
<CAPTION>
Since Inception on
1 Year 5 Years* 12/30/88*
------ -------- ------------------
<S> <C> <C>
9.7% 8.2% 11.7%
</TABLE>
- --------------------------------------------------------------------------------
* Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
Portfolio of Investments (Value in thousands)
T. Rowe Price International Discovery Fund / October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
ARGENTINA -- 1.4%
- -------------------------------------------------------------------------------------------------------------
Value
--------
<C> <S> <C>
COMMON STOCKS
76,323 shs. Banco Frances del Rio de la Plata........................................ $ 653
298,000 *Cadipsa.................................................................. 560
35,500 *Capex GDR (USD).......................................................... 692
5,000 Central Puerto........................................................... 33
20,000 Central Puerto ADS (USD)................................................. 655
392,500 *Colorin.................................................................. 455
62,358 Juan Minetti............................................................. 390
35,000 *Mirgor ADS (USD)........................................................ 320
234,076 Modelo Terrabusi......................................................... 1,002
26,446 Molinos Rio de la Plata.................................................. 232
351,295 Polledo.................................................................. 748
59,000 Quilmes Industrial (USD)................................................. 1,549
TOTAL ARGENTINA 7,289
- -------------------------------------------------------------------------------------------------------------
AUSTRALIA -- 5.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
2,331,673 AAPC..................................................................... 1,662
1,452,000 AWA...................................................................... 906
262,200 Ampolex.................................................................. 794
325,199 Australia Gas & Light.................................................... 1,051
939,000 Azon..................................................................... 1,395
794,634 BRL Hardy................................................................ 1,180
154,421 BRL Hardy, new........................................................... 112
1,041,000 Burswood Property Trust.................................................. 990
616,601 Country Road............................................................. 462
491,750 *ERG Australia............................................................ 891
729,100 Elders Australia......................................................... 920
404,233 Eltin.................................................................... 1,291
360,000 Evans Deakin Industries.................................................. 722
505,000 Finemore Holdings........................................................ 983
128,673 Foodland Associated...................................................... 422
1,225,000 *Hamilton Island.......................................................... 700
409,000 Healthscope.............................................................. 456
721,028 Henry Walker Group....................................................... 755
371,000 JNA Telecommunications................................................... 510
388,000 Just Jeans Holdings...................................................... 671
523,659 Leighton Holdings........................................................ 778
176,000 Mildara Blass............................................................ 795
1,260,158 Sea World Property Trust................................................. 983
897,000 Seven Network............................................................ 2,045
904,730 Stanilite Pacific........................................................ 2,251
737,589 Tyndall Australia........................................................ 657
573,000 Walker Corporation....................................................... 408
1,010,989 Wesgo.................................................................... 1,276
114,500 West Australian Newspapers............................................... 299
16,357 wts. *West Australian Newspapers, 6/30/99...................................... $ 6
26,371
PREFERRED STOCK
5,894 shs. Bank of Melbourne, Cum. Cv., 6.00%....................................... 55
TOTAL AUSTRALIA 26,426
- -------------------------------------------------------------------------------------------------------------
AUSTRIA -- 0.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCK
7,300 *VA Technologie........................................................... 751
PREFERRED STOCK
4,430 Maculan Holding.......................................................... 451
TOTAL AUSTRIA 1,202
- -------------------------------------------------------------------------------------------------------------
BELGIUM -- 0.3%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
828 Audiofina................................................................ 440
9,000 CMB Shipping............................................................. 753
25,000 wts. *National Portefeuille, 6/15/99........................................... 129
12,000 *Union Miniere, 12/15/94.................................................. 111
1,433
CORPORATE BOND
1,275,000 LUF Audiofina, Cv., 5.00%, 12/31/96.......................................... 41
TOTAL BELGIUM 1,474
- -------------------------------------------------------------------------------------------------------------
BELIZE -- 0.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCK
42,000 shs. Belize Holdings (USD).................................................... 751
- -------------------------------------------------------------------------------------------------------------
BRAZIL -- 5.7%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCK
65,000 *Capco Automotive Products (USD).......................................... 796
PREFERRED STOCKS & RIGHTS
22,042,428 Acesita.................................................................. 2,141
2,650,000 *Alpargatas Santista Textiles............................................. 599
118,000,000 *Artex .................................................................. 880
343,000 *Bahia Sul Celulose....................................................... 292
56,992,000 Banco Nacional........................................................... 1,532
3,076,000 *Casa Anglo Bras.......................................................... 819
42,200,000 Ceval Alimentos.......................................................... 675
224,000 *Cosipa................................................................... 703
5,177,758 Coteminas................................................................ 2,207
1,506,000 *Dixie Lalekla............................................................ 1,097
314,965 rts. *Dixie Lalekla............................................................ 0
30,000,000 shs. Duratex.................................................................. 2,167
1,044,000 Eucatex.................................................................. 668
750,000 Frigobras................................................................ 813
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price International Discovery Fund / Portfolio of Investments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
BRAZIL (Cont'd)
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
55,000,000 shs. Ipiranga Petroleo........................................................ $ 1,042
21,477,834 Lojas Americanas......................................................... 669
9,459,900 *Mesbla................................................................... 1,848
535,000 *Moinho Santista.......................................................... 2,091
1,622,000 Multibras Eletrodomesticos............................................... 2,650
718,387,676 Refrigeracao Paranapanema................................................ 2,169
10,291,920 *Sifco.................................................................... 1,146
3,000,000 Weg...................................................................... 1,581
27,789
TOTAL BRAZIL 28,585
- -------------------------------------------------------------------------------------------------------------
CANADA -- 0.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCK
153,000 *Arakis Energy Corporation (USD).......................................... 937
- -------------------------------------------------------------------------------------------------------------
CHILE -- 0.7%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
45,571 Chile Fund (USD)......................................................... 2,256
7,500 Chilectra ADR (USD)...................................................... 383
16,000 Empresas Telex de Chile ADR (USD)........................................ 296
1,000 Enersis ADS (USD)........................................................ 29
32,400 Laboratorio Chile ADR (USD).............................................. 624
TOTAL CHILE 3,588
- -------------------------------------------------------------------------------------------------------------
CHINA -- 0.8%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
288,000 *China North Industries (USD)............................................. 302
1,508,500 *Shanghai Diesel `B' (USD)................................................ 1,614
442,900 *Shanghai Friendship Company `B' (USD).................................... 211
3,410,000 *Shanghai Haixin Shipping `H' (HKD)....................................... 644
761,000 *Shanghai Post & Telecom `B' (USD)........................................ 451
805,000 *Shanghai Shangling Electric Appliance `B' (USD).......................... 657
TOTAL CHINA 3,879
- -------------------------------------------------------------------------------------------------------------
COLUMBIA -- 0.5%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
60,000 Bancol GDS (USD)......................................................... 636
42,000 Cementos Diamante GDS (USD).............................................. 997
18,000 *Cementos Paz del Rio ADR (USD)........................................... 446
17,500 Maderas y Sinteticos Sociedad Anoma ADR (USD)............................ 479
TOTAL COLUMBIA 2,558
- -------------------------------------------------------------------------------------------------------------
DENMARK -- 0.4%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
12,000 shs. Incentive................................................................ $ 654
20,000 *Olicom (USD)............................................................. 235
11,100 Silcon................................................................... 538
1,427
CORPORATE BOND
3,100,000 DKK Danske Traelastkompagni, Cv., 5.25%, 1/1/02.............................. 648
TOTAL DENMARK 2,075
- -------------------------------------------------------------------------------------------------------------
FINLAND -- 0.3%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
25,000 shs. Huhtamaki Oy............................................................. 797
30,000 Kymmene Corporation...................................................... 820
TOTAL FINLAND 1,617
- -------------------------------------------------------------------------------------------------------------
FRANCE -- 3.8%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
2,000 Bail-Investissement...................................................... 338
14,250 wts. *Barclays de Zoete Wedd, 9/15/95.......................................... 201
14,100 shs. Burelle.................................................................. 1,097
2,682 But...................................................................... 474
3,827 C.E.E.................................................................... 375
5,400 Cardif................................................................... 771
9,011 Centrale pour L'Industrie................................................ 578
11,600 Cipe France.............................................................. 1,618
6,100 *Club Mediterranee........................................................ 522
3,000 *Concorde................................................................. 466
9,000 Dauphin.................................................................. 577
2,400 De Dietrich & Cie........................................................ 1,207
18,297 Ecco Travail Temporaire.................................................. 1,137
3,000 Galeries Lafayette....................................................... 1,328
3,400 *Grandoptical Photoservice................................................ 222
9,536 Guilbert................................................................. 758
3,000 IDIA..................................................................... 94
7,624 Immeubles de France...................................................... 637
14,000 *Legris................................................................... 995
8,100 Manutan.................................................................. 645
23,000 *Moulinex................................................................. 526
19,037 Rochefortaise Communication.............................................. 721
5,400 SITA..................................................................... 701
8,500 Spir Communication....................................................... 1,073
14,500 *Vallourec................................................................ 787
3,287 Virbac................................................................... 493
10,335 *Vulcanic................................................................. 333
16,601 Z Groupe Zannier......................................................... 608
19,282
CORPORATE BOND
410,760 FRF Virbac, Cv., 5.00%, 1/1/01............................................... 82
TOTAL FRANCE 19,364
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
GERMANY -- 3.8%
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS
3,000 shs. Balcke Durr.............................................................. $ 858
13,200 Bremer Vulkan Verbund.................................................... 903
2,600 DLW...................................................................... 724
3,750 *Dorries Scharmann........................................................ 479
1,300 FA Gunther & Sohn........................................................ 397
1,200 Jean Pascale............................................................. 328
1,216 Kampa Hause.............................................................. 788
1,000 Klein, Schanzlin & Becker................................................ 259
1,437 Leffers.................................................................. 330
1,875 Nordstern Lebensmittel................................................... 398
1,125 Pfleiderer Bau und Verkehrssysteme....................................... 422
9,300 *Pittler.................................................................. 618
2,666 Plettac.................................................................. 1,326
612 Sixt..................................................................... 188
125 Sixt, profit sharing units............................................... 85
3,400 Vereinigte Baubeschlag Handel............................................ 1,033
720 Victoria Holding......................................................... 546
1,380 Vossloh.................................................................. 485
1,530 Weru..................................................................... 865
11,032
PREFERRED STOCKS
1,600 Edding................................................................... 460
3,124 Einhell Hans............................................................. 654
487 Einhell Hans, new........................................................ 96
1,403 Hach..................................................................... 718
2,400 Klein, Schanzlin & Becker................................................ 567
2,000 Leffers.................................................................. 412
1,200 Marschollek Lautenschlaeger.............................................. 677
1,320 Rhon Klinikum............................................................ 900
4,050 Signalbau Huber.......................................................... 816
268 Sixt..................................................................... 72
2,500 Spar Handells............................................................ 540
1,485 Sto...................................................................... 905
1,600 Villeroy & Boch.......................................................... 345
4,914 Westag & Getalit......................................................... 1,176
8,338
TOTAL GERMANY 19,370
- -------------------------------------------------------------------------------------------------------------
HONG KONG -- 4.1%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
500,000 Amoy Properties.......................................................... 621
176,000 wts. *Amoy Properties, 3/31/95................................................. 72
6,413,000 shs. Anex International....................................................... 788
2,892,602 Champion Technology...................................................... 936
724,000 China Strategic Investment............................................... 309
2,156,000 *Esprit Asia.............................................................. 1,018
1,996,000 Fairyoung Holdings....................................................... 788
3,901,000 Harbour Ring International............................................... 545
557,166 wts. *Harbour Ring International, 7/17/97...................................... $ 9
2,104,400 shs. Hon Kwok Land Investment................................................. 681
176,000 Hong Kong China.......................................................... 116
1,260,000 Hong Kong Ferry.......................................................... 1,761
1,173,000 JCG Holdings............................................................. 767
265,000 Joyce Boutique........................................................... 62
1,201,000 Lamex Holdings........................................................... 521
6,204,967 Luks Industries.......................................................... 1,156
1,077,593 wts. *Luks Industries, 6/30/96................................................. 28
772,000 shs. Manhattan Card Company................................................... 315
762,000 Ming Pao Enterprise...................................................... 537
1,999,000 wts. *National Mutual Asia, 3/31/95............................................ 653
1,337,650 shs. Paliburg International................................................... 827
86,690 Pioneer Industries International......................................... 62
1,007,000 Playmates Toy Holdings................................................... 485
5,260,000 S. Megga International................................................... 810
903,000 Shell Electric Manufacturing............................................. 441
1,300,000 Siu Fung Ceramics........................................................ 301
843,104 South Sea Development.................................................... 66
2,150,000 Swank International Manufacturing........................................ 487
468,800 wts. *Swank International Manufacturing, 6/30/95............................... 23
6,392,000 shs. Techtronic Industries.................................................... 902
6,058,000 Termbray Industries International........................................ 925
2,752,000 Tian An China Investments................................................ 698
871,700 wts. *Tian An China Investments, 1/25/96....................................... 32
1,108,000 shs. Tian Teck Land........................................................... 274
2,207,000 Ultronics International Holdings......................................... 180
200,000 Wing Hang Bank........................................................... 519
1,300,000 Wing Shan International.................................................. 323
2,138,528 World Houseware.......................................................... 782
6,319,000 Yeebo International...................................................... 957
1,263,800 wts. *Yeebo International, 8/31/96............................................. 28
TOTAL HONG KONG 20,805
- -------------------------------------------------------------------------------------------------------------
HUNGARY -- 0.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
825 shs. Chinoin.................................................................. 399
144,000 Fotex (ATS).............................................................. 502
125 wts. *Hungarian Investments, 6/30/95 (USD)..................................... 1
TOTAL HUNGARY 902
- -------------------------------------------------------------------------------------------------------------
INDIA -- 1.6%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
93,000 shs. *Core Parenterals GDR (USD)............................................... 918
45,000 Grasim GDS (USD)......................................................... 1,091
</TABLE>
9
<PAGE>
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T. Rowe Price International Discovery Fund / Portfolio of Investments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
INDIA (Cont'd)
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
43,800 shs. Hindalco GDR (USD)....................................................... $ 1,511
93,000 *Indo Gulf Fertilisers & Chemicals GDR (USD).............................. 284
20,000 Reliance Industries GDS (USD)............................................ 510
167,000 *Videocon International GDR (USD)......................................... 919
5,233
CORPORATE BONDS
490,000 USD Essar Gujarat, Cv., 5.50%, 8/5/98........................................ 997
985,000 Gujarat Ambuja Cements, Cv., 3.50%, 6/30/99.............................. 1,768
2,765
TOTAL INDIA 7,998
- -------------------------------------------------------------------------------------------------------------
INDONESIA -- 3.5%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
430,000 shs. Argha Karya Prima Industries............................................. 555
522,000 Bank Dagang Nasional Indonesia........................................... 1,010
269,583 Duta Anggada Realty...................................................... 273
103,500 *Enseval Putera Megatrading............................................... 405
112,160 Gadjah Tunggal........................................................... 191
457,200 Ganda Wangsa Utama....................................................... 290
167,500 Hanjaya Mandala Sampoerna................................................ 810
190,000 Indorama Synthetic....................................................... 761
23,000 *Indosat ADS (USD)........................................................ 911
161,000 *Indosat `B'.............................................................. 634
353,000 Inti Indorayon Utama..................................................... 959
136,500 Intraco Penta............................................................ 187
161,500 Jakarta International Hotels............................................. 219
85,500 *Jaya Real Property....................................................... 346
24,000 Kabelmetal Indonesia..................................................... 35
173,000 Mayora Indah............................................................. 956
110,500 Modernland Realty........................................................ 387
416,000 *Mulia Industrindo........................................................ 1,217
807,000 Pabrik Kertas Tjiwi Kimia................................................ 2,082
566,000 Pakuwon Jati............................................................. 606
831,000 Panin Bank............................................................... 1,454
295,200 Semen Cibinong........................................................... 1,047
190,400 Sinar Mas Agro Resources & Technology.................................... 307
256,000 United Tractors.......................................................... 660
16,302
CORPORATE BONDS
1,100,000 USD Global Mark International, Cv., 3.50%, 4/6/97............................ 1,208
200,000 CHF Indorama Synthetic, 4.50%, 12/31/97...................................... 188
1,396
TOTAL INDONESIA 17,698
- -------------------------------------------------------------------------------------------------------------
IRELAND -- 0.5%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
306,000 shs. Abbey.................................................................... $ 690
600,000 Barlo Group.............................................................. 657
53,000 Grafton Group............................................................ 320
700,000 *Kenmare Resources (GBP).................................................. 117
266,000 Kingspan Group........................................................... 599
840,000 Ryan Hotels.............................................................. 379
TOTAL IRELAND 2,762
- -------------------------------------------------------------------------------------------------------------
ISRAEL -- 0.3%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
9,200 Discount Investment...................................................... 699
26,000 Teva Pharmaceutical ADR (USD)............................................ 708
TOTAL ISRAEL 1,407
- -------------------------------------------------------------------------------------------------------------
ITALY -- 2.0%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS
182,000 Cementeria di Augusta.................................................... 290
280,000 Danieli & Company, savings shares........................................ 910
55,500 wts. *Danieli & Company, 11/30/99.............................................. 48
690,000 shs. Editoriale la Republica.................................................. 1,269
101,500 Fila Holdings ADR (USD).................................................. 1,675
27,000 Industrie Natuzzi ADS (USD).............................................. 864
92,081 Merloni Elettrodomestici................................................. 327
473,081 Merloni Elettrodomestici, savings shares................................. 747
41,500 *Saes Getters............................................................. 378
205,500 rts. *Saes Getters............................................................. 15
74,000 shs. Safilo................................................................... 457
75,000 Standa, savings shares................................................... 453
720,000 Tecnost.................................................................. 1,395
90,000 Telecocavi, savings shares............................................... 257
90,000 Vianini Lavori........................................................... 175
21,000 Zucchi, savings shares................................................... 61
9,321
PREFERRED STOCK
154,000 Saes Getters............................................................. 782
CORPORATE BOND
333,000,000 ITL Danieli & Company, 7.25%, 1/1/00......................................... 169
TOTAL ITALY 10,272
- -------------------------------------------------------------------------------------------------------------
JAPAN -- 17.8%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
500 wts. *Aichi Electric, 12/7/94 (DEM)............................................ 1
58,000 shs. Amway Japan.............................................................. 1,879
107,000 Apollo Electronics....................................................... 2,983
38,000 Asatsu................................................................... 1,954
18,000 Aval Data Corporation.................................................... 520
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
JAPAN (Cont'd)
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
120,000 shs. Avon Products............................................................ $ 906
1,010 wts. *C Cube, 2/13/96 (CHF).................................................... 450
35,000 shs. Canon Sales Company...................................................... 1,182
2,510 wts. *Canon Sales Company, 11/11/97 (CHF)...................................... 480
18,000 shs. Chofu Seisakusho......................................................... 480
165,000 *Chuetsu Pulp & Paper..................................................... 964
88,000 Comson .................................................................. 1,681
42,000 Daibiru ................................................................. 434
44,000 Daifuku.................................................................. 672
20,000 Daika.................................................................... 268
20,000 Daishinku................................................................ 279
20,000 Danto.................................................................... 262
37,000 Eidensha................................................................. 512
1,450 wts. *Eidensha, 2/14/96 (DEM).................................................. 191
51,000 shs. Emoto Industries......................................................... 764
38,000 Enix..................................................................... 1,444
43,000 Enplas................................................................... 1,439
17,000 Fanuc.................................................................... 825
1,000 Fuji..................................................................... 13
69,000 Fuji Distribution........................................................ 535
100,000 Hamada Printing Press.................................................... 909
22,000 Heiwa.................................................................... 552
28,500 Higashi Nihon House...................................................... 771
14,000 Hirose Electric.......................................................... 831
23,000 Hitachi Tool Engineering................................................. 145
52,000 Horiba................................................................... 924
24,000 Idec Izumi............................................................... 239
37,000 Impact 21................................................................ 726
70,000 Ishiguro Homa............................................................ 1,886
44,000 Japan Airport Terminal................................................... 572
107,000 Japan Living Service..................................................... 1,282
1,500 wts. *Japan Transcity, 6/13/95 (DEM)........................................... 7
46,000 shs. Juel Verite Ohkubo....................................................... 494
100 wts. *Juel Verite Ohkubo, 3/10/98 (CHF)........................................ 25
86,000 shs. Juntendo................................................................. 870
61,000 KOA...................................................................... 1,027
65,700 KTK Telecommunications Engineering....................................... 916
90,000 Kansai Sekiwa Real Estate................................................ 1,533
45,000 Kato Denki............................................................... 1,231
700 wts. *Kawasaki Electronics, 12/20/96 (CHF)..................................... 9
9,100 shs. Keyence.................................................................. 1,099
47,000 Kinseki.................................................................. 985
24,000 Kyokuto Kaihatsu......................................................... 748
19,000 Lasertec................................................................. 951
23,000 Levi Strauss Japan....................................................... 684
61,000 Lintec................................................................... 1,014
26,000 Mabuchi Motor............................................................ 1,992
700 Maezawa Industries....................................................... 24
1,500 wts. *Marutomi Group, 4/2/96 (DEM)............................................. $ 18
58,000 shs. Meitec................................................................... 1,198
64,000 Meitetsu Transport....................................................... 532
1,300 wts. *Meitetsu Transport, 4/30/97 (CHF)........................................ 217
30,000 shs. Mori Seiki Company....................................................... 846
84,000 Namura Shipbuilding...................................................... 651
18,000 Natoco Paint............................................................. 771
87,000 New Japan Securities..................................................... 663
166,000 Nichicon................................................................. 2,382
3,800 Nichiei.................................................................. 245
22,000 Nihon Dempa Kogyo........................................................ 795
233,000 *Nippon Columbia.......................................................... 1,852
105,000 Nippon Denwa Shisetsu.................................................... 1,572
48,000 Nippon Kagaku Yakin...................................................... 1,289
446,000 *Nippon Kakoh Seishi...................................................... 2,256
93,000 Nippon Konpo Unyu Soko................................................... 921
67,000 Nippon Seiki............................................................. 1,314
215,000 Nippon Thompson.......................................................... 1,698
136,000 Nippon Yusoki............................................................ 771
28,000 Nissha Printing.......................................................... 598
50,000 Nitta.................................................................... 759
52,000 Okasan................................................................... 346
36,000 Osaka Organic Chemical................................................... 502
58,000 Paltac................................................................... 1,114
1,800 Promise.................................................................. 100
23,000 SMC...................................................................... 1,230
49,000 Sanken Electric.......................................................... 469
4,000 Sankyo................................................................... 310
23,000 *Sankyo Engineering....................................................... 777
128,000 *Sankyo Seiki Manufacturing............................................... 982
39,000 Sanoyas Hishino Meisho................................................... 322
64,000 Sanyo Securities......................................................... 354
23,000 Seiko.................................................................... 556
96,000 Sekisui House Wood....................................................... 753
37,000 Senshukai................................................................ 1,089
5,000 Shin Nippon Meteorology & Oceanography................................... 375
102,000 Shinko Wire.............................................................. 538
126,000 Sogo Denki............................................................... 859
10,000 Sumitomo Precision....................................................... 78
131,000 Tamura................................................................... 1,065
23,000 Tenma.................................................................... 710
24,000 Toc...................................................................... 471
32,000 Tohoku Telecommunications................................................ 360
59,000 Tokai Rubber Industries.................................................. 1,078
13,000 Tokyo Ohka Kogyo......................................................... 460
171,000 Topre.................................................................... 1,448
272,000 *Toshiba Tungaloy......................................................... 1,517
29,000 Toyo Communication....................................................... 943
54,000 Toyo Steel............................................................... 348
122,000 Toyo Umpanki............................................................. 630
11,000 Tsutsunaka Plastic....................................................... 136
19,000 Uniden................................................................... 555
</TABLE>
11
<PAGE>
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T. Rowe Price International Discovery Fund / Portfolio of Investments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
JAPAN (Cont'd)
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
82,000 shs. Wako Securities.......................................................... $ 813
60,000 Xebio.................................................................... 2,478
73,000 *Yamatane Securities...................................................... 387
31,000 Yamato Kogyo............................................................. 327
TOTAL JAPAN 89,392
- -------------------------------------------------------------------------------------------------------------
MALAYSIA -- 4.1%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS
1,405,000 Affin Holdings........................................................... 2,365
56,333 Arab Malaysian Finance................................................... 192
225,333 rts. *Arab Malaysian Finance................................................... 30
333,000 shs. Bandar Raya Development.................................................. 631
999,000 wts. *Bandar Raya Development, 9/1/97.......................................... 1,259
215,833 shs. Berjaya Sports Toto...................................................... 336
105,000 CHG Industries........................................................... 329
116,500 Cement Manufacturers..................................................... 538
49,800 rts. *Cement Manufacturers..................................................... 172
421,333 shs. Golden Plus Holdings..................................................... 2,045
338,000 *Granite Industries....................................................... 919
420,000 Hock Hua Bank............................................................ 1,331
665,000 Land & General........................................................... 3,279
160,000 Lityan Holdings.......................................................... 470
404,000 MTD Capital.............................................................. 2,530
146,000 Metacorp................................................................. 566
431,000 Public Finance........................................................... 843
212,000 Sungei Way Holdings...................................................... 838
11,000 wts. *Sungei Way Holdings, 6/29/99............................................. 18
135,000 shs. Westmont................................................................. 956
167,000 Yeo Hiap Seng Malaysia................................................... 843
TOTAL MALAYSIA 20,490
- -------------------------------------------------------------------------------------------------------------
MEXICO -- 4.8%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
63,600 Consorcio G Grupo Dina ADS (USD)......................................... 819
16,000 *Corporacion Geo.......................................................... 109
174,000 Desc `B'................................................................. 1,317
7,300 Desc `C'................................................................. 51
660,000 Embotelladores del Valle Anahuac......................................... 3,151
340,000 Empaques Ponderosa....................................................... 1,372
39,000 GRC International ADS (USD).............................................. 663
200,000 *Grupo Fernandez Editores................................................. 346
30,000 *Grupo Industrial Durango ADR (USD)....................................... 551
5,100 Grupo Iusacell ADR (USD)................................................. 143
11,900 *Grupo Iusacell ADS (USD)................................................. 360
14,926 *Grupo Mexicano de Desarrollo (Series B) ADS (USD)........................ 271
111,949 *Grupo Mexicano de Desarrollo (Series L) ADS (USD)........................ 2,281
650,000 *Grupo Posadas `A'........................................................ 639
2,640 shs. *Grupo Sidek ADR (USD).................................................... $ 47
212,400 Grupo Sidek Sponsored ADR (USD).......................................... 1,805
12,000 *Grupo Simec ADR (USD).................................................... 306
63,009 *Grupo Situr ADR (USD).................................................... 1,922
65,172 *Grupo Tribasa ADR (USD).................................................. 2,053
180,888 *International de Ceramica `C'............................................ 958
100,000 *Jugos del Valle.......................................................... 553
45,000 *Sears Roebuck ADS (USD).................................................. 1,058
28,000 *Sears Roebuck GDS (USD).................................................. 658
965,000 *Seguros Comercial Americana.............................................. 601
40,000 Servicios Financieros Quadrum ADR (USD).................................. 580
102,000 Tolmex `B'............................................................... 1,514
TOTAL MEXICO 24,128
- -------------------------------------------------------------------------------------------------------------
NETHERLANDS -- 1.4%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
8,750 Aalberts Industries...................................................... 420
7,500 Atag..................................................................... 500
47,210 Boskalis Westminster..................................................... 1,072
14,000 Frans Maas Kon........................................................... 445
14,000 Hagemeyer................................................................ 1,117
3,550 Hollandsche Beton Groep.................................................. 599
19,700 International Mueller.................................................... 1,086
5,600 Polynorm................................................................. 605
17,000 Randstad Holdings........................................................ 880
56,000 wts. *Randstad Holdings, 4/21/97............................................... 228
TOTAL NETHERLANDS 6,952
- -------------------------------------------------------------------------------------------------------------
NEW ZEALAND -- 2.7%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
1,906,000 shs. *CDL Hotels............................................................... 751
36,000 Ceramco.................................................................. 81
30,989 Fernz.................................................................... 111
804,066 Fisher & Paykel.......................................................... 2,128
321,000 Independent Newspapers................................................... 958
139,000 PDL Holdings............................................................. 796
928,000 Ports of Auckland........................................................ 1,285
1,897,697 Skellerup Group.......................................................... 2,815
271,000 Steel & Tube Holdings.................................................... 1,067
219,000 The Helicopter Line...................................................... 580
926,857 Whitcoulls Group......................................................... 2,134
941,000 Wrightson................................................................ 701
TOTAL NEW ZEALAND 13,407
- -------------------------------------------------------------------------------------------------------------
NORWAY -- 1.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
29,000 Aker..................................................................... 333
40,500 Awilco Shipping.......................................................... 477
40,400 *Bona Ship Holdings....................................................... 340
17,680 Det Norske Luftfartselskap............................................... 552
29,700 Kverneland Gruppen....................................................... 391
35,700 Liva Bil................................................................. 671
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NORWAY (Cont'd)
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
78,750 shs. Schibsted................................................................ $ 927
56,000 *Smedvig Tankships........................................................ 445
100,000 Sysdeco Group............................................................ 703
15,224 Unitor................................................................... 275
24,000 Veidekke................................................................. 411
75,000 Western Bulk Shipping.................................................... 442
TOTAL NORWAY 5,967
- -------------------------------------------------------------------------------------------------------------
PERU -- 0.6%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
251,280 Backus y Johnston Cerveceria............................................. 618
1,290 Cementos Lima............................................................ 526
23,600 Compania de Seguros la Fenix Peruana..................................... 407
57,500 Enrique Ferreyros........................................................ 103
126,260 *Southern Peru Copper..................................................... 722
2,376
CORPORATE BOND
540,000 USD International Financial Holdings, 6.50%, 8/1/99.......................... 640
TOTAL PERU 3,016
- -------------------------------------------------------------------------------------------------------------
PHILIPPINES -- 0.8%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & RIGHTS
182,400 shs. First Philippine Holdings................................................ 918
60,800 rts. *First Philippine Holdings................................................ 112
12,600 shs. Philippine Long Distance Telephone (USD)................................. 715
3,993,000 *SM Prime................................................................. 1,366
3,111
CORPORATE BOND
253,300 USD Benpres Holdings, Cv., 4.20%, 11/26/99................................... 1,013
TOTAL PHILIPPINES 4,124
- -------------------------------------------------------------------------------------------------------------
POLAND -- 0.3%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
1,329,372 shs. *International UNP Holdings (CAD)......................................... 884
100,000 *Mostostal................................................................ 607
TOTAL POLAND 1,491
- -------------------------------------------------------------------------------------------------------------
PORTUGAL -- 0.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
3,880 Banco Totta e Acores..................................................... 81
30,000 *Jornalgeste.............................................................. 565
11,000 *Lusotur Sociedad Financeira.............................................. 203
9,000 Salvador Caetano......................................................... 221
TOTAL PORTUGAL 1,070
- -------------------------------------------------------------------------------------------------------------
RUSSIA -- 0.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
35,000 shs. *Petersburg Long Distance (CAD)........................................... $ 298
96,000 *Petersburg Long Distance (USD)........................................... 792
TOTAL RUSSIA 1,090
- -------------------------------------------------------------------------------------------------------------
SINGAPORE -- 3.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
770,000 *Aztech Systems........................................................... 624
1,013,000 CSA Holdings............................................................. 897
143,000 Far East Levingston Shipbuilding......................................... 706
405,000 Hour Glass............................................................... 463
380,000 Hwa Tat Lee.............................................................. 285
287,000 Intraco.................................................................. 534
183,000 Jurong Shipyard.......................................................... 1,645
243,000 Malayan Credit........................................................... 639
1,285,000 Marco Polo Development................................................... 2,275
905,000 Pacific Carriers......................................................... 924
2,780,600 Republic Hotels & Resorts................................................ 5,112
553,000 Tiger Medicals........................................................... 738
516,000 Wing Tai Holdings........................................................ 1,054
TOTAL SINGAPORE 15,896
- -------------------------------------------------------------------------------------------------------------
SOUTH AFRICA -- 0.2%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCK
140,000 Rembrandt Group.......................................................... 888
- -------------------------------------------------------------------------------------------------------------
SOUTH KOREA -- 1.6%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & RIGHTS
10,000 Coryo Securities......................................................... 191
38,459 Dong Shin Constuction.................................................... 589
15,750 HS Chemical.............................................................. 672
3,819 *HS Chemical, new......................................................... 148
2,190 *Hanshin Construction, new................................................ 24
18,372 Kisan Corporation........................................................ 362
4,149 *Kisan Corporation, new................................................... 82
22 Korea Growth Trust IDR (USD)............................................. 968
23,000 Kun Young Construction................................................... 485
5,361 rts. *Kun Young Construction................................................... 32
14,050 shs. Pacific Corporation...................................................... 694
23,000 Samick Construction...................................................... 320
6,101 *Samick Construction, new................................................. 73
800 Samsung 1/2 Non-voting GDS (USD)......................................... 11
2,500 *Samsung 1/2 Voting GDS (USD)............................................. 53
60,319 *Samsung Engineering & Construction....................................... 2,591
7,295
</TABLE>
13
<PAGE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SOUTH KOREA (Cont'd)
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PREFERRED STOCKS
15,815 shs. Hanshin Construction..................................................... $ 119
25,000 Pacific Corporation...................................................... 507
626
TOTAL SOUTH KOREA 7,921
- -------------------------------------------------------------------------------------------------------------
SPAIN -- 1.5%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
15,000 Azkoyen.................................................................. 1,066
187,500 Corporacion Financiaera Reunida.......................................... 599
23,000 Espanol de Carburos Metalicos............................................ 803
25,500 Europistas............................................................... 218
16,000 Europistas, new.......................................................... 134
90,000 Filo..................................................................... 856
23,821 *Grupo Anaya.............................................................. 738
27,500 Hidroelectrica del Cantabrico............................................ 835
19,000 Inmobiliaria Metropolitana Vasco......................................... 623
59,700 Marco Iberica Distribucion............................................... 813
14,000 Prosegur Compania Securidad.............................................. 277
125,000 *Sotogrande............................................................... 373
7,335
CORPORATE BOND
32,910,000 ESP Grupo Anaya, Cv., 7.00%, 3/18/98......................................... 275
TOTAL SPAIN 7,610
- -------------------------------------------------------------------------------------------------------------
SWEDEN -- 2.7%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
57,000 shs. Angpanne Foreningen `B'.................................................. 880
11,000 *Arjo..................................................................... 199
257,000 *BPA...................................................................... 457
240,000 *Bilspedition `B'......................................................... 834
90,500 *Catena................................................................... 830
35,000 Euroc.................................................................... 599
598,000 *Finnveden Investments `B'................................................ 582
380,000 *Frontline................................................................ 1,110
37,532 Gambro `B'............................................................... 441
42,100 Getinge Industrial `B'................................................... 1,159
55,000 *Hoganas `B'.............................................................. 914
111,000 ICB Shipping `B'......................................................... 833
64,000 *Kalmar Industries........................................................ 774
32,900 Linjebuss................................................................ 595
58,000 Scribona `B'............................................................. 415
18,000 Securitas AB `B'......................................................... 511
140,000 Stena Line `B'........................................................... 767
64,000 *TV 4..................................................................... 1,628
13,528
CORPORATE BOND
900,000 SEK Stena Line, Cv., 7.00%, 4/30/01.......................................... 130
TOTAL SWEDEN 13,658
- -------------------------------------------------------------------------------------------------------------
SWITZERLAND -- 2.0%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
2,900 shs. Affichage................................................................ $ 820
455 Bil...................................................................... 232
540 Bobst.................................................................... 697
1,010 Bosshard Holdings........................................................ 1,367
750 Bucher Holdings.......................................................... 430
2,600 wts. *Bucher Holdings, 7/21/95................................................. 114
750 *Bucher Holdings, 10/27/95................................................ 2
360 shs. Gurit Heberlien.......................................................... 622
2,290 Intershop Holdings....................................................... 1,007
3,000 Kardex................................................................... 788
560 wts. *Landis & Gyr, 2/15/95.................................................... 1
3,550 shs. Porst Holdings........................................................... 720
1,375 Saurer................................................................... 449
340 Sig Schweiz Industrie.................................................... 661
3,158 Sika Finanz.............................................................. 905
4,400 *Suter & Suter............................................................ 736
7,000 *Von Moos Holdings........................................................ 752
TOTAL SWITZERLAND 10,303
- -------------------------------------------------------------------------------------------------------------
TAIWAN -- 0.4%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
15,000 *Tung Ho Steel Enterprise GDS (USD)....................................... 232
29,100 Yageo Corporation GDR (USD).............................................. 611
843
CORPORATE BONDS
280,000 USD Acer, Cv., 4.00%, 6/10/01................................................ 707
90,000 Microtek International, Cv., 3.50%, 6/26/01.............................. 95
270,000 United Micro Electronics, Cv., 1.25%, 6/8/04............................. 376
1,178
TOTAL TAIWAN 2,021
- -------------------------------------------------------------------------------------------------------------
THAILAND -- 3.5%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS
31,000 shs. Bangkok Insurance Public................................................. 702
399,000 First Pacific Land....................................................... 280
399,000 rts. *First Pacific Land....................................................... 120
41,900 shs. Goodyear................................................................. 689
67,000 Hana Microelectronics.................................................... 473
630,000 Industrial Finance of Thailand........................................... 1,630
17,830 International Cosmetics.................................................. 401
143,000 Karat Sanitaryware....................................................... 689
96,700 Matichon................................................................. 737
53,000 Nation Publishing........................................................ 146
167,000 Precious Shipping........................................................ 2,144
92,000 Property Perfect......................................................... 1,196
20,444 wts. *Property Perfect, 12/31/99............................................... 76
468,000 shs. SK Garment............................................................... 352
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
THAILAND (Cont'd)
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
323,200 shs. Saha Union............................................................... $ 366
976,000 *Sahaviriya Steel (L)..................................................... 2,448
20,000 Sanyo Universal Electric................................................. 465
2,396,000 Siam City Bank........................................................... 3,149
124,000 Swedish Motor............................................................ 821
102,000 *Unithai Line Public...................................................... 876
TOTAL THAILAND 17,760
- -------------------------------------------------------------------------------------------------------------
TURKEY -- 0.1%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
249,400 Guney Biracilik.......................................................... 99
684,320 Medya Holdings........................................................... 34
TOTAL TURKEY 133
- -------------------------------------------------------------------------------------------------------------
UNITED KINGDOM -- 11.1%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS
99,000 wts. *Abtrust Lloyds Insurance, 2008........................................... 53
106,000 shs. Applied Distribution Group............................................... 290
341,666 Ashtead Group............................................................ 2,525
105,150 Avon Rubber.............................................................. 923
210,000 Baggeridge Brick......................................................... 429
250,000 *Berisford International.................................................. 773
123,664 *British Biotechnology.................................................... 1,223
905,047 Britton Group............................................................ 1,909
3,705,000 *Brown & Jackson.......................................................... 151
800,000 Bruntcliffe Aggregates................................................... 419
327,600 CALA..................................................................... 632
397,222 CRT Group................................................................ 578
375,000 Carpetright.............................................................. 1,429
950,585 Casket................................................................... 455
173,000 *Chamberlain Phipps....................................................... 495
140,000 Claremont Garments....................................................... 723
145,000 Control Techniques....................................................... 863
425,000 Corporate Services Group................................................. 410
167,540 Cowie Group.............................................................. 584
964,790 Crestacare............................................................... 497
265,000 Devro International...................................................... 906
12,857,142 *Dragon Oil............................................................... 342
494,505 Dragon Oil Units......................................................... 2
55,000 Druck.................................................................... 1,313
587,734 Enviromed................................................................ 1,163
250,000 *Eurodollar Holdings...................................................... 834
150,952 Ferraris Group........................................................... 217
67,500 Finelist Group........................................................... 179
325,000 First Choice Holidays.................................................... 606
65,000 First National Finance................................................... 71
247,200 Frost Group.............................................................. 918
17,103 GWR Group................................................................ 250
174,000 Graham Group............................................................. 458
3,839,837 Graystone................................................................ 863
160,875 Greycoat................................................................. 313
690,000 shs. HTV Group................................................................ $ 1,670
480,000 *Halkin Holdings.......................................................... 510
150,000 Helical Bar.............................................................. 832
32,500 Henderson Administration Group........................................... 508
357,000 Hi-Tech Sports........................................................... 244
73,000 Highland Distilleries.................................................... 495
1,350,000 Hobson................................................................... 530
385,625 Holliday Chemical Holding................................................ 1,362
290,000 Ibstock.................................................................. 365
108,000 Iceland Group............................................................ 286
300,000 Ingham................................................................... 397
290,500 JBA Holdings............................................................. 637
185,000 Keller Group............................................................. 327
150,000 Kenwood Appliances....................................................... 927
155,000 Kewill Systems........................................................... 641
287,330 London & Overseas Freighters............................................. 409
130,000 Matthew Clark............................................................ 1,144
78,000 rts. *Matthew Clark............................................................ 50
1,565,000 shs. Mayflower................................................................ 1,408
172,705 Medeva................................................................... 497
332,000 Millgate................................................................. 103
485,000 Mirror Group Newspapers.................................................. 1,118
706,176 Monument Oil & Gas....................................................... 803
258,000 Northern Leisure......................................................... 249
47,843 *Norton Group............................................................. 0
733,333 *Pentos................................................................... 198
141,000 Peter Black Holdings..................................................... 588
105,000 Pict Petroleum........................................................... 254
100,000 *Pillar Property Investments.............................................. 239
335,000 Pizza Express............................................................ 619
139,000 Powerscreen International................................................ 675
300,000 Princedale Group......................................................... 140
2,100,000 Prospect Industries...................................................... 489
263,575 Prowting................................................................. 565
294,979 Quadramatic.............................................................. 762
510,000 Raine Industries......................................................... 442
27,001,416 *Regal Hotel Group........................................................ 662
50,000 Serco Group.............................................................. 236
765,000 Shandwick................................................................ 569
635,555 Spring Ram............................................................... 463
121,000 Stagecoach Holdings...................................................... 429
593,750 Stakis................................................................... 757
210,000 Sterling Publishing...................................................... 472
750,000 Stirling Group........................................................... 736
8,800,000 Ticketing Group.......................................................... 180
960,000 Transtec................................................................. 848
63,500 Trifast.................................................................. 221
671,043 UK Estates............................................................... 241
475,000 Ugland International..................................................... 1,025
4,226,309 *Verity Group............................................................. 622
265,000 Vibroplant............................................................... 498
541,000 *Videologic Group......................................................... 168
599,000 WPP Group................................................................ 1,097
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price International Discovery Fund / Portfolio of Investments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
UNITED KINGDOM (Cont'd)
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
772,301 shs. Wellman.................................................................. $ 486
573,888 Wickes................................................................... 831
5,015,000 *Wiggins Group............................................................ 554
55,374
PREFERRED STOCKS
77,000 First National Finance, Cum. Cv., 7.00%.................................. 158
120,000 Iceland Group............................................................ 261
419
CORPORATE BOND
43,000 GBP Northern Leisure Floating Rate Note, Cv., 3.55%, 5/31/01................. 93
TOTAL UNITED KINGDOM 55,886
- -------------------------------------------------------------------------------------------------------------
VENEZUELA -- 0.5%
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS
15,000 shs. Corimon ADR (USD)........................................................ 155
25,899 *Mavesa ADR (USD)......................................................... 146
133,333 *Mavesa Sponsored ADR (USD)............................................... 750
109,333 *Mavesa ADS (USD)......................................................... 615
48,000 Sudamtex de Venezuela ADR (USD).......................................... 360
80,000 *Venprecar GDS (USD)...................................................... 500
TOTAL VENEZUELA 2,526
- -------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 1.6%
- -------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER
$5,800,000 Ciesco, 4.80%, 11/1/94................................................... 5,799
66,000 Harvard University, 4.75%, 11/1/94....................................... 66
5,865
OTHER
2,000,000 Corporate Asset Funding Floating Rate Medium-
Term Note, 4.98%, 12/12/94............................................. 2,000
TOTAL SHORT-TERM INVESTMENTS 7,865
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 98.2%
OF NET ASSETS (COST -- $448,722) $494,553
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
(ATS) Austrian schilling denominated
(CAD) Canadian dollar denominated
(CHF) Swiss franc denominated
(DEM) German deutschemark denominated
(DKK) Danish krone denominated
(ESP) Spanish peseta denominated
(FRF) French franc denominated
(GBP) British sterling denominated
(HKD) Hong Kong dollar denominated
(ITL) Italian lira denominated
(LUF) Luxembourg franc denominated
(SEK) Swedish krona denominated
(USD) U.S. dollar denominated
(L) Local registered shares
- --------------------------------------------------------------------------------
Security Classification
- --------------------------------------------------------------------------------
October 31, 1994
<TABLE>
<CAPTION>
Market
Cost Value
Percent of Net Assets (000) (000)
- ----------------------------------- -------- --------
<S> <C> <C>
Common Stocks, Rights
& Warrants, 87.4% $406,018 $439,798
- -------------------------------------------------------------------
Preferred Stocks, 7.6% 28,181 38,460
- -------------------------------------------------------------------
Bonds, 1.6% 6,658 8,430
- -------------------------------------------------------------------
Short-Term Investments, 1.6% 7,865 7,865
- -------------------------------------------------------------------
Total Investments, 98.2% 448,722 494,553
- -------------------------------------------------------------------
Other Assets Less
Liabilities, 1.8% 8,858 8,889
- -------------------------------------------------------------------
Total Net Assets, 100.0% $457,580 $503,442
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
T. Rowe Price International Discovery Fund / October 31, 1994
<TABLE>
<CAPTION>
Amounts in Thousands
------------------------
<S> <C> <C>
ASSETS
Investments in securities at value (Cost -- $448,722)........................ $494,553
Receivable for investment securities sold.................................... 8,697
Other assets................................................................. 18,375
-------
Total assets................................................................. $521,625
LIABILITIES
Payable for investment securities purchased.................................. 5,523
Other liabilities............................................................ 12,660
-------
Total liabilities............................................................ 18,183
-------
NET ASSETS CONSISTING OF:
Accumulated net investment income --net of distributions..................... 1,537
Accumulated realized gains/losses --net of distributions..................... 22,517
Net unrealized appreciation of investments................................... 45,862
Paid-in-capital applicable to 28,547,879 shares
of $0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized......................... 433,526
-------
NET ASSETS $503,442
=======
NET ASSET VALUE PER SHARE $ 17.63
=======
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price International Discovery Fund / October 31, 1994
<TABLE>
<CAPTION>
Amounts in Thousands
---------------------------
<S> <C> <C>
INVESTMENT INCOME
Income
Dividends (net of foreign taxes of $880)..................................... $ 7,280
Interest..................................................................... 1,264
--------
Total income................................................................. $ 8,544
Expenses
Investment management fees................................................... 5,142
Shareholder servicing fees & expenses........................................ 980
Custodian and accounting fees & expenses..................................... 410
Prospectus & shareholder reports............................................. 98
Registration fees & expenses................................................. 97
Legal & auditing fees........................................................ 48
Proxy & annual meeting expenses.............................................. 35
Directors' fees & expenses................................................... 15
Miscellaneous expenses....................................................... 9
--------
Total expenses............................................................... 6,834
--------
Net investment income.......................................................... 1,710
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss).......................................................
Securities................................................................... 34,461
Foreign currency transactions................................................ (517)
--------
Net realized gain.............................................................. 33,944
Change in net unrealized appreciation or depreciation
Securities................................................................... (3,858)
Other assets and liabilities denominated in foreign currencies............... 58
--------
Change in net unrealized appreciation or depreciation.......................... (3,800)
--------
Net gain on investments........................................................ 30,144
--------
INCREASE IN NET ASSETS FROM OPERATIONS.......................................... $ 31,854
========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price International Discovery Fund
<TABLE>
<CAPTION>
Year Ended
Year Ended Ten Months Ended December 31,
October 31, 1994 October 31, 1993* 1992
---------------- ----------------- -------------
Amounts in Thousands
----------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income......................................... $ 1,710 $ 1,519 $ 1,922
Net realized gain (loss) on investments....................... 33,944 5,120 (3,531)
Change in net unrealized appreciation or
depreciation of investments................................. (3,800) 67,531 (16,465)
---------- ---------- ----------
Increase (decrease) in net assets from operations............. 31,854 74,170 (18,074)
---------- ---------- ----------
Distributions to shareholders
Net investment income......................................... (1,527) -- (1,870)
Net realized gain on investments.............................. (437) -- --
---------- ---------- ----------
Decrease in net assets from distributions to shareholders..... (1,964) -- (1,870)
---------- ---------- ----------
Capital share transactions
Sold 16,233, 11,047 and 6,437 shares.......................... 283,987 155,157 82,642
Distributions reinvested of 102, 0 and 144 shares............. 1,746 -- 1,672
Redeemed 8,143, 4,933 and 5,181 shares........................ (141,266) (66,688) (64,839)
Redemption fees............................................... 84 -- --
---------- ---------- ----------
Increase in net assets from capital share transactions........ 144,551 88,469 19,475
---------- ---------- ----------
Net equalization................................................ -- -- 12
---------- ---------- ----------
Total increase (decrease)....................................... 174,441 162,639 (457)
NET ASSETS
Beginning of period........................................... 329,001 166,362 166,819
---------- ---------- ----------
End of period................................................. $ 503,442 $ 329,001 $ 166,362
========== ========== ==========
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The Fund's fiscal year-end was changed to October 31.
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price International Discovery Fund / October 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price International Funds, Inc. (the Corporation) is registered under
the Investment Company Act of 1940. The International Discovery Fund (the Fund),
a diversified, open-end management investment company, is one of the portfolios
established by the Corporation.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including NASDAQ) are valued at the last quoted sales price at the
time the valuations are made. A security which is listed or traded on more than
one exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price within
the limits of the latest bid and asked prices deemed by the Board of Directors,
or by persons delegated by the Board, best to reflect fair value.
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 which, when combined with accrued
interest, approximates fair value.
For purposes of determining the Fund's net asset value per share, the
U.S. dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
Fund, as authorized by the Board of Directors.
B) Currency translation - Foreign currency amounts are translated into U.S.
dollars at prevailing exchange rates as follows: assets and liabilities at the
rate of exchange at the end of the respective period, purchases and sales of
securities and income and expenses at the rate of exchange prevailing on the
dates of such transactions. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a component of
such gains or losses.
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on an identified cost basis. Dividend income and distributions to
shareholders are recorded by the Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
Effective January 1, 1993, the Fund discontinued its practice of equalization.
The results of operations and net assets were not affected by this change.
NOTE 2 - INVESTMENT TRANSACTIONS
As a part of its investment program, the Fund engages in the following
activities, the nature and risk of which are set forth more fully in the Fund's
Prospectus and Statement of Additional Information.
A) Emerging Markets - The Fund has investments in securities of companies
located in emerging markets. Future economic or political developments could
adversely affect the liquidity or value, or both, of such securities.
B) Other - Purchases and sales of portfolio securities, other than short-term
and U.S. Government securities, aggregated $402,635,000 and $263,384,000,
respectively, for the year ended October 31, 1994.
20
<PAGE>
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the Fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income. Capital loss carryforwards utilized in the year ended
October 31, 1994 amounted to $10,670,000.
In order for the Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, $488,000 of
undistributed net investment income and $428,000 of undistributed net realized
gains were reclassified as a $60,000 increase to paid-in-capital during the year
ended October 31, 1994. The results of operations and net assets were not
affected by the reclassifications.
At October 31, 1994, the aggregate cost of investments for federal
income tax and financial reporting purposes was $448,722,000 and net unrealized
appreciation aggregated $45,831,000, of which $75,625,000 related to appreciated
investments and $29,794,000 to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Fund is managed by Rowe Price-Fleming International, Inc. (Price-Fleming),
which is owned by T. Rowe Price Associates, Inc. (Price Associates), Robert
Fleming Holdings Limited, and Jardine Fleming Holdings Limited under a joint
venture agreement.
The investment management agreement between the Fund and Price-Fleming
(the Manager) provides for an annual investment management fee, computed daily
and paid monthly, consisting of an Individual Fund Fee equal to 0.75% of average
daily net assets and a Group Fee. The Group Fee is based on the combined assets
of certain mutual funds sponsored by the Manager or Price Associates (the
Group). The Group Fee rate ranges from 0.48% for the first $1 billion of assets
to 0.31% for assets in excess of $34 billion. The effective annual Group Fee
rate at October 31, 1994, and for the year then ended was 0.34%. The Fund pays a
pro rata portion of the Group Fee based on the ratio of the Fund's net assets to
those of the Group.
Under the terms of the investment management agreement, the Manager was
required to bear any expenses through December 31, 1993, which would have caused
the Fund's ratio of expenses to average net assets to exceed 1.50%. Thereafter,
the Fund is required to reimburse the Manager for these expenses, provided that
average net assets have grown or expenses have declined sufficiently so as to
cause the Fund's ratio of expenses to average net assets not to exceed 1.50% in
any month, and that no such reimbursement shall be made to the Manager after
December 31, 1995. Pursuant to this and a previous agreement, $159,000 of
unaccrued 1991-1992 fees were repaid during the year ended October 31, 1994, and
$386,000 remains subject to reimbursement through December 31, 1994.
Additionally, $85,000 of unaccrued management fees from the ten months ended
October 31, 1993 are subject to reimbursement through December 31, 1995.
During the year ended October 31, 1994, the Fund, in the ordinary course
of business, paid commissions of $366,000 to, and placed security purchase and
sale orders aggregating $73,515,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions at the direction
of Price-Fleming.
T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc.
(RPS) are wholly owned subsidiaries of Price Associates. TRPS provides transfer
and dividend disbursing agent functions and shareholder services for all
accounts. RPS provides subaccounting and recordkeeping services for certain
retirement accounts invested in the Fund. Price Associates, under a separate
agreement, calculates the daily share price and maintains the financial records
of the Fund. For the year ended October 31, 1994, the Fund incurred fees
totalling approximately $882,000 for these services provided by related parties.
At October 31, 1994, these investment management and service fees payable were
$557,000.
21
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price International Discovery Fund
<TABLE>
<CAPTION>
For a share outstanding throughout each period
------------------------------------------------------------------------------------
From
December 30,
1988
Year Ten Months (Commencement
Ended Ended Year Ended December 31, of Operations) to
October 31, October 31, ---------------------------------- December 31,
1994 1993++ 1992 1991 1990 1989
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................... $16.16 $11.68 $12.99 $11.75 $13.94 $10.00
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income.................. 0.04 0.07* 0.13* 0.13* 0.14* 0.14*
Net realized and unrealized gain
(loss)............................... 1.52 4.41 (1.31) 1.24 (1.91) 4.03
------- ------- ------- ------- ------- -------
Total from Investment Activities........... 1.56 4.48 (1.18) 1.37 (1.77) 4.17
------- ------- ------- ------- ------- -------
Distributions
Net investment income.................. (0.07) -- (0.13) (0.13) (0.15) (0.13)
Net realized gain...................... (0.02) -- -- -- (0.27) (0.10)
------- ------- ------- ------- ------- -------
Total Distributions........................ (0.09) -- (0.13) (0.13) (0.42) (0.23)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............. $17.63 $16.16 $11.68 $12.99 $11.75 $13.94
======= ======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return............................... 9.7% 38.4% (9.1)% 11.7% (12.8)% 41.8%
Ratio of Expenses to Average Net Assets.... 1.50% 1.50%+* 1.50%* 1.50%* 1.50%* 1.50%*
Ratio of Net Investment Income
to Average Net Assets.................. 0.38% 0.81%+ 1.07% 1.03% 1.10% 0.76%
Portfolio Turnover Rate.................... 57.4% 71.8%+ 38.0% 56.3% 44.0% 38.3%
Net Assets, End of Period (in thousands)... $503,442 $329,001 $166,362 $166,819 $136,660 $61,166
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ The Fund's fiscal year-end was changed to October 31.
* Excludes expenses in excess of a 1.50% voluntary expense limitation in
effect through December 31, 1993.
+ Annualized.
22
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
T. Rowe Price International Discovery Fund
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of operations
and of changes in net assets and the selected per share data and information
(which appears under the heading "Financial Highlights") present fairly, in all
material respects, the financial position of T. Rowe Price International
Discovery Fund (one of the portfolios constituting T. Rowe Price International
Funds, Inc.) at October 31, 1994, the results of its operations, the changes in
its net assets and the selected per share data and information for each of the
fiscal periods presented in conformity with generally accepted accounting
principles. These financial statements and selected per share data and
information (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1994 by
correspondence with custodians and brokers and, where appropriate, the
application of alternative auditing procedures for unsettled security
transactions, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
November 17, 1994
23
