-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LM3x9sOPt9ROMdFsz8UW2CyjQSf8uDtAHy13wqNDFkNDKA7L6MmnwpmRpRVCzNPY LRcQnTW8TIdAwHiZBl/IpQ== 0000313212-01-500017.txt : 20010614 0000313212-01-500017.hdr.sgml : 20010614 ACCESSION NUMBER: 0000313212-01-500017 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20010613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUNDS INC CENTRAL INDEX KEY: 0000313212 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 521175211 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-02958 FILM NUMBER: 1660168 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 3015472000 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL TRUST DATE OF NAME CHANGE: 19900301 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUND INC DATE OF NAME CHANGE: 19890914 N-30D 1 ems0430.txt EMERGING MARKETS STOCK FUND Semiannual Report Emerging Markets Stock Fund April 30, 2001 T. Rowe Price Report Highlights - -------------------------------------------------------------------------------- Emerging Markets Stock Fund o Emerging markets struggled in the six-month period ending April 30; most of last year's trends, including the slide in the technology sector, continued. o The fund performed better than the MSCI Emerging Markets Free Index but lagged its Lipper peer group average in the last six months. o Our country weightings were largely responsible for the fund's underperformance, but stock selection in Asia was very strong. o Portfolio activity was directed at changing the fund's sector diversification and individual holdings rather than regional allocations. o We will gradually shift assets to growth stocks that we believe will outperform in the next up cycle for emerging markets. UPDATES AVAILABLE For updates on T. Rowe Price funds following the end of each calendar quarter, please see our Web site at www.troweprice.com. Fellow Shareholders Emerging markets continued to struggle in the six months ended April 30, 2001, amid rapid downgrades in global growth expectations. Most of last year's trends continued, including the decline of technology, media, and telecommunications stocks. However, aggressive interest rate cuts in the U.S. and reductions in Japan and the U.K. helped restore some optimism by the end of the period. Performance Comparison - -------------------------------------------------------------------------------- Periods Ended 4/30/01 6 Months 12 Months - -------------------------------------------------------------------------------- Emerging Markets Stock Fund -9.82% -24.43% MSCI Emerging Markets Free Index -14.10 -25.83 Lipper Emerging Markets Funds Average -7.87 -25.83 Your fund returned -9.82% in the first half of the fund's fiscal year. As shown in the table, the fund's performance was better than that of the Morgan Stanley Capital International (MSCI) Emerging Markets Free Index but slightly weaker than that of the Lipper Emerging Markets Funds Average. The fund's 12-month performance, although disappointing, was better than both benchmarks. Country weightings were responsible for much of the fund's underperformance versus the Lipper benchmark in the last six months. Our modest overweighting in Turkey was a negative, as the country's currency devaluation reduced the dollar value of our holdings. In addition, underweighting South Africa-where several resource stocks performed very well-hurt relative performance. On the plus side, our stock selection in Asia was very strong, especially in Taiwan, where we have largely focused on technology hardware manufacturers that have benefited from outsourcing trends in the U.S. and Japan. In Latin America, where market declines were limited by the region's low representation in the globally weak technology sector, our high exposure to Mexico (16% of assets) helped relative performance. MARKET AND PORTFOLIO REVIEW During the last six months, portfolio activity was directed at changing the fund's sector diversification and individual holdings rather than regional allocations. The most significant changes involved Emerging European and Middle East countries, as we felt that sharp price moves in those markets offered excellent buying opportunities. Our largest new purchase was Check Point Software Technologies. We have always admired this Israel-based leader in the Internet security market but have believed until recently that its shares were overvalued. After the stock declined 35%, we initiated a position and continued buying as the price fell further. At the end of our reporting period, we had a 1.8% position in the stock, which now has a price-to-earnings (P/E) ratio below 35 but is forecast to have earnings growth exceeding 50%. We also increased our allocation to Turkey by 1% immediately after its currency devaluation. We targeted companies in the relatively steady media and food retail industries that, in our opinion, were oversold. Market Performance - -------------------------------------------------------------------------------- (In U.S. Dollar Terms) Periods Ended 4/30/01 6 Months 12 Months Argentina -0.51% -17.86% Brazil -3.78 -3.03 Chile -6.97 2.98 China (Free) -16.08 -23.69 Israel (Nondomestic) -43.91 -17.72 Malaysia (Free) -21.51 -35.60 Mexico -0.29 -2.81 Poland -18.68 12.76 South Africa 6.84 3.73 Thailand -36.36 9.72 Source: RIMES Online, using MSCI indices. To fund these purchases, we eliminated Gilat Satellite Networks, an Israeli company whose prospects for offering broadband Internet access to consumers had worsened due to product delays and weak consumer sentiment. We also trimmed our position in Orbotech, the leading maker of testing equipment for printed circuit boards and flat-panel monitors. In Europe, we reduced our holding in the Hungarian bank OTP Bank due to concerns over a deteriorating macroeconomic environment and eliminated Greek telecom positions because of relatively high valuations. In India, we trimmed financial stocks that had performed well and sold some pharmaceutical holdings following euphoric reactions to new AIDS treatments. Far East Asian market performance was mixed in the last six months, and local returns were exacerbated by regional currency weakness versus the U.S. dollar. Thailand and South Korea rose about 10% and 5% (in dollar terms), respectively, while India fell 10% and Taiwan 7%. In Taiwan, the central bank cut interest rates several times in an attempt to boost the economy. Politics also improved somewhat after relations improved between the previous administration and the new Democratic Party government. Our investments in semiconductor companies Elan Microelectronics and Via Technologies have performed well, and we continued to purchase shares of high-quality technology companies during periods of weakness. However, with new U.S. orders for Taiwan electronic exports at a 15-year low, we will underweight the country until the situation improves. We are cautious about South Korea, where export growth is falling sharply, debt levels at the major conglomerates are increasing, and the banking system remains fragile. We cut our position in Korea Telecom in the last six months for several reasons. The regulatory environment remains hostile, another part of the government's stake in the company is due to be sold shortly, and the firm's heavy investments in broadband technology are unlikely to generate meaningful returns for some time. Elsewhere in Asia, the major news was weakness in India due to a series of scandals, including the unwinding of a major speculator group that owned large positions in some of the market's largest and most liquid companies. Nevertheless, Reliance Industries, a conglomerate moving heavily into telecom services, and mortgage lender Housing Development Finance were two of our top performers. We remain overweighted in India as we continue to find many companies with quality management and high returns on equity. Emerging Europe and the Middle East The emerging markets of Europe and the Middle East fared poorly in the last six months. Stocks in Greece fell 9%, Russia 14%, and Hungary 17%. Israel and Turkey fared worst, with declines exceed ing 40%. Poland bucked the negative trend with a 13% gain. Turkey's market weakness stemmed from a 36% devaluation of the lira against the U.S. dollar. Bad loans at second tier banks, increasingly punitive interest rates, and a public dispute about economic policy between senior politicians contributed to the collapse in the "crawling peg" currency system set up by the International Monetary Fund (IMF) just over a year ago. As stated earlier, we slightly increased our Turkish exposure after the devaluation because we felt that stocks in certain sectors overreacted. We purchased newspaper company Hurriyet Gazetecilik ve Matbaacilik and food retailer Tansas, which now sell at substantial discounts (in terms of price to sales ratios) to peers in other emerging markets. We hope that Kemal Dervis, a World Bank official entrusted with the country's economic policy, will succeed in stabilizing the economy. However, the challenges facing him are substantial, and we will use any strong market rebound as a selling opportunity. Israel's market fell amid sharp declines in technology stocks, the collapse of the peace process following the defeat of Ehud Barak in national elections, and a slowing economy. As mentioned earlier, we added Internet security leader Check Point Software Technologies to the fund. We may purchase other technology stocks when the demand picture shows signs of improvement. We maintained our exposure to Teva Pharmaceutical, which reported excellent earnings growth fueled by its multiple sclerosis drug Copaxone and a healthy pipeline of new generic drug launches. Geographic Diversification - -------------------------------------------------------------------------------- Latin America 30 Far East 28 Other & Reserves 19 Europe 12 Africa & Middle East 11 Central European markets were hit by a decline in the euro, and signs of a weakening German economy raised concerns that the region's current account situation could again become a problem or that interest rates may need to remain high. Neither scenario is good for equities, so we eliminated our position in Polish bank Pekao. The stock had performed well on the back of good earnings, a result of aggressive cost cutting directed by its foreign strategic partner Unicredito Italiano. Latin America Although there were major debt problems in Argentina, Latin American markets were relatively stable in the last six months. Brazil fell 5%, Chile rose 3%, and Mexico and Argentina slipped less than 1%. In Mexico, GDP projections have fallen to 3.3% for 2001, and inflation will be lower at 7%. Despite a weaker growth outlook, Mexican banks performed well thanks to industry consolidation, an improved regulatory environment, and sufficient reserves for dealing with problematic loans. We maintained large holdings in both Banacci and Grupo Financiero BBVA Bancomer but took some profits during periods of rising stock prices. In the telecom sector, Telefonos de Mexico (Telmex) split into fixed and mobile businesses; we trimmed the latter, America Movil, due to concerns of increasing competition. We added Wal-Mart de Mexico, which continues to improve its relative position in Mexico's retail sector, Stocks in Brazil started the year well but faded as concerns about Argentina spread. Its currency dropped 10%, and the central bank-bucking the global trend-raised short-term interest rates. The performance of telecommunications stocks was particularly poor as auctions for additional mobile telecom spectrum could radically change the competitive landscape. In response, we cut our position in Telebras and eliminated Embratel. In the financial sector, Unibanco declined as it is generally perceived to have the lowest quality of the major private sector banks. Industry Diversification - -------------------------------------------------------------------------------- Percent of Net Assets 10/31/00 4/30/01 - -------------------------------------------------------------------------------- Financials 19.0% 22.3% Telecommunication Servi 26.8 19.0 Information Technology 13.7 16.6 Consumer Staples 8.5 11.0 Consumer Discretionary 8.3 8.7 Energy 7.9 8.3 Materials 3.6 4.8 Health Care 5.7 3.6 Industrials 1.7 2.4 All Other 1.1 0.4 Reserves 3.7 2.9 - -------------------------------------------------------------------------------- Total 100.0% 100.0% Argentina's economic situation continued to deteriorate in the last six months. A debt renegotiation is now a virtual certainty, as the country remains committed to keeping the peso pegged to the U.S. dollar. While our weighting in Argentina is low, the country's difficulties could have a major effect on neighboring Brazil. We are encouraged, however, that the contagion has been limited elsewhere. Mexico, in particular, seems to have decoupled from the region's problems. OUTLOOK Emerging market performance in the last year was disappointing as growth in developed economies decelerated. However, central banks worldwide have been lowering interest rates, which we believe will eventually halt the global economic slowdown. Structurally, emerging markets are in much better shape than they were over the last decade, yet valuations have fallen to multi-year lows both in absolute terms and relative to their developed market peers. We think emerging markets resemble an undervalued stock that simply needs a catalyst to unlock its potential value. We remain fully invested and will gradually shift assets into growth stocks that we believe will outperform in the next up cycle for emerging markets. Respectfully submitted, John R. Ford President, T. Rowe Price International Funds, Inc. May 24, 2001 T. Rowe Price Emerging Markets Stock Fund - -------------------------------------------------------------------------------- Portfolio Highlights - -------------------------------------------------------------------------------- TWENTY-FIVE LARGEST HOLDINGS Percent of Net Assets 4/30/01 Petroleo Brasileiro (Petrobras), Br 4.1% China Mobile (Hong Kong), Hong Kong 3.5 Reliance Industries, India 3.2 Samsung Electronics, South Korea 2.9 United Microelectronics, Taiwan 2.5 --------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing, 2.3 Grupo Financiero BBVA Bancomer, Mex 2.3 Telefonos de Mexico (Telmex), Mexic 2.1 Wal-Mart de Mexico, Mexico 2.0 Banacci, Mexico 2.0 --------------------------------------------------------------------------- Housing Development Finance, India 1.9 ICICI, India 1.9 South Korea Telecom, South Korea 1.9 Mobile Telesystems, Russia 1.8 Check Point Software Technologies, 1.8 --------------------------------------------------------------------------- Antenna TV, Greece 1.7 Femsa, Mexico 1.6 LUKoil, Russia 1.6 Ambev, Brazil 1.6 Hurriyet Gazetecilik ve Matbaacilik 1.3 -------------------------------------------------------------------------- Hindustan Lever, India 1.2 Telebras, Brazil 1.2 Pao de Acucar, Brazil 1.2 Nedcor, South Africa 1.1 Banco Itau, Brazil 1.1 --------------------------------------------------------------------------- Total 49.8% Note: Table excludes reserves. T. Rowe Price Emerging Markets Stock 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 benchmarks, which may include a broad-based market index and a peer group average or index. Market indexes do not include expenses, which are deducted from fund returns as well as mutual fund averages and indexes. EMERGING MARKETS STOCK FUND Date Markets Free Markets Funds Stock Fund Index Average 3/31/95 10000 10000 10000 4/30/95 10449 10428 10460 4/30/96 11951 12315 12131 4/30/97 12464 13424 12888 4/30/98 10652 12429 12828 4/30/99 9567 10286 10375 4/30/00 11682 13151 15547 4/30/01 8664 9654 11749 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 End 1 Year 3 Years 5 Years Inception Date ------------------------------------------------------------------------------- Emerging Markets Stock Fund -24.43% -2.88% -0.64% 2.69% 3/31/95 Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. T. Rowe Price Emerging Markets Stock Fund Unaudited Financial Highlights For a share outstanding throughout each period - -------------------------------------------------------------------------------- 6 Months Year Ended Ended 4/30/01 10/31/00 10/31/99 10/31/98 10/31/97 10/31/96 NET ASSET VALUE Beginning of period $12.42 $11.08 $ 7.95 $11.08 $11.59 $10.48 Investment activities Net investment income (loss) 0.01 (0.02) (0.01)* 0.05* 0.02* 0.02* Net realized and unrealized gain (loss) (1.23) 1.34 3.18 (3.06) (0.23) 1.08 Total from investment activities (1.22) 1.32 3.17 (3.01) (0.21) 1.10 Distributions Net investment income -- -- (0.04) -- (0.04) (0.01) Net realized gain -- -- -- (0.15) (0.30) -- Total distributions -- -- (0.04) (0.15) (0.34) (0.01) Redemption fees added to paid-in-capital -- 0.02 -- 0.03 0.04 0.02 NET ASSET VALUE End of period $11.20 $12.42 $11.08 $ 7.95 $11.08 $11.59 ------------------------------------------------------ Ratios/Supplemental Dat Total return (diamond) (9.82)% 12.09% 40.08%* 27.31)%* (1.60)%* 10.69%* Ratio of total expenses to average net assets 1.54%! 1.50% 1.75%* 1.75%* 1.75%* 1.75%* Ratio of net investment income (loss) to average net assets 0.27%! (0.12)% (0.14)%* 0.46%* 0.21%* 0.44%* Portfolio turnover rate 60.4%! 56.1% 59.0% 54.5% 84.3% 41.7% Net assets, end of period (in thousands) $165,368 $152,990 $108,418 $69,752 $119,285 $67,896 (diamond) 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. * Excludes expenses in excess of a 1.75% voluntary expense limitation in effect through 10/31/01. !Annualized The accompanying notes are an integral part of these financial statements. T. Rowe Price Emerging Markets Stock Fund - -------------------------------------------------------------------------------- Unaudited April 30, 2001 Portfolio of Investments Shares Value - -------------------------------------------------------------------------------- in thousands ARGENTINA 1.1% Common Stocks 1.1% BBVA Banc Frances ADR 25,850 $ 732 Perez Companc 683,755 1,046 Total Argentina (Cost $2,010) 1,778 BRAZIL 11.7% Common Stocks 6.9% Brasil Telecom Participacoes ADR (USD) 3,302 142 Companhia Vale do Rio Doce ADR (USD) 33,000 766 Embraer Aircraft (USD) 27,000 1,210 Pao de Acucar ADR (USD) 68,018 1,935 Petroleo Brasileiro (Petrobras) ADR (USD) 123,000 3,321 Tele Norte Leste Participacoes ADR (USD) * 34,984 611 Telebras ADR (USD) 38,580 1,977 Unibanco GDR (USD) 59,000 1,419 11,381 Preferred Stocks 4.8% Ambev 10,466,705 2,573 Banco Itau 23,295,600 1,884 Cia Energetica Minas Gerais 10,116,123 117 Petroleo Brasileiro (Petrobras) 141,090 3,442 8,016 Total Brazil (Cost $19,065) 19,397 CHILE 1.1% Common Stocks 1.1% Banco Santiago ADR (USD) 41,471 881 Embotelladora Andina ADR (USD) 29,989 400 Enersis ADR (USD) 28,445 467 Total Chile (Cost $1,908) 1,748 CHINA 0.6% Common Stocks 0.6% PetroChina (HKD) 4,782,000 1,024 Total China (Cost $786) 1,024 CZECH REPUBLIC 0.6% Common Stocks 0.6% Komercni Banka * 44,118 1,050 Total Czech Republic (Cost $825) 1,050 EGYPT 1.9% Common Stocks 1.9% Al Ahram Beverages GDR (USD) * 117,346 1,171 Egyptian Company for Mobile Services * 119,821 1,880 Lakah Group GDR (USD) * 163,678 102 Total Egypt (Cost $5,683) 3,153 ESTONIA 0.7% Common Stocks 0.7% Eesti Telekom GDR (USD) 84,843 1,094 Total Estonia (Cost $1,777) 1,094 GREECE 2.4% Common Stocks 2.4% Antenna TV ADR (USD) * 177,035 2,880 National Bank of Greece (EUR) 27,880 1,086 Total Greece (Cost $4,149) 3,966 HONG KONG 5.1% Common Stocks 5.1% Brilliance China Automotive Holdings 2,332,000 628 China Mobile (Hong Kong) * 1,171,500 5,768 China Resources Beijing 1,422,000 363 China Unicom * 472,000 657 Citic Pacific 121,000 348 CNOOC * 434,000 417 Phoenix Satellite Television Holdings * 1,348,000 244 Total Hong Kong (Cost $6,641) 8,425 HUNGARY 2.3% Common Stocks 1.7% EGIS 50,917 $1,483 Gedeon Richter 23,549 1,318 2,801 Preferred Stocks 0.6% OTP Bank 22,109 1,042 1,042 Total Hungary (Cost $4,158) 3,843 INDIA 13.1% Common Stocks 13.1% Apollo Hospitals 110,650 241 Britannia Industries * 104,420 1,548 Global Tele-Systems 106,500 453 HDFC Bank 352,000 1,730 Hindustan Lever 448,190 2,014 Housing Development Finance * 253,000 3,204 ICICI * 949,515 1,696 ICICI ADR (USD) * 118,635 1,412 ICICI Bank * 335,280 1,118 Infosys Technologies 10,400 832 McDowell 292,000 241 Ranbaxy Laboratories * 97,770 1,046 Reliance Industries 729,000 5,347 Wipro * 16,000 494 Wipro ADR (USD) * 10,074 347 Total India (Cost $24,978) 21,723 ISRAEL 4.4% Common Stocks 4.4% Check Point Software Technologies (USD) * 46,543 2,920 NICE Systems ADR (USD) * 30,470 352 Orbotech (USD) * 36,753 1,270 Partner Communications ADR (USD) * 244,250 1,056 Teva Pharmaceutical ADR (USD) 31,510 1,716 Total Israel (Cost $8,059) 7,314 MEXICO 15.6% Common Stocks 15.6% America Movil ADR (USD) * 87,690 $1,613 Banacci 1,757,000 3,226 Cemex Participating Certificates (Represents 2 Series A and 1 Series B shares) 280,838 1,316 Coca-Cola Femsa (Class L) ADR (USD) 92,000 1,794 Corporacion Interamericana de Entretenimiento * 125,800 441 Femsa, UBD Units (Represents 1 Series B and 4 Series D shares) 681,040 2,617 Grupo Aeroportuario del Sureste ADR (USD) * 35,000 635 Grupo Elektra 97,000 92 Grupo Financiero BBVA Bancomer * 4,741,600 3,805 Grupo Iusacell ADR (USD) * 65,200 531 Grupo Modelo (Class C) 216,000 595 Grupo Televisa GDR (USD) * 47,821 1,819 Kimberly-Clark de Mexico (Class A) 186,000 497 Telefonos de Mexico (Telmex) (Class L) ADR (USD) 98,690 3,415 Wal-Mart de Mexico ADR (USD) 137,113 3,342 Total Mexico (Cost $19,696) 25,738 PERU 0.0% Common Stocks 0.0% Credicorp (USD) 10,560 77 Total Peru (Cost $192) 77 POLAND 1.6% Common Stocks 1.6% Computerland * 34,352 850 Elektrim Spolka Akcyjna * 253,687 1,761 Total Poland (Cost $3,850) 2,611 RUSSIA 4.4% Common Stocks 4.4% LUKoil ADR (USD) * 44,561 1,860 LUKoil Holdings (USD) * 24,351 $ 253 LUKoil Holdings ADR (USD) * 11,850 495 Mobile Telesystems ADR (USD) * 103,260 2,964 Surgutneftegaz ADR (USD) 147,279 1,767 Total Russia (Cost $8,773) 7,339 SOUTH AFRICA 3.0% Common Stocks 3.0% M-Cell 362,300 952 Metropolitan Life 633,700 675 Nedcor 103,200 1,889 Sanlam 1,138,090 1,368 Total South Africa (Cost $4,976) 4,884 SOUTH KOREA 9.4% Common Stocks 9.4% Hana Bank 58,000 277 Hite Brewery 11,590 393 Housing & Commercial Bank 37,648 716 Hyundai Motor 107,770 1,686 Kook Min Bank 55,900 662 Korea Telecom 26,750 1,280 Korea Telecom Freetel * 16,000 573 LG Household & Health Care * 34,970 478 Samsung Electronics 27,255 4,739 Samsung Fire & Marine Insurance 15,480 416 Samsung Securities 20,000 526 Shinhan Bank 76,000 675 South Korea Telecom 17,990 3,094 Total South Korea (Cost $12,447) 15,515 SWITZERLAND 0.4% Common Stocks 0.4% Compagnie Financiere Richemont (ZAR) 23,450 584 Total Switzerland (Cost $457) 584 TAIWAN 11.3% Common Stocks 11.3% Acer 785,000 $ 508 Ambit Microsystems 149,000 901 Asustek Computer 155,000 704 China Development Industrial Bank * 1,071,000 954 China Trust Commercial Bank * 576,000 420 Elan Microelectronics 574,000 1,396 Hon Hai Precision 145,640 855 Powerchip Semiconductors 459,000 426 Powerchip Semiconductors GDR (USD) * 24,263 226 President Chain Store 472,856 1,366 Siliconware Precision Industries * 1,328,132 1,034 Sunplus Technology GDR (USD) * 25,000 239 Taiwan Cellular * 461,000 729 Taiwan Semiconductor Manufacturing * 1,403,531 3,883 United Microelectronics 2,630,980 4,200 Via Technologies * 91,000 858 Total Taiwan (Cost $19,335) 18,699 THAILAND 1.1% Common Stocks and Rights 1.1% TelecomAsia * 1,976,700 844 TelecomAsia, Rights * 187,357 19 Total Access Communications (USD) * 374,900 1,031 Total Thailand (Cost $2,655) 1,894 TURKEY 4.6% Common Stocks 4.6% Anadolu Efes Biracilik ve Malt Sanayii * 21,083,759 1,049 Dogan Yayin Holding * 291,749,631 1,133 Hurriyet Gazetecilik ve Matbaacilik * 409,402,248 2,144 Tansas *7,705,35871 Turkiye Garanti Bankasi 255,332,009 1,315 Yapi ve Kredi Bankasi * 392,188,576 1,815 Total Turkey (Cost $11,237) 7,527 VENEZUELA 0.7% Common Stocks 0.7% Compania Anonima Nacional Telefonos de Venezuela (CANTV) (Class D) ADR (USD) 51,088 $1,170 Total Venezuela (Cost $1,618) 1,170 UNITED STATES 0.0% Common Stocks 0.0% StarMedia Network (Class B) * 14,000 34 Total United States (cos 34 SHORT-TERM INVESTMENTS 4.6% Money Market Funds 4.6% T. Rowe Price Reserve Investment Fund, 5.18% # 7,616,883 7,617 Total Short-Term Investments (cost $7,617) 7,617 Total Investments in Securities 101.7% of Net Assets (Cost $173,302) $168,204 Other Assets Less Liabilities (2,836) NET ASSETS $165,368 * Non-income producing # Seven-day yield ADR American depository receipt EUR Euro GDR Global depository receipt HKD Hong Kong dollar USD U.S. dollar ZAR South African rand The accompanying notes are an integral part of these financial statements. T. Rowe Price Emerging Markets Stock Fund - -------------------------------------------------------------------------------- Unaudited April 30, 2001 Statement of Assets and Liabilities - -------------------------------------------------------------------------------- In thousands Assets Investments in securities, at value (cost $173,302) $ 168,204 Securities lending collateral 11,129 Other assets 5,944 Total assets 185,277 Liabilities Obligation to return securities lending collateral $ 11,129 Other liabilities 8,780 Total liabilities 19,909 NET ASSETS 165,368 Net Assets Consist of: Accumulated net investment income - net of distributions $ 214 Accumulated net realized gain/loss - net of distributions (20,190) Net unrealized gain (loss) (5,150) Paid-in-capital applicable to 14,767,361 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized $190,494 NET ASSETS $165,368 NET ASSET VALUE PER SHARE 11.20 The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- T. Rowe Price Emerging Markets Stock Fund - -------------------------------------------------------------------------------- Unaudited Statement of Operations - -------------------------------------------------------------------------------- In thousands 6 Months Ended 4/30/01 Investment Income (Loss) Income Dividend (net of foreign taxes of $127) 1,154 Interest (net of foreign taxes of $2) 242 Securities lending 48 Total income 1,444 Expenses Investment nt management 852 Shareholder servicing 232 stody and accounting 90 Prospectus and shareholder reports 24 Registration 17 Legal and audit 10 Directors 3 Miscellaneous 2 Total expenses 1,230 Net investment income (loss) 214 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities (net of foreign taxes of $46) (8,762) Foreign currency transactions (476) Net realized gain (loss) (9,238) Change in net unrealized gain or loss Securities (net of decrease in deferred foreign taxes of $87) (7,761) Other assets and liabilities denominated in foreign currenciesChange in net (5) unrealized gain or loss (7,766) Net realized and unrealized gain (loss) (17,004) INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS (16,790) ------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Emerging Markets Stock Fund - -------------------------------------------------------------------------------- Unaudited Statement of Changes in Net Assets - -------------------------------------------------------------------------------- In thousands 6 Months Year Ended Ended 4/30/01 10/31/00 Increase (Decrease) in Nxt Assets Operations Net investment income (loss) $ 214 $ (207) Net realized gain (loss) (9,238) 10,821 Change in net unrealized gain or loss (7,766) (6,426) Increase (decrease) in net assets from oper (16,790) 4,188 Capital share transactioxs * Shares sold 64,022 128,378 Shares redeemed (34,930) (88,277) Redemption fees received 76283 Increase (decrease) in net assets from capital share transactions 29,168 40,384 Net Assets Increase (decrease) during period 12,378 44,572 Beginning of period 152,990 108,418 End of period $165,368 $152,990 *Share information Shares sold 5,472 8,450 Shares redeemed (3,025) (5,915) Increase (decrease) in shares outstandin 2,447 2,535 The accompanying notes are an integral part of these financial statements. T. Rowe Price Emerging Markets Stock Fund - -------------------------------------------------------------------------------- Unaudited April 30, 2001 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 Emerging Markets Stock Fund (the fund), a diversified, open-end management investment company, is one of the portfolios established by the corporation and commenced operations on March 31, 1995. The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located, or with primary operations, in emerging markets. The accompanying financial statements were prepared in accordance with generally accepted accounting principles, which require the use of estimates made by fund management. Valuation Equity securities are valued at the last quoted sales price at the time the valuations are made. A security that 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. Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. 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 denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and offer prices of such currencies against U.S. dollars quoted by a major bank. 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. Redemption Fees The fund assesses a 2% fee on redemptions of fund shares held less than twelve months. Such fees are retained by the fund, and have the primary effect of increasing paid-in-capital. 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 net investment income and realized gains determined in accordance with generally accepted accounting principles. Credits earned on daily uninvested cash balances at the custodian are used to reduce the fund's custody charges. 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, 2001, approximately 97% of the fund's net assets were invested 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. It receives as collateral cash and U.S. government securities valued at 102%-105% of the value of the securities on loan. Cash collateral 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 the value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the fund the next business day. 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 the securities. At April 30, 2001, the value of loaned securities was $10,841,000; aggregate collateral consisted of $11,129,000 in the securities lending collateral pool. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $75,503,000 and $45,708,000, respectively, for the six months ended April 30, 2001. 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. As of October 31, 2000, the fund had $10,904,000 of capital loss carryforwards, $10,590,000 of which expires in 2006 and $314,000 in 2007. The fund intends to retain gains realized in future periods that may be offset by available capital loss carryforwards. At April 30, 2001, the cost of investments for federal income tax purposes was substantially the same as for financial reporting and totaled $173,302,000. Net unrealized loss aggregated $5,098,000 at period-end, of which $21,693,000 related to appreciated investments and $26,791,000 to depreciated investments. Note 4 - FOREIGN TAXES The fund is subject to foreign income taxes imposed by certain countries in which it invests. Foreign income taxes are accrued by the fund as a reduction of dividend and interest income. Gains realized upon disposition of Indian securities held by the fund are subject to capital gains tax in India, payable prior to repatriation of sales proceeds. The fund accrues a deferred tax liability for net unrealized gains, which totaled $29,000 at April 30, 2001. NOTE 5 - RELATED PARTY TRANSACTIONS The fund is managed by T. Rowe Price International, Inc. (the manager), a wholly owned subsidiary of T. Rowe Price Associates, Inc. (Price Associates), which is wholly owned by T. Rowe Price Group. The investment management agreement between the fund and the manager provides for an annual investment management fee, of which $137,000 was payable at April 30, 2001. 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 Price Associates (the group). The group fee rate ranges from 0.48% for the first $1 billion of assets to 0.295% for assets in excess of $120 billion. At April 30, 2001, and for the six months 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. Under the terms of the investment management agreement, the manager is required to bear any expenses, excluding interest, taxes, brokerage, and extraordinary expenses, through October 31, 2001, which would cause the fund's ratio of total expenses to average net assets to exceed 1.75%. Thereafter, through October 31, 2003, the fund is required to reimburse the manager for these expenses, provided that average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing the fund's ratio of total expenses to average net assets to exceed 1.75%. In addition, the fund has entered into agreements with Price Associates and two wholly owned subsidiaries of Price Associates, pursuant to which the fund receives certain other services. Price Associates computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc. is the fund's transfer and dividend disbursing agent and provides shareholder and administrative services to the fund. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. The fund incurred expenses pursuant to these related party agreements totaling approximately $248,000 for the six months ended April 30, 2001, of which $42,000 was payable at period-end. Additionally, the fund is one of several mutual funds sponsored by Price Associates (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, Price Associates, and, in the case of T. Rowe Price Spectrum International, T. Rowe Price International. Spectrum International Fund held approximately 2.8% of the outstanding shares of the Emerging Markets Stock Fund at April 30, 2001. For the six months then ended, the fund was allocated $11,000 of Spectrum expenses, $1,000 of which was payable at period-end. The fund may invest in the T. Rowe Price Reserve Investment Fund and T. Rowe Price Government Reserve Investment Fund (collectively, the Reserve Funds), open-end management investment companies managed by Price Associates. The Reserve Funds are offered as cash management options only to mutual funds and other accounts sponsored by Price Associates, 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, 2001, totaled $229,000 and are reflected as interest income in the accompanying Statement of Operations. T. Rowe Price Shareholder Services - -------------------------------------------------------------------------------- Investment Services and Information KNOWLEDGEABLE SERVICE REPRESENTATIVES By Phone 1-800-225-5132 Available Monday through Friday from 7 a.m. to midnight 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(registered trademark) and the T. Rowe Price Web site on the Internet. Address: www.troweprice.com BROKERAGE SERVICES* Individual Investments Stocks, bonds, options, precious metals, and other securities at a savings over full-service 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, Retirement Readiness Guide, and Retirement Planning Kit. * T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC. ** Based on a January 2001 survey for representative-assisted stock trades. Services vary by firm, and commissions may vary depending on size of order. T. Rowe Price Mutual Funds - -------------------------------------------------------------------------------- STOCK FUNDS Domestic Blue Chip Growth Capital Appreciation Capital Opportunity Developing Technologies 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 Tax-Efficient Growth Tax-Efficient Multi-Cap Growth Total Equity Market Index Value BLENDED ASSET FUNDS Balanced Personal Strategy Balanced Personal Strategy Growth Personal Strategy Income Tax-Efficient Balanced BOND FUNDS Domestic Taxable Corporate Income GNMA High Yield New Income Short-Term Bond Spectrum Income Summit GNMA U.S. Bond Index 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 Tax-Free Bond MONEY MARKET FUNDS! Taxable Prime Reserve Summit Cash Reserves U.S. Treasury Money Tax-Free California Tax-Free Money Maryland Tax-Free Money New York Tax-Free Money Summit Municipal Money Market Tax-Exempt Money INTERNATIONAL/GLOBAL FUNDS Stock Emerging Europe & Mediterranean Emerging Markets Stock European Stock Global Stock Global Technology International Discovery* International Equity Index International Growth & Income International Stock Japan Latin America New Asia Spectrum International Bond Emerging Markets Bond International Bond T. ROWE PRICE NO-LOAD VARIABLE ANNUITY Blue Chip Growth Portfolio Equity Income Portfolio Equity Index 500 Portfolio Health Sciences Portfolio International Stock Portfolio Limited-Term Bond Portfolio Mid-Cap Growth Portfolio New America Growth Portfolio Personal Strategy Balanced Portfolio Prime Reserve Portfolio * Closed to new investors. ! Investments in the funds are not insured or guaranteed by the FDIC or any other government agency. Although the funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds. Please call for a prospectus, which contains complete information, including risks, fees, and expenses. 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. For fund and account information or to conduct transactions, 24 hours, 7 days a week By touch-tone telephone Tele*Access 1-800-638-2587 By Account Access on the Internet www.troweprice.com/access For assistance with your existing fund account, call: Shareholder Service Center 1-800-225-5132 To open a brokerage account or obtain information, call: 1-800-638-5660 For the hearing impaired, call: 1-800-367-0763 Internet address: www.troweprice.com Plan Account Lines for retirement plan participants: The appropriate 800 number appears on your retirement account statement. 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 appropriate to the fund or funds covered in this report. Investor Centers: For directions, call 1-800-225-5132 or visit our Web site at www.troweprice.com/investorcenters Baltimore Area Downtown 105 East Lombard Street Owings Mills Three Financial Center 4515 Painters Mill Road Boston Area 386 Washington Street Wellesley Chicago Area 1900 Spring Road, Suite 104 Oak Brook Opening June 2001 Colorado Springs 2260 Briargate Parkway Los Angeles Area Warner Center 21800 Oxnard Street, Suite 270 Woodland Hills New Jersey/New York Area 51 JFK Parkway, 1st Floor Short Hills, New Jersey San Francisco Area 1990 North California Boulevard, Suite 100 Walnut Creek Tampa 4200 West Cypress Street 10th Floor Washington, D.C. Area Downtown 900 17th Street N.W. Farragut Square Tysons Corner 1600 Tysons Boulevard Suite 150 Opening July 2001 T. Rowe Price Invest with Confidence (registered trademark) T. Rowe Price Investment Services, Inc., Distributor.F05-051 4/30/01 -----END PRIVACY-ENHANCED MESSAGE-----