<PAGE>
Annual Report
INTERNATIONAL
DISCOVERY
FUND
------------------
OCTOBER 31, 1998
------------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
<PAGE>
REPORT HIGHLIGHTS
------------------------------
International Discovery Fund
. A sharp global correction wiped out early-year gains and left your fund with
losses of -17.09% and -5.40% for the past six and 12 months, respectively.
. Small-caps suffered significantly greater losses during the sell-off than
larger companies.
. The fund maintained an overweighted position in Europe while trimming some
holdings in the U.K. and in the information technology sector generally.
. We remained skeptical of small-caps in Japan and pared holdings in the
emerging markets.
. In coming months we hope to reinvest cash into small firms that can outperform
regardless of the market.
<PAGE>
FELLOW SHAREHOLDERS
The 12 months ended October 31, 1998, saw a reversal of fortune for both your
fund and the small-company markets it invests in. After 18 months of improvement
for small-cap stocks, underpinned by a strong U.S. dollar, a severe correction
hit our investment universe in July, with most markets in Europe showing
declines of 20% from July through September. Smaller companies fared
considerably worse than their larger counterparts, leading to significant fund
underperformance versus the large-company MSCI Europe, Australasia, and Far East
(EAFE) Index.
In our report to you only six months ago, we noted an upward
trend in small-cap performance overseas, driven by falling
interest rates and improving corporate earnings particularly in
Continental Europe. In July, however, economic growth rates began
to slip globally. Deteriorating investment conditions were
exacerbated by the devaluation of the ruble, the default of
Russia's debt, and a severe downturn in Latin America. Nearly all
global markets, from the U.S. to Asia, lost their footing during
the resulting crisis. In an environment of rising risk, small
companies are often hurt disproportionately because they are
perceived as being chancier--even though in many cases they are
better insulated from external macroeconomic shocks than larger
multinationals.
- --------------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
Periods Ended 10/31/98 6 Months 12 Months
- --------------------------------------------------------------------------------
International Discovery Fund -17.09% -5.40%
- --------------------------------------------------------------------------------
MSCI EAFE Index -4.88 9.95
- --------------------------------------------------------------------------------
Unfortunately, many of the positions and strategies that helped
fund performance over the longer term were not beneficial during
the July-to-October period. For example, our significant
overweighting in the U.K. compared with the EAFE was an important
contributor to performance until July when the U.K. market began
to decline on expectation of economic weakness. Some of the
European markets that had done very well for the fund, such as
Germany and Sweden, were particularly hard hit by the financial
fallout of the Russian collapse and by declining growth in
Europe. On the other hand, our underweighted
1
<PAGE>
- ---------------------------------------------------------------
PREPARING FOR THE YEAR 2000
- --------------------------------------------------------------------------------
The Year 2000 draws closer every day, and it holds special meaning beyond the
arrival of a new millennium. The issue for investors is that many computer
programs throughout the world use two digits instead of four to identify the
year and may assume the next century starts with 1900. If these programs are not
modified, they will not be able to correctly handle the century change when the
year changes from "99" to "00" on January 1, 2000, and they will no longer be
able to perform necessary functions. The Year 2000 issue affects all companies
and organizations.
T. Rowe Price has been taking steps to assure that its computer systems and
processes are capable of functioning in the Year 2000. Detailed plans for
remediation efforts have been developed and are currently being executed.
OUR PLAN OF ACTION
We began to address these issues several years ago by requiring that all new
systems process and store four-digit years. We plan to complete all
reprogramming efforts for the major application systems, including business
applications required to service our customers and processing infrastructure
necessary to ensure the integrity of customer data and investments, by December
31, 1998, leaving a full 12 months for system testing. Because we exchange data
electronically with customers and vendors, we are working with them to assess
the adequacy of their own compliance efforts. Our goal is to ensure the
continuation of the same level of service to all our mutual fund shareholders
and clients after December 31, 1999.
We are asking all vendors and companies we do business with for a Year 2000
compliance status, with the expectation that some organizations will not be able
to modify their interface files prior to December 31, 1999. Our goal is to
identify any noncompliant files so that we can implement alternative solutions.
In addition, we are scheduling tests for critical vendors and companies that
claim Year 2000 compliance to ensure that time-related data and calculations
function properly as we move into the next century.
SMOOTH TRANSITION PLANNED
We believe our programs and initiatives will provide a smooth transition into
the next millennium. We are assessing all systems providing products or services
to our retail mutual fund shareholders, retirement plan sponsors, and
participants, and we are taking steps to modify them where necessary for the
Year 2000. Our plan provides time to develop solutions for all noncompliant
systems and data files from customers or vendors.
The Securities Industry Association (SIA) is coordinating Year 2000 testing to
assure that securities markets, clearing corporations, depositories, and third
party service providers can send, receive, and process files and transactions
accurately. In late July 1998, the SIA completed a beta test of Year 2000
readiness. The test was considered successful in terms of transactions completed
and will serve as the basis for the SIA's industry-wide approach. During October
1998, T. Rowe Price completed its beta test of Year 2000 readiness with the SIA
and is ready for the industry-wide test that is scheduled for March and April
1999.
For a more detailed discussion of our Year 2000 effort, as well as continuing
updates on our progress, please check our Web site (www.troweprice.com).
2
<PAGE>
position in Japan, which had been an important part of the fund's
longer-term outperformance of the EAFE, put us at some
disadvantage when the yen strengthened in September.
MARKET REVIEW
Europe
The U.K. has the broadest market for small companies in Europe
and remained our largest single country position. Nonetheless, we
gradually reduced an overweighting there to a more neutral
position, compared with the EAFE, over the past six months. The
U.K., which is in the later stages of its business cycle, showed
signs of an economic slowdown. Profits of exporters, for example,
came under pressure with the strength of the pound, and there was
a significant weakening of consumer confidence evidenced in
declining profit for leading retailer Marks & Spencer. Because of
the downturn we sold some of our business services holdings, such
as Select Appointment and Corporate Services. We have also been
sellers of stocks exposed to the consumer cycle, such as
Carpetright and garden equipment maker Hozelock.
Although we reduced the fund's U.K. position to 20% as of October
31 from 27% six months earlier, we continued to have some
interest in British small-caps. Valuations in the market became
so low over the summer that the dividend yield on London's FTSE
Small Cap Index exceeded that of a 10-year gilt (government bond)
on September 30. The low valuations contributed to an increase in
corporate merger and acquisition activity. The Bank of England
also adopted an easing strategy to spark fresh business
investment.
We trimmed cautiously in other parts of Europe as well. One major
shift in strategy was the sale of several information technology
(IT)
- --------------------------------------------------
GEORGRAPHIC DIVERSIFICATION
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Other and Reserves 12%
Europe 58%
Japan 16%
Far East 13%
Latin America 1%
Based on net assets as of 10/31/98.
3
<PAGE>
service businesses, such as Getronics in the Netherlands,
Mandator in Sweden, and Merkantildata in Norway. These companies
recently enjoyed a period of unprecedented demand for their
services, with extra work created by the Year 2000 issue and the
creation of the single European currency. We believe that after
the millennium, business opportunities for these companies will
decline, and therefore we expect a downturn in revenues for the
sector in 2001 and 2002.
An intriguing feature of the small-cap market in Europe has been
the genesis of new exchanges for young growth stocks, such as
Germany's "new market" and the Belgium-based Easdaq (Europe's
version of Nasdaq). The sudden popularity of these exchanges
encouraged many entrepreneurs to undertake initial public
offerings for their businesses, whereas the entrepreneurial
spirit was once a scarce commodity in European markets. We expect
the inception of these exchanges to provide good investment
opportunities for the fund in the future.
The Economic and Monetary Union (EMU) is rapidly approaching with
the inception of the single European currency set for January 1,
1999. Many peripheral economies cut interest rates in order to
converge at a standard European rate, which we believe will be
around 3.3%. The single currency will present both risks and
opportunities for Europe's small-cap universe. In particular, we
expect that pricing differentials for similar properties across
different nations will become increasingly visible. That should
benefit low-cost providers and regional players, especially those
whose businesses struggled with currency fluctuations in the
past. Ahrend, a Dutch distributor of office furniture and
supplies, is one company we see benefiting from this trend.
- --------------------------------------------------
MARKET PERFORMANCE
- --------------------------------------------------------------------------------
Six Months Local Local Currency U.S.
Ended 10/31/98 Currency vs. U.S. Dollars Dollars
- --------------------------------------------------------------------------------
Australia - 1.14% - 4.56% - 5.65%
................................................................................
Brazil - 37.04 - 4.14 - 39.65
................................................................................
France - 8.17 8.29 - 0.55
................................................................................
Germany - 8.44 8.35 - 0.80
................................................................................
Hong Kong 9.60 - 9.60
................................................................................
India - 27.24 - 6.24 - 31.78
................................................................................
Japan - 15.99 13.39 - 4.74
................................................................................
Mexico - 17.98 - 15.70 - 30.85
................................................................................
Netherlands - 15.78 8.18 - 8.89
................................................................................
Sweden - 15.08 - 1.00 - 15.93
................................................................................
United Kingdom - 7.76 0.16 - 7.61
................................................................................
Source: FAME Information Services, Inc.; using MSCI indices.
4
<PAGE>
Japan
We were approximately half-weighted in Japan versus EAFE during
the course of the year. This was a beneficial strategy until
September, when a considerable strengthening of the yen against
the dollar propelled Japan's stock market to some fast-paced
gains. Smaller-cap stocks showed mixed performance during the
runup but generally held their value at a time when other markets
were correcting. As a result, the fund's position in Japan
increased from 11% to 16%, despite our making no significant
purchases.
We remain somewhat skeptical about the potential of small-cap
stocks in this market. The Japanese economy is in
recession--second quarter gross domestic product shrunk 1.6% year
over year--and recovery is not expected until late in 1999.
Slowing economies are rarely a good backdrop for small companies,
which often rely on positive consumer demand and strong business
investment for success. Signs of deflation in Japan's economy
(consumer prices fell 0.3% in August) are particularly worrisome
for the universe. However, we noted with interest some pockets of
vitality, which in some cases led to good absolute gains for your
fund. Hardware manufacturer Nidec performed well and continued to
be one of our larger holdings in the region.
Southeast Asia and Latin America
Your fund did not participate to a great extent in the September
and October bounce in Southeast Asian markets, since our holdings
in the region were quite light outside of Hong Kong, Australia,
and New Zealand. Our modest position in Hong Kong performed
respectably, as that market climbed in response to the Hong Kong
Monetary Authority's heavy buying.
INDUSTRY DIVERSIFICATION
- --------------------------------------------------------------------------------
Percent of Net Assets
4/30/98 10/31/98
- --------------------------------------------------------------------------------
Services 35.6% 35.5%
................................................................................
Capital Equipment 29.5 23.6
................................................................................
Consumer Goods 14.0 16.0
................................................................................
Finance 7.2 7.2
................................................................................
Multi-industry 2.7 2.2
................................................................................
Materials 3.0 1.0
................................................................................
Energy - 0.8
................................................................................
All Other 2.5 1.4
................................................................................
Reserves 5.5 12.3
- --------------------------------------------------------------------------------
Total 100.0% 100.0%
5
<PAGE>
Outside of Australia and New Zealand, we remain bearish on the
region and have been selling holdings into strength in markets
such as Thailand. Similarly, we have been selling in Latin
America. Macro-economic fundamentals have deteriorated in the
region, where we expect that steep rises in interest rates will
precipitate recession.
In the smaller emerging markets generally, we have found it very
difficult to identify small and mid-size companies with
attractive attributes, and, as a result, we have derived only
limited benefit from diversifying in these areas. Even in
Australia where the market is comparable in size to those of
Germany, Switzerland, and France, returns outside of the top-10
growth stocks have been very disappointing, and the market's many
resource-related industries have suffered from weak commodity
markets. We will be highly circumspect about building significant
positions in these markets as long as current conditions persist.
INVESTMENT OUTLOOK
The recent underperformance of international small-cap companies
compared with mainstream equities has by now been well
documented. A diagnosis of this weakness is key to our future
investment strategy. We have identified four key themes to the
underperformance and approach stock selection accordingly:
. Globalization A genuinely successful company needs to
think and operate globally. This is one reason investors
have been paying significant premiums for large-cap,
global operators over small, predominantly local firms.
We will focus on companies that potentially have global
reach or at least have a franchise that is exportable.
. Deflation When prices fall, small manufacturing
companies are affected the most both in terms of pricing
power and the declining value of their inventories. We
seek to avoid nondifferentiated manufacturing companies.
. Restructuring Because of deflation and a growing
awareness of shareholder value, many corporations,
particularly in Europe, have cut costs. This has two
implications: first, large companies generally have more
fat to cut than small, and second, suppliers (often
smaller companies) are pressured in order to recoup the
loss of consumer pricing power. We seek to avoid
intermediate goods and component suppliers, such as
those supplying the automotive industry.
6
<PAGE>
. Technology The diffusion of information technology has
in many cases allowed big companies to react like
smaller, more nimble ones. We will seek to invest in
companies that will benefit from technological change.
In a time of considerable market turmoil, we raised the fund's
cash reserve position to 12% of assets, but we do not plan to
maintain this position for the long term. We expect to reinvest
our cash assets over the next several months as attractive
opportunities present themselves. The majority of investment
opportunities will come from companies capitalized between $100
million and $1.5 billion. In this universe, we will invest in
growth companies that have superior technologies and market
positions as well as a business model that generates above-
average and sustainable profit margins. Our locally based
analysts make many "due diligence" visits to these companies, and
their findings are logged on a centralized database that enables
us to keep on top of our opportunity set.
For some time, we have been overweighted in Europe while staying
light on Japan. Because we do not see Japan successfully
addressing either its economy or its banking sector problems, we
expect to continue the status quo.
Successful small and medium-sized stocks often reach a threshold
where they are recognized by the market and revalued. Our ability
to identify these opportunities is the key to capturing long-term
capital growth for your fund. Moreover, we believe that an
environment of economic sluggishness and downward earnings
revisions will play into our hands as investors in steady growth
stocks.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
November 20, 1998
7
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
- ------------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
10/31/98
------------------------------------------------------------------------------
Ashtead Group, United Kingdom 2.9%
..............................................................................
Serco Group, United Kingdom 2.6
..............................................................................
Sixt, Germany 2.6
..............................................................................
Tomra Systems, Norway 2.6
..............................................................................
Greggs, United Kingdom 2.2
------------------------------------------------------------------------------
Gewiss, Italy 2.2
..............................................................................
Swisslog Holding, Switzerland 2.2
..............................................................................
Mayflower, United Kingdom 1.7
..............................................................................
Securitas (Class B), Sweden 1.7
..............................................................................
Assa-Abloy (Class B), Sweden 1.7
------------------------------------------------------------------------------
Devro International, United Kingdom 1.6
..............................................................................
Semcon, Sweden 1.5
..............................................................................
Irish Permanent, Ireland 1.5
..............................................................................
Boewe Systec, Germany 1.4
..............................................................................
Pizza Express, United Kingdom 1.4
------------------------------------------------------------------------------
Bodycote International, United Kingdom 1.4
..............................................................................
Disetronic Holding, Switzerland 1.3
..............................................................................
Carbone Lorraine, France 1.3
..............................................................................
Ahrend, Netherlands 1.3
..............................................................................
Leon de Bruxelles, France 1.2
------------------------------------------------------------------------------
Iona Technologies ADR, United Kingdom 1.2
..............................................................................
Eidos, United Kingdom 1.2
..............................................................................
GTI, Netherlands 1.1
..............................................................................
Freepages Group, United Kingdom 1.1
..............................................................................
Rhon Klinikum, Germany 1.1
------------------------------------------------------------------------------
Total 42.0%
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
--------------------------------------------------------------------------
Date MCSI EAFE Index International Discovery Fund
---- --------------- ----------------------------
12/31/88 10000 10000
10/31/89 10170 12850
10/31/90 8893 13462
10/31/91 9543 13973
10/31/92 8312 12672
10/31/93 11461 17357
10/31/94 12650 19036
10/31/95 12642 16551
10/31/96 14007 18471
10/31/97 14696 18784
10/31/98 16159 17770
- -------------------------------------------
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.
Since Inception
Periods Ended 10/31/98 1 Year 3 Years 5 Years Inception Date
------------------------------------------------------------------------------
International Discovery Fund -5.40% 2.40% 0.47% 6.02% 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.
9
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
- -------------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Year
Ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
NET ASSET VALUE
Beginning of period $ 16.11 $ 15.97 $ 14.43 $ 17.63 $ 16.16
..................................................
Investment activities
Net investment income 0.05 0.02 0.07 0.10 0.04
Net realized and
unrealized gain (loss) (0.92) 0.25 1.59 (2.38) 1.52
..................................................
Total from
investment activities (0.87) 0.27 1.66 (2.28) 1.56
..................................................
Distributions
Net investment income -- (0.07) (0.10) (0.06) (0.07)
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)
..................................................
Redemption fees added
to paid-in-capital -- -- -- 0.01 --
..................................................
NET ASSET VALUE
End of period $ 14.99 $ 16.11 $ 15.97 $ 14.43 $ 17.63
--------------------------------------------------
Ratios/Supplemental Data
Total return* (5.40)% 1.69% 11.60% (13.06)% 9.67%
................................................................................
Ratio of expenses to
average net assets 1.47% 1.41% 1.45% 1.50% 1.50%
................................................................................
Ratio of net investment
income to average
net assets 0.25% 0.13% 0.40% 0.55% 0.38%
................................................................................
Portfolio turnover rate 34.2% 72.7% 52.0% 43.5% 57.4%
................................................................................
Net assets, end of period
(in thousands) $189,001 $254,430 $325,639 $325,374 $503,442
................................................................................
*Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions and payment of no redemption or account fees.
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
October 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------
PORTFOLIO OF INVESTMENTS Shares/Par Value
- --------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
AUSTRALIA 3.8%
Common Stocks 3.8%
Austrim 515,290 $ 806
................................................................................
Computershare 161,000 685
................................................................................
Foodland Associated 76,000 413
................................................................................
Lang 715,000 1,051
................................................................................
Novogen 439,000 645
................................................................................
Novus Petroleum 315,757 381
................................................................................
Prime Television 532,079 616
................................................................................
Skilled Engineering 494,211 448
................................................................................
Sonic Healthcare 357,309 503
................................................................................
Spotless Group 222,000 493
................................................................................
Stanilite Pacific * 209,476 0
................................................................................
Tyndall Australia 963,281 1,169
................................................................................
Total Australia (Cost $9,982) 7,210
.............
BRAZIL 0.7%
Common Stocks 0.2%
Cia Paranaense de Energia Copel 32,515,000 199
................................................................................
Electricidade de Rio de Janeiro * 867,417,000 284
................................................................................
Telecomunicacoes de Minas Gerais 149,683 2
................................................................................
Telecomunicacoes de Minas Gerais Celular * 149,683 1
................................................................................
486
.............
Preferred Stocks 0.5%
Banco Nacional * 45,992,000 0
................................................................................
Electropaulo Metropolitana * 2,286,000 77
................................................................................
Empresa Bandeirante de Energia * 2,286,000 22
................................................................................
Empresa Metropolitana de Aguas e Energia * 2,286,000 3
................................................................................
Empresa Paulista Transmissao do Energia Electrica * 2,286,000 7
................................................................................
Telecomunicacoes de Minas Gerais (Class B) 7,602,839 235
................................................................................
Telecomunicacoes de Minas Gerais Celular (Class C) * 7,602,839 71
................................................................................
Telecomunicacoes do Parana 940,743 158
................................................................................
Telecomunicacoes do Parana Celular (Class B) * 940,743 40
................................................................................
Telecomunicacoes do Rio de Janeiro 4,553,874 143
................................................................................
Telecomunicacoes do Rio de Janeiro Celular (Class B) * 4,553,874 141
................................................................................
897
.............
Total Brazil (Cost $3,265) 1,383
.............
</TABLE>
11
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CHILE 0.1%
Common Stocks 0.1%
Chilquinta ADR (USD) 18,494 $ 150
..........................................................................
Santa Isabel ADR (USD) 4,525 26
..........................................................................
Total Chile (Cost $435) 176
..............
CHINA 0.4%
Common Stocks 0.4%
Shenzhen Expressway (Class H) (HKD) 3,332,000 753
..........................................................................
753
Convertible Bonds 0.0%
Qingling Motors, 3.50%, 1/22/02 USD 65,000 19
..........................................................................
19
..............
Total China (Cost $1,084) 772
..............
FRANCE 4.8%
Common Stocks 4.8%
Boiron 12,200 929
..........................................................................
Carbone Lorraine 42,300 2,436
..........................................................................
Cegedim 2,651 112
..........................................................................
Europeenne des Casinos 20,359 2,012
..........................................................................
Infonie 32,000 1,154
..........................................................................
Leon de Bruxelles 28,970 2,347
..........................................................................
Total France (Cost $8,610) 8,990
..............
GERMANY 6.7%
Common Stocks 5.7%
Boewe Systec 67,390 2,665
..........................................................................
Eurobike 125,390 2,006
..........................................................................
Kamps * 21,800 990
..........................................................................
Sartorius 475 143
..........................................................................
Sixt 23,895 4,933
..........................................................................
10,737
..............
12
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Preferred Stocks 1.0%
Rhon Klinikum 19,670 $ 2,019
..........................................................................
2,019
..............
Total Germany (Cost $9,865) 12,756
..............
HONG KONG 3.1%
Common Stocks and Warrants 3.1%
Esprit Holdings 1,938,000 726
..........................................................................
Glorious Sun Enterprises 1,470,000 266
..........................................................................
HKR International 789,600 446
..........................................................................
HKR International, Warrants, 6/23/00 * 725,200 69
..........................................................................
Lai Sun Hotels International, Warrants,
4/30/99 * 269,906 0
..........................................................................
Legend Holdings 2,166,000 729
..........................................................................
Li & Fung 390,000 611
..........................................................................
Moulin International Holding * 7,033,287 781
..........................................................................
Road King Infrastructure 700,000 497
..........................................................................
Sa Sa International Holdings 2,668,000 207
..........................................................................
Smartone Telecommunications 133,000 378
..........................................................................
VTech Holdings 194,600 730
..........................................................................
Wing Hang Bank 199,000 379
..........................................................................
Total Hong Kong (Cost $6,942) 5,819
..............
INDIA 1.9%
Common Stocks 1.9%
HCL Infosystems 80,200 464
..........................................................................
HDF Corporation 6,500 342
..........................................................................
Hindustan Lever 21,000 795
..........................................................................
Hindustan Petroleum 50,800 319
..........................................................................
Industrial Credit & Investment Corporation
of India 96,450 574
..........................................................................
Mahanagar Telephone 183,000 790
..........................................................................
Ranbaxy Laboratories 29,650 349
..........................................................................
Total India (Cost $5,137) 3,633
..............
INDONESIA 0.1%
Common Stocks 0.1%
Gulf Indonesia Resources (USD) * 15,000 148
..........................................................................
Total Indonesia (Cost $292) 148
..............
13
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
IRELAND 2.5%
Common Stocks 2.5%
Arnotts 215,830 $ 1,881
..........................................................................
Irish Permanent 194,560 2,773
..........................................................................
Total Ireland (Cost $4,569) 4,654
............
ITALY 3.1%
Common Stocks 3.1%
Gewiss 196,902 4,119
..........................................................................
Gucci Group (USD) 31,333 1,195
..........................................................................
Trenno Societa SPA 233,200 528
..........................................................................
Total Italy (Cost $5,687) 5,842
............
JAPAN 16.1%
Common Stocks 16.1%
Aeon Credit Service 13,700 823
..........................................................................
Apollo Electronics 30,000 189
..........................................................................
Chofu Seisakusho 20,200 174
..........................................................................
Computer Engineering & Consulting 32,000 489
..........................................................................
Data Communication System 5,600 90
..........................................................................
Disco 26,000 736
..........................................................................
FCC 72,500 622
..........................................................................
Fuji Machine 35,000 1,030
..........................................................................
Fuji Soft ABC 11,600 438
..........................................................................
Fujimi 19,000 636
..........................................................................
Fujitsu Support and Service 24,000 1,204
..........................................................................
Hirose Electric 18,400 1,065
..........................................................................
Hokuto 17,030 307
..........................................................................
Horiba 22,000 202
..........................................................................
Hoya 19,000 813
..........................................................................
Japan Airport Terminal 75,000 398
..........................................................................
Kawasumi Laboratories 90,000 1,505
..........................................................................
Keyence 7,200 721
..........................................................................
Kirin Beverage 1,000 19
..........................................................................
Koa 49,000 378
..........................................................................
Koha 41,000 763
..........................................................................
Lasertec 17,000 423
..........................................................................
14
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Mabuchi Motor 17,300 $ 1,128
..........................................................................
Marukyo 52,000 277
..........................................................................
Matsumotokiyoshi 21,800 823
..........................................................................
Megachips 11,000 311
..........................................................................
Meitec 18,800 363
..........................................................................
Mercian 168,000 761
..........................................................................
Nichicon 56,000 608
..........................................................................
Nichiei 12,200 986
..........................................................................
Nidec 18,700 1,702
..........................................................................
Nippon Denwa Shisetsu 49,000 153
..........................................................................
Obara 20,000 197
..........................................................................
Paris Miki 51,700 868
..........................................................................
People 13,400 391
..........................................................................
Rohto Pharmaceutical 41,000 298
..........................................................................
Roland 22,600 434
..........................................................................
Ryohin Keikaku 10,600 1,146
..........................................................................
Sanix 16,000 316
..........................................................................
Santen Pharmaceutical 55,000 943
..........................................................................
Shinkawa 7,100 69
..........................................................................
Shohkoh Fund 3,500 1,064
..........................................................................
Sysmex 61,000 607
..........................................................................
TOC 108,000 1,008
..........................................................................
Tachihi Enterprise 8,000 169
..........................................................................
Tokyo Seimitsu 34,000 1,065
..........................................................................
Toyo Information 28,000 432
..........................................................................
Union Tool 11,900 438
..........................................................................
Watami Food Service 35,000 904
..........................................................................
Total Japan (Cost $32,104) 30,486
.............
MEXICO 0.6%
Common Stocks 0.6%
Control Commercial Mexicana, Units (Each unit
consists of 3 Class B shares and 1 Class
C share) 336,590 213
.........................................................................
Gruma (Class B) * 49,776 118
..........................................................................
Grupo Elektra, Participating Certificates
(Represents 1 Class L share and 2 Class
B shares) 301,520 133
..........................................................................
Grupo Industrial Maseca (Class B) 632,313 513
..........................................................................
Sigma Alimentos (Class B) 155,847 239
..........................................................................
Total Mexico (Cost $1,929) 1,216
.............
15
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
NETHERLANDS 5.4%
Common Stocks 5.4%
Aalberts Industries 70,840 $ 1,695
..........................................................................
Accell Group * 37,750 517
..........................................................................
Ahrend 117,124 2,376
..........................................................................
Atag Group * 36,750 914
..........................................................................
Athlon Groep 57,530 1,632
..........................................................................
Draka Holdings 28,905 882
..........................................................................
GTI 80,820 2,163
..........................................................................
Total Netherlands (Cost $11,185) 10,179
............
NEW ZEALAND 1.7%
Common Stocks 1.7%
Auckland International Airport * 389,000 404
..........................................................................
Corporate Investments 2,003,000 944
..........................................................................
Independent Newspapers 134,000 461
..........................................................................
Sky City 171,000 516
..........................................................................
Warehouse Group 388,900 978
..........................................................................
Total New Zealand (Cost $3,905) 3,303
............
NORWAY 2.6%
Common Stocks 2.6%
Tomra Systems 172,620 4,853
..........................................................................
Total Norway (Cost $2,303) 4,853
............
PHILIPPINES 0.2%
Common Stocks 0.2%
La Tondena Distillers * 468,000 273
..........................................................................
Universal Robina 1,506,000 119
Total Philippines (Cost $1,583) 392
............
SPAIN 1.5%
Common Stocks 1.5%
Azkoyen 10,325 1,385
..........................................................................
Prosegur Seguridad 115,177 1,394
..........................................................................
Total Spain (Cost $2,529) 2,779
............
16
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
SWEDEN 5.6%
Common Stocks 5.6%
Assa-Abloy (Class B) 78,868 $ 3,142
..........................................................................
Atle 112,290 1,539
..........................................................................
Securitas (Class B) * 258,000 3,173
..........................................................................
Semcon 322,845 2,792
..........................................................................
Total Sweden (Cost $8,391) 10,646
............
SWITZERLAND 5.1%
Common Stocks 5.1%
Bachem (Class B) * 780 1,041
..........................................................................
Disetronic Holding 1,113 2,484
..........................................................................
Swisslog Holding 44,860 4,088
..........................................................................
Valora Holding 7,350 1,977
..........................................................................
Total Switzerland (Cost $7,987) 9,590
............
TAIWAN 1.0%
Common Stocks 1.0%
Bank Sino Pacific 1,232,130 526
..........................................................................
Compal Electronics 75,400 235
..........................................................................
Far East Textile 292,320 204
..........................................................................
Far Eastern Silo & Shipping 939,400 513
..........................................................................
Hon Hai Precision Industry 99,400 478
..........................................................................
Total Taiwan (Cost $2,567) 1,956
............
THAILAND 0.4%
Common Stocks 0.4%
Royal Orchid Hotel 449,600 183
..........................................................................
Siam Makro 291,000 531
..........................................................................
Total Thailand (Cost $597) 714
............
UNITED KINGDOM 20.2%
Common Stocks 19.9%
Ashtead Group 1,678,996 5,508
..........................................................................
Bodycote International 181,043 2,591
..........................................................................
CRT Group 401,301 1,135
..........................................................................
17
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Carpetright 91,000 $ 279
.........................................................................
Chamberlain Phipps * 134,000 0
..........................................................................
Corporate Services Group * 34,951 88
..........................................................................
Devro International 632,500 2,985
..........................................................................
Eidos * 162,000 2,229
..........................................................................
Freepages Group 5,362,412 2,109
..........................................................................
Greggs 108,000 4,248
..........................................................................
Harvey Nichols Group 694,000 1,614
..........................................................................
Iona Technologies ADR (USD) * 88,000 2,332
..........................................................................
Mayflower 1,460,000 3,177
..........................................................................
N Brown Group 126,340 607
..........................................................................
Pizza Express 208,000 2,653
..........................................................................
Regal Hotel Group 2,120,906 1,100
..........................................................................
Serco Group 283,000 4,973
..........................................................................
37,628
............
Preferred Stocks 0.3%
Regal Hotel Group, Cv. Loan Stock, 8.00%,
6/30/01 335,039 561
..........................................................................
561
............
Total United Kingdom (Cost $34,852) 38,189
............
VIETNAM 0.1%
Common Stocks 0.1%
Lazard Vietnam Fund Limited (USD) * 106,600 107
..........................................................................
Total Vietnam (Cost $320) 107
............
.
SHORT-TERM INVESTMENTS 12.4%
Money Market Funds 12.4%
Reserve Investment Fund, 5.41% # 23,449,403 23,449
..........................................................................
Total Short-term Investments (Cost $23,449) 23,449
............
18
<PAGE>
#
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
100.1% of Net Assets (Cost $189,569) $ 189,242
Other Assets Less Liabilities (241)
.............
NET ASSETS $ 189,001
-------------
* Non-income producing
# Seven-day yield
ADR American depository receipt
HKD Hong Kong dollar
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
October 31, 1998
- --------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value (cost $189,569) $ 189,242
Securities lending collateral pool 8,395
Other assets 1,875
..............
Total assets 199,512
..............
Liabilities
Securities lending collateral 8,395
Other liabilities 2,116
..............
Total liabilities 10,511
..............
NET ASSETS $ 189,001
--------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 124
Accumulated net realized gain/loss - net of distributions 3,433
Net unrealized gain (loss) (288)
Paid-in-capital applicable to 12,605,060 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 185,732
..............
NET ASSETS $ 189,001
--------------
NET ASSET VALUE PER SHARE $ 14.99
--------------
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/98
Investment Income
Income
Dividend (net of foreign taxes of $ 419) $ 3,245
Interest 719
..............
Total income 3,964
..............
Expenses
Investment management 2,476
Shareholder servicing 552
Custody and accounting 215
Prospectus and shareholder reports 64
Registration 43
Legal and audit 25
Directors 6
Miscellaneous 4
..............
Total expenses 3,385
..............
Net investment income 579
..............
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 3,742
Foreign currency transactions (723)
..............
Net realized gain (loss) 3,019
..............
Change in net unrealized gain or loss
Securities (14,385)
Other assets and liabilities
denominated in foreign currencies 270
..............
Change in net unrealized gain or loss (14,115)
..............
Net realized and unrealized gain (loss) (11,096)
..............
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ (10,517)
--------------
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/98 10/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income $ 579 $ 403
Net realized gain (loss) 3,019 21,686
Change in net unrealized gain or loss (14,115) (13,345)
...........................
Increase (decrease) in net assets from operations (10,517) 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 28,150 29,231
Distributions reinvested 3,562 2,392
Shares redeemed (82,937) (109,073)
Redemption fees received 67 71
...........................
Increase (decrease) in net assets from capital
share transactions (51,158) (77,379)
...........................
Net Assets
Increase (decrease) during period (65,429) (71,209)
Beginning of period 254,430 325,639
...........................
End of period $ 189,001 $ 254,430
---------------------------
* Share information
Shares sold 1,701 1,743
Distributions reinvested 237 149
Shares redeemed (5,128) (6,488)
...........................
Increase (decrease) in shares outstanding (3,190) (4,596)
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
October 31, 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 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.
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 October 31, 1998, the value of loaned securities was $8,001,000;
aggregate collateral consisted of $8,395,000 in the securities lending
collateral pool.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $74,435,000 and $134,307,000, respectively, for the
year ended October 31, 1998.
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.
24
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
In order for the fund's capital accounts and distributions to shareholders
to reflect the tax character of certain transactions, the following
reclassifications were made during the year ended October 31, 1998. The
results of operations and net assets were not affected by the
increases/(decreases) to these accounts.
-------------------------------------------------------------------------
Undistributed net investment income $ (455,000)
Undistributed net realized gain 391,000
Paid-in-capital 64,000
At October 31, 1998, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$189,569,000. Net unrealized loss aggregated $327,000 at period end, of
which $28,363,000 related to appreciated investments and $28,690,000 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 $164,000 was
payable at October 31, 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 October 31, 1998,
and for the year ended then ended, the effective annual group fee rate 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
25
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
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
$576,000 for the year ended October 31, 1998, of which $63,000 was payable
at period-end.
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
and Government 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 year ended October 31, 1998, totaled $600,000 and are
reflected as interest income in the accompanying Statement of Operations.
During the year ended October 31, 1998, the fund, in the ordinary course
of business, placed security purchase and sale orders aggregating
$23,583,000 with certain affiliates of the manager and paid commissions of
$72,000 related thereto.
- -------------------------------------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 10/31/98
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included $3,754,000 from long-term
capital gains; all of which was subject to the 20% rate gains category.
The fund will pass through foreign source income of $494,000 and foreign
taxes paid of $404,000.
- --------------------------------------------------------------------------------
<PAGE>
T. ROWE PRICE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of T. Rowe Price International Funds, Inc. and
Shareholders of International Discovery Fund
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
International Discovery Fund (one of the portfolios constituting T. Rowe
Price International Funds, Inc., hereafter referred to as the "Fund") at
October 31, 1998, and the results of its operations, the changes in its
net assets and the financial highlights for each of the fiscal periods
presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at October 31,
1998 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 18, 1998
27
<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.
28
<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 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 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.
**Closed to new investors.
***Formerly named Florida Insured Intermediate Tax-Free.
+Formerly named Tax-Free Insured Intermediate Bond.
++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.
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. F38-050 10/31/98
