Semiannual Report
International Discovery Fund
April 30, 1996
T. Rowe Price
REPORT HIGHLIGHTS
o Smaller foreign companies performed well over the last six months. In
general, returns to U.S. investors were only slightly dampened by a
strengthening of the dollar.
o Southeast Asian markets performed best, led by Malaysia and Indonesia.
Japan continued its recovery. European markets performed well, although
Germany and the U.K. trailed. Latin American markets were mixed.
o The International Discovery Fund outpaced its benchmark for the 12
months ended April 30. While producing a solid 13.4% return for the last
six months, it trailed its benchmark.
o Small international stocks should continue to do well for the rest of
the year, especially in Asia and Latin America. The economic environment
is generally favorable, earnings growth is good, and we believe
valuations are reasonable.
Fellow Shareholders
Smaller foreign companies generally performed well over the last six months,
although returns to U.S. investors were dampened slightly by a strengthening
in the dollar. Southeast Asian markets performed best, particularly Malaysia
and Indonesia. European markets, paced by Spain and Italy, provided mostly
good returns, while Germany and the U.K. trailed. The Japanese market
continued to recover even though some yen weakness trimmed U.S. dollar
returns. Latin American markets were mixed, with Mexico up robustly but Chile
showing a loss.
Performance Comparison
Periods Ended 4/30/96 6 Months 12 Months
_____________________________________________________________________________
International Discovery Fund 13.42% 16.74%
FTA Euro-Pacific Small Cap Index 18.56 12.28
The International Discovery Fund outperformed its benchmark for the 12 months
ended April 30 due to advantageous stock selection and country weightings.
While showing good results for the last six months, the fund lagged its
benchmark because of relatively low exposure to the surging Japanese market
and some poor stock selection in Southeast Asia.
MARKET REVIEW
Europe
European smaller companies rebounded strongly early in 1996 after the
lackluster final months of 1995. The prospect of lower interest rates and some
pickup in growth combined with seasonal factors to push prices higher. Europe
remained your fund's largest regional weighting at 40% of net assets.
We don't expect French small companies to sustain their recent exceptional
performance and therefore took profits in SITA, a waste disposal contractor,
and Manutan, a mail order wholesaler. However, we made a new investment in
radio operator NRJ because its recovery from international difficulties could
lead to higher earnings. In Belgium, we added shares in Barco, a diversified
electronics company that is growing strongly. Italian small companies also
produced nice gains. We reduced our stake in Safilo, a manufacturer of
ophthalmic and fashion sunglasses, which is benefiting from global fashion
trends, and sold Editoriale la Republica, a newspaper publisher facing
increased competition. We added to holdings in Pagnossin, a ceramics
manufacturer, and La Doria, a food processor benefiting from industrywide
restructuring.
_____________________________________________________________________________
AFTER LAGGING SHARPLY LAST YEAR, SMALLER STOCKS IN THE U.K. REGAINED SOME
GROUND, BUOYED BY THE PROSPECT OF STRONGER CONSUMER DEMAND AND PICKUPS IN THE
HOUSING AND RETAIL SECTORS.
In Germany, the market performed reasonably well despite concerns that the
economy is fundamentally uncompetitive. On a positive note, the deutschemark
fell back to early-1995 levels, which should help exports, and the Bundesbank
led the move toward lower European interest rates, which should encourage
economic growth. Of course, returns to U.S. investors were significantly
dampened by the weakening deutschemark. We expect smaller companies to move
ahead once the economy shows signs of improvement.
In the Netherlands, we made two big purchases, Getronics and Atag. Getronics
has been unique in the Dutch technology sector, producing consistently good
earnings. Atag, a manufacturer of bicycles, cooking appliances, light
fittings, and other consumer products, is acquiring companies and aggressively
cutting costs. We believe it will produce earnings growth of around 15% a
year.
After lagging sharply last year, smaller stocks in the U.K. regained some
ground, buoyed by the prospect of stronger consumer demand and pickups in the
housing and retail sectors. We bought a position in Cordiant, the advertising
group being revived by new management. We also bought more shares in Corporate
Services Group, a contract labor provider whose recent acquisition of the Blue
Arrow recruitment business could boost profits.
The Norwegian economy remained robust, and this strength was reflected in
significantly higher valuations. Therefore, we trimmed our overweighting here,
reducing our holdings in Sysdeco Group, a computer software company, and
Transocean, a drilling rig operator.
Japan
The economy continued its rebound from last year's deflation, exhibiting
modest but steady growth. Wholesale prices, which fell for most of last year
due to the strong yen's negative effect on international demand, clawed their
way out of negative territory and remained essentially flat. After nearly four
years of declines, department store sales showed a slight increase for the
year to April 30. However, our optimism is tempered somewhat because these
increases are measured against the abnormally low levels following last year's
Kobe earthquake and the Tokyo subway gas attacks. We feel that consumption
will rise slowly as job security and incomes improve.
Market Performance
Six Months Local Local Currency U.S.
Ended 4/30/96 Currency vs. U.S. Dollars Dollars
_____________________________________________________________________________
France 21.4% - 5.5% 14.8%
Germany 13.9 - 8.2 4.6
Hong Kong 16.0 - 0.1 16.0
Indonesia 31.4 - 2.5 28.1
Italy 15.2 1.9 17.4
Japan 21.1 - 2.4 18.2
Malaysia 25.5 2.0 28.0
Mexico 36.1 - 4.5 30.1
Netherlands 24.8 - 7.9 14.9
Norway 18.2 - 5.4 11.8
Singapore 15.2 0.6 15.9
Sweden 12.4 - 2.3 9.9
United Kingdom 10.8 - 4.9 5.4
Source: Randall Helms Database, using MSCI Indices.
Capital expenditures should continue to show modest growth despite the
long-range strategy of moving production offshore because simple replacement
capacity is now needed. Although it got a late start in combatting deflation,
the Bank of Japan continued to print money in an effort to spur the economy,
with the money supply as measured by M1 growing 16% in the year through March.
We expect small-capitalization companies to outperform their larger
counterparts, as they typically do in an improving economy, although investors
may wait for higher bond yields to provide evidence that deflation has been
licked. Small-cap valuations remained cheaper than large-caps, but not
markedly so. By our estimates, the Tokyo Stock Exchange First Section (large
companies) was selling for 40 times 1996 earnings, excluding the loss-riddled
banking sector, while the Exchange's Second Section (smaller companies) was
selling for 35 times earnings.
We see no shortage of attractive smaller companies with healthy balance sheets
in interesting niches. During the last six months, we added to positions in
real estate and services while trimming our exposure to capital equipment
stocks. With an improving outlook for commercial property, we added to
positions in Toc and Daibiru, both of which were priced at substantial
discounts to book value, and initiated positions in the construction machinery
lease companies, Nishio Rent All and Wakita.
Southeast Asia
Hong Kong stocks drew some strength from the real estate sector, where prices
showed signs of bottoming. After a strong run through January, however, the
market hit a bump when U.S. bond prices dropped (Hong Kong is sensitive to
U.S. interest rates because its currency is pegged to the dollar). Tensions
between Taiwan and mainland China exacerbated the market's problems.
Nevertheless, your fund benefited from the first signs in five years of a
small-cap recovery. We trimmed some holdings that had risen rapidly, but
bought more shares in China Apollo Holdings, a health drink concern in
mainland China.
Chart 1 - Geographic Diversification
Malaysia was one of the star markets of the last six months, rising 28% in
dollar terms. Investors became excessively gloomy on Malaysia last autumn, and
foreigners sold aggressively. However, a surprisingly good trade surplus
report for December caught the bears off-guard, and foreigners rushed back
into the market in February. We trimmed our exposure to Malaysia last August
but have remained overweighted based on the depth and energy of the economy,
sensible and prescient infrastructure spending, and policies that seem to be
cooling the economy without freezing it. We recently added stockbroker, TA
Enterprise; newspaper company, Star Publications, on the strength of lower
paper prices and booming advertising; Time Engineering, whose optical fiber
network is the target of a merger; and Tan Chong Motor Holdings, whose
Singapore property will be redeveloped. We took profits on information
technology consultant, Lityan Holdings, and sold more of our real estate
holdings.
In Indonesia, regulatory risk again dominated the headlines, reflecting what
continued to be a highly controlled economy. This time, a new National Auto
Policy was announced, giving an exclusive license with key tax advantages to a
company connected to President Suharto's family. Nevertheless, the Indonesian
market gained a resounding 28% over the half, led by strong earnings from the
market's largest stock, Telekom Indonesia.
Industry Diversification
Percent of Percent of
Net Assets Net Assets
10/31/95 4/30/96
_____________________________________________________________________________
Services 22.5% 25.0%
Capital Equipment 25.1 22.5
Consumer Goods 16.2 16.2
Finance 14.3 15.3
Materials 13.8 9.8
Energy 2.2 2.2
Multi-Industry 2.0 2.0
Gold Mines - 0.3
Miscellaneous 0.8 0.2
Reserves 3.1 6.5
_____________________________________________________________________________
Total 100.0% 100.0%
In Singapore, the economy continued slowing, with non-oil exports up a mere
5.2% through the year ended in February. Blame can be placed on the slowing
growth of global demand for electronics. Earnings reports were disappointing,
with manufacturing companies, notably the ship-repair sector, showing the
worst results. However, with continued low interest rates, asset prices again
improved, which benefited our overweighting in real estate stocks, such as
Parkway Holdings.
Latin America
Smaller stocks in Latin America endured a miserable 1995 but have generally
picked up in 1996, with the larger markets of Brazil and Mexico leading the
recovery.
In Brazil, the rapid drop in inflation and strong economic growth have
dramatically improved the lot of the average Brazilian, as well as President
Cardoso's standing in the opinion polls. The economy appears sound over the
short term, with the currency steady, the trade account in balance, and
interest rates falling. However, constitutional reform is a must for this rosy
scenario to continue. Congress passed some tax legislation, and the
much-delayed privatization of the main electricity distributor is scheduled
for the second quarter. Private sector companies, particularly appliance
manufacturers, steel producers, and retailers, have enjoyed good performance
due to increased demand. We remain enthusiastic about Brazil over the long
term.
In Mexico, the economy showed signs of recovery, with slight increases in
retail and car sales. The peso steadied and interest rates inched downward.
With the expectation that this modest revival will continue, we purchased
shares in Controladora Commercial Mexicana, a food retailer that was
attractively priced, and Grupo Cementos de Chihuahua, a regional cement
producer.
In Chile, fears of surging economic growth pushed interest rates higher.
Meanwhile, a lack of growth restrained Argentina's stock market, and continued
tension between President Menem and Finance Minister Cavallo offered little
support. Political instability also caused investor concern in Colombia, with
President Samper struggling to avoid impeachment for misuse of campaign funds,
and in Peru, where Prime Minister Cordova resigned over policy differences
with President Fujimori.
INVESTMENT POLICY AND OUTLOOK
Smaller companies have started the year well, and we are hopeful that this
trend will continue through the rest of 1996. The economic backdrop remains
reasonable, corporate earnings growth is good, bond markets should not weaken
from present levels, and valuations are generally acceptable. We believe
smaller companies in Asia and Latin America can make further progress this
year, and attractive investment opportunities can also be found in both Japan
and Europe.
Respectfully submitted,
Martin G. Wade
President
May 24, 1996
Revisiting the Case for International Equity Investing
Chart 2 - Correlation of Returns
Over the past 15 years, a growing number of U.S. investors have added
international stocks to their portfolios, mixing domestic and foreign stocks
in the pursuit of higher overall returns with lower volatility. In recent
months, however, some naysayers have questioned the benefits of international
diversification. Some claim that the era of higher international returns is
over, citing the recent superior performance of U.S. stocks. Others point to
short periods when U.S. and international markets moved in tandem, so-called
"high correlation," as proof that foreign stocks no longer offer adequate
diversification.
On the contrary, performance and correlation, when viewed over the long term,
reinforce the case for international diversification. For instance, although
U.S. stocks have recently outperformed, foreign stocks have outpaced them in
seven of the last 12 years. (We used the MSCI Europe, Australia, and Far East
Index - EAFE - to measure foreign stocks and the Standard & Poor's 500 Stock
Index for domestic equities.)
Furthermore, correlations have remained low over the long term. The chart
shows the correlation of various foreign markets to the U.S. over two 10-year
periods. A measurement of 100% would indicate that foreign stocks moved in the
same direction as U.S. stocks all of the time. The overall correlation of
foreign stocks has actually declined: from 1981 through 1990, the EAFE and the
S&P 500 moved in the same direction 41% of the time, but from 1986 through
1995, the correlation dropped to 34%. Correlations declined in the
Netherlands, Germany, and Japan and rose only modestly in the U.K. and Hong
Kong.
Inevitably, there are short periods when foreign markets move with the U.S.
market, usually when the latter is experiencing significant volatility. In
general, however, foreign markets follow their own path depending mostly on
the unique fundamentals of each country. In our opinion, the case for
international diversification remains solid. Foreign stocks may be poised to
regain leadership because many international economies are at earlier stages
of expansion than the U.S. economy. If correlations remain low over the long
term, as we expect, diversifying into foreign stocks could continue to be an
effective way to limit risk and enhance returns.
T. Rowe Price International Discovery Fund
Portfolio Highlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/96
_____________________________________________________________________________
Telekom Indonesia, Indonesia 0.9%
Phileo Allied, Malaysia 0.8
China Trust, Taiwan 0.8
Otra, Netherlands 0.8
JBA Holdings, United Kingdom 0.7
_____________________________________________________________________________
Ranstad Holdings, Netherlands 0.7
Test Rite International, Taiwan 0.6
Yageo, Taiwan 0.6
Corporate Services Group, United Kingdom 0.6
MTD Capital, Malaysia 0.6
_____________________________________________________________________________
Regal Hotel Group, United Kingdom 0.6
Keyence, Japan 0.6
British Biotechnology, United Kingdom 0.5
Matthew Clark, United Kingdom 0.5
Ashtead Group, United Kingdom 0.5
_____________________________________________________________________________
HTV Group, United Kingdom 0.5
Druck Holdings, United Kingdom 0.5
Mayflower, United Kingdom 0.5
Britton Group, United Kingdom 0.5
TA Enterprise, Malaysia 0.5
_____________________________________________________________________________
Rhoen Klinikum, Germany 0.4
Mirror Group, United Kingdom 0.4
Malaysian Assurance Alliance, Malaysia 0.4
Hoganas, Sweden 0.4
China Apollo Holdings, China 0.4
_____________________________________________________________________________
Total 14.3%
T. Rowe Price International Discovery Fund
Performance Comparison
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
Chart 3 - SEC Graph - International Discovery Fund
Average Annual Compound Total Return
1 3 5 Since Inception
Periods Ended 4/30/96 Year Years Years Inception Date
_____________________________________________________________________________
International
Discovery Fund 16.74% 8.56% 5.70% 8.97% 12/30/88
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
T. Rowe Price International Discovery Fund
Unaudited
Financial Highlights For a share outstanding throughout each period
6 Months Year 10 Months# Year
Ended Ended Ended Ended
4/30/96 10/31/95 10/31/94 10/31/93 12/31/92 12/31/91 12/31/90
NET ASSET VALUE
Beginning of
period $ 14.43 $ 17.63 $ 16.16 $11.68 $ 12.99 $ 11.75 $ 13.94
Investment activities
Net
investment
income 0.01 0.10 0.04 0.07* 0.13* 0.13* 0.14*
Net realized
and unrealized
gain (loss) 1.91 (2.38) 1.52 4.41 (1.31) 1.24 (1.91)
Total from
investment
activities 1.92 (2.28) 1.56 4.48 (1.18) 1.37 (1.77)
Distributions
Net investment
income (0.10) (0.06) (0.07) - (0.13) (0.13) (0.15)
Net realized
gain (0.02) (0.87) (0.02) - - - (0.27)
Total
distri-
butions (0.12) (0.93) (0.09) - (0.13) (0.13) (0.42)
Redemption fees
added to paid-
in-capital - 0.01 - - - - -
NET ASSET VALUE
End of period $ 16.23 $ 14.43 $ 17.63 $16.16 $ 11.68 $ 12.99 $ 11.75
Ratios/Supplemental Data
Total return 13.4% (13.1)% 9.7% 38.4%* (9.1)%* 11.7%* (12.8)%*
Ratio of expenses
to average
net assets 1.47%! 1.50% 1.50% 1.50%!* 1.50%* 1.50%* 1.50%*
Ratio of net
investment
income to
average
net assets 0.12%! 0.55% 0.38% 0.81%!* 1.07%* 1.03%* 1.10%*
Portfolio
turnover
rate 52.2%! 43.5% 57.4% 71.8%! 38.0% 56.3% 44.0%
Average
commission
rate paid $0.0036 - - - - - -
Net assets, end
of period (in
thousands) $334,562 $325,374 $503,442 $329,001 $166,362 $166,819 $136,660
* Excludes expenses in excess of a 1.50% voluntary expense limitation in
effect through 12/31/93.
! Annualized.
# The fund's fiscal year-end was changed to 10/31.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Discovery Fund
Unaudited April 30, 1996
Statement of Net Assets Shares/Par Value
In thousands
ARGENTINA 0.9%
Common Stocks 0.9%
Astra Cia Argentina de Petroleo 179,000 $ 381
Capex (Class A) GDR (USD) 23,500 347
Enron Global Power & Pipeline (USD) 31,000 763
Fiplasto (Class B) * 90,000 311
Juan Minetti 12,471 50
Mirgor ADS (USD) 70,000 214
Polledo (Class B) * 351,294 265
Quilmes Industrial (USD) 20,930 251
Sociedad Comercial del Plata * 111,200 333
_____________________________________________________________________________
2,915
Preferred Stocks 0.0%
Quilmes Industrial ADR, new (USD) * 10,465 124
_____________________________________________________________________________
124
_____________________________________________________________________________
Total Argentina (Cost $3,952) 3,039
AUSTRALIA 1.4%
Common Stocks 1.4%
AAPC Limited 602,865 403
Acacia Resources * 259,000 651
Advance Bank of Australia 188,153 774
BRL Hardy 154,421 309
ERG Limited 340,791 407
ERG Limited, new * 90,447 107
Henry Walker Group 224,850 350
JNA Telecommunications 163,000 90
Just Jeans Holdings 218,000 368
Leighton Holdings 131,759 424
Stanilite Pacific 209,476 62
Tyndall Australia 440,005 594
Tyndall Australia, new * 48,300 65
Walker 342,000 132
_____________________________________________________________________________
Total Australia (Cost $4,658) 4,736
BELGIUM 0.2%
Common Stocks and Warrants 0.2%
Barco 5,000 $ 789
National Portefeuille, warrants,
exp. 6/15/99 * 25,000 52
_____________________________________________________________________________
Total Belgium (Cost $760) 841
BELIZE 0.1%
Common Stocks 0.1%
BHI (USD) 20,750 301
_____________________________________________________________________________
Total Belize (Cost $367) 301
BRAZIL 3.6%
Common Stocks 0.5%
Ceteco Holding (NLG) 33,000 1,396
Cia Paulista de Forca e Luz 6,000,000 388
Telecomunicacoes de Minas Gerais 175,900 12
_____________________________________________________________________________
1,796
Preferred Stocks 3.1%
Artex 257,298,371 348
Banco Nacional 45,992,000 0
Ceval Alimentos 30,200,000 350
Cia Acos Especiais Itabira 89,430,973 386
Cia Bras de Frigorificos 550,000 305
Cia Tecidos Norte de Minas 2,592,018 1,087
Dixie Toga * 1,162,114 1,089
Duratex 18,478,720 885
Eluma * 10,888,000 296
Eucatex 1,044,000 147
Industia e Comercio Chapeco 451,392,000 86
Ipiranga Petroleo 43,600,000 409
Lojas Americanas 4 0
Lojas Arapua 30,100,000 310
Lojas Renner 25,628,220 917
Mesbla * 7,379,900 141
Multibras Eletrodomesticos 407,000 427
Pettenati 7,300,000 88
Refrigeracao Parana 213,387,676 $ 531
Serrana * 535,000 351
Sifco * 3,601,516 163
Telecomunicacoes de Minas Gerais 3,014,000 246
Weg 1,940,910 835
Wentex Textile * 485,230 1,027
_____________________________________________________________________________
10,424
_____________________________________________________________________________
Total Brazil (Cost $16,029) 12,220
CANADA 0.1%
Common Stocks 0.1%
Arakis Energy (USD) * 54,000 240
_____________________________________________________________________________
Total Canada (Cost $325) 240
CHILE 0.4%
Common Stocks 0.4%
Chilquinta ADR (USD) 32,000 516
Genesis Chile Fund (USD) 9,150 373
Sociedad Quimica Minera de Chile ADR (USD) 6,550 350
_____________________________________________________________________________
Total Chile (Cost $1,089) 1,239
CHINA 0.8%
Common Stocks 0.8%
China Apollo Holdings (HKD) * 5,152,000 1,432
China Merchants Shekou Port Service
(Class B) (HKD) 240,600 85
China North Industries Investment (USD) * 288,000 216
Shanghai Diesel Engine (Class B) (USD) 857,500 489
Shanghai New Asia (Class B) (USD) * 646,000 381
_____________________________________________________________________________
Total China (Cost $2,338) 2,603
COLOMBIA 0.3%
Common Stocks 0.3%
Cementos Diamante (Class B) GDS (USD) 15,000 296
Gran Cadena Almacenes (Class B) ADS (USD) 20,000 340
Maderas y Sinteticos Sociedad Anoma
ADR (USD) 14,500 230
_____________________________________________________________________________
Total Colombia (Cost $831) 866
CZECH REPUBLIC 0.2%
Common Stocks 0.2%
IPS Praha 6,297 $ 710
_____________________________________________________________________________
Total Czech Republic (Cost $453) 710
DENMARK 0.8%
Common Stocks 0.6%
Bang & Olufsen 8,000 255
Crisplant Industries * 9,200 647
ISS International (Class B) 35,000 990
_____________________________________________________________________________
1,892
Convertible Bonds 0.2%
Danske Traelastkompagni, 5.25%, 1/01/02 DKK 3,100,000 647
_____________________________________________________________________________
647
_____________________________________________________________________________
Total Denmark (Cost $2,336) 2,539
ECUADOR 0.1%
Common Stocks 0.1%
La Cemento Nacional GDS (USD) * 1,705 268
_____________________________________________________________________________
Total Ecuador (Cost $369) 268
FINLAND 0.2%
Common Stocks 0.2%
Huhtamaki 15,000 496
Orion (Class B) 10,000 275
_____________________________________________________________________________
Total Finland (Cost $798) 771
FRANCE 3.0%
Common Stocks 3.0%
Assystem * 8,811 1,066
But 11,300 755
Cardif 6,400 1,147
Cipe France 11,780 1,026
Concorde * 1,620 260
Ecco Travail Temporaire 8,771 730
Guilbert 7,636 $ 1,255
NRJ 5,000 627
Rexel 3,100 743
Rochefortaise Communication 19,037 766
Societe des Immeubles de France 5,906 405
Spir Communication 4,740 528
Television Francaise 6,000 650
_____________________________________________________________________________
Total France (Cost $6,855) 9,958
GERMANY 3.2%
Common Stocks and Warrants 1.0%
Altana 1,590 980
Balcke Durr 1,030 205
Buderus 1,250 457
Duerr Beteiligungs 1,000 342
Kampa Haus 9,142 314
Pfleiderer Bau und Verkehrssysteme 1,125 312
Pittler Maschinenfabrik * 9,300 304
Sixt 92 25
Sixt, warrants, exp. 5/17/00 * 125 95
Vereinigte Baubeschlag Handel 2,250 519
_____________________________________________________________________________
3,553
Preferred Stocks 2.2%
Berentzen Gruppe 17,600 627
Edding 1,600 520
Hach 1,600 562
Leffers 2,000 196
Marschollek Lautenschlaeger 1,070 1,080
Rhoen Klinikum 12,610 1,491
Signalbau Huber 4,050 391
Sixt 268 70
Spar Handells 3,110 626
Sto 1,246 525
Villeroy & Boch 3,200 431
Westag & Getalit 3,924 718
_____________________________________________________________________________
7,237
_____________________________________________________________________________
Total Germany (Cost $10,686) 10,790
GUATEMALA 0.2%
Common Stocks 0.2%
Basic Petroleum (USD) * 24,580 $ 713
_____________________________________________________________________________
Total Guatemala (Cost $275) 713
HONG KONG 5.0%
Common Stocks and Warrants 4.9%
Aeon Credit Service * 1,929,000 580
Amway Asia Pacific (USD) 39,000 1,170
Chaifa Holdings 602,000 167
Chaifa Holdings, warrants, exp. 3/31/97 * 480,000 64
Champion Technology 326,000 38
China Hong Kong Photo Products 1,633,035 807
Dah Sing Financial 258,000 717
Fairyoung Holdings 880,000 353
Fairyoung Holdings, warrants, exp. 6/30/96 * 343,200 1
Golden Harvest Entertainment 2,166,000 763
Goldlion Holdings 642,000 539
Harbour Ring International, warrants,
exp. 7/17/97 * 1,023,166 8
HKR International, warrants, exp. 6/23/00 * 725,200 230
Hualing Holdings 3,472,000 458
JCG Holdings 1,230,000 1,137
Lai Sun Development 3,609,000 616
Lai Sun Development, warrants, 3/23/99 * 360,900 16
Liu Chong Hing Bank 372,000 515
National Mutual Asia 815,000 690
Orient Overseas International 808,000 627
Pacific Basin Bulk Shipping (USD) 95,000 1,045
Pacific Basin Bulk Shipping, warrants,
exp. 9/30/99 (USD) * 113,000 49
Pokphand 808,000 342
QPL International 1,256,000 1,291
Seapower Resources International 3,609,000 387
Sing Tao Holdings 96,000 57
Siu Fung Ceramics 2,916,540 486
South China Morning Post 241,000 164
Union Bank of Hong Kong 720,000 740
Wah Kwong Shipping 400,000 $ 608
Wai Kee Holdings 1,757,926 443
Wing Hang Bank 149,000 545
Winton Holdings 2,406,000 591
World Houseware 1,291,943 157
Yeebo, warrants, exp. 8/31/96 * 83,800 0
_____________________________________________________________________________
16,401
Corporate Bonds 0.1%
Goldlion Capital, 4.875%, 2/01/99 USD 315,000 417
_____________________________________________________________________________
417
_____________________________________________________________________________
Total Hong Kong (Cost $15,019) 16,818
HUNGARY 0.2%
Common Stocks 0.2%
Richter Gedeon * 19,360 675
_____________________________________________________________________________
Total Hungary (Cost $318) 675
INDIA 1.6%
Common Stocks 1.4%
Ashok Leyland GDR (USD) 25,000 334
East India Hotels GDR (USD) 8,000 236
Grasim Industries GDS (USD) 23,300 454
Gujarat Ambuja Cement GDR (USD) 94,920 1,092
Hindalco GDR (USD) 19,800 873
Indian Aluminium GDS (USD) 10,000 76
Indian Hotels GDR (USD) * 11,000 325
ITC GDR (USD) 45,000 399
Reliance Industries GDS (USD) 42,000 704
Videocon International GDR (USD) 109,000 300
_____________________________________________________________________________
4,793
Convertible Bonds 0.2%
Essar Gujarat, 5.50%, 8/05/98 USD 540,000 530
_____________________________________________________________________________
530
_____________________________________________________________________________
Total India (Cost $4,820) 5,323
INDONESIA 3.9%
Common Stocks 3.9%
Bank International Indonesia 195,000 $ 959
Hanjaya Mandala Sampoerna 106,500 1,175
Indofoods Sukses Makmur 142,350 654
Indorama Synthetic 172,600 559
Indosat (Class B) 119,000 413
Indosat (Class B) ADR (USD) 14,000 485
Jaya Real Property 226,500 786
Mayora Indah 692,000 475
Modern Photo Film 107,000 527
Modernland Realty 94,500 106
Mulia Industrindo 471,680 910
Pabrik Kertas Tjiwi Kimia 913,021 959
Panin Bank 510,125 519
Semen Cibinong 265,200 784
Semen Gresik 211,000 730
Telekom Indonesia * 875,000 1,453
Telekom Indonesia ADS (USD) * 48,000 1,626
_____________________________________________________________________________
13,120
Convertible Bonds 0.0%
Modernland Realty, 6.00%, 1/04/03 IDR 265,200,000 89
_____________________________________________________________________________
89
_____________________________________________________________________________
Total Indonesia (Cost $11,318) 13,209
IRELAND 0.5%
Common Stocks 0.5%
Barlo Group 600,000 294
Dragon Oil (GBP) 494,505 6
Kenmare Resources (GBP) * 643,000 307
Kingspan Group 215,080 1,021
_____________________________________________________________________________
Total Ireland (Cost $1,220) 1,628
ISRAEL 0.7%
Common Stocks 0.7%
Bank Hapoalim 314,000 469
Blue Square * 106,000 $ 770
Elco Holdings 3,900 163
Teva Pharmaceutical ADR (USD) 18,000 823
_____________________________________________________________________________
Total Israel (Cost $1,849) 2,225
ITALY 2.8%
Common Stocks and Warrants 2.7%
Cementeria di Augusta * 69,000 106
Danieli & Company, savings shares 305,000 1,097
Danieli & Company, warrants, exp. 11/30/99 * 55,500 50
Fila Holdings ADR (USD) 11,200 757
Industria Macchine Automatiche * 152,000 1,071
Industrie Natuzzi ADR (USD) 19,800 1,030
La Doria 184,000 795
Merloni Elettrodomestici, savings shares 549,081 529
Pagnossin * 80,000 487
Saes Getters 38,200 966
Safilo 51,000 1,033
Tecnost 524,500 910
Telecocavi, savings shares 58,000 124
Vianini Lavori 90,000 156
_____________________________________________________________________________
9,111
Corporate Bonds 0.1%
Danieli & Company, 7.25%, 1/01/00 ITL 333,000,000 192
_____________________________________________________________________________
192
_____________________________________________________________________________
Total Italy (Cost $6,910) 9,303
JAPAN 14.6%
Common Stocks and Warrants 14.6%
Amway Japan 23,000 1,185
Apollo Electronics 63,000 1,313
Asatsu 20,900 919
Avon Products 66,000 328
Chofu Seisakusho 28,000 731
Daibiru 100,000 1,348
Daifuku 37,000 584
Disco 10,000 333
Eidensha 21,000 $ 283
Emoto Industry 20,000 220
Enix 26,000 756
Enplas 3,000 70
Fanuc 6,000 261
FCC 27,500 1,025
Glory 27,000 968
Hamada Printing Press 80,000 570
Higashi Nihon House 10,500 171
Hirose Electric 11,300 698
Hitachi Tool Engineering 63,000 506
Homac 41,800 927
Home Wide 8,000 103
Horiba 42,000 598
Idec Izumi 95,000 945
Iwata Air Compressor Manufacturing 83,000 524
Japan Airport Terminal 72,000 1,039
Japan Living Service 70,000 632
Juel Verite Ohkubo 34,000 321
Juel Verite Ohkubo, warrants,
exp. 3/10/98 (CHF) * 100 28
Juken Sangyo 69,000 805
Juntendo 66,550 576
Kato Denki 24,900 550
Keyence 14,200 1,873
Kirin Beverage 49,000 693
KOA 30,000 482
KTK Telecommunications Engineering 17,000 190
Kyokuto Kaihatsu Kogyo 23,100 528
Levi Strauss Japan Kabushiki Kaisha 11,000 226
Lintec 18,000 317
Mabuchi Motor 14,700 905
Masaru 23,000 187
Matsumotokiyoshi 10,100 323
Meitec 25,000 552
Meitetsu Transport 79,000 481
Meitetsu Transport, warrants,
exp. 4/30/97 (CHF) * 1,300 70
Mori Seiki 31,000 708
Mos Food Services 26,400 $ 681
Namura Shipbuilding 21,000 127
New Japan Securities * 34,000 236
Nichicon 45,000 749
Nichiei 14,000 937
Nihon Dempa Kogyo 6,000 141
Nippon Denwa Shisetsu 40,000 377
Nippon Kagaku Yakin 35,000 381
Nippon Konpo Unyu Soko 51,000 461
Nippon Seiki 24,000 365
Nippon Yusoki 52,000 326
Nishio Rent All 14,000 355
Nissha Printing 11,000 174
Nitta 47,000 827
Okasan Securities * 32,000 198
Osaka Organic Chemical 27,000 395
Paltac 48,000 789
Promise 19,000 808
Rinnai 21,400 536
Sanken Electric 20,000 181
Sankyo Engineering * 18,000 282
Sansei Yusoki 53,000 694
Santen Pharmaceutical 33,700 783
Seiko 25,000 614
Senshukai 21,000 349
Shimachu 16,000 543
Shinkawa 13,500 379
Sintokogio 117,000 1,063
Sodick * 80,000 1,025
Sogo Denki 84,000 482
Sony Music Entertainment 8,000 434
Tamura 25,000 172
Techno Ryowa 21,000 422
Toc 96,000 1,110
Tokai Rubber Industries 28,000 361
Tokyo Ohka Kogyo 8,000 243
Toshiba Tungaloy * 37,000 240
Toyo Communication Equipment 7,000 $ 150
Trusco Nakayama 11,400 287
Tsuchiya Home 25,000 490
Uniden 14,000 308
Wakita 25,000 449
Wako Securities 61,000 565
Xebio 8,000 298
Yamatane Securities * 61,000 300
Yamato Kogyo 62,000 711
Zuiko 14,000 325
_____________________________________________________________________________
Total Japan (Cost $49,670) 48,975
MALAYSIA 5.3%
Common Stocks, Rights and Warrants 5.3%
Bandar Raya Developments, warrants,
exp. 9/01/97 * 364,000 400
Chemical Company of Malaysia 298,000 950
Chemical Company of Malaysia, rights * 74,500 48
Intiplus 497,000 544
Jaya Tiasa Holdings 124,000 771
Kampong Lanjut Tin Dredging * 197,000 1,145
LB Aluminum 157,000 463
Lityan Holdings 41,000 253
Malaysian Assurance Alliance 246,125 1,471
MTD Capital 334,666 1,946
Peladang Kimia 156,000 485
Phileo Allied 473,000 2,826
RJ Reynolds 272,000 862
Star Publications * 418,000 1,232
Sunway Building Technology 159,000 791
TA Enterprise 516,000 890
TA Enterprise, warrants, exp. 11/22/98 * 632,000 649
Tan Chong Motor Holdings 372,000 600
Time Engineering 240,000 703
Westmont Industries 90,000 195
Westmont Industries (Class A) * 211,400 441
_____________________________________________________________________________
Total Malaysia (Cost $13,876) 17,665
MEXICO 2.5%
Common Stocks 2.5%
Altos Hornos de Mexico * 97,589 $ 708
Apasco 121,108 657
Banco Quadrum ADR (USD) *! 100,210 589
Controladora Commercial Mexicana (Class B) * 538,590 490
Embotelladores del Valle Anahuac (Class B) * 738,850 477
Grupo Cementos de Chihuahua (Class B) 261,000 245
Grupo Elektra 153,252 1,028
Grupo Financiero Inbursa (Class B) 153,000 595
Grupo Herdez (Class A) * 1,796,917 559
Grupo Industrial Maseca (Class B) 301,600 295
Grupo Mexicano de Desarrollo
(Class B) ADS (USD) * 14,926 34
Grupo Mexicano de Desarrollo
(Class L) ADS (USD) * 26,000 71
Grupo Radio Centro ADS (USD) 39,000 346
Internacional de Ceramica * 180,888 265
Internacional de Ceramica ADR (USD) * 50,000 375
Jugos de Valle (Class B) * 290,000 383
Sears Roebuck de Mexico
(Class B) ADS (USD) * 20,380 102
Sears Roebuck de Mexico
(Class B) GDS (USD) * 56,000 280
Seguros Comercial Americana (Class B) * 1,125,000 386
Sigma Alimentos (Class B) 47,700 343
_____________________________________________________________________________
Total Mexico (Cost $11,928) 8,228
NETHERLANDS 3.1%
Common Stocks 3.1%
Aalberts Industries 8,884 713
Ahrend Groep 25,775 1,124
Atag 15,450 1,190
Content Beheer 22,500 716
Getronics 11,609 806
Hagemeyer 16,930 1,159
Otra 103,700 2,572
Randstad Holdings 34,020 2,180
_____________________________________________________________________________
Total Netherlands (Cost $6,860) 10,460
NEW ZEALAND 0.7%
Common Stocks 0.7%
CDL Hotels * 618,000 $ 238
Independent Newspapers 141,000 523
PDL Holdings 28,000 160
Sky City * 164,000 697
Warehouse Group 211,000 616
_____________________________________________________________________________
Total New Zealand (Cost $2,294) 2,234
NORWAY 2.4%
Common Stocks 2.4%
Computer Advances * 12,400 170
Kverneland Gruppen 30,670 682
Merkantildata * 96,400 946
Multisoft 12,600 479
Nera 15,100 549
Norske Skogsindustrier 17,700 542
Ringcom 39,800 200
Schibsted 61,840 904
Sensonor * 72,150 604
Smedvig 32,980 811
Sysdeco Group * 36,000 433
Tomra Systems 116,500 1,082
Transocean * 24,436 684
_____________________________________________________________________________
Total Norway (Cost $4,982) 8,086
PAKISTAN 0.2%
Common Stocks 0.2%
Pakistan Telecom GDS (USD) * 7,000 718
_____________________________________________________________________________
Total Pakistan (Cost $606) 718
PERU 0.7%
Common Stocks 0.6%
Cementos Lima 24,225 285
Cementos Yura (Class C) (USD) 34,100 264
Compania de Seguard la Fenix Peruana 26,071 $ 275
Compania Embotelladora del Pacifico
(Class B) (USD) * 280,000 188
Enrique Ferreyros 129,838 175
Explosivos (Class C) * 155,647 154
Explosivos (Class T) * 155,647 154
Minsur 28,222 229
Peru Real Estate (Class B) * 1,013,333 364
Southern Peru Copper (Class T) 1 0
_____________________________________________________________________________
2,088
Corporate Bonds 0.1%
International Financial Holdings,
6.50%, 8/01/99 USD 250,000 372
_____________________________________________________________________________
372
_____________________________________________________________________________
Total Peru (Cost $3,637) 2,460
PHILIPPINES 2.3%
Common Stocks 2.1%
Ayala Land (Class B) 177,000 274
C & P Homes 501,000 431
EEI 10,246,000 799
First Philippine Holdings (Class B) 286,168 651
Manila Electric 25,000 233
Mondragon International * 248,000 201
Philippine Commercial International Bank 76,000 1,016
Philippine National Bank 49,000 730
Pilipino Telephone 433,000 637
Southeast Asia Cement * 7,926,000 1,166
Universal Robina 244,000 123
William Gothong & Aboitiz 2,664,000 825
_____________________________________________________________________________
7,086
Convertible Bonds 0.2%
Benpres Holdings, 4.20%, 11/26/49 USD 253,300 469
_____________________________________________________________________________
469
_____________________________________________________________________________
Total Philippines (Cost $6,149) 7,555
POLAND 0.7%
Common Stocks 0.7%
Bank Rozwoju Eksportu 14,000 334
Bank Slaski 9,000 $ 673
Gorazdze * 9,429 303
International UNP Holdings (CAD) * 1,679,372 494
Mostostal Export * 200,000 586
_____________________________________________________________________________
Total Poland (Cost $2,701) 2,390
PORTUGAL 0.3%
Common Stocks 0.2%
Sempa * 47,250 509
_____________________________________________________________________________
509
Preferred Stocks 0.1%
Filmes Lusomundo * 41,610 358
_____________________________________________________________________________
358
_____________________________________________________________________________
Total Portugal (Cost $791) 867
PUERTO RICO 0.1%
Common Stocks 0.1%
Pepsi Cola Puerto Rico Bottling
Company (USD) 30,900 290
_____________________________________________________________________________
Total Puerto Rico (Cost $433) 290
RUSSIA 0.4%
Common Stocks 0.4%
Lukoil ADR (USD) 22,500 534
Petersburg Long Distance (USD) * 96,000 480
Petersburg Long Distance (CAD) * 35,000 175
Star Mining (AUD) * 2,750,000 313
_____________________________________________________________________________
Total Russia (Cost $2,037) 1,502
SINGAPORE 1.4%
Common Stocks and Warrants 1.4%
Acer Computer International (USD) * 456,000 866
Far East Levingston Shipbuilding 62,000 362
Hong Fok 308,000 522
Hour Glass 179,000 169
Hwa Tat Lee 332,000 145
Malayan Credit 215,000 442
Parkway Holdings 225,000 $ 672
Republic Hotels & Resorts 150,000 206
Republic Hotels & Resorts, warrants,
exp. 7/12/00 * 184,000 113
Tiger Medicals 187,000 322
Venture Manufacturing 175,000 598
Wing Tai Holdings 98,000 254
_____________________________________________________________________________
Total Singapore (Cost $4,641) 4,671
SOUTH AFRICA 1.2%
Common Stocks 1.2%
Anglo America Industrial 6,750 311
Barlow Limited 106,900 1,231
Iscor 519,200 475
Murray & Roberts Holdings 66,000 302
Rembrandt Group 123,800 1,060
Sasol 53,800 560
Speciality Stores (Class N) 96,000 117
_____________________________________________________________________________
Total South Africa (Cost $3,652) 4,056
SOUTH KOREA 0.8%
Common Stocks 0.8%
Coryo Securities 10,000 174
Daehan City Gas 200 20
Korea Growth Trust IDR (USD) 22 781
Kun Young Construction 25,502 223
LG Information & Communications 6,000 844
Samsung GDR, 1/2 voting (USD) * 1,321 18
Seoul City Gas 5,760 478
_____________________________________________________________________________
Total South Korea (Cost $2,241) 2,538
SPAIN 1.7%
Common Stocks 1.6%
Algodonera de St. Antonia * 57,250 405
Amper * 24,000 270
Azkoyen 13,330 931
Corporacion Financiaera Reunida 187,500 660
Cristaleria Espanola * 11,020 $ 696
Filo 135,000 655
Grupo Anaya 23,821 490
Marco Iberica 62,870 426
Marco Iberica, new 2,553 17
Prosegur Compania Securidad 27,000 985
_____________________________________________________________________________
5,535
Convertible Bonds 0.1%
Grupo Anaya, 7.00%, 3/18/98 ESP 32,910,000 239
_____________________________________________________________________________
239
_____________________________________________________________________________
Total Spain (Cost $6,437) 5,774
SWEDEN 3.0%
Common Stocks and Warrants 3.0%
Angpanne Foreningen (Class B) 32,870 591
BPA (Class A) * 371,800 757
BPA, warrants, exp. 12/15/00 * 164,400 99
Catena (Class A) 100,500 771
Finnveden (Class B) 91,337 970
Getinge Industrier (Class B) 22,100 1,163
Hoganas (Class B) 43,950 1,458
ICB Shipping (Class B) 84,670 799
Kalmar Industries 42,000 762
Linjebuss (Class A) 29,770 272
Securitas (Class B) 24,000 1,380
TV 4 (Class A) 51,690 957
_____________________________________________________________________________
9,979
Convertible Bonds 0.0%
Stena Line, 7.00%, 4/30/01 SEK 900,000 125
_____________________________________________________________________________
125
_____________________________________________________________________________
Total Sweden (Cost $7,919) 10,104
SWITZERLAND 2.4%
Common Stocks 2.4%
Belimo Automation 3,000 623
Bossard Holdings 410 892
Bucher Holding 1,820 1,363
Edipresse 2,000 $ 541
Generale d'Affichage 2,850 1,297
Gurit Heberlien 360 795
Hilti 1,070 827
Lem Holdings 2,500 775
Liechtenstein Global Trust 1,655 845
Von Moos * 2,000 129
_____________________________________________________________________________
Total Switzerland (Cost $6,537) 8,087
TAIWAN 2.8%
Common Stocks 2.6%
Bank Sino Pacific * 108,000 87
China Trust 1,332,000 2,721
National Investment Trust * 253,000 642
Test Rite International 2,323,000 2,094
Wan Hai Lines * 561,000 1,239
Yageo * 1,018,000 2,061
_____________________________________________________________________________
8,844
Convertible Bonds 0.2%
Acer, 4.00%, 6/10/01 USD 120,000 314
United Micro Electronics, 1.25%, 6/08/04 USD 150,000 185
_____________________________________________________________________________
499
_____________________________________________________________________________
Total Taiwan (Cost $8,097) 9,343
THAILAND 0.9%
Common Stocks and Warrants 0.9%
Bangkok Insurance 20,000 349
Hana Microelectronics 62,000 356
Industrial Finance of Thailand 206,000 832
Precious Shipping 131,800 720
Property Perfect 29,500 150
Property Perfect, warrants, exp. 7/07/99 * 20,444 33
Robinson Department Store 85,000 202
Sahavirya Steel * 104,000 98
Sanyo Universal Electric 67,000 220
_____________________________________________________________________________
Total Thailand (Cost $3,001) 2,960
UNITED KINGDOM 15.1%
Common Stocks, Rights and Warrants 14.6%
Abtrust Lloyds Insurance, warrants,
exp. 11/24/98 * 99,000 $ 43
Acorn Computer Group * 264,000 1,025
Ashtead Group 627,998 1,796
BCE Holdings 3,175,000 932
Berisford International 192,000 613
British Biotechnology * 41,288 1,833
Britton Group 628,047 1,550
Carpetright 148,000 1,297
Chamberlain Phipps 223,000 228
Chiroscience Group * 100,000 670
Cordiant * 285,000 571
Corporate Services Group 992,250 2,046
CRT Group 352,222 766
Devro International 252,500 886
Druck Holdings 32,000 1,596
Enviromed * 587,734 203
FII Group 105,000 743
First Technology 83,000 566
Frost Group 212,200 406
Graystone 6,067,860 1,370
Helical Bar 134,000 758
Henderson Administration Group 32,500 545
HTV Group 300,000 1,666
Iceland Group 111,000 254
Inn Business Group * 626,720 505
JBA Holdings 286,500 2,191
JKX Oil & Gas * 180,000 480
Kewill Systems 83,000 592
Knox D'Arcy Trust 938,889 509
Knox D'Arcy Trust, rights * 300,000 7
London & Overseas Freighters 215,330 276
Mackie International Group 93,000 497
Matthew Clark 155,000 1,806
Mayflower 924,000 1,586
Mirror Group 432,000 1,483
Oliver Group 300,000 $ 230
Pentos * 733,333 0
Peter Black Holdings 141,000 601
Pizza Express 140,000 735
Powerscreen International 139,000 956
Princedale Group 1,414,856 724
Prowting 263,575 548
Quadramatic 104,979 384
Quality Software 60,000 247
Regal Hotel Group 2,314,422 1,533
RJB Mining 103,140 955
Ronson 263,000 174
Roxspur * 6,329,228 453
Select Appointment 1,200,000 343
Serco Group 50,000 395
Shire Pharmaceuticals Group * 165,500 511
Stakis 543,750 892
Standard Platforms * 800,000 144
Stordata Solutions * 903,333 224
Stoves 94,000 358
Taylor Nelson 618,530 396
Transtec 669,000 1,098
Ugland International Holdings * 644,423 582
Verity Group 3,269,501 763
Videologic Group * 991,000 1,134
Visual Action Holdings * 92,950 353
Wickes 323,888 636
Wiggins Group * 1,515,000 160
WPP Group 351,000 1,065
_____________________________________________________________________________
48,889
Preferred Stocks 0.5%
Berisford International,
5.00% cv. loan stock, 2015 427,000 591
Iceland Group, cum. cv. 120,000 217
Knox D'Arcy Trust, cv. loan stock, 9/30/07 638,889 346
Regal Hotel Group,
8.00% cv. loan stock, 2001 264,505 398
_____________________________________________________________________________
1,552
_____________________________________________________________________________
Total United Kingdom (Cost $37,874) 50,441
VENEZUELA 0.4%
Common Stocks 0.4%
Mavesa ADR (USD) 14,982 $ 80
Mavesa ADR, sponsored (USD) 19,930 106
Mavesa ADS (USD) 112,066 595
Sudamtex de Venezuela (Class B) ADR (USD) 55,440 270
Venezolana de Prerreducidos Caroni GDS (USD) 28,000 168
_____________________________________________________________________________
Total Venezuela (Cost $1,514) 1,219
VIETNAM 0.3%
Common Stocks 0.3%
Lazard Freres & Co. Vietnam Fund (USD) * 106,600 1,133
_____________________________________________________________________________
Total Vietnam (Cost $1,098) 1,133
SHORT-TERM INVESTMENTS 5.0%
Commercial Paper 5.0%
Asset Securitization Cooperative,
4(2), 5.30%, 6/10/96 $ 5,000,000 4,970
Delaware Funding, 5.30%, 5/16/96 2,000,000 1,992
Den Danske, 5.305%, 5/28/96 5,000,000 4,976
Mobil Australia Finance,
4(2), 5.32%, 5/16/96 2,000,000 1,991
Investments in Commercial Paper through
a joint account, 5.36 - 5.37%, 5/01/96 2,967,242 2,967
_____________________________________________________________________________
Total Short-Term Investments (Cost $16,896) 16,896
Total Investments in Securities
98.5% of Net Assets (Cost $299,446) $ 329,667
Other Assets Less Liabilities 4,895
NET ASSETS $ 334,562
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 80
Accumulated net realized gain/loss - net of distributions (13,693)
Net unrealized gain (loss) 30,224
Paid-in-capital applicable to 20,608,917 shares of $0.01 par
value capital stock outstanding; 2,000,000,000 shares
of the Corporation authorized 317,951
NET ASSETS $ 334,562
NET ASSET VALUE PER SHARE $ 16.23
* Non-income producing
! Affiliated company
AUD Australian dollar
CAD Canadian dollar
CHF Swiss franc
DKK Danish krone
ESP Spanish peseta
GBP British sterling
HKD Hong Kong dollar
IDR Indonesian rupia
ITL Italian lira
NLG Dutch guilder
SEK Swedish krona
USD U.S. dollar
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors."
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Discovery Fund
Unaudited
Statement of Operations
In thousands
6 Months
Ended
4/30/96
Investment Income
Income
Dividend (net of foreign taxes of $ 223) $ 2,056
Interest 441
Total income 2,497
Expenses
Investment management 1,711
Shareholder servicing 364
Custody and accounting 136
Prospectus and shareholder reports 47
Registration 25
Legal and audit 20
Directors 4
Miscellaneous 8
Total expenses 2,315
Net investment income 182
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (4,213)
Foreign currency transactions (168)
Net realized gain (loss) (4,381)
Change in net unrealized gain or loss
Securities 43,995
Other assets and liabilities
denominated in foreign currencies 4
Change in net unrealized gain or loss 43,999
Net realized and unrealized gain (loss) 39,618
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 39,800
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Discovery Fund
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/96 10/31/95
Increase (Decrease) in Net Assets
Operations
Net investment income $ 182 $ 2,142
Net realized gain (loss) (4,381) (7,501)
Change in net unrealized
gain or loss 43,999 (59,637)
Increase (decrease) in net assets
from operations 39,800 (64,996)
Distributions to shareholders
Net investment income (2,150) (1,593)
Net realized gain (429) (23,937)
Decrease in net assets from
distributions (2,579) (25,530)
Capital share transactions*
Shares sold 31,450 55,318
Distributions reinvested 2,296 23,502
Shares redeemed (61,809) (166,714)
Redemption fees received 30 352
Increase (decrease) in net assets
from capital share transactions (28,033) (87,542)
Net Assets
Increase (decrease) during period 9,188 (178,068)
Beginning of period 325,374 503,442
End of period $ 334,562 $ 325,374
*Share information
Shares sold 2,090 3,750
Distributions reinvested 160 1,573
Shares redeemed (4,186) (11,326)
Increase (decrease) in shares
outstanding (1,936) (6,003)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price International Discovery Fund
Unaudited April 30, 1996
Notes to Financial Statements
Note 1 - Significant Accounting Policies
T. Rowe Price International Funds, Inc., (the Corporation) is registered under
the Investment Company Act of 1940. The International Discovery Fund (the
fund), a diversified, open-end management investment company, is one of the
portfolios established by the Corporation and commenced operations on December
30, 1988.
Valuation
Equity securities listed or regularly traded on a securities exchange
(including Nasdaq) are valued at the last quoted sales price at the time the
valuations are made. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
Affiliated Companies
Investments in companies 5% or more of whose outstanding voting securities are
held by the fund are defined as "Affiliated Companies" in Section 2(a)(3) of
the Investment Company Act of 1940.
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.
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
the 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
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Emerging Markets
At April 30, 1996, the fund held 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.
Commercial Paper Joint Account
The fund, and other affiliated funds, may transfer uninvested cash into a
commercial paper joint account, the daily aggregate balance of which is
invested in high-grade commercial paper. All securities purchased by the joint
account satisfy the fund's criteria as to quality, yield, and liquidity.
Securities Lending
To earn additional income, the fund lends its securities to approved brokers.
At April 30, 1996, the market value of securities on loan was $8,538,000,
which was fully collateralized with cash. Although the risk is mitigated by
the collateral, the fund could experience a delay in recovering its securities
and a possible loss of income or value if the borrower fails to return them.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $83,219,000 and $125,467,000, respectively, for the six months
ended April 30, 1996.
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 $8,323,000 which expire in 2003. The fund
intends to retain gains realized in future periods that may be offset by
available capital loss carryforwards.
At April 30, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $299,446,000 and net unrealized gain
aggregated $30,221,000, of which $66,081,000 related to appreciated
investments and $35,860,000 to depreciated investments.
Note 4 - Related Party Transactions
The fund is managed by Rowe Price-Fleming International, Inc. (the Manager),
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 the Manager provides
for an annual investment management fee, of which $289,000 was payable at
April 30, 1996. The fee is 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. At April 30, 1996, and for the six months then ended,
the effective annual Group Fee rate was 0.33%. The fund pays a pro rata share
of the Group Fee based on the ratio of its net assets to those of the Group.
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., 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 $367,000 for
the six months ended April 30, 1996, of which $92,000 was payable at
period-end.
During the six months ended April 30, 1996, the fund, in the ordinary course
of business, paid commissions of $182,000 to, and placed security purchase and
sale orders aggregating $37,235,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions.
T. Rowe Price 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 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. and weekends from 8:30 a.m. to 5 p.m.
In Person Available in T. Rowe Price Investor Centers.
Account Services
Checking Available on most fixed income funds.
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(registered trademark) and
PC*Access(registered trademark).
Discount Brokerage
Individual Investments Stocks, bonds, options, precious metals, and other
securities; potentially large savings on commissions.
Investment Information
Combined Statement An overview of your T. Rowe Price accounts.
Shareholder Reports Fund managers' reviews of their strategies and results.
The T. Rowe Price Report A quarterly investment newsletter discussing markets
and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning Kit.
T. Rowe Price Mutual Funds
Stock Funds
Domestic
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
New America Growth
New Era
New Horizons
OTC
Science & Technology
Small-Cap Value
Spectrum Growth
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Bond Funds
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Global Government Bond
Emerging Markets Bond
International Bond
Short-Term Global Income
Money Market
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
Blended Asset
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
T. Rowe Price No-Load Variable Annuity
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
For yield, price, last transaction, and current balance, 24 hours, 7 days a
week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price International
Discovery Fund.
Invest With Confidence(registered trademark)
T. Rowe Price
T. Rowe Price Investment Services, Inc., Distributor REPTIDF 4/30/96
Chart 1 - Geographic Diversification - A pie chart showing geographic
diversification of net assets as of 4/30/96 as follows: Europe 40%; Far East
26%; Japan 15%; Latin America 9%; Other and Reserves 10%.
Chart 2 - Correlation of Returns - a bar chart showing the correlation of
total returns of various international countries with the U.S. stock market
from 1981-1990 and from 1986-1995.
Footnote: Percentage of time that foreign markets moved in the same direction
as the U.S. market. Sources: Morgan Stanley Capital International indexes,
Standard & Poor's 500 Stock Index, and Frank Russell Company.
Chart 3 - SEC Graph - International Discovery Fund - A two-line graph showing
performance of a $10,000 investment in the International Discovery Fund and
the MSCI EAFE Index (Net) from 12/30/88 through 4/30/96.
