<PAGE>
FELLOW SHAREHOLDERS
After strong equity market performance in 1993, investor euphoria began to
evaporate in early 1994. The prospect of inflationary pressures from an
accelerating U.S. economy sent shivers through world financial markets, and
stocks of international smaller companies were unable to withstand the
downdraft. Markets that had excelled in the last quarter of 1993 experienced the
sharpest pullback, notably Hong Kong, Mexico, and Argentina. In contrast, good
performance over the quarter came from Japan, Italy, and Scandinavia.
TOTAL RETURN PERFORMANCE
<TABLE>
<CAPTION>
Periods Ended 4/30/94
3 Months 6 Months
---------------------
<S> <C> <C>
International Discovery Fund -5.2% 7.3%
</TABLE>
--------------------------------------------------------------------------------
The relative return on your portfolio was affected by the underweighting in
Japan and by the overweightings in Southeast Asia and Latin America. In Europe,
smaller companies made a positive contribution but it was not enough to
compensate for the shortfall elsewhere.
MARKET REVIEW
SOUTHEAST ASIA
Asian stock markets led the decline in world equity markets in the first quarter
of the year, with falls of 20%-30% from the highs of the prior quarter.
Nevertheless, the markets at the end of April were still above the levels
prevailing when the buying madness took hold last October. We believe investors
who jumped on the performance bandwagon have largely been shaken out of Asian
markets. Fundamental investors are returning, attracted by continued high
earnings growth and valuations which are again more reasonable.
Unlike governments elsewhere, MALAYSIAN authorities took an active role in
deflating the 1993 mini-bubble. The current and former finance ministers both
warned against excessive speculation early in January, stating by way of example
that they had sold most of their personal stock holdings and that anyone who was
still very active in the market was a fool! The bank reserve requirement, in a
dramatic policy move, was raised to drain liquidity from the system, and
measures were taken to freeze foreign inflows. Brokers faced stricter limits on
individual trading activity.
The authorities' purpose was to prevent speculation from getting out of
hand and diverting corporate and individual resources from the more important
task of nation building. The latter will continue quite aggressively in 1994,
with GNP growth expected again to top 8% and inflation still relatively subdued.
However, the Malaysian recovery is well advanced, labour shortages are
worsening, and last year's record trade surplus is eroding. More worrisome,
however, are the huge financings planned by companies to pay for ambitious
infrastructure projects, which will cap the market's upside.
Last quarter's "maximum bullishness" turned to profit-taking and renewed
awareness of HONG KONG's risks. China's economy is definitely overheating.
Dissident arrests have more to do with forestalling another Tiananmen Square
economic protest than with thumbing Beijing's nose at the U.S. The U.S. will
most likely renew China's most favored nation trade status, but with conditions
and after greater debate than last year. Meanwhile, Hong Kong's democracy talks
between China and the UK have completely broken down, causing China to delay
approval for the two major infrastructure projects critical to Hong Kong's long-
term growth -- the new airport and the container terminal. Finally, Hong Kong
authorities have awakened to the territory's property bubble, promising measures
by mid-summer to deflate it gradually.
Of the various risks, only Chinese economic overheating truly worries us. A
hard landing for that economy now seems increasingly like-
<PAGE>
ly, which will keep further foreign buying of Hong Kong stocks at bay for 1994.
Over the quarter, we eliminated our position in PROD-ART TECHNOLOGY, whose pager
sales are plummeting with China's new austerity program. GROUP SENSE'S
electronic dictionary sales are similarly stalling, so this stock was sold out.
We took good profits on luxury retailer JOYCE when the stock price surged as its
earnings turnaround became apparent. We added HARBOUR RING, a toy manufacturer
geared to the U.S. recovery, and WING SHAN, an inexpensive power utility in
southern China.
SINGAPORE stock prices fell only a little, but they had also risen less in
November and December. During the April quarter, we cut our major interest-
sensitive holdings, as rising rates and lower stockbroking profits may lead to
future disappointments. The proceeds have been redeployed into commercial
property and hotels, as Singapore is finally realising its promise as a regional
business center. With commercial rents 20% of those in Hong Kong, we foresee a
steady catch-up. Our overall weighting in Singapore has fallen, however, as we
can find better values elsewhere.
We have used profits from the above markets to increase our weightings in
Australia and New Zealand. These markets did not run up to speculative peaks
last year, the economies are just starting to recover, and inflation rates are
still falling. Finally, if the U.S. recovery is joined next year by Europe and
Japan, Australia and New Zealand should benefit from higher commodity prices.
The AUSTRALIAN market was resilient considering the hammering taken by the
bond market. Renewed interest in commodities provided good support for the
currency. We are increasingly enthusiastic about economic developments in
Australia and are forecasting sustainable, low-inflation economic growth.
Exports of manufactured goods are picking up and should provide support for the
current account, which in the past has been a main constraint on growth. Over
the quarter we added WESGO, a media stock with excellent potential in an
economic pickup.
Economic fundamentals in NEW ZEALAND continue to strengthen. During the
quarter, growth forecasts were upgraded once more, inflation remained negligible
and fiscal balance forecasts improved substantially. To add icing to the cake,
as an exporter of agricultural products, New Zealand stands to gain more than
virtually any other nation from the GATT agreement signed in December 1993. We
added SKELLERUP, STEEL & TUBE and Ports of Auckland, all highly leveraged to
economic recovery.
Geographical Diversification
[PIE CHART APPEARS HERE]
1/31/94
Europe 32.1%
Latin America 13.0%
Japan 15.8%
Other 6.6%
Southeast Asia 32.5%
It is difficult to say that the Japanese economy is improving, as many
year-on-year comparisons remain in negative territory. It now appears that the
recession bottomed in mid-1993, but a genuine recovery will probably not be
evident until the summer of 1994. On the positive side, housing has been the
first area to improve and its growth has started to feed through into other
areas. Electrical appliance and furniture sales have also begun to improve as
people equip their new houses. Spending remains very value conscious with
discount operators doing well at the expense of high-priced department stores.
Our company visits continue to reveal a trading down by the consumer whether for
new kitchens or sporting goods. The leading indicators rose in January to a
point which prompted the first comment from the governor of the Bank of Japan,
Mr. Mieno, to the effect that the economy was at last improving.
2
<PAGE>
As with the economy, the political situation in Japan also remains fragile.
The coalition government of former Prime Minister Hosokawa succeeded at the
eleventh hour in finally passing its electoral reform package. This represents
the largest constitutional change since General MacArthur left Japan nearly 50
years ago. Partly single-member constituencies and partly proportional
representation is likely to alter Japan's political landscape radically. The
most likely outcome is that a two-party system will eventually develop, with
consumer-oriented policies becoming far more prevalent. This is likely to favour
lower prices, deregulation, and a more statesmanlike role for Japan in world
affairs. Over the longer term this has to be good for Japan's development, but
in the meantime the ruling coalition remains weak and further political
reshuffling is likely. The new, tough approach of the Clinton Administration is
adding to internal pressures.
In sum, the environment for small companies continues to improve slowly.
With recent bond market weakness and an improvement in industrial production,
the classic requirements for small-company outperformance are now in place.
Against this backdrop we continue to increase your Fund's weighting in stocks of
more economically sensitive companies. We sold out almost entirely of public
work stocks as the era of countercyclical pump priming appears to be close to
over. We also reduced positions in homebuilder Higashi Nihon House, and in
housing materials as the housing story becomes increasingly mature. The main
absorbers of this cash have been electricals and services. In electronic
components the order picture continues to pick up sharply based on a vibrant
U.S. market and a domestic turnaround. We have added to positions in Nichicon
and Sanken. With growth in the telecom and PC end-user market as well as the
longer-term potential of multi-media applications, component stocks should
continue to do well. In services we have added a position in Asatsu, an
advertising agency. With advertising spending again showing signs of life and
Asatsu gaining market share from its old-fashioned competitors, the company
should do well. The thrust of the Fund will continue to move towards these kind
of stocks as signs of an economic recovery are increasingly confirmed.
EUROPE
Smaller companies started the quarter with a surge of investor interest in
February, but could not withstand the sharp sell-off in global bond markets in
March.
In Germanic Europe, higher capital equipment orders, improving industrial
production, and better retail sales figures suggest that the worst of the
recession is behind us. Your portfolio remains oriented toward growth
opportunities in Central Europe such as the German house builder Kampa Hause
which is experiencing strong demand, the Swiss retailer Porst, and the Polish
construction group Mostostal. The delay in lowering interest rates in Germany
means that the rebound in corporate earnings will lag the rest of Europe. Our
holdings continue to focus on special situations, the largest of which is
economic reconstruction in the east.
The strongest signs of economic recovery continue to come from Scandinavia
and the UK. In Scandinavia, the Swedish economy is picking up, with corporate
and consumer optimism more evident. Job advertising is up more than 100% over
the first quarter of last year and the consumer is starting to spend once more;
Volvo auto sales were up by 80% in the first quarter this year. Real estate
prices are recovering. Although the strength was initially focused in the export
industries, it has broadened into the domestic economy, boosting government
revenues and reducing the threat of national bankruptcy. In Norway, the domestic
economy is now growing quite strongly and we have focused on stocks such as Liva
Bil, a car rental company, and Veidekke, a construction company. We have also
been adding to our shipping exposure with companies such as ICB in Sweden and
Smedvig Tankships in Norway as a way to benefit when world trade revives.
In the UK, small companies have performed steadily in contrast to the main
market which has suffered under a cloud of economic and political worries.
Despite the tax increases due in April, economic momentum appears to be
sustainable and will continue to benefit
3
<PAGE>
smaller companies. The problem is that the small-company universe is no longer
looking cheap, selling at more than a 20% premium to the main market.
LATIN AMERICA
In Mexico, the happy memory of the fourth quarter of 1993 was erased by the New
Year uprising of Zapatista peasants in Chiapas. Although the government
responded swiftly to negotiate a peace settlement, the uprising highlighted that
economic reforms have failed to benefit the poor and that democratic processes
need to be strengthened. The nomination by President Salinas of Donaldo Colosio
as the PRI's candidate for the August presidential elections was followed a
month later by Colosio's assassination while campaigning. Rumours that this
shocking event was a conspiracy by his opponents within the PRI have continued
to cause uncertainty despite the nomination of Ernesto Zedillo, Colosio's
campaign manager, as the new presidential candidate.
The Argentinian economy continues on its course of rehabilitation with a
combination of strong GDP growth and very low inflation. We took advantage of
the market weakness to start a holding in the food producer Molinos which is
being turned around by new management. We have bought a position in Colorin, the
paint company that has become an associate of Corimon, a well-managed Venezuelan
building materials group.
INVESTMENT POLICY & OUTLOOK
Despite the market shakeout, we remain optimistic about prospects for small
companies in most parts of the world. As bond markets suffer and industrial
production picks up, smaller companies should fare well. Whereas 1993's
outperformance came largely from successful country weightings, we hope that
1994 will see the small-company effort make a positive contribution.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
May 25, 1994
SECURITY CLASSIFICATION
April 30, 1994
<TABLE>
<CAPTION>
Market
Cost Value
Percent of Net Assets (000) (000)
-------------------------------- -------- --------
<S> <C> <C>
Common Stocks, Rights
& Warrants, 88.3% $369,732 $410,284
Preferred Stocks, 5.2% 19,835 23,908
Bonds, 1.2% 5,214 5,353
Short-Term Investments, 3.0% 14,095 14,095
-------- --------
Total Investments, 97.7% 408,876 453,640
Other Assets Less
Liabilities, 2.3% 10,937 10,909
---------------------------------------------------------------------
Net Assets, 100.0% $419,813 $464,549
=====================================================================
</TABLE>
4
<PAGE>
TWENTY-FIVE LARGEST HOLDINGS
April 30, 1994
<TABLE>
<CAPTION>
Percent of
Net Assets
----------
<S> <C>
Philippine Long Distance Telephone
(USD), Philippines 0.7%
Republic Hotels & Resorts, Singapore 0.7
Land & General, Malaysia 0.6
Skellerup Group, New Zealand 0.6
Embotelladores del Valle Anahuac,
Mexico 0.6
Berjaya Sports Toto, Malaysia 0.6
Whitcoulls Group, New Zealand 0.5
Kelanamas, Malaysia 0.5
Nichicon, Japan 0.5
Apollo Electronics, Japan 0.5
Company Siderurgica Nacional, Brazil 0.5
Affin Holdings, Malaysia 0.5
Samsung Construction, South Korea 0.5
Compania Interamericana de Auto,
Argentina 0.5
Ishiguro Homa, Japan 0.5
Enplas, Japan 0.5
Chile Fund (USD), Chile 0.5
Mavesa (USD), Venezuela 0.4
Ashtead Group, United Kingdom 0.4
Fisher & Paykel, New Zealand 0.4
Elektra, Mexico 0.4
Tolmex 'B', Mexico 0.4
Sears Roebuck (USD), Mexico 0.4
Desc, Mexico 0.4
Brasmotor, Brazil 0.4
----------------------------------------------------------
Total 12.5%
==========================================================
</TABLE>
INDUSTRY DIVERSIFICATION
April 30, 1994
<TABLE>
<CAPTION>
Percent of
Net Assets
----------
<S> <C>
Building Materials & Components 9.8%
Electrical & Electronics 7.8
Merchandising 7.7
Food & Household Products 6.3
Real Estate 6.2
Machinery & Engineering 5.2
Financial Services 5.0
Media 4.6
Business & Public Services 4.4
Transport & Storage 3.9
Banking 3.4
Entertainment/Leisure 3.2
Miscellaneous 3.2
Textile 3.0
Health & Personal Care 2.3
Automobiles 2.2
Metals - Steel 2.0
Beverage/Tobacco 1.9
Multi-Industry 1.9
Chemicals 1.8
Forestry & Paper Products 1.6
Investment Trusts 1.3
Energy Sources 0.6
Telecommunications 0.1
Other Industries 5.3
Short-Term Investments 3.0
Other Assets Less Liabilities 2.3
----------------------------------------------------------
Net Assets 100.0%
==========================================================
</TABLE>
5
<PAGE>
STATEMENT OF NET ASSETS (VALUE IN THOUSANDS)
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND / APRIL 30, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
ARGENTINA -- 2.2%
Value
--------
<C> <S> <C>
COMMON STOCKS
76,323 shs. Banco Frances del Rio de la Plata........................... $ 710
298,000 Cadipsa..................................................... 626
43,400 *Central Costanera ADS (USD)................................. 1,411
5,000 Central Puerto.............................................. 40
20,000 Central Puerto ADS (USD).................................... 760
192,500 Colorin..................................................... 270
156,827 Compania Interamericana de Auto............................. 2,166
156,051 Modelo Terrabusi............................................ 804
45,265 Molinos Rio de la Plata..................................... 560
175,648 Polledo..................................................... 879
74,000 Quilmes Industrial (USD).................................... 1,506
11,178 Telefonica de Argentina ADR (USD)........................... 715
Total Argentina 10,447
AUSTRALIA -- 6.5%
COMMON STOCKS
2,307,500 AAPC........................................................ 1,813
1,023,000 AWA......................................................... 680
228,942 Advance Bank of Australia................................... 1,586
262,200 Ampolex..................................................... 824
296,199 Australia Gas & Light....................................... 948
838,500 *Australia Media............................................. 898
939,000 Azon........................................................ 1,462
866,827 BRL Hardy................................................... 1,300
154,421 *BRL Hardy, part-paid........................................ 110
101,573 Bank of Melbourne........................................... 406
1,041,000 Burswood Property Trust..................................... 1,219
468,000 Challenge Bank.............................................. 1,223
616,601 Country Road................................................ 573
491,750 ERG Australia............................................... 1,124
650,100 *Elders Australia............................................ 868
398,764 Eltin....................................................... 1,467
360,000 Evans Deakin Industries..................................... 836
128,673 Foodland Associated......................................... 478
1,225,000 *Hamilton Island............................................. 875
409,000 *Healthscope................................................. 511
608,800 Henry Walker Group.......................................... 687
341,000 Just Jeans Holdings......................................... 531
523,659 Leighton Holdings........................................... 823
156,000 Mildara Blass............................................... 602
1,260,158 Sea World Property Trust.................................... 936
561,000 Seven Network............................................... 1,443
458,993 Stanilite Pacific........................................... 1,803
585,384 Tyndall Australia........................................... 753
71,175 Tyndall Australia, new...................................... 84
1,111,000 *Vox......................................................... 555
1,160,989 shs. Wesgo....................................................... $ 1,277
458,000 West Australian Newspapers.................................. 1,325
30,020
PREFERRED STOCK
5,894 *Bank of Melbourne, Cum. Cv., 6.00%.......................... 58
Total Australia 30,078
AUSTRIA -- 0.1%
PREFERRED STOCK
4,430 Maculan..................................................... 427
BELGIUM -- 0.7%
COMMON STOCKS & RIGHTS
828 Audiofina................................................... 419
828 rts. *Audiofina................................................... 1
6,000 shs. CMB Shipping................................................ 441
125,000 Cockerill Sambre............................................ 698
3,000 Deceuninck.................................................. 373
5,460 Desimpel.................................................... 225
3,800 Tessenderlo Chemie.......................................... 1,128
Total Belgium 3,285
BELIZE -- 0.1%
COMMON STOCK
22,000 Belize Holdings (USD)....................................... 360
BRAZIL -- 3.6%
COMMON STOCKS
88,887,700 Companhia Siderurgica Nacional.............................. 2,355
5,177,758 Coteminas................................................... 1,312
3,667
PREFERRED STOCKS
22,042,428 Acesita..................................................... 1,007
118,000,000 Artex....................................................... 381
79,675,000 Banco do Estado de Sao Paulo................................ 887
14,450,000 Banco Nacional.............................................. 643
7,000,000 Brasmotor................................................... 1,908
3,076,000 Casa Anglo Bras............................................. 638
506,000 *Dixie Lalekla............................................... 185
5,000,000 Industrias Villares......................................... 1,152
5,588,894 Lojas Americanas............................................ 1,266
3,153,300 Mesbla...................................................... 1,840
435,000 Moinho Santista............................................. 1,536
749,400,000 Refrigeracao Paranapanema................................... 1,525
12,968
Total Brazil 16,635
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
CHILE -- 0.5%
COMMON STOCKS
45,571 shs. Chile Fund (USD)............................................ $ 2,096
9,500 Compania Cervecerias Unidas ADS (USD)....................... 209
1,000 Enersis ADS (USD)........................................... 21
Total Chile 2,326
CHINA -- 0.6%
COMMON STOCKS
1,879,000 *Shanghai Diesel (USD)....................................... 1,691
1,263,900 *Shanghai Friendship Company (USD)........................... 695
364,000 *Shanghai Shangling Electric Appliance (USD)................. 218
Total China 2,604
COLOMBIA -- 0.4%
PREFERRED STOCK
44,000 Banco Ganadero GDS (USD).................................... 1,012
CORPORATE BOND
600,000 USD Bancol, Cv., 5.20%, 2/1/99.................................. 708
Total Colombia 1,720
DENMARK -- 0.2%
COMMON STOCKS
20,000 shs. *Olicom (USD)................................................ 165
11,100 Silcon...................................................... 709
Total Denmark 874
FINLAND -- 0.4%
COMMON STOCKS
25,000 Huhtamaki Oy................................................ 990
145,000 Kansallis-Osake Park........................................ 326
30,000 Kymmene Corporation......................................... 614
15,000 Okobank..................................................... 148
Total Finland 2,078
FRANCE -- 4.1%
COMMON STOCKS
2,000 Bail-Investissement......................................... 341
12,100 Burelle..................................................... 963
2,682 But......................................................... 405
4,500 Cardif...................................................... 871
9,011 Centrale pour L'Industrie................................... 580
3,827 Cie Cont. d'Equipment Electricite........................... 491
11,600 Cipe France................................................. 1,307
3,000 Concorde.................................................... 560
18,000 Dauphin..................................................... 1,014
2,400 De Dietrich & Cie........................................... 1,183
25,297 Ecco Travail Temporaire..................................... 1,576
1,500 France...................................................... 607
3,000 shs. Galeries Lafayette.......................................... $ 1,405
8,583 Guilbert.................................................... 860
1,000 Guyenne & Gascogne.......................................... 282
3,000 Idia........................................................ 117
7,624 Immeubles de France......................................... 758
2,500 International Metal Service................................. 163
7,700 Legris...................................................... 367
4,050 Manutan..................................................... 706
4,200 Redoute..................................................... 678
15,000 Rochefortaise Communication................................. 475
4,400 SITA........................................................ 629
4,000 Spir Communication.......................................... 609
4,500 Vallourec................................................... 260
3,287 Virbac...................................................... 504
10,335 Vulcanic.................................................... 313
3,274 Z Groupe Zannier............................................ 702
753 *Z Groupe Zannier, new....................................... 158
18,884
CORPORATE BOND
410,760 FRF Virbac, Cv., 5.00%, 1/1/01.................................. 77
Total France 18,961
GERMANY -- 3.6%
COMMON STOCKS
2,300 shs. Balcke Duerr................................................ 723
9,200 Bremer Vulkan Verbund....................................... 554
2,600 DLW......................................................... 934
1,300 FA Gunther & Sohn........................................... 486
1,200 Jean Pascale................................................ 352
1,216 Kampa Hause................................................. 696
1,000 Klein, Schanzlin & Becker................................... 328
1,150 Leffers..................................................... 347
1,500 Nordstern Lebensmittel...................................... 384
1,125 Pfleiderer Bau und Verkehrssysteme.......................... 410
7,000 Pittler..................................................... 679
2,400 Plettac..................................................... 1,009
612 Sixt........................................................ 201
125 Sixt, profit sharing units.................................. 81
1,700 VBH Vereinigte Baubeschlag Handel........................... 837
600 Victoria Holdings........................................... 513
120 *Victoria Holdings, new...................................... 101
1,380 Vossloh..................................................... 511
9,146
PREFERRED STOCKS
1,600 Edding...................................................... 520
1,000 Hach........................................................ 410
2,623 Hans Einhell................................................ 506
2,400 Klein, Schanzlin & Becker................................... 625
1,600 Leffers..................................................... 381
1,500 Marschollek Lautenschlaeger................................. 904
1,320 Rhon Klinikum............................................... 684
</TABLE>
7
<PAGE>
T. Rowe Price International Discovery Fund / Statement of Net Assets
<TABLE>
<S> <C> <C>
GERMANY (Cont'd)
770 shs. SAP......................................................... $ 1,466
1,200 Signalbau Huber............................................. 243
268 Sixt........................................................ 79
262 Steffen..................................................... 45
1,300 Sto......................................................... 764
4,300 Westag & Getalit............................................ 1,153
7,780
Total Germany 16,926
HONG KONG -- 5.6%
COMMON STOCKS & WARRANTS
633,000 Amoy Properties............................................. 836
176,000 wts. *Amoy Properties, 3/31/95.................................... 84
46,000 shs. Amway Asia Pacific (USD).................................... 1,742
5,323,000 Anex International.......................................... 1,309
3,683,000 Applied International Holdings.............................. 1,192
766,000 B & B Asia.................................................. 273
2,875,000 Champion Technology......................................... 1,070
843,000 China Strategic Investment.................................. 447
1,059,000 Chinney Investment.......................................... 211
264,000 wts. *Citic Telecommunications, 2/10/95........................... 332
2,283,000 shs. *Esprit Asia................................................. 946
2,388,000 Fairyoung Holdings.......................................... 1,128
1,381,000 Harbour Ring International.................................. 279
2,044,000 Hon Kwok Land Investment.................................... 807
1,745,000 Hong Kong China............................................. 858
882,000 JCG Holdings................................................ 562
88,400 Lai Sun Garment International............................... 166
1,603,000 Lamex Holdings.............................................. 623
6,204,967 Luks Industries............................................. 1,342
1,077,593 wts. *Luks Industries, 6/30/96.................................... 60
923,000 shs. Manhattan Card Company...................................... 332
950,000 Ming Pao Enterprise......................................... 664
1,988,000 wts. *National Mutual Asia, 3/31/95............................... 412
189,360 shs. New World Development....................................... 581
1,112,000 *Paliburg Development........................................ 167
1,734,920 Paliburg International...................................... 1,381
182,000 Pioneer Industries International............................ 104
5,260,000 S. Megga International...................................... 1,532
843,104 South Sea Development....................................... 75
2,150,000 Swank International Manufacturing........................... 554
468,800 wts. *Swank International Manufacturing, 6/30/95.................. 39
7,122,000 shs. Techtronic Industries....................................... 1,263
6,058,000 Termbray Industries International........................... 1,106
4,850,500 Tian An China Investment.................................... 1,162
871,700 wts. *Tian An China Investment, 1/25/96.......................... 52
1,108,000 shs. Tian Teck Land.............................................. $ 316
1,497,000 *Ultronics International Holdings............................ 397
250,000 Wing Hang Bank.............................................. 579
1,104,000 Wing Shan International..................................... 307
1,849,000 World Houseware............................................. 862
Total Hong Kong 26,152
HUNGARY -- 0.2%
COMMON STOCKS & WARRANTS
225 *Chinion (USD)............................................... 104
144,000 Fotex (ATS)................................................. 707
125 wts. *Hungarian Investments, 6/30/95 (USD)........................ 2
Total Hungary 813
INDIA -- 0.7%
COMMON STOCKS
43,800 shs. *Hindalco GDR (USD).......................................... 898
93,000 *Indo Gulf Fertilisers & Chemicals GDR (USD)................. 293
20,000 Reliance Industries GDS (USD)............................... 355
1,546
CORPORATE BONDS
490,000 USD Essar Gujarat, Cv., 5.50%, 8/5/98........................... 652
845,000 Gujarat Ambuja Cements, Cv., 3.50%, 6/30/99................. 1,073
1,725
Total India 3,271
INDONESIA -- 2.5%
COMMON STOCKS
522,000 shs. *Bank Dagang Nasional Indonesia.............................. 762
418,750 Duta Anggada Realty......................................... 937
112,160 Gadjah Tunggal (L).......................................... 181
360,000 *Ganda Wangsa Utama.......................................... 492
190,000 Indorama Synthetics......................................... 555
284,000 Inti Indorayon Utama........................................ 724
136,500 *Intraco Penta (L)........................................... 218
160,000 Jakarta International Hotels & Development.................. 230
429,000 Jakarta International Hotels & Development (L).............. 617
24,000 *Kabelmetal Indonesia........................................ 66
115,000 Modernland Realty........................................... 373
361,000 *Mulia Industrindo........................................... 770
446,000 Pabrik Kertas Tjiwi Kimia................................... 993
283,000 Pakuwon Jati................................................ 400
831,000 Panin Bank.................................................. 1,272
164,000 Semen Cibinong.............................................. 913
</TABLE>
8
<PAGE>
<TABLE>
<S> <C> <C>
136,000 shs. Sinar Mas Agro Resources & Technology (L)................... $ 301
256,000 United Tractors............................................. 570
10,374
CORPORATE BONDS
1,100,000 USD Indofood, Cv., 3.50%, 6/4/97................................ 1,095
200,000 CHF Indorama Synthetics, 4.50%, 12/31/97........................ 164
1,259
Total Indonesia 11,633
IRELAND -- 0.3%
COMMON STOCKS
306,000 shs. Abbey....................................................... 788
226,000 Kingspan Group.............................................. 465
Total Ireland 1,253
ITALY -- 2.0%
COMMON STOCKS
50,000 Cementeria di Augusta....................................... 108
178,000 Danieli & Company, savings shares........................... 783
470,000 Editoriale la Republica..................................... 1,329
101,500 *Fila Holdings ADR (USD)..................................... 1,408
23,000 *Industrie Natuzzi ADS (USD)................................. 621
30,000 Lloyd Adriatico............................................. 310
92,081 Merloni Elettrodomestici.................................... 397
473,081 Merloni Elettrodomestici, savings shares.................... 951
100,000 Standa, savings shares...................................... 1,013
478,000 Tecnost..................................................... 1,205
90,000 Teleco Cavi, savings shares................................. 342
21,000 Zucchi, savings shares...................................... 78
8,545
PREFERRED STOCK
77,000 Saes Getters................................................ 692
Total Italy 9,237
JAPAN -- 15.8%
COMMON STOCKS & WARRANTS
52,000 Ado Electronic Industries................................... 1,727
57,000 Aichi Electric.............................................. 443
500 wts. *Aichi Electric, 11/30/94 (DEM).............................. 5
23,000 shs. Amway Japan................................................. 947
96,000 Apollo Electronics.......................................... 2,427
29,000 Asatsu...................................................... 1,446
109,000 Avon Products............................................... 726
1,010 wts. *C Cube, 2/13/96 (CHF)....................................... 620
13,000 shs. Canon Sales................................................. 408
2,510 wts. *Canon Sales, 11/11/97 (CHF)................................. 570
63,000 shs. Chofu Seisakusho............................................ 1,574
40,000 Cleanup..................................................... 686
20,000 shs. Daika....................................................... $ 319
46,000 Daishinku................................................... 599
36,000 Danto....................................................... 497
32,000 Eidensha.................................................... 542
1,450 wts. *Eidensha, 2/14/96 (DEM)..................................... 462
51,000 shs. Emoto Industries............................................ 1,129
31,000 Enix........................................................ 1,492
60,000 Enplas...................................................... 2,134
13,000 Fanuc....................................................... 545
24,000 Footwork Construction....................................... 517
1,000 Fuji........................................................ 11
60,500 Fuji Distribution........................................... 495
22,000 Heiwa....................................................... 513
24,600 Hibiya Engineering.......................................... 345
20,000 Higashi Nihon House......................................... 1,056
18,000 Hirose Electric............................................. 1,037
23,000 Hitachi Tool Engineering.................................... 111
24,000 Hokkaido Coca-Cola Bottling................................. 442
37,200 Impact 21................................................... 496
81,400 Ishiguro Homa............................................... 2,154
33,000 Japan Airport Terminal...................................... 430
72,000 Japan Living Service........................................ 995
104,000 Juntendo.................................................... 943
52,000 KOA......................................................... 780
27,000 KTK Telecommunications Engineering.......................... 344
89,000 Kansai Sekiwa Real Estate................................... 1,788
63,800 Kato Denki.................................................. 1,675
700 wts. *Kawasaki Electronics, 12/20/96 (CHF)........................ 27
41,000 shs. Kinseki..................................................... 659
29,000 Kitakei..................................................... 483
19,000 Kyokuto Kaihatsu............................................ 503
15,000 Lasertec.................................................... 654
21,000 Levi Strauss Japan.......................................... 638
106,000 Lintec...................................................... 1,745
25,000 Mabuchi Motor............................................... 1,788
700 Maezawa Industries.......................................... 33
14,000 Marukyo..................................................... 494
1,500 wts. *Marutomi Group, 4/2/96 (DEM)................................ 38
55,000 shs. Meitetsu Transport.......................................... 453
1,300 wts. *Meitetsu Transport, 4/30/97 (CHF)........................... 300
13,000 shs. Mitsui Real Estate.......................................... 317
8,000 Mori Seiki Company.......................................... 185
84,000 Namura Shipbuilding......................................... 595
183,000 Nichicon.................................................... 2,439
16,900 Nichiei..................................................... 1,499
22,000 Nihon Dempa................................................. 617
116,000 Nippon Columbia............................................. 837
72,600 Nippon Denwa Shisetsu....................................... 1,174
18,000 Nippon Kagaku Yakin......................................... 349
76,000 Nippon Konpo Unyu Soko...................................... 693
</TABLE>
9
<PAGE>
T. Rowe Price International Discovery Fund / Statement of Net Assets
<TABLE>
<S> <C> <C>
JAPAN (Cont'd)
58,000 shs. Nippon Seiki................................................ $ 989
12,000 Nippon Shoji................................................ 203
57,000 Nippon Thompson............................................. 369
24,000 Nissha Printing............................................. 647
2,300 Okinawa Electric Power...................................... 86
36,000 Olympic Sports.............................................. 663
25,000 PS Corporation.............................................. 551
53,000 Paltac...................................................... 1,584
6,250 Promise..................................................... 400
22,000 Rinnai...................................................... 673
18,000 SMC......................................................... 684
98,000 Sanken Electric............................................. 837
4,000 Sankyo...................................................... 256
16,000 Sankyo Engineering.......................................... 384
108,000 Sankyo Seiki Manufacturing.................................. 791
33,000 Sanoyas Hishino............................................. 283
14,000 Sansei Yusoki............................................... 254
12,400 Santen Pharmaceutical....................................... 329
37,000 Sanyo Securities............................................ 227
96,000 Sekisui House Wood.......................................... 698
13,200 Senshukai................................................... 453
12,000 Shin Nippon Meteorology & Oceanography...................... 869
102,000 Shinko Wire................................................. 513
11,000 Sogo Denki.................................................. 85
39,000 Taisei Prefab Construction.................................. 512
128,000 Tamura...................................................... 878
40,000 Tenma....................................................... 1,254
29,000 Tohoku Telecommunications................................... 406
50,000 Tokai Rubber Industries..................................... 818
110,000 Topre....................................................... 950
173,000 Toshiba Tungaloy............................................ 883
48,000 Toyo Communication.......................................... 1,326
11,000 Tsuchiya Home............................................... 346
11,000 Tsutsunaka Plastic.......................................... 136
14,000 Uniden...................................................... 466
125 wts. *Uniden, 9/13/94 (USD)....................................... 28
35,000 shs. Wako Securities............................................. 343
46,000 Xebio....................................................... 1,650
39,000 Yamatane Securities......................................... 227
1,500 wts. *Yokkaichi Warehouse, 6/13/95 (DEM).......................... 51
15 shs. Yoshinoya D&C............................................... 276
Total Japan 73,328
MALAYSIA -- 6.2%
COMMON STOCKS & WARRANTS
1,405,000 Affin Holdings.............................................. 2,297
286,000 Arab Malaysian Finance...................................... 1,057
1,461,833 Berjaya Sports Toto......................................... 2,619
343,000 CHG Industries.............................................. 1,133
1,055,000 Daiman Development.......................................... 1,181
516,000 shs. Dunlop Estates.............................................. $ 1,541
191,000 Golden Plus Holdings........................................ 877
94,333 Golden Plus Holdings, new................................... 431
338,000 Granite Industries.......................................... 915
239,000 Hock Hua Bank............................................... 656
396,000 Hong Leong Properties....................................... 556
470,000 *KL Industries Holdings...................................... 740
862,200 Kelanamas................................................... 1,915
603,600 wts. *Kelanamas, 2/7/99........................................... 590
832,000 shs. Land & General.............................................. 2,826
486,000 Larut Consolidated.......................................... 653
185,000 Leader Universal Holdings................................... 898
54,000 *Lityan Holdings............................................. 142
267,000 Malaysian Helicopter........................................ 1,176
318,000 Metacorp.................................................... 1,531
1,168,000 Olympia Industries.......................................... 1,605
314,000 Public Finance Berhad....................................... 492
535,000 Southern Bank............................................... 1,348
124,000 Sungei Way Holdings......................................... 542
135,000 Westmont.................................................... 1,008
Total Malaysia 28,729
MEXICO -- 5.6%
COMMON STOCKS
33,600 Consorcio G Grupo Dina ADS (USD)............................ 441
299,000 Desc `B'.................................................... 1,899
7,300 Desc `C'.................................................... 45
645,000 Ekco........................................................ 252
213,000 *Elektra..................................................... 1,984
660,000 Embotelladores del Valle Anahuac............................ 2,640
600,000 Empaques Ponderosa.......................................... 1,429
80,450 *Farmacias Benavides......................................... 396
39,000 GRC International ADS (USD)................................. 868
806,000 Grupo Financiero Bancomer `B'............................... 783
71,260 Grupo Financiero Bancomer `C'............................... 92
13,000 *Grupo Mexicano de Desarrollo (Series B) ADS (USD)........... 193
97,500 *Grupo Mexicano de Desarrollo (Series L) ADS (USD)........... 1,584
650,000 *Grupo Posadas `A'........................................... 592
250,000 *Grupo Posadas `L'........................................... 244
212,400 Grupo Sidek ADR (USD)....................................... 1,805
69,009 Grupo Situr ADR (USD)....................................... 1,725
65,172 Grupo Tribasa ADR (USD)..................................... 1,613
180,888 *International de Ceramica `C'............................... 1,132
598,000 Salinas y Rocha............................................. 539
45,000 *Sears Roebuck ADS (USD)..................................... 1,209
28,000 *Sears Roebuck GDS (USD)..................................... 752
965,000 *Seguros Comercial Americana................................. 625
550,000 *Sistema Argos............................................... 1,018
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C>
908,500 shs. Texel....................................................... $ 222
162,000 Tolmex `B'.................................................. 1,971
Total Mexico 26,053
NETHERLANDS -- 0.9%
COMMON STOCKS
3,000 Atag........................................................ 249
46,000 Boskalis Westminster........................................ 1,086
14,000 Hagemeyer................................................... 1,088
2,300 Hollandsche Beton Groep..................................... 412
19,700 International Mueller....................................... 922
11,000 Randstad Holdings........................................... 452
Total Netherlands 4,209
NEW ZEALAND -- 3.1%
COMMON STOCKS & RIGHTS
36,000 Ceramco..................................................... 117
28,172 Fernz....................................................... 128
2,817 rts. *Fernz....................................................... 7
787,615 shs. Fisher & Paykel............................................. 2,001
321,000 Independent Newspapers...................................... 1,047
1,038,700 LWR Industries.............................................. 1,439
139,000 PDL Holdings................................................ 1,091
775,000 Ports of Auckland........................................... 976
1,893,993 Skellerup Group............................................. 2,679
228,000 Steel & Tube Holdings....................................... 1,014
331,000 The Helicopter Line......................................... 917
926,857 Whitcoulls Group............................................ 2,542
941,000 *Wrightson, part-paid........................................ 560
Total New Zealand 14,518
NORWAY -- 1.6%
COMMON STOCKS
39,000 Aker........................................................ 504
40,500 *Awilco Shipping............................................. 425
40,400 *Bona Ship Holdings.......................................... 404
17,000 *Braathens Safe.............................................. 562
20,000 Ganger Rolf................................................. 386
49,000 Helikopter Service.......................................... 626
18,700 *Liva Bil.................................................... 317
15,750 Schibsted................................................... 1,017
85,000 Sensonor.................................................... 461
56,000 Smedvig Tankships........................................... 521
100,000 Sysdeco Group............................................... 556
85,000 Uni Storebrand.............................................. 201
15,500 Unitor...................................................... 308
24,000 Veidekke.................................................... 633
75,000 *Western Bulk Shipping....................................... 417
Total Norway 7,338
PHILIPPINES -- 1.0%
COMMON STOCKS
182,400 First Philippine Holdings................................... 669
50,600 shs. Philippine Long Distance
Telephone (USD)......................................... $3,282
3,951
CORPORATE BOND
208,600 USD Benpres Holdings,
Cv., 4.20%, 11/26/99.................................... 480
Total Philippines 4,431
POLAND -- 0.4%
COMMON STOCKS
1,329,372 shs. *International UNP Holdings (CAD)............................ 1,203
8,000 *Mostostal................................................... 482
Total Poland 1,685
PORTUGAL -- 0.3%
COMMON STOCKS & RIGHTS
23,800 Banco Totta e Acores........................................ 503
3,880 *Banco Totta e Acores, new................................... 76
23,400 Companhia de Seguros Imperio................................ 178
30,000 *Jornalgeste................................................. 511
30,000 rts. *Jornalgeste................................................. 3
Total Portugal 1,271
RUSSIA -- 0.3%
COMMON STOCKS
35,000 shs. *Petersburg Long Distance (CAD).............................. 304
96,000 *Petersburg Long Distance (USD).............................. 852
Total Russia 1,156
SINGAPORE -- 2.9%
COMMON STOCKS & WARRANTS
770,000 *Aztech Systems.............................................. 718
1,013,000 CSA Holdings................................................ 801
143,000 Far East Levingston Shipbuilding............................ 602
703,000 Hour Glass.................................................. 787
122,000 wts. *Hour Glass, 12/21/95........................................ 77
380,000 shs. *Hwa Tat Lee................................................. 281
287,000 Intraco..................................................... 461
183,000 Jurong Shipyard............................................. 1,754
243,000 Malayan Credit.............................................. 506
1,118,000 Marco Polo Development...................................... 1,582
905,000 Pacific Carriers............................................ 937
1,044,600 Republic Hotels & Resorts................................... 1,545
1,228,000 *Republic Hotels & Resorts `A'............................... 1,856
553,000 Tiger Balm.................................................. 836
516,000 Wing Tai Holdings........................................... 889
Total Singapore 13,632
</TABLE>
11
<PAGE>
T. Rowe Price International Discovery Fund / Statement of Net Assets
<TABLE>
<S> <C> <C>
SOUTH KOREA -- 1.3%
COMMON STOCKS & RIGHTS
38,459 shs. Dong Shin Constuction....................................... $ 524
15,750 HS Chemical................................................. 468
3,819 *HS Chemical, new............................................ 103
2,190 Hanshin Construction, new................................... 22
18,372 Kisan....................................................... 343
22 *Korea Growth Trust IDR (USD)................................ 803
23,000 Kun Young Construction...................................... 402
5,250 Pacific Corporation......................................... 176
23,000 Samick Construction......................................... 229
6,101 rts. *Samick Construction......................................... 23
43,561 shs. Samsung Construction........................................ 2,225
5,318
PREFERRED STOCKS
15,815 *Hanshin Construction........................................ 145
25,000 Pacific Corporation......................................... 656
801
Total South Korea 6,119
SOUTH AFRICA -- 0.2%
COMMON STOCK
140,000 Rembrandt Group............................................. 969
SPAIN -- 1.4%
COMMON STOCKS
15,000 Azkoyen..................................................... 869
187,500 Corporacion Financiaera Reunida............................. 638
15,000 Espanol de Carburos Metalicos............................... 443
36,000 Europistas.................................................. 437
12,000 Europistas, new............................................. 144
90,000 Filo........................................................ 946
23,821 Grupo Anaya................................................. 542
27,500 Hidroelectrica del Cantabrico............................... 852
19,000 Inmobiliaria Metropolitana Vasco............................ 745
34,000 Prosegur Compania Securidad................................. 729
6,345
CORPORATE BOND
32,910,000 ESP Grupo Anaya, Cv., 7.00%, 3/18/98........................... 244
Total Spain 6,589
SWEDEN -- 1.4%
COMMON STOCKS
180,000 shs. Bilspedition `B'............................................ 728
295,000 Frontline................................................... 790
9,383 Gambro `B'.................................................. 451
22,000 Getinge Industrial `B'...................................... 617
45,000 *Hoganas `B'................................................. 605
111,000 shs. ICB Shipping `B'............................................ $ 1,333
18,000 Securitas `B'............................................... 611
80,000 Stena Line `B'.............................................. 590
20,000 *Stena Line `B', new......................................... 144
35,000 *TV 4........................................................ 695
6,564
CORPORATE BOND
900,000 SEK Stena Line, Cv., 7.00%, 4/30/01............................. 117
Total Sweden 6,681
SWITZERLAND -- 2.2%
COMMON STOCKS & WARRANTS
2,900 shs. Affichage................................................... 767
3,100 wts. *Baloise Holdings, 11/14/95.................................. 400
540 shs. Bobst....................................................... 701
1,010 Bosshard Holdings........................................... 1,218
150 Bucher...................................................... 506
2,600 wts. *Bucher, 7/21/95............................................. 332
360 shs. Gurit Heberlien............................................. 664
1,200 Intershop Holdings.......................................... 536
21,800 wts. *Intershop Holdings, 6/20/94................................. 93
1,800 shs. Kardex...................................................... 516
560 Landis & Gyr................................................ 351
560 wts. *Landis & Gyr, 2/15/95....................................... 1
2,800 shs. Porst Holdings.............................................. 854
7,500 wts. *Porst Holdings, 6/15/94..................................... 43
1,900 shs. Prodega..................................................... 552
350 Saurer GH/GI................................................ 732
2,558 Sika Finanz................................................. 671
4,400 Suter & Suter............................................... 843
5,700 *Von Moos Holdings........................................... 667
Total Switzerland 10,447
TAIWAN -- 0.5%
COMMON STOCK
62,900 Taiwan Fund (USD)........................................... 1,730
CORPORATE BONDS
340,000 USD Microtek International, Cv., 3.50%, 6/26/01................. 382
310,000 Tung Ho Steel, Cv., 4.00%, 7/26/01.......................... 361
743
Total Taiwan 2,473
THAILAND -- 2.3%
COMMON STOCKS & RIGHTS
31,000 shs. Bangkok Insurance Public.................................... 461
31,000 rts. *Bangkok Insurance Public.................................... 454
40,400 shs. Goodyear.................................................... 834
630,000 Industrial Finance of Thailand.............................. 1,151
26,600 International Cosmetics..................................... 752
1,330 rts. *International Cosmetics..................................... 37
</TABLE>
12
<PAGE>
143,000 shs. Karat Sanitaryware................................ $ 716
81,700 Matichon.......................................... 850
53,000 Nation Publishing................................. 164
148,000 Precious Shipping................................. 1,551
92,000 Property Perfect.................................. 1,103
117,000 SK Garment........................................ 344
323,200 Saha Union........................................ 411
15,000 Sanyo Universal Electric.......................... 304
1,198,000 Siam City Bank.................................... 904
62,000 Swedish Motor..................................... 714
27,000 Varopakorn........................................ 98
Total Thailand 10,848
--------------------------------------------------------------------------------
TURKEY -- 0.1%
--------------------------------------------------------------------------------
COMMON STOCKS
86,000 Guney Biracilik................................... 59
12,220 Medya Holdings.................................... 57
105,000 *Turkiye Garanti Bankasi ADR (USD)................. 144
Total Turkey 260
--------------------------------------------------------------------------------
UNITED KINGDOM -- 12.3%
--------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS
495,000 *Abtrust Lloyds Insurance.......................... 629
99,000 wts. *Abtrust Lloyds Insurance, 2008.................... 61
35,000 shs. Anglian Group..................................... 136
106,000 *Applied Distribution Group........................ 212
341,666 Ashtead Group..................................... 2,048
80,250 Avon Rubber....................................... 730
210,000 Baggeridge Brick.................................. 400
250,000 Berisford International........................... 882
215,000 Bradford Property Trust........................... 804
134,000 British Biotechnology............................. 848
11,166 rts. *British Biotechnology............................. 35
564,000 shs. Britton Group..................................... 1,391
4,144,809 Brown & Jackson................................... 345
435,000 Bruntcliffe Aggregates............................ 230
327,600 CALA.............................................. 645
325,000 CRT Group......................................... 536
375,000 Carpetright....................................... 1,544
760,585 Casket............................................ 639
145,000 Control Techniques................................ 1,084
964,790 Crestacare........................................ 540
101,000 *DFS Furniture..................................... 459
265,000 Devro International............................... 1,043
12,857,142 *Dragon Oil........................................ 389
55,000 Druck............................................. 1,203
587,734 *Enviromed......................................... 1,192
150,952 Ferraris Group.................................... 238
20,000 *Finelist Group.................................... 45
330,000 First National Finance............................ 370
113,000 First Technology.................................. 525
247,200 Frost Group....................................... 917
26,315 shs. GWR Group......................................... $ 398
39,000 *Graham Group...................................... 123
3,839,837 Graystone......................................... 785
81,000 Greenalls......................................... 574
1,170,000 Greycoat.......................................... 323
690,000 HTV Group......................................... 1,389
300,000 *Halkin Holdings................................... 277
155,000 Hall Engineering.................................. 570
150,000 Helical Bar....................................... 834
32,500 Henderson Administration Group.................... 452
357,000 Hi-Tech Sports.................................... 481
115,000 Highland Distilleries............................. 712
308,500 Holliday Chemical Holding......................... 1,032
77,125 rts. *Holliday Chemical Holding......................... 48
190,000 shs. Ibstock Johnsen................................... 227
300,000 Ingham............................................ 531
105,000 JD Wetherspoon.................................... 588
87,000 Jupiter Tyndall Group............................. 374
150,000 Kenwood Appliances................................ 824
155,000 Kewill Systems.................................... 633
300,000 Laura Ashley Holdings............................. 402
287,330 London & Overseas Freighters...................... 409
1,565,000 Mayflower......................................... 1,326
525,252 Medeva............................................ 1,121
200,000 *Millgate.......................................... 133
485,000 Mirror Group Newspapers........................... 1,248
706,176 Monument Oil & Gas................................ 745
142,000 Nestor............................................ 150
258,000 *Northern Leisure.................................. 168
47,843 *Norton Group...................................... 0
415,000 Owners Abroad..................................... 776
100,000 Pentos............................................ 42
133,333 rts. *Pentos............................................ 4
141,000 shs. Peter Black Holdings.............................. 529
105,000 Pict Petroleum.................................... 257
385,000 Pizza Express..................................... 723
32,000 Porvair........................................... 169
139,000 Powerscreen International......................... 505
300,000 Princedale Group.................................. 98
2,100,000 Prospect Industries............................... 564
263,575 Prowting.......................................... 674
264,979 Quadramatic....................................... 734
510,000 Raine Industries.................................. 672
5,751,000 Regal Hotel Group................................. 174
145,000 Sage Group........................................ 1,304
50,000 Serco Group....................................... 215
510,000 Shandwick......................................... 386
255,000 rts. *Shandwick......................................... 19
635,555 shs. Spring Ram........................................ 582
121,000 Stagecoach Holdings............................... 350
475,000 Stakis............................................ 647
118,750 Stakis, new....................................... 162
210,000 Sterling Publishing............................... 578
13
<PAGE>
--------------------------------------------------------------------------------
UNITED KINGDOM (Cont'd)
--------------------------------------------------------------------------------
750,000 shs. Stirling Group.................................... $ 636
167,540 T Cowie........................................... 837
106,000 The Telegraph..................................... 977
6,800,000 Ticketing Group................................... 206
960,000 Transfer Technology Group......................... 1,206
51,000 *Trifast........................................... 162
187,000 Trinity Holdings.................................. 877
671,043 *UK Estates........................................ 264
475,000 *Ugland International.............................. 891
4,126,309 Verity Group...................................... 726
14,437 wts. *Verity Group...................................... 0
265,000 shs. Vibroplant........................................ 389
599,000 WPP Group......................................... 1,106
573,888 Wickes............................................ 934
5,015,000 Wiggins Group..................................... 493
56,865
PREFERRED STOCK
77,000 First National Finance, Cum. Cv., 7.00%........... 170
Total United Kingdom 57,035
--------------------------------------------------------------------------------
VENEZUELA -- 0.6%
--------------------------------------------------------------------------------
COMMON STOCKS
102,667 Mavesa ADR (USD).................................. 616
133,333 Mavesa Sponsored ADR (USD)........................ 800
109,333 Mavesa ADS (USD).................................. 656
48,000 Sudamtex de Venezuela ADR (USD)................... 342
40,000 *Veprecar GDS (USD)................................ 280
Total Venezuela 2,694
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 3.0%
--------------------------------------------------------------------------------
COMMERCIAL PAPER
$2,000,000 Abbey National, 3.42%, 5/9/94..................... 1,999
5,000,000 Export Finance & Insurance, 3.21%, 7/1/94......... 4,928
3,100,000 Federal Home Loan Bank, 3.55%, 5/2/94............. 3,099
3,000 Harvard University, 3.55%, 5/2/94................. 3
2,100,000 Province of Quebec, 3.25%, 7/18/94................ 2,066
12,095
OTHER
$2,000,000 Corporate Asset Funding, Floating Rate Medium-Term
Note, 3.72%, 12/12/94............................. $ 2,000
Total Short-Term Investments 14,095
--------------------------------------------------------------------------------
Total Investments in Securities -- 97.7%
(Cost--$408,876) $453,640
--------------------------------------------------------------------------------
Other Assets Less Liabilities -- 2.3%................................ 10,909
Net Assets Consisting of:
Accumulated net investment income
- net of distributions................................. $ 196
Accumulated realized gains/losses
- net of distributions................................. 14,116
Unrealized appreciation of investments.................... 44,736
Paid-in-capital applicable to
26,953,805 shares of $0.01 par
value capital stock outstanding;
1,000,000,000 shares of the
Corporation authorized................................. 405,501
-------
Net Assets - 100.0% $464,549
========
Net Asset Value Per Share $17.24
======
--------------------------------------------------------------------------------
* Non-income producing
(ATS) Austrian schilling denominated
(CAD) Canadian dollar denominated
(CHF) Swiss franc denominated
(DEM) German deutschemark denominated
(ESP) Spanish peseta denominated
(FRF) French franc denominated
(SEK) Swedish krona denominated
(USD) U.S. dollar denominated
(L) Local registered shares
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations
--------------------------------------------------------------------------------
T. Rowe Price International Discovery Fund / Six Months Ended April 30, 1994
(Unaudited)
Amounts in Thousands
--------------------
INVESTMENT INCOME
Income
Dividends (net of foreign taxes of $337)............... $ 2,770
Interest............................................... 725
-------
Total income........................................... $ 3,495
Expenses
Investment management fees............................. 2,323
Shareholder servicing fees & expenses.................. 524
Custodian and accounting fees & expenses............... 211
Registration fees & expenses........................... 48
Prospectus & shareholder reports....................... 45
Legal & auditing fees.................................. 22
Directors' fees & expenses............................. 6
Proxy & annual meeting expenses........................ 3
Miscellaneous expenses................................. 4
-------
Total expenses......................................... 3,186
-------
Net investment income.................................... 309
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
Securities............................................. 25,731
Foreign currency transactions.......................... (188)
-------
Net realized gain........................................ 25,543
Change in unrealized appreciation or depreciation
Securities............................................. (4,925)
Other assets and liabilities denominated in foreign
currencies........................................... (1)
-------
Change in unrealized appreciation or depreciation........ (4,926)
-------
Net gain on investments.................................. 20,617
-------
INCREASE IN NET ASSETS FROM OPERATIONS................... $20,926
=======
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
Statement of Changes in Net Assets
T. Rowe Price International Discovery Fund (Unaudited)
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Ten Months Ended December 31,
April 30, 1994 October 31, 1993* 1992
---------------- ------------------ ------------
Amounts in Thousands
----------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income.................................................... $ 309 $ 1,519 $ 1,922
Net realized gain (loss) on investments.................................. 25,543 5,120 (3,531)
Change in unrealized appreciation or
depreciation of investments............................................ (4,926) 67,531 (16,465)
---------- ---------- ----------
Increase (decrease) in net assets from operations........................ 20,926 74,170 (18,074)
---------- ---------- ----------
Distributions to shareholders
Net investment income.................................................... (1,527) -- (1,870)
Net realized gain on investments......................................... (436) -- --
---------- ---------- ----------
Decrease in net assets from distributions to shareholders................ (1,963) -- (1,870)
---------- ---------- ----------
Capital share transactions
Sold 12,184, 11,047 and 6,437 shares..................................... 213,451 155,157 82,642
Distributions reinvested of 102, 0 and 144 shares........................ 1,746 -- 1,672
Redeemed 5,688, 4,933 and 5,181 shares................................... (98,612) (66,688) (64,839)
---------- ---------- ----------
Increase in net assets from capital share transactions................... 116,585 88,469 19,475
---------- ---------- ----------
Net equalization........................................................... -- -- 12
---------- ---------- ----------
Total increase (decrease).................................................. 135,548 162,639 (457)
NET ASSETS
Beginning of period...................................................... 329,001 166,362 166,819
---------- ---------- ----------
End of period............................................................ $ 464,549 $ 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.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
T. Rowe Price International Discovery Fund / April 30, 1994 (Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price International Funds, Inc. (the Corporation) is registered under
the Invest-ment 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, all
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at the mean of the bid and offer prices of such currencies
against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
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.
NOTE 2 - FINANCIAL INSTRUMENTS
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 $207,816,000 and $113,420,000.
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. The Fund has unused realized capital loss carryforwards for
federal income tax purposes of $10,670,000 at October 31, 1993, which expire
through 2000.
17
<PAGE>
At April 30, 1994, the aggregate cost of investments for federal income tax
and financial reporting purposes was $408,876,000 and net unrealized
appreciation aggregated $44,764,000, of which $68,010,000 related to appreciated
investments and $23,246,000 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 April 30, 1994, and for the six months 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
average net assets have grown or expenses have declined sufficiently so as not
to cause the Fund's ratio of expenses to average net assets 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, $18,000 of
unaccrued 1991-1992 fees were repaid during the six months ended April 30, 1994,
and $528,000 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 six months ended April 30, 1994, the Fund, in the ordinary
course of business, paid commissions of $200,000 to, and placed security
purchase and sale orders aggregating $32,981,000 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 six months ended April 30, 1994, the Fund incurred fees
totalling approximately $472,000 for these services provided by related parties.
At April 30, 1994, these investment management and service fees payable were
$480,000.
18
<PAGE>
Financial Highlights
T. Rowe Price International Discovery Fund (Unaudited)
<TABLE>
<CAPTION>
For a share outstanding throughout each period
----------------------------------------------------------------------------------
From
December 30,
1988
Six Months Ten Months (Commencement
Ended Ended Year Ended December 31, of Operations) to
April 30, 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......................... -- 0.07* 0.13* 0.13* 0.14* 0.14*
Net realized and unrealized gain (loss)....... 1.17 4.41 (1.31) 1.24 (1.91) 4.03
-------- -------- -------- -------- -------- -------
Total from Investment Activities................ 1.17 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.................. $ 17.24 $ 16.16 $ 11.68 $ 12.99 $ 11.75 $ 13.94
======== ======== ======== ======== ======== =======
===================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Total Return.................................... 7.3% 38.4% (9.1)% 11.7% (12.8)% 41.8%
Ratio of Expenses to Average Net Assets......... 1.51%+ 1.50%+* 1.50%* 1.50%* 1.50%* 1.50%*
Ratio of Net Investment Income
to Average Net Assets......................... 0.15%+ 0.81%+ 1.07% 1.03% 1.10% 0.76%
Portfolio Turnover Rate......................... 58.9%+ 71.8%+ 38.0% 56.3% 44.0% 38.3%
Net Assets, End of Period (in thousands)........ $464,549 $329,001 $166,362 $166,819 $136,660 $61,166
Number of Shareholder Accounts,
End of Period................................. 40,000 27,000 20,000 21,000 20,000 5,000
===================================================================================================================================
</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.
19
<PAGE>
GRAPHICS APPENDIX LIST
----------------------
International Discovery Fund Semiannual
---------------------------------------
Geographical Comparison
A pie chart breaks out the percentages of International Discovery Fund
holdings held in individual countries throughout the world.
<PAGE>
SemiAnnual 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 distri-
bution 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
April 30, 1994
(ART APPEARS HERE)
