<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
This was a disappointing quarter for Japanese stocks, although favorable
currency conversion salvaged performance for U.S. investors. After four years
of waiting, the Japanese economy finally confirmed a steady recovery and the
interest rate environment remained benign. Nevertheless, the markets fell
sharply. In yen terms, the Tokyo Stock Exchange First Section (large
companies) fell by 9%, and the Second Section (smaller companies) by 11.2%,
although all of these translated into substantial gains in dollar terms, as
shown below.
Your fund also benefited from the strong yen, providing a solid
quarterly advance that reflected its mix of large- and smaller-company
stocks. The strength of the yen has been surprising, although we did not
expect a rise in the dollar this year. We do not foresee significant dollar
weakness from present levels, but neither do we see much improvement.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
Periods Ended 4/30/95
3 Months 6 Months
------------------------
<S> <C> <C>
Japan Fund 6.4% -8.5%
Tokyo First Section Index* 7.2 -3.0
Tokyo Second Section Index* 4.6 -10.9
- --------------------------------------------------------------------------------
</TABLE>
* Unmanaged
MARKET REVIEW
It would be easy to blame market weakness on the impact of the devastating
Kobe earthquake and its likely $100 billion cost or the effects of the rising
yen on corporate profit expectations. However, both reasons seem subordinate
to the core problem, which was the poor supply/demand situation for stocks.
The cross-shareholding system (in which corporations own each other's stock)
continued to erode. The corporate sector has been a net seller of equities
for a record 54 months, and the banks were also keen to book equity profits
to prop up weak balance sheets ahead of their fiscal year-end on March 31.
The main buyers of Japanese stocks of late, foreigners, greatly scaled back
their level of activity following further reductions in global liquidity
aggravated by higher U.S. interest rates. Domestic demand was weak.
The major question now seems to be not what the earnings recovery will
look like but what the appropriate valuation level is for this future
earnings stream. The main Japanese market still looks mixed to negative. On
the positive side, the price/cash flow multiple has fallen to 8.1, price/book
value to 2.1 (both lower than the U.S. market); and the difference between
the dividend yield and long-term interest rates is near the low end of its
recent ranges.
However, in view of continued deflation and the stubborn unwillingness
of business to break with the social contract and meaningfully cut costs,
returns on equity remain very low and price/earnings multiples high. While it
is hard to say that the overall market looks cheap given these
characteristics, it cannot be stressed enough that within the market there
are many attractively priced companies showing good growth.
The economic picture continues to improve slowly. The impact of Kobe and
the strong yen will severely restrain this improvement, but we do not think
it will be aborted. A yen at 85 per dollar or thereabouts will certainly
depress repatriated overseas profits, but with so many Japanese export
industries holding dominant world market shares with strong brands, customers
are unlikely to reduce demand significantly.
Prior to the recent yen strength, the economic figures were good. In the
consumer sector, new vehicle sales rose 14% for the 12 months ending in
February, with electrical retailers also reporting strong gains. Capital
investment looks to be turning as expected: despite the longer-term need to
move
<PAGE>
production facilities offshore, simple replacement domestic investment is now
required after the last boom in the late 1980s. Indeed, machine tool orders
jumped significantly in February and March compared with year-earlier levels.
More broadly, industrial production was up 5.1% for the 12 months ending in
March, and the previously sluggish growth of the broad money supply finally
started to accelerate.
Despite this improvement, inflation remains negligible. The CPI rose
marginally in February, while the wholesale price index actually fell slightly.
This has helped drive the long bond yield back down to 3.4%. Combined with the
pickup in the economy, these should have been ideal conditions for good equity
market performance.
PORTFOLIO STRATEGY
Against this background, we have continued to favor more economically
sensitive stocks, with major overweightings compared with the index in
machinery, electricals, and specialty retailers. In machinery the weighting
was raised to 11% because of our optimistic view on capital investment. We
added DISCO, SHINKAWA, and TOKYO ELECTRON, semiconductor production equipment
manufacturers; IDEC IZUMI, a diversified control equipment manufacturer; and
SODICK, the laser cutting tools producer. All have low price/sales and
price/book value ratios. More important, they all have high world market
shares and, therefore, are often able to price their products at yen-
equivalent levels.
We selectively increased exposure to electricals, now 21% of your fund,
following price weakness resulting from the strong yen. We added to your
holdings in leading industrial electronics manufacturer NEC and the component
manufacturer TDK, while maintaining current positions in retailers. While
deflation remains a problem, strong volume growth across all retail sectors
from sports goods to electrical products has ensured continued solid revenue
growth. Retailers smart enough to secure overseas supply sources have also
seen margins expand.
We reduced exposure to construction and housing companies by selling
into strength following the earthquake. Although interest rates have recently
fallen again, we have resisted the temptation to buy back into interest rate-
sensitive stocks, believing we are close to a bottom in this cycle and the
next major interest rate move will be up.
INVESTMENT OUTLOOK
Despite the market's overall pessimistic tone, we continue to find quality
companies showing good growth and selling at reasonable valuations,
particularly in economically sensitive sectors. A number of stocks in your
fund now have mid-teen P/E multiples, which would look reasonable on any
other stock market even before factoring in the impact of cross-shareholdings,
higher depreciation, and a backdrop of lower bond yields and inflation. We
will continue our extensive company visits, believing that when the
supply/demand picture in the broader market improves, these lower-multiple
stocks should perform well.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
May 15, 1995
2
<PAGE>
- --------------------------------------------------------------------------------
Industry Diversification
- --------------------------------------------------------------------------------
April 30, 1995
<TABLE>
<CAPTION>
Percent of
Net Assets
-----------
<S> <C>
Capital Goods 32.6%
- --------------------------------------------------------------------------------
Consumer Goods 26.6
- --------------------------------------------------------------------------------
Basic Industry 24.0
- --------------------------------------------------------------------------------
Financial/Insurance 3.9
- --------------------------------------------------------------------------------
Transport/Storage 3.9
- --------------------------------------------------------------------------------
Energy 0.9
- --------------------------------------------------------------------------------
Reserves 8.1
- --------------------------------------------------------------------------------
Total Net Assets 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Security Classification
- --------------------------------------------------------------------------------
April 30, 1995
Percent Market
of Net Cost Value
Assets (000) (000)
-------- ------- -------
<S> <C> <C> <C>
Common Stocks
and Warrants 91.9% $151,611 $143,593
- --------------------------------------------------------------------------------
Short-Term
Investments 7.3 11,492 11,492
- --------------------------------------------------------------------------------
Total Investments 99.2 163,103 155,085
- --------------------------------------------------------------------------------
Other Assets Less
Liabilities 0.8 1,178 1,210
- --------------------------------------------------------------------------------
Total Net Assets 100.0% $164,281 $156,295
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Average Annual Compound Total Returns
- --------------------------------------------------------------------------------
Periods Ended April 30, 1995
Since Inception
1 Year 12/27/91
---------- ---------------
-6.9% 4.5%
- --------------------------------------------------------------------------------
Note: For the calendar quarter ending 3/31/95, the fund's returns for the
above periods were -7.6% and 3.8%, respectively.
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
- --------------------------------------------------------------------------------
Twenty-Five Largest Holdings
- --------------------------------------------------------------------------------
April 30, 1995
<TABLE>
<CAPTION>
Percent of
Net Assets
----------
<S> <C>
Sony 2.7%
- --------------------------------------------------------------------------------
Sekisui Chemical 2.6
- --------------------------------------------------------------------------------
TDK 2.4
- --------------------------------------------------------------------------------
Sumitomo 2.3
- --------------------------------------------------------------------------------
National House 2.2
- --------------------------------------------------------------------------------
Murata Manufacturing 2.2
- --------------------------------------------------------------------------------
Mitsui Fudosan 2.2
- --------------------------------------------------------------------------------
NEC 2.1
- --------------------------------------------------------------------------------
Komori 2.1
- --------------------------------------------------------------------------------
Kuraray 2.1
- --------------------------------------------------------------------------------
Japan Synthetic Rubber 2.1
- --------------------------------------------------------------------------------
DDI 2.0
- --------------------------------------------------------------------------------
Nippon Denso 2.0
- --------------------------------------------------------------------------------
Canon 2.0
- --------------------------------------------------------------------------------
Mitsubishi Heavy Industries 1.9
- --------------------------------------------------------------------------------
Ryoyo Electro 1.9
- --------------------------------------------------------------------------------
Sharp 1.8
- --------------------------------------------------------------------------------
Makita 1.6
- --------------------------------------------------------------------------------
Marui 1.6
- --------------------------------------------------------------------------------
Sekisui House 1.6
- --------------------------------------------------------------------------------
Teijin 1.6
- --------------------------------------------------------------------------------
Tokyo Electron 1.6
- --------------------------------------------------------------------------------
Nippon Steel 1.6
- --------------------------------------------------------------------------------
Amada 1.6
- --------------------------------------------------------------------------------
Sumitomo Electric 1.6
- --------------------------------------------------------------------------------
Total 49.4%
- --------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
T. Rowe Price Japan Fund / April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
(values in thousands except capital stock information)
- --------------------------------------------------------------------------------
JAPAN -- 91.9%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
--------
<S> <C> <C>
COMMON STOCKS & WARRANTS
35,000 shs. Advantest................................... $ 1,133
111,000 Alps Electric............................... 1,281
232,000 Amada....................................... 2,479
10,000 Amway Japan................................. 372
41,000 Aoyama Trading.............................. 795
50,000 Apollo Electronics.......................... 863
10,200 Asatsu...................................... 407
8,000 Aval Data................................... 137
42,000 Avon Products............................... 299
185,000 Canon....................................... 3,060
12,000 Canon Sales................................. 317
1,000 wts. *Canon Sales, 11/11/97 (CHF)................. 74
3,000 shs. Chofu Seisakusho............................ 77
4,000 Chuetsu Pulp & Paper........................ 23
235,000 Citizen Watch............................... 1,686
363 DDI......................................... 3,196
62,000 Dai Nippon Screen
Manufacturing ............................ 402
23,000 Daibiru..................................... 285
20,000 Daifuku..................................... 262
55,000 Daiichi Pharmaceutical...................... 890
101,000 Daiwa House................................. 1,683
10,000 Disco....................................... 306
408 East Japan Railway.......................... 2,122
13,000 Eidensha.................................... 176
560 wts. *Eidensha, 2/14/96 (DEM)..................... 22
4,000 shs. Emoto Industry.............................. 67
11,000 Enix........................................ 351
10,000 Enplas...................................... 233
3,600 F.C.C....................................... 113
6,000 Fanuc....................................... 271
12,000 Glory....................................... 366
35,000 Hamada Printing Press....................... 308
4,000 Hirose Electric............................. 243
167,000 Hitachi..................................... 1,699
28,000 Hitachi Tool Engineering.................... 167
323,000 Hitachi Zosen............................... 1,549
138,000 Honda Motor................................. 2,233
14,000 Horiba...................................... 180
37,000 Idec Izumi.................................. 315
22,000 Ishiguro Homa............................... 419
359,000 Ishihara Sangyo Kaisha...................... 1,422
20,000 Ito-Yokado.................................. 1,078
54,000 Iwata Air Compressor
Manufacturing ............................ 261
26,000 Japan Airport Terminal...................... 322
28,000 Japan Living Service........................ 220
526,000 shs. Japan Synthetic Rubber...................... 3,223
17,000 Juel Verite Ohkubo.......................... 165
40 wts. *Juel Verite Ohkubo,
3/10/98 (CHF) ............................ 4
16,000 shs. KOA......................................... 244
14,000 KTK Telecommunications
Engineering .............................. 170
11,000 Kansai Sekiwa Real Estate................... 165
8,000 Kato Denki.................................. 195
4,100 Keyence..................................... 437
36,000 Kokuyo...................................... 925
256,000 Komatsu..................................... 2,035
131,000 Komori...................................... 3,258
147,000 Kumagai Gumi................................ 819
274,000 Kuraray..................................... 3,257
10,000 Kyocera..................................... 773
9,200 Kyokuto Kaihatsu Kogyo...................... 214
7,000 Lasertec.................................... 266
4,000 Levi Strauss Japan
Kabushiki Kaisha ......................... 68
9,000 Lintec...................................... 154
900 Mabuchi Motor............................... 59
166,000 Makita...................................... 2,568
167,000 Marui....................................... 2,563
7,700 Masaru...................................... 145
103,000 Matsushita Electric
Industrial ............................... 1,728
22,000 Meitec...................................... 280
38,000 Meitetsu Transport.......................... 273
1,500 wts. *Meitetsu Transport,
4/30/97 (CHF) ............................ 95
418,000 shs. Mitsubishi Heavy Industries................. 3,034
137,000 Mitsubishi Paper Mills...................... 990
297,000 Mitsui Fudosan.............................. 3,456
146,000 Mitsui Petrochemical
Industries ............................... 1,383
12,000 Mori Seiki.................................. 224
4,000 Mos Food Services........................... 118
86,000 Murata Manufacturing........................ 3,459
299,000 NEC......................................... 3,309
27,000 Namura Shipbuilding......................... 161
170,000 National House.............................. 3,480
11,000 Natoco Paint................................ 170
32,000 New Japan Securities........................ 196
50,000 Nichicon.................................... 714
1,000 Nichiei..................................... 64
8,000 Nihon Dempa Kogyo........................... 243
50,000 Nippon Columbia............................. 339
157,000 Nippon Denso................................ 3,157
40,800 Nippon Denwa Shisetsu....................... 377
11,000 Nippon Kagaku Yakin......................... 110
92,000 Nippon Kakoh Seishi......................... 481
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
27,000 shs. Nippon Konpo Unyu Soko...................... $ 264
25,000 Nippon Seiki................................ 405
631,000 Nippon Steel................................ 2,508
36,000 Nippon Thompson............................. 261
52,000 Nippon Yusoki............................... 242
6,000 Nissha Printing............................. 101
27,600 Nitta....................................... 401
39,000 Nomura Securities........................... 789
20,000 Okasan Securities........................... 112
13,000 Osaka Organic Chemical...................... 152
12,000 Paltac...................................... 200
73,000 Pioneer Electronic.......................... 1,538
3,300 Promise..................................... 144
132,000 Ryoyo Electro............................... 2,984
2,900 SMC......................................... 154
10,000 Sangetsu.................................... 295
17,000 Sanken Electric............................. 157
101,200 Sankyo...................................... 2,433
11,000 Sankyo Engineering.......................... 267
36,000 Sankyo Seiki Manufacturing.................. 217
14,000 Sanoyas Hishino Meisho...................... 80
24,000 Sanyo Securities............................ 109
36,000 Sega Enterprises............................ 1,654
330,000 Sekisui Chemical............................ 4,123
194,000 Sekisui House............................... 2,563
11,000 Senshukai................................... 215
33,000 Seven-Eleven Japan.......................... 2,376
167,000 Sharp....................................... 2,742
88,000 Shinetsu Chemical........................... 1,707
11,000 Shinkawa.................................... 275
54,000 Sintokogio.................................. 461
42,000 Sodick...................................... 335
44,000 Sogo Denki.................................. 327
82,400 Sony........................................ 4,158
363,000 Sumitomo.................................... 3,607
182,000 Sumitomo Electric........................... 2,469
84,000 Sumitomo Forestry........................... 1,489
20,000 Sumitomo Precision.......................... 145
81,000 TDK......................................... 3,701
20,000 Tamura...................................... 150
452,000 Teijin...................................... 2,550
16,000 Toc......................................... 171
12,000 Tohoku
Telecommunications ....................... 86
23,100 Tokai Rubber Industries..................... 291
81,000 Tokyo Electron.............................. 2,525
81,000 Tokyo Steel Manufacturing................... 1,696
86,000 Toppan Printing............................. 1,249
36,000 Topre....................................... 310
76,000 Toshiba Tungaloy............................ 393
12,000 Toyo Communication
Equipment ................................ 293
41,000 shs. Toyo Steel.................................. $ 190
35,000 Toyo Umpanki................................ 167
6,000 Trusco Nakayama............................. 141
7,000 Uniden...................................... 147
30,000 Wako Securities............................. 236
10,900 Xebio....................................... 384
27,000 Yamatane Securities......................... 130
24,000 Yamato Kogyo................................ 246
47,000 York Benimaru............................... 1,857
23,000 Yurtec...................................... 509
TOTAL JAPAN 143,593
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 7.3%
- --------------------------------------------------------------------------------
COMMERCIAL PAPER
$3,000,000 Bank of Nova Scotia (London),
6.07%, 5/4/95............................. 3,000
500,000 Ciba-Geigy, 6.00%, 7/10/95.................. 494
2,000,000 Ciesco L.P., 5.98%, 7/20/95................. 1,971
30,000 President & Fellows Harvard
College, 5.93%, 5/1/95 ................... 30
6,000,000 UBS Finance (Delaware),
5.93%, 5/1/95............................. 5,997
TOTAL SHORT-TERM INVESTMENTS 11,492
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES--99.2% OF NET
ASSETS (COST $163,103) $155,085
- --------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES ...................................... 1,210
--------
NET ASSETS CONSIST OF: Value
--------
Accumulated net investment income
- net of distributions..................... $ (369)
Accumulated net realized gain/loss
-net of distributions...................... (156)
Net unrealized gain (loss)................... (7,986)
Paid-in-capital applicable to
15,849,340 shares of $0.01 par
value capital stock outstanding;
2,000,000,000 shares of the
Corporation authorized..................... 164,806
-------
Net Assets.......................................................... $156,295
========
Net Asset Value Per Share........................................... $9.86
========
- --------------------------------------------------------------------------------
</TABLE>
* Non-income producing
(CHF) Swiss franc
(DEM) German deutschemark
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price Japan Fund / Six Months Ended April 30, 1995 (Unaudited)
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividend (net of foreign taxes of $109)........................... $ 618
Interest.......................................................... 201
--------
Total income...................................................... 819
--------
Expenses
Investment management............................................. 748
Shareholder servicing............................................. 234
Custody and accounting............................................ 94
Registration...................................................... 44
Prospectus and shareholder reports................................ 41
Legal and audit................................................... 13
Proxy and annual meeting.......................................... 6
Directors......................................................... 5
Miscellaneous..................................................... 3
--------
Total expenses.................................................... 1,188
--------
Net investment income............................................... (369)
--------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities........................................................ (202)
Foreign currency transactions..................................... (119)
--------
Net realized gain (loss).......................................... (321)
--------
Change in net unrealized gain or loss on:
Securities........................................................ (16,503)
Other assets and liabilities denominated in foreign currencies.... 26
--------
Change in net unrealized gain or loss............................. (16,477)
--------
Net realized and unrealized gain (loss)............................. (16,798)
--------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS................... $(17,167)
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price Japan Fund (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1995 October 31, 1994
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income................................................ $ (369) $ (1,064)
Net realized gain (loss)............................................. (321) 13,693
Change in net unrealized gain or loss................................ (16,477) (1,704)
-------- ---------
Increase (decrease) in net assets from operations.................... (17,167) 10,925
-------- ---------
Distributions to shareholders
Net realized gain.................................................... (12,421) (5,844)
-------- ---------
Capital share transactions*
Shares sold.......................................................... 64,314 318,131
Distributions reinvested............................................. 11,939 5,598
Shares redeemed...................................................... (93,673) (212,670)
-------- ---------
Increase (decrease) in net assets from capital share transactions.... (17,420) 111,059
-------- ---------
Increase (decrease) in net assets ..................................... (47,008) 116,140
NET ASSETS
Beginning of period.................................................... 203,303 87,163
-------- ---------
End of period.......................................................... $156,295 $ 203,303
======== =========
- -------------------------------------------------------------------------------------------------------------------
*Share information
Shares sold........................................................ 6,582 28,189
Distributions reinvested........................................... 1,181 573
Shares redeemed.................................................... (9,374) (18,831)
-------- ---------
Increase (decrease) in shares outstanding.......................... (1,611) 9,931
======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price Japan Fund / April 30, 1995 (Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price International Funds, Inc. (the Corporation) is registered under
the Investment Company Act of 1940. The Japan 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.
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 - Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such
transactions. The effect of changes in foreign exchange rates on realized and
unrealized security gains and losses is reflected as a component of such
gains and 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 and may differ from those determined in accordance with
generally accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term and U.S.
government securities, aggregated $21,909,000 and $60,253,000, respectively,
for the six months ended April 30, 1995.
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.
At April 30, 1995, the aggregate cost of investments for federal income
tax and financial reporting purposes was $163,103,000 and net unrealized loss
aggregated $8,018,000, of which $5,219,000 related to appreciated investments
and $13,237,000 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, of which
$123,000 was payable at April 30, 1995. The fee is computed
8
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
daily and paid monthly, and consists of an Individual Fund Fee equal to 0.50%
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. At April 30,
1995, and for the six months then ended, the effective annual Group Fee rate
was 0.34%. The fund pays a pro rata share of the Group Fee based on the ratio
of its net assets to those of the Group.
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through October 31, 1995 which would cause the
fund's ratio of expenses to average net assets to exceed 1.50%. Thereafter
through October 31, 1997, the fund is required to reimburse the Manager for
these expenses, provided that average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing the fund's ratio
of expenses to average net assets to exceed 1.50%. Pursuant to this and a
previous agreement, $79,000 of unaccrued 1992-1993 fees were repaid during
the six months ended April 30, 1995, and $262,000 remains subject to
reimbursement through December 31, 1995.
In addition, the fund has entered into agreements with Price Associates
and two wholly owned subsidiaries of Price Associates, pursuant to which the
fund receives certain other services. Price Associates computes the daily
share price and maintains the financial records of the fund. T. Rowe Price
Services, Inc. (TRPS) is the fund's transfer and dividend disbursing agent
and provides shareholder and administrative services to the fund. T. Rowe
Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping
services for certain retirement accounts invested in the fund. The fund
incurred expenses pursuant to these related party agreements totaling
approximately $231,000 for the six months ended April 30, 1995, of which
$59,000 was payable at period-end.
During the six months ended April 30, 1995, the fund, in the ordinary
course of business, paid commissions of $136,000 to, and placed security
purchase and sale orders aggregating $26,679,000 with, certain affiliates of
the Manager in connection with the execution of various portfolio
transactions.
9
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price Japan Fund (Unaudited)
<TABLE>
<CAPTION>
For a share outstanding throughout each period
-----------------------------------------------------------------------
From
December 30, 1991
Six Months Year Ten Months (Commencement of
Ended Ended Ended Operations) to
April 30, October 31, October 31, December 31,
1995 1994 1993++ 1992
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............. $11.64 $11.58 $ 8.64 $10.00
------ ------ ------ ------
Investment Activities
Net investment income........... (0.02) (0.06)* (0.05)* (0.01)*
Net realized and unrealized gain
(loss)........................ (0.95) 0.97 2.99 (1.35)
------ ------ ------ ------
Total from Investment Activities.... (0.97) 0.91 2.94 (1.36)
------ ------ ------ ------
Distributions
Net realized gain............... (0.81) (0.85) -- --
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD...... $ 9.86 $11.64 $11.58 $ 8.64
====== ====== ====== ======
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return........................ (8.5)% 9.3%* 33.7%* (13.4)%*
Ratio of Expenses to Average
Net Assets...................... 1.50%+ 1.50%* 1.50%+* 1.50%*
Ratio of Net Investment Income to
Average Net Assets.............. (0.46)%+ (0.68)%* (0.58)%+* (0.22)%*
Portfolio Turnover Rate............. 28.3%+ 61.5% 61.4%+ 41.6%
Net Assets, End of Period
(in thousands).................. $156,295 $203,303 $87,163 $45,792
- ----------------------------------------------------------------------------------------------------------------------
</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 October 31, 1995.
+ Annualized.
10
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Services
- --------------------------------------------------------------------------------
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information and services--at no extra cost.
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE--Shareholder service representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m ET. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
IN PERSON--Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While
there, you can drop off applications or obtain prospectuses and other
literature.
AUTOMATED 24-HOUR SERVICES
Tele*Access(R) (1-800-638-2587) provides information such as account
balance, date and amount of your last transaction, latest dividend payment,
and fund prices and yields. Additionally, you have the ability to request
prospectuses, statements, account and tax forms; reorder checks; and initiate
purchase, redemption, and exchange orders for identically registered
accounts.
PC*Access(R) provides the same information as Tele*Access, but on a
personal computer via dial-up modem.
ACCOUNT SERVICES
Checking--Write checks for $500 or more on any money market and most
bond fund accounts (except the High Yield Fund and Emerging Markets Bond Fund).
Automatic Investing--Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder.
Additionally, Automatic Exchange enables you to set up systematic investments
from one fund account into another, such as from a money fund into a stock
fund. A low, $50 minimum makes it easy to get started.
Automatic Withdrawal--If you need money from your fund account on a
regular basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options--Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
INVESTMENT INFORMATION
Combined Statement--A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides
total portfolio value, and lists your investments by type--stock, bond, and
money market. Detail pages itemize account transactions by fund.
Quarterly Shareholder Reports--Portfolio managers review the performance
of the funds in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report--A quarterly newsletter with relevant articles on
market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Insights--A library of information that includes reports on mutual fund
tax issues, investment strategies, and financial markets.
Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also
available on disk for PC use), and Guide to Risk-Adjusted Performance can
help you determine and reach your investment goals.
DISCOUNT BROKERAGE
You can trade stocks, bonds, options, precious metals, and other securities
at a substantial savings over regular commission rates. Call a shareholder
service representative for more information.
11
<PAGE>
- --------------------------------------------------------------------------------
SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
T. Rowe Price
- -------------
JAPAN FUND
APRIL 30, 1995
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
Japan Fund.
T. Rowe Price
Invest With Confidence/(R)/
JAF
