<PAGE>
Semiannual Report
INTERNATIONAL
DISCOVERY
FUND
APRIL 30, 1998
[GRAPHIC APPEARS HERE]
T. ROWE PRICE
<PAGE>
REPORT HIGHLIGHTS
--------------------------------
International Discovery Fund
. Small companies improved overall, although European markets offered
significantly better results than Asia or Latin America.
. Your fund did well but, in an environment where small-caps lagged, fell
modestly behind the large-cap EAFE index.
. Most European economies posted good growth and low inflation, and the fund
increased holdings in the region.
. Holdings in Japan, Southeast Asia, and Latin America were reduced owing to a
lack of compelling investment opportunities.
. Small-cap stocks currently appear to offer significantly better value than
many of their larger counterparts.
<PAGE>
FELLOW SHAREHOLDERS
International markets and your fund performed well over the last six and 12
months, but double-digit gains obscured divergent market trends. Improving
economic fundamentals, falling bond yields, and corporate restructuring spurred
European markets to particularly strong gains, while the Far East struggled
through an economic crisis in Southeast Asia and a recession in Japan. Latin
America was an area of market strength in 1997, although the problems in Asia
have caused volatility in the region's stocks since last autumn.
--------------------------
PERFORMANCE COMPARISON
----------------------------------------------------
Periods Ended 4/30/98 6 Months 12 Months
----------------------------------------------------
International Discovery Fund 14.10% 12.49%
....................................................
MSCI EAFE Index 15.59 19.23
....................................................
Your fund enjoyed a strong 14.10% gain over the last six months, which helped to
erase the small deficit it posted in the previous six-month period.
Nonetheless, the fund fell modestly short of its EAFE benchmark, which measures
performance of the larger companies of Europe, Australasia, and the Far East.
The smaller companies your fund focuses on once again did not keep pace with the
sharp gains made by large multinational corporations. Fortunately, a low fund
weighting in Japan and high exposure to the U.K. added value compared with the
EAFE, helping to address the shortfall.
Smaller companies have not been the primary beneficiaries of strong European
markets over the last year. Investors have preferred to concentrate on large,
liquid stocks where the potential benefits from corporate restructurings and
management changes are relatively easy to discern. Similarly, larger companies
have benefited most from the perception that the introduction of the euro at the
end of 1998 will enhance profitability, improve market opportunities, and reduce
costs.
We were encouraged that smaller companies in a number of Europe's markets
performed better in the early part of 1998. Their behavior elsewhere was more
mixed throughout the period, although small-caps underperformed sharply in Japan
at the end of 1997 as investors con-
1
<PAGE>
1999: THE YEAR OF THE EURO
On the first business day of 1999, several major European countries will
officially inaugurate the European Economic and Monetary Union (EMU) and
adopt the euro as a single European currency backed by the European Central
Bank. The event could be one of the most significant financial developments
of the century, creating a vast economic and currency bloc equal to the U.S.
in size and power. Since the EMU has far-reaching implications for investors
and funds with exposure to European securities, it is important for you to
understand what is taking place.
The currencies of the original participating countries will become fixed rate
units of the euro, much the same as the nickel, dime, quarter, and half
dollar are denominations of the U.S. dollar. The exchange rates versus the
euro were set in May and will officially be determined by the end of 1998.
Country Currency Euro Rate
-----------------------------------------------------------------------------
Austria Schilling 13.91
.............................................................................
Belgium Franc 40.78
.............................................................................
Finland Mark 6.01
.............................................................................
France Franc 6.63
.............................................................................
Germany Mark 1.98
.............................................................................
Ireland Punt 0.80
.............................................................................
Italy Lira 1958.00
.............................................................................
Luxembourg Franc 40.78
.............................................................................
Netherlands Guilder 2.23
.............................................................................
Portugal Escudo 202.70
.............................................................................
Spain Peseta 168.20
.............................................................................
Source: The Wall Street Journal, May 4, 1998
Beginning in January 1999, some European holdings will be redenominated in
euros, particularly government securities. The face value of other
investments might remain in the existing national currencies for a time, but
they will be priced, settled, and valued in euros by stock exchanges and
other agencies. Thus, some of the European holdings in your funds will be
valued in euros.
This will not affect the investment value of your funds in U.S. dollar terms,
since the euro will be converted into the dollar in the same way
deutschemarks, francs, lire, and other European currencies are currently
converted at the prevailing exchange rates.
During the transition period, which lasts from January 1, 1999, until June
30, 2002, other countries that have moved to adopt the economic terms of the
Maastricht Treaty of 1993 will be able to participate in the EMU. The primary
criteria for joining are:
. a sustainable budget deficit less than 3% of GDP;
. public debt less than 60% of GDP;
. low inflation and interest rates; and
. no currency devaluations within two years of application.
Some of the original participants are not totally compliant with these terms
but are expected to embrace them by 2002. Countries joining later may have to
be in strict accord before entering the EMU, or at least be well along the
path to achieving them. So far, the transition seems to be progressing
smoothly, but there has been resistance to some of the more stringent terms.
French Socialists, in particular, would prefer to maintain heavy government
subsidies for social programs. Therefore, the jury is still out on whether
complete economic and monetary convergence will be attained as planned.
Assuming all goes well, the national currencies of participating countries
will cease to exist and all accounting will be in euros following the
transition period. However, regardless of whether or not full convergence is
realized on the date specified, we do not expect pricing in euros to have any
special impact on the value of your investment. Of course, problems could
develop that might be unfavorable for the fund, but we do not anticipate them
at this time.
This supplements the prospectus dated March 1, 1998.
2
<PAGE>
centrated on the international manufacturing companies and avoided smaller
companies with domestic exposure.
The fund continues to lean toward smaller growth companies in attractive
areas such as services, capital equipment, and consumer goods.
MARKET REVIEW
Europe
Economic conditions in Continental Europe continued to improve over the
last six months, with signs that growth may be spreading beyond the
export-sensitive sectors. In France, increased consumer confidence began to
appear with vehicle sales up strongly in March. A similar trend occurred in
Germany, although in both countries high unemployment put a ceiling on
consumer enthusiasm. Smaller European economies also enjoyed renewed
consumer spending and accelerating growth. Importantly, inflation remained
subdued, which allowed bond markets to rally over the last six months. The
U.K. was the exception to this benign economic scene: its economy slowed
because of higher short-term interest rates and a strong currency. The
slowdown is likely to continue through 1998, and only next year might we
see renewed growth.
[PIE CHART APPEARS HERE]
GEOGRAPHIC DIVERSIFICATION
Latin America 2%
Japan 11%
Far East 11%
Other and Reserves 8%
Europe 68%
Based on net assets as of 4/30/98.
The overall good news encouraged us to increase a reasonably high weighting
in Europe's smaller companies, from 59% of assets six months ago to 68% by
April 30. We continued to find many attractively priced smaller companies
with excellent growth prospects. We expect the Europe portion of your fund
to post profit growth of 21% and an average return on equity of 24% in
1998, for which we are paying a price-to-earnings multiple of 19. These
figures look compelling relative to the larger companies in Europe, which
are growing more slowly and appear much more expensive.
3
<PAGE>
Over the last six months, we maintained U.K. exposure near 27% of the
portfolio. The smaller-company universe is particularly attractive in this
market, combining growth, appealing valuations, and aggressive management.
One example is Ashtead Group, your fund's largest U.K. holding. This plant
hire specialist has been growing at 25% per year and yet carried a
price-to-earnings multiple of less than 20. Also attractive were temporary
employment firms Select Appointment and Corporate Services Group,
specialist auto engineer Mayflower, and support service outsourcing company
Serco Group. These enjoy good business franchises, plenty of scope for
further expansion, impressive management, and the ability to generate high
levels of free cash flow--all characteristics we look for in the smaller
companies we purchase.
The fund's stake in Germany rose from 3% to nearly 8% of assets over the
last six months in response to a flow of attractive new issues coming to
this market. We added Boewe Systec, which controls about 20% of the world
market in cutting-and-inserting machines. This company represents
medium-sized German industry at its best: first-rate management,
leading-edge products, and a business mix in which high-margin and
noncyclical service activities account for a major part of profits.
Holdings with similar characteristics include Pfeiffer Vacuum Technology, a
leader in vacuum technology; Rofin-Sinar Technologies, which makes
laser-cutting and welding machines; and Sartorious, a world leader in
sophisticated weighing machines.
Positions in the Netherlands and Switzerland increased also, to about 7% of
assets each. In the Netherlands, we added Athlon, a car leasing
------------------------------------------------------------------------------
MARKET PERFORMANCE
------------------------------------------------------------------------------
Six Months Local Local Currency U.S.
Ended 4/30/98 Currency vs. U.S. Dollars Dollars
------------------------------------------------------------------------------
Brazil 20.94% -3.58% 16.61%
..............................................................................
France 42.66 -4.35 36.45
..............................................................................
Germany 36.45 -4.09 30.87
..............................................................................
Hong Kong -9.43 -0.21 -9.62
..............................................................................
Indonesia -14.00 -55.36 -61.61
..............................................................................
Italy 54.01 -4.62 46.90
..............................................................................
Japan -1.11 -8.98 -9.99
..............................................................................
Malaysia -4.13 -10.43 -14.13
..............................................................................
Mexico 15.25 -0.98 14.12
..............................................................................
Netherlands 25.96 -3.95 20.99
..............................................................................
Norway 5.91 -6.13 -0.59
..............................................................................
Sweden 29.12 -3.29 24.88
..............................................................................
United Kingdom 23.74 -0.29 23.38
..............................................................................
Source: FAME Information Services, Inc.; using MSCI indices.
4
<PAGE>
company that is enjoying strong profit growth as it increases penetration
of a fragmented market. The company stock sells at 14 times this year's
earnings but is capable of growing by 18% per year going forward. In
Switzerland, we happily continue to hold major positions in Disetronic
Holdings, an insulin pump manufacturer; Swisslog Holding, a specialist in
turnkey logistics; and SMH Neuenburg, maker of Swatch timepieces, which is
growing at 15% and throwing off large amounts of free cash flow.
Elsewhere in Europe, we increased your fund's exposure to France and Norway
to 4.7% and 3.3% of assets, respectively, while paring Spain to only 1.1%.
In France, we added Carbone Lorraine, a manufacturer of electrochemical
components. Steady expansion, small acquisitions, and improving margins
should allow this company to grow at more than 20% in the next few years
and yet it trades at only 14 times earnings. We also added Leon de
Bruxelles, a fast-expanding restaurant chain specializing in mussels. This
company is a play on the consolidation of the European restaurant industry
(as is Pizza Express in the U.K.). In Spain, we took profits in vending
machine operator Azkoyen and security specialist Prosegur Seguridad: both
had performed well in the recent past and appeared expensive.
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
- --------------------------------------------------------------------------------
Percent of Net Assets
10/31/97 4/30/98
- --------------------------------------------------------------------------------
Services 32.7% 35.6%
................................................................................
Capital Equipment 26.4 29.5
................................................................................
Consumer Goods 13.6 14.0
................................................................................
Finance 9.4 7.2
................................................................................
Materials 5.8 3.0
................................................................................
Multi-industry 2.1 2.7
................................................................................
Energy 2.0 -
................................................................................
All Other 0.8 2.5
................................................................................
Reserves 7.2 5.5
- --------------------------------------------------------------------------------
Total 100.0% 100.0%
Japan
The economic outlook in Japan worsened, and high levels of government
spending later this year are likely to do little more than prevent a
headlong fall into deep recession. The difficulties of the domestic
financial system and the economic woes of the rest of Asia only exacerbated
existing problems. Given this backdrop, we reduced your fund's exposure to
this market from 14% of assets six months ago to 11% currently. We
concentrated the remaining holdings in high-quality smaller companies that
have product, management, and valuation characteristics similar to their
European counterparts. Larger holdings
5
<PAGE>
included Nidec, which has a 70% market share in spindle motors for hard
disk drives. This company not only is expanding rapidly through organic
growth but also is making acquisitions that expand its product line in a
sensible fashion. Its president has aligned his interests with those of
other shareholders by owning 10% of the company.
Areas of emphasis included several beneficiaries of financial deregulation
efforts, such as Nichiei and Promise; specialist retailers Circle K Japan
and Matsumotokiyoshi; and software developers Fuji Soft ABC and Computer
Engineering & Consulting. The latter two, which are recent additions, are
benefiting from a trend to outsource software services and may also gain a
flood of business from the belated recognition of the Year 2000 problem.
Selectively, Japanese smaller companies have become much more aware of the
need to take shareholders' interests seriously. Rohto Pharmaceutical, an
ophthalmic medicine firm, announced a share buyback and a stock option
program for senior employees this year. By American standards these moves
are hardly unusual, but by Japanese standards they mark a watershed in the
attitude of management.
Southeast Asia and Latin America
Your fund's exposure to the smaller markets of the Far East has been
slashed: on April 30, Hong Kong stood at just over 2% of assets while other
country weightings were even smaller. The regional currency crisis of late
1997 darkened the economic outlook, and we think investors will be
disappointed by the slow pace at which stability returns. We have also had
difficulty finding businesses that can generate cash flow or that offer
good management and reasonable balance sheets. Better news existed on the
Asian periphery: we increased the weighting in Australia to 4.1% and in
India to 2.1% of assets over the last six months. In Australia, we found
interesting entrepreneurial companies in growth areas such as the media
(Prime Television) and financial services (Tyndall Australia), while in
India we were excited by the dynamism in the local software (HCL
Infosystems) and health care (Ranbaxy Laboratories) industries.
Following good performance last year, we reduced the weighting in Latin
America to a very low level, which reflects the market dominance of
large-cap firms and the difficulty of identifying interesting small-caps
there.
6
<PAGE>
INVESTMENT OUTLOOK
While performing well at times, smaller companies have been left behind by
the global market dominance of large-cap stocks that we have seen in recent
years. The acceleration of that trend at the end of 1997 left a wide range
of attractive smaller growth companies selling at compelling valuations.
The companies in your fund may see earnings growth of 22% this year for
which we are paying on average a price-to-earnings multiple of only 17.
Their return on equity may reach 20% but their price is only 3.2 times
their book value. These relationships are substantially better than the
same figures for large international companies, where growth tends to be
slower and valuations higher.
In a world where deregulation and corporate liberalization hold sway,
increased opportunity falls not just to larger companies but also to their
smaller brethren. There has been a better trend in smaller-company
performance so far this year, and we are hopeful that investors are
becoming aware of this fact.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
May 20, 1998
7
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/98
------------------------------------------------------------------------------
Ashtead Group, United Kingdom 3.0%
..............................................................................
Select Appointment, United Kingdom 2.4
..............................................................................
Corporate Services Group, United Kingdom 2.4
..............................................................................
Mayflower, United Kingdom 2.3
..............................................................................
Devro International, United Kingdom 2.3
------------------------------------------------------------------------------
Serco Group, United Kingdom 2.2
..............................................................................
Tomra Systems, Norway 2.2
..............................................................................
CRT Group, United Kingdom 2.1
..............................................................................
Konecranes International, Finland 2.0
..............................................................................
Gewiss, Italy 1.9
------------------------------------------------------------------------------
Swisslog Holding, Switzerland 1.9
..............................................................................
Sixt, Germany 1.8
..............................................................................
Greggs, United Kingdom 1.8
..............................................................................
Ahrend, Netherlands 1.6
..............................................................................
Bodycote International, United Kingdom 1.4
------------------------------------------------------------------------------
Carbone Lorraine, France 1.4
..............................................................................
Pfeiffer Vacuum Technology, Germany 1.4
..............................................................................
Freepages Group, United Kingdom 1.3
..............................................................................
Boewe Systec, Germany 1.3
..............................................................................
Disetronic Holdings, Switzerland 1.2
------------------------------------------------------------------------------
Harvey Nichols Group, United Kingdom 1.2
..............................................................................
Leon de Bruxelles, France 1.2
..............................................................................
GTI, Netherlands 1.2
..............................................................................
Eurobike, Germany 1.2
..............................................................................
Merkantildata, Norway 1.1
------------------------------------------------------------------------------
Total 43.8%
8
<PAGE>
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.
INTERNATIONAL DISCOVERY FUND
---------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
MSCI Eafe TRP International Discovery Fund
12/30/88 10000 10000
4/30/89 10128 10810
4/30/90 8827 13524
4/30/91 9243 14225
4/30/92 8487 14106
4/30/93 10359 14672
4/30/94 12114 18615
4/30/95 12827 16081
4/30/96 14333 17772
4/30/97 14248 19053
4/30/98 16988 21433
- ------------------------------------
AVERAGE ANNUAL COMPOUND TOTAL RETURN
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
<TABLE>
<CAPTION>
Since Inception
Periods Ended 4/30/98 1 Year 3 Years 5 Years Inception Date
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
International Discovery Fund 12.49% 10.05% 7.87% 8.51% 12/30/88
........................................................................................
</TABLE>
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
9
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Unaudited
- --------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year Ten Months++ Year
Ended Ended Ended Ended
4/30/98 10/31/97 10/31/96 10/31/95 10/31/94 10/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 16.11 $ 15.97 $ 14.43 $ 17.63 $ 16.16 $ 11.68 $ 12.99
.............................................................................
Investment activities
Net investment income 0.01 0.02 0.07 0.10 0.04 0.07* 0.13*
Net realized and
unrealized gain (loss) 2.21 0.25 1.59 (2.38) 1.52 4.41 (1.31)
.............................................................................
Total from
investment activities 2.22 0.27 1.66 (2.28) 1.56 4.48 (1.18)
.............................................................................
Distributions
Net investment income -- (0.07) (0.10) (0.06) (0.07) -- (0.13)
Net realized gain (0.25) (0.06) (0.02) (0.87) (0.02) -- --
.............................................................................
Total distributions (0.25) (0.13) (0.12) (0.93) (0.09) -- (0.13)
.............................................................................
Redemption fees added
to paid-in-capital -- -- -- 0.01 -- -- --
NET ASSET VALUE
End of period $ 18.08 $ 16.11 $ 15.97 $ 14.43 $ 17.63 $ 16.16 $ 11.68
=============================================================================
Ratios/Supplemental Data
Total return 14.10% 1.69% 11.60% (13.06)% 9.67% 38.36%* (9.08)%*
........................................................................................................
Ratio of expenses to
average net assets 1.43%+ 1.41% 1.45% 1.50% 1.50% 1.50%*+ 1.50%*
.......................................................................................................
Ratio of net investment
income to average
net assets 0.10%+ 0.13% 0.40% 0.55% 0.38% 0.81%+* 1.07%*
.......................................................................................................
Portfolio turnover rate 20.6% 72.7% 52.0% 43.5% 57.4% 71.8%+ 38.0%
.......................................................................................................
Average commission
rate paid $ 0.0076 $ 0.0008 $ 0.0013 $ - $ - $ - $ -
.......................................................................................................
Net assets, end of period
(in thousands) $ 252,024 $254,430 $325,639 $325,374 $503,442 $329,001 $166,362
.......................................................................................................
</TABLE>
* 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.
10
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Unaudited April 30, 1998
- -----------------------
STATEMENT OF NET ASSETS Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
AUSTRALIA 4.1%
Common Stocks and Rights 4.1%
Austrim 615,290 $ 1,332
..........................................................................
BRL Hardy 200,602 701
..........................................................................
Foodland Associated 99,000 717
..........................................................................
Harvey Norman Holdings 108,312 552
..........................................................................
Lang Corporation 841,000 933
..........................................................................
Novogen 442,000 911
..........................................................................
Novus Petroleum 400,079 833
..........................................................................
Prime Television 621,628 1,419
..........................................................................
Skilled Engineering 639,211 792
..........................................................................
Sonic Healthcare 430,309 575
..........................................................................
Stanilite Pacific * 209,476 0
..........................................................................
Tyndall Australia 912,978 1,578
..........................................................................
Tyndall Australia, Rights, 5/14/98 * 91,297 37
..........................................................................
Total Australia (Cost $11,315) 10,380
............
BRAZIL 1.5%
Common Stocks 0.4%
Cia Paranaense de Energia Copel 32,515,000 375
..........................................................................
Electricidade de Rio de Janeiro * 867,417,000 630
..........................................................................
Telecomunicacoes de Minas Gerais 149,683 16
..........................................................................
1,021
............
Preferred Stocks 1.1%
Banco Nacional * 45,992,000 0
..........................................................................
Electropaulo Metropolitana 2,286,000 269
..........................................................................
Empresa Bandeirante de Energia * 2,286,000 78
..........................................................................
Empresa Metropolitana de Aguas e Energia * 2,286,000 4
..........................................................................
Empresa Paulista Transmissao do Energia
Electrica * 2,286,000 16
..........................................................................
Telecomunicacoes de Minas Gerais (Class B) 7,602,839 1,173
..........................................................................
Telecomunicacoes do Parana 940,743 537
..........................................................................
Telecomunicacoes do Rio de Janeiro 4,553,874 717
..........................................................................
2,794
............
Total Brazil (Cost $3,265) 3,815
............
11
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
CHILE 0.1%
Common Stocks 0.1%
Chilquinta ADR (USD) 18,494 $ 219
................................................................................
Santa Isabel ADR (USD) * 4,525 75
................................................................................
Total Chile (Cost $435) 294
..............
CHINA 0.5%
Common Stocks 0.4%
Shenzhen Expressway (Class H) (HKD) * 3,332,000 914
................................................................................
914
..............
Convertible Bonds 0.1%
Qingling Motors, 3.50%, 1/22/02 (USD) 529,000 394
................................................................................
394
..............
Total China (Cost $1,557) 1,308
..............
FINLAND 2.0%
Common Stocks 2.0%
Konecranes International 107,260 5,120
................................................................................
Total Finland (Cost $4,558) 5,120
..............
FRANCE 4.7%
Common Stocks and Warrants 4.7%
Altran Technologies 11,792 1,881
................................................................................
CET 17,630 842
................................................................................
Carbone Lorraine 8,460 3,469
................................................................................
Europeenne des Casinos * 18,509 142
................................................................................
Europeenne des Casinos, Warrants, 4/30/03 * 18,509 1,597
................................................................................
Leon de Bruxelles * 28,970 3,060
................................................................................
Television Francaise 6,816 958
................................................................................
Total France (Cost $9,027) 11,949
..............
GERMANY 7.9%
Common Stocks 7.1%
Boewe Systec 67,390 3,154
................................................................................
Eurobike 125,390 3,005
................................................................................
</TABLE>
12
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Loesch 17,043 $ 518
.................................................................................
Pfeiffer Vacuum Technology ADR (USD) * 48,605 3,445
.................................................................................
Rofin-Sinar Technologies (USD) * 125,559 2,817
.................................................................................
Sartorius 475 249
.................................................................................
Sixt 36,295 4,611
.................................................................................
17,799
...............
Preferred Stocks 0.8%
Rhon Klinikum 19,670 2,028
.................................................................................
2,028
...............
Total Germany (Cost $13,040) 19,827
...............
HONG KONG 2.4%
Common Stocks and Warrants 2.4%
Esprit Holdings 1,938,000 769
.................................................................................
Giordano International 2,310,000 537
.................................................................................
HKR International, Warrants, 6/23/00 * 725,200 88
.................................................................................
Lai Sun Development, Warrants, 3/23/99 * 360,900 1
.................................................................................
Lai Sun Hotels International, Warrants, 4/30/99 * 269,906 2
.................................................................................
Legend Holdings * 2,166,000 930
.................................................................................
Moulin International Holding 6,820,158 660
.................................................................................
QPL International 1,160,000 502
.................................................................................
Road King Infrastructure 700,000 651
.................................................................................
Sa Sa International Holdings 2,668,000 500
.................................................................................
Smartone Telecommunications 226,000 594
.................................................................................
Vtech Holdings 194,600 683
.................................................................................
Total Hong Kong (Cost $8,086) 5,917
...............
INDIA 2.1%
Common Stocks 2.1%
HCL Infosystems 80,200 284
.................................................................................
HDF Corporation * 6,500 528
.................................................................................
Hindustan Lever 21,000 834
.................................................................................
Hindustan Petroleum 50,800 518
.................................................................................
Industrial Credit & Investment Corporation of India * 596,450 1,554
..................................................................................
Mahanagar Telephone 183,000 1,161
..................................................................................
Ranbaxy Laboratories 29,650 495
..................................................................................
</TABLE>
13
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
State Bank of India 3,000 $ 22
..................................................................................
Total India (Cost $5,162) 5,396
................
INDONESIA 0.1%
Common Stocks 0.1%
Gulf Indonesia Resources (USD) * 15,000 231
..................................................................................
Total Indonesia (Cost $292) 231
................
IRELAND 1.8%
Common Stocks 1.8%
Arnotts 215,830 1,900
..................................................................................
Irish Permanent 194,560 2,594
..................................................................................
Total Ireland (Cost $4,569) 4,494
................
ITALY 2.5%
Common Stocks 2.5%
Gewiss 196,902 4,846
..................................................................................
Gucci Group (USD) 31,333 1,459
..................................................................................
Total Italy (Cost $5,253) 6,305
................
JAPAN 11.2%
Common Stocks 11.2%
Apollo Electronics 30,000 227
..................................................................................
Chofu Seisakusho 20,200 299
..................................................................................
Circle K Japan 16,240 669
..................................................................................
Computer Engineering & Consulting 18,000 241
..................................................................................
Disco 20,000 574
..................................................................................
FCC 72,500 679
..................................................................................
Fuji Machine 48,000 1,371
..................................................................................
Fuji Soft ABC 6,400 228
..................................................................................
Fujimi 19,030 764
..................................................................................
Hirose Electric 24,400 1,233
..................................................................................
Hokuto Corporation 13,100 356
..................................................................................
Horiba 22,000 251
..................................................................................
Hoya 37,000 1,225
..................................................................................
</TABLE>
14
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Japan Airport Terminal 27,000 $ 169
..................................................................................
Japan Living Service 11,000 23
..................................................................................
KOA 49,000 485
..................................................................................
Kawasumi Laboratories 106,000 1,654
..................................................................................
Keyence 7,200 970
..................................................................................
Kirin Beverage 37,000 724
..................................................................................
Lasertec 17,000 385
..................................................................................
Mabuchi Motor 19,900 1,152
..................................................................................
Marukyo 33,000 190
..................................................................................
Matsumotokiyoshi 21,800 753
..................................................................................
Meitec 22,200 730
..................................................................................
Nichicon 56,000 609
..................................................................................
Nichiei 14,410 1,122
..................................................................................
Nidec 23,600 1,266
..................................................................................
Nippon Denwa Shisetsu 97,000 407
..................................................................................
Noritsu Koki 32,000 955
..................................................................................
Otsuka Kagu 5,600 256
..................................................................................
Paris Miki 51,700 832
..................................................................................
Promise 14,400 731
..................................................................................
Rohto Pharmaceutical 108,000 877
..................................................................................
Ryohin Keikaku 6,000 512
..................................................................................
Santen Pharmaceutical 55,000 553
..................................................................................
Seiko 16,000 65
..................................................................................
Shinkawa 38,000 660
..................................................................................
Shohkoh Fund 1,900 604
..................................................................................
Tachihi Enterprise 13,000 308
..................................................................................
Toa Medical Electronics 61,000 532
..................................................................................
Toc 108,150 1,005
..................................................................................
Toppan Forms 85,000 1,021
..................................................................................
Watami Food Service 13,000 269
..................................................................................
Zuiko 27,000 202
..................................................................................
Total Japan (Cost $33,269) 28,138
................
MEXICO 0.8%
Common Stocks 0.8%
Control Commercial Mexicana, Units (Each unit consists
of 3 Class B shares and 1 Class C share) 336,590 417
..................................................................................
</TABLE>
15
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Gruma (Class B) * 48,960 $ 113
..........................................................................
Grupo Elektra 301,520 431
..........................................................................
Grupo Industrial Maseca (Class B) 632,313 456
..........................................................................
Sigma Alimentos (Class B) 32,700 532
..........................................................................
Total Mexico (Cost $1,929) 1,949
...............
NETHERLANDS 7.1%
Common Stocks 7.1%
Aalberts Industries 70,840 2,048
..........................................................................
Ahrend * 117,124 4,059
..........................................................................
Atag 37,750 2,616
..........................................................................
Athlon * 11,506 1,619
..........................................................................
Draka Holdings 28,905 1,252
..........................................................................
GTI * 80,820 3,021
..........................................................................
Getronics 20,402 903
..........................................................................
Otra 128,480 2,353
..........................................................................
Total Netherlands (Cost $14,573) 17,871
...............
NEW ZEALAND 1.6%
Common Stocks 1.6%
Corporate Investments 2,838,000 1,387
..........................................................................
Independent Newspapers 159,000 676
..........................................................................
Sky City 317,000 893
..........................................................................
Warehouse Group 557,900 1,131
..........................................................................
Total New Zealand (Cost $5,100) 4,087
............
NORWAY 3.3%
Common Stocks 3.3%
Merkantildata 223,920 2,823
..........................................................................
Tomra Systems 172,620 5,556
..........................................................................
Total Norway (Cost $3,546) 8,379
............
PHILIPPINES 0.2%
Common Stocks 0.2%
La Tondena Distillers 324,400 251
..........................................................................
16
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Universal Robina 1,506,000 $ 285
..........................................................................
Total Philippines (Cost $1,468) 536
.............
SINGAPORE 0.1%
Common Stocks 0.1%
Clipsal (USD) 228,000 328
..........................................................................
Total Singapore (Cost $643) 328
.............
SPAIN 1.1%
Common Stocks 1.1%
Azkoyen 10,325 1,413
..........................................................................
Prosegur Seguridad 115,177 1,437
..........................................................................
Total Spain (Cost $2,529) 2,850
.............
SWEDEN 3.9%
Common Stocks 3.9%
ADB Gruppen Mandator 86,370 2,499
..........................................................................
Assa-Abloy (Class B) 78,868 2,751
..........................................................................
Atle 112,290 2,103
..........................................................................
Securitas (Class B) 64,500 2,374
..........................................................................
Total Sweden (Cost $6,329) 9,727
.............
SWITZERLAND 6.5%
Common Stocks 6.5%
Bucher Holding 1,320 1,522
..........................................................................
Disetronic Holdings 1,113 3,138
..........................................................................
Gurit Heberlien 460 1,640
..........................................................................
Komax * 1,670 896
..........................................................................
SMH Neuenburg 3,722 2,428
..........................................................................
Swisslog Holding 44,860 4,784
..........................................................................
Valora Holdings 7,350 1,920
..........................................................................
Total Switzerland (Cost $11,941) 16,328
.............
17
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
TAIWAN 1.5%
Common Stocks 1.5%
Bank Sino Pacific 1,025,067 $ 746
..........................................................................
Chuntex Electronics 165,000 303
..........................................................................
Compal Electronics 188,500 820
..........................................................................
Far East Textile 261,000 238
..........................................................................
Far Eastern Silo & Shipping 420,000 397
..........................................................................
Hon Hai Precision Industry 71,000 414
..........................................................................
Hung Poo Construction 285,600 418
..........................................................................
Taishin International Bank 515,403 363
..........................................................................
3,699
.............
Preferred Stocks 0.0%
Taishin International Bank* 130,956 85
..........................................................................
85
.............
Total Taiwan (Cost $3,899) 3,784
.............
THAILAND 0.4%
Common Stocks 0.4%
Dusit Thani 165,000 211
..........................................................................
Royal Orchid Hotel 560,900 254
..........................................................................
Siam Makro 291,000 478
..........................................................................
Thai Wah Resort Development 277,900 124
..........................................................................
Total Thailand (Cost $1,137) 1,067
.............
UNITED KINGDOM 27.0%
Common Stocks 26.8%
Ashtead Group 1,678,996 7,583
..........................................................................
Bodycote International 181,043 3,610
..........................................................................
CRT Group 733,422 5,361
..........................................................................
Carpetright 241,000 1,395
..........................................................................
Chamberlain Phipps * 134,000 0
..........................................................................
Corporate Services Group 1,519,250 6,048
..........................................................................
Devro International 632,500 5,745
..........................................................................
Freepages Group * 5,362,412 3,229
..........................................................................
Greggs 108,000 4,471
..........................................................................
Harvey Nichols Group 694,000 3,088
..........................................................................
18
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Hozelock Group 209,679 $ 1,115
................................................................................
JBA Holdings 235,836 2,130
................................................................................
Mayflower 1,460,000 5,910
................................................................................
N Brown Group 126,340 803
................................................................................
Pentos * 733,333 0
................................................................................
Pizza Express 208,000 2,718
................................................................................
Powerscreen International 308,000 953
................................................................................
Regal Hotel Group 2,120,906 1,534
................................................................................
Select Appointment 439,935 6,167
................................................................................
Serco Group 283,000 5,595
................................................................................
67,455
...................
Preferred Stocks 0.2%
Regal Hotel Group, Cv. Loan Stock, 8.00%, 6/30/01 335,039 611
................................................................................
611
...................
Total United Kingdom (Cost $46,014) 68,066
...................
VIETNAM 0.1%
Common Stocks 0.1%
Lazard Vietnam Fund Limited (USD) * 106,600 107
................................................................................
Total Vietnam (Cost $320) 107
...................
SHORT-TERM INVESTMENTS 4.4%
Money Market Funds 4.4%
Reserve Investment Fund, 5.65% 11,080,303 11,080
................................................................................
Total Short-Term Investments (Cost $11,080) 11,080
...................
</TABLE>
19
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
98.9% of Net Assets (Cost $210,336) $ 249,333
Other Assets Less Liabilities 2,691
.............
NET ASSETS $ 252,024
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 117
Accumulated net realized gain/loss - net of distributions 6,218
Net unrealized gain (loss) 38,913
Paid-in-capital applicable to 13,940,365 shares of $0.01 par
value capital stock outstanding; 2,000,000,000 shares
of the Corporation authorized 206,776
.............
NET ASSETS $ 252,024
-------------
NET ASSET VALUE PER SHARE $ 18.08
-------------
* Non-income producing
HKD Hong Kong dollar
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Unaudited
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
4/30/98
Investment Income
Income
Dividend (net of foreign taxes of $ 184) $ 1,457
Interest (net of foreign taxes of $ 6) 355
.............
Total income 1,812
.............
Expenses
Investment management 1,271
Shareholder servicing 265
Custody and accounting 105
Prospectus and shareholder reports 22
Registration 14
Legal and audit 14
Directors 3
Miscellaneous 1
.............
Total expenses 1,695
.............
Net investment income 117
.............
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 6,747
Foreign currency transactions (552)
.............
Net realized gain (loss) 6,195
.............
Change in net unrealized gain or loss
Securities 24,912
Other assets and liabilities
denominated in foreign currencies 174
.............
Change in net unrealized gain or loss 25,086
.............
Net realized and unrealized gain (loss) 31,281
.............
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 31,398
-------------
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Unaudited
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
4/30/98 10/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income $ 117 $ 403
Net realized gain (loss) 6,195 21,686
Change in net unrealized gain or loss 25,086 (13,345)
..........................
Increase (decrease) in net assets from operations 31,398 8,744
..........................
Distributions to shareholders
Net investment income -- (1,385)
Net realized gain (3,754) (1,189)
..........................
Decrease in net assets from distributions (3,754) (2,574)
..........................
Capital share transactions*
Shares sold 15,657 29,231
Distributions reinvested 3,562 2,392
Shares redeemed (49,315) (109,073)
Redemption fees received 46 71
..........................
Increase (decrease) in net assets from capital
share transactions (30,050) (77,379)
..........................
Net Assets
Increase (decrease) during period (2,406) (71,209)
Beginning of period 254,430 325,639
..........................
End of period $ 252,024 $ 254,430
--------------------------
*Share information
Shares sold 956 1,743
Distributions reinvested 237 149
Shares redeemed (3,048) (6,488)
..........................
Increase (decrease) in shares outstanding (1,855) (4,596)
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Unaudited April 30, 1998
- -----------------------------
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Equity securities 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.
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.
Investments open-end in mutual funds are valued at the closing net asset
value per share of the mutual fund on the day of valuation.
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.
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.
23
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Premiums and Discounts Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
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, 1998, 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.
Securities Lending The fund lends its securities to approved brokers to
earn additional income and receives cash and U.S. Treasury securities as
collateral against the loans. Cash collateral received is invested in a
money market pooled account by the fund's lending agent. Collateral is
maintained over the life of the loan in an amount not less than 100% of the
value of loaned securities. Although 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. At
April 30, 1998, the value of loaned securities was $14,038,000; aggregate
collateral consisted of $8,854,000 in the securities lending collateral
pool and U.S. Treasury securities valued at $5,958,000.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $46,922,000 and $76,648,000, respectively, for the
six months ended April 30, 1998.
24
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
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, 1998, the aggregate cost of investments for federal income tax
and financial reporting purposes was $210,336,000, and net unrealized gain
aggregated $38,997,000, of which $59,770,000 related to appreciated
investments and $20,773,000 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 $222,000 was
payable at April 30, 1998. The fee is computed daily and paid monthly, and
consists 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 0.30% for assets in excess of $80 billion. At April 30, 1998, and
for the six months then ended, the effective annual group fee rates was
0.32%. 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. (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 $279,000 for the six months ended April 30, 1998, of
which $55,000 was payable at period-end.
25
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds
(Spectrum) may invest. Spectrum does not invest in the underlying funds for
the purpose of exercising management or control. Expenses associated with
the operation of Spectrum are borne by each underlying fund to the extent
of estimated savings to it and in proportion to the average daily value of
its shares owned by Spectrum, pursuant to special servicing agreements
between and among Spectrum, the underlying funds, T. Rowe Price, and, in
the case of T. Rowe Price Spectrum International, Rowe Price-Fleming
International. Spectrum International Fund held none of the shares of the
International Discovery Fund at April 30, 1998. For the six months then
ended, the fund was allocated no Spectrum expenses.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and other
accounts managed by T. Rowe Price and its affiliates and are not available
to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the six months ended
April 30, 1998, totaled $292,000 and are reflected as interest income in
the accompanying Statement of Operations.
During the six months ended April 30, 1998, the fund, in the ordinary
course of business, placed security purchase and sale orders aggregating
$17,952,000 with certain affiliates of the manager and paid commissions of
$54,000 related thereto.
26
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
INVESTMENT SERVICES AND INFORMATION
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from
8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
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(R) and the T.
Rowe Price Web site on the Internet. Address: www.troweprice.com
DISCOUNT BROKERAGE*
Individual Investments Stocks, bonds, options, precious metals,
and other securities at a savings over regular commission rates.
INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe
Price.
Shareholder Reports Fund managers' reviews of their strategies
and results.
T. Rowe Price Report 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,
Diversifying Overseas: A Guide to International Investing,
Personal Strategy Planner, Retirees Financial Guide, and
Retirement Planning Kit.
*A division of T. Rowe Price Investment Services, Inc. Member
NASD/SIPC.
27
<PAGE>
T. ROWE PRICE MUTUAL FUNDS
- --------------------------------------------------------------------------------
STOCK FUNDS
................................................................................
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500*
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications**
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons***
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value***
Spectrum Growth
Total Equity Market Index Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
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
Emerging Markets Bond
Global Bond+
International Bond
MONEY MARKET FUNDS++
................................................................................
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 FUNDS
................................................................................
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
................................................................................
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
*Formerly named Equity Index.
**Formerly the closed-end New Age Media Fund. Converted to open-end status on
7/28/97.
***Closed to new investors.
+Formerly named Global Government Bond.
++Neither the funds nor their share prices are insured or guaranteed by the
U.S. government.
Please call for a prospectus. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
28
<PAGE>
T. ROWE PRICE DISCOUNT BROKERAGE
- --------------------------------------------------------------------------------
DISCOUNT BROKERAGE
A Division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC
This low-cost service gives you the opportunity to easily consolidate
all your investments with one company. Through T. Rowe Price Discount
Brokerage, you can buy and sell individual securities--stocks, bonds,
options, and others--as well as mutual funds at considerable
commission savings over full-service brokers.* We also provide a wide
range of services, including:
Automated Telephone and Internet Services You can enter trades, access
quotes, and review account information 24 hours a day, seven days a
week. Any trades executed through these programs provide additional
savings on commissions.**
Investor Information A variety of informative reports, such as our
Brokerage Insights series, S&P Market Month newsletter, and select
stock reports, can help you better evaluate economic trends and
investment opportunities.
Dividend Reinvestment Service Virtually all stocks held in customer
accounts are eligible for this service, free of charge.
*Based on an April 1998 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary by size of
order.
**Discount applies to our current commission schedule. All trades
subject to a $35 minimum commission except equity trades placed
through Internet-Trader, which are subject to a $29.95 minimum
commission.
29
<PAGE>
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access(R):
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
www.troweprice.com
T. Rowe Price Associates
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.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor.
