N-CSRS 1 ems.txt T. ROWE PRICE MARKET EMERGING MARKETS STOCK FUND Item 1. Report to Shareholders T. Rowe Price Emerging Markets Stock Fund -------------------------------------------------------------------------------- April 30, 2004 Certified Semiannual Report This report is certified under the Sarbanes-Oxley Act of 2002, which requires that public companies, including mutual funds, affirm that the information provided in their annual and semiannual shareholder reports fully and fairly represents their financial position. T. Rowe Price Emerging Markets Stock Fund -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) Financial Highlights For a share outstanding throughout each period 6 Months Year Ended Ended 4/30/04 10/31/03 10/31/02 10/31/01 10/31/00 10/31/99 NET ASSET VALUE Beginning of period $ 14.30 $ 9.87 $ 9.15 $ 12.42 $ 11.08 $ 7.95 Investment activities Net investment income (loss) 0.06 0.09 0.04 0.02 (0.02) (0.01)* Net realized and unrealized gain (loss) 1.26 4.36 0.68 (3.30) 1.34 3.18 Total from investment activities 1.32 4.45 0.72 (3.28) 1.32 3.17 Distributions Net investment income (0.09) (0.02) (0.01) - - (0.04) Redemption fees added to paid-in-capital - - 0.01 0.01 0.02 - NET ASSET VALUE End of period $ 15.53 $ 14.30 $ 9.87 $ 9.15 $ 12.42 $ 11.08 ----------------------------------------------------------- Ratios/Supplemental Data Total return^ 9.27% 45.16% 7.97% (26.33)% 12.09% 40.08%* Ratio of total expenses to average net assets 1.33%! 1.43% 1.51% 1.58% 1.50% 1.75%* Ratio of net investment income (loss) to average net assets 0.93%! 1.12% 0.41% 0.19% (0.12)% (0.14)%* Portfolio turnover rate 73.6%! 65.6% 70.5% 70.3% 56.1% 59.0% Net assets, end of period (in thousands) $ 509,192 $ 345,380 $158,465 $131,436 $152,990 $108,418 ^ 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% contractual 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 -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) April 30, 2004 Portfolio of Investments (ss.) ++ Shares Value -------------------------------------------------------------------------------- (Cost and value in $ 000s) ARGENTINA 0.5% Common Stocks 0.5% Quilmes Industrial ADR (USD) * 57,900 1,056 Tenaris ADR (USD) 58,400 1,751 Total Argentina (Cost $2,597) 2,807 BRAZIL 9.3% Common Stocks 7.0% Cia De Concessoes 99,100 848 Companhia de Bebidas ADR (USD) 131,097 2,459 Companhia Siderurgica Nacional 51,191,600 2,427 Companhia Vale do Rio Doce ADR (USD) 90,000 3,518 Companhia Vale do Rio Doce ADR (1 ADR represents 1 common share) (USD) 45,800 2,084 Embraer Aircraft ADR (USD) 42,405 1,094 Petroleo Brasileiro (Petrobras) ADR (USD) 465,590 11,616 Tele Centro Oeste Celular ADR (USD) 1 0 Tele Norte Leste Participacoes * 210,070,900 2,285 Tele Norte Leste Participacoes ADR (USD) 222,000 2,629 Telemig Celular Participacoes ADR (USD) 27,000 826 Telesp Celular Participacoes ADR (USD) * 489,600 3,491 Votorantim Celulose ADR (USD) 75,600 2,374 35,651 Preferred Stocks 2.3% Ambev 5 0 Banco Bradesco 27,499 1,114 Banco Itau Holding Financeira 37,235,300 2,949 Caemi Mineracao e Metalurgica * 2,091,200 761 Cia Energetica Minas Gerais (Cemig) 200,905,000 3,073 Cia Suzano de Papel e Celulose 676,100 2,987 Gerdau 57,000 601 11,485 Total Brazil (Cost $47,722) 47,136 CHINA 3.8% Common Stocks 3.8% China Insurance (HKD) 3,976,000 1,903 China Mobile (Hong Kong) (HKD) 1,920,000 5,008 China Resources Enterprise (HKD) 1,784,000 2,053 Cnooc (HKD) 8,110,000 2,886 Panva Gas Holdings (HKD) * 5,199,000 2,314 Shanghai Forte Land Company (H shares) (HKD) * 6,712,000 1,479 Shanghai Industrial Holdings (HKD) 751,000 1,400 tom.com (HKD) * 10,198,000 2,239 Total China (Cost $21,224) 19,282 CZECH REPUBLIC 0.5% Common Stocks 0.5% Komercni Banka 24,134 2,649 Total Czech Republic (Cost $2,201) 2,649 EGYPT 0.4% Common Stocks 0.4% Orascom Construction Industries 145,300 2,251 Total Egypt (Cost $2,241) 2,251 HUNGARY 0.4% Common Stocks 0.4% Gedeon Richter 21,119 2,145 Total Hungary (Cost $2,108) 2,145 INDIA 4.9% Common Stocks 4.9% Arvind Mills * 1,774,157 1,985 Ballarpur Industries, 144A (USD) 130,530 966 Castrol (India) 110,400 447 HDFC Bank * 294,000 2,512 Hindalco Industries 65,780 1,633 I-Flex Solutions 52,500 624 I-Flex Solutions 144A * 58,800 699 ITC 128,160 3,104 Mahindra & Mahindra 240,800 2,540 Oil & Natural Gas * 82,000 1,549 Oil & Natural Gas (Regulation S shares) * 83,600 1,579 Tata Tea 287,200 2,455 Zee Telefilms 1,800,500 5,122 Total India (Cost $22,163) 25,215 INDONESIA 1.0% Common Stocks 1.0% INDOSAT 6,477,500 2,920 Telekom Indonesia 2,301,000 2,098 Total Indonesia (Cost $3,839) 5,018 ISRAEL 5.9% Common Stocks 5.9% Bank Hapoalim 1,665,198 4,268 Check Point Software Technologies (USD) * 182,414 4,274 Koor Industries * 37,748 1,463 Lipman Electronic Engineering (USD) * 46,800 2,083 Makhteshim-Agan Industries * 848,300 3,411 NICE Systems ADR (USD) * 89,900 2,086 Orbotech (USD) * 134,600 2,843 Partner Communications ADR (USD) * 559,930 4,239 Teva Pharmaceutical ADR (USD) 90,940 5,598 Total Israel (Cost $28,333) 30,265 KAZAKHSTAN 1.0% Common Stocks 1.0% PetroKazakhstan (USD) 181,100 4,855 Total Kazakhstan (Cost $5,331) 4,855 MALAYSIA 6.6% Common Stocks 6.6% Astro All Asia * 1,174,100 1,607 Astro All Asia (Regulation S shares) * 536,000 734 Berjaya Sports Toto 2,505,600 2,884 CIMB Berhad 1,770,200 2,579 Hong Leong Bank 1,776,100 2,381 IJM 1,706,200 2,093 Magnum 3,719,700 2,832 Malayan Banking Berhad 2,299,400 6,345 Malaysian Industrial Development Finance Berhad 4,793,100 1,499 MK Land Holdings 3,340,900 2,455 Multi-Purpose Holdings * 3,487,100 1,161 Multi Purpose Holdings, Warrants, 2/26/09 * 355,350 58 Public Bank Berhad 2,247,800 2,018 Sime Darby 1,319,000 1,874 Symphony House * 2,224,300 949 Symphony House, Class A *!! 302,200 127 Symphony House, Warrants, 3/11/08 * 444,860 0 Telekom Malaysia * 624,000 1,549 Telekom Malaysia (Regulation S shares) 184,000 457 Total Malaysia (Cost $32,722) 33,602 MEXICO 7.3% Common Stocks 7.3% America Movil ADR (USD) 386,490 13,063 Cemex 460,982 2,697 Consorcio ARA * 536,700 1,459 Grupo Aeroportuario del Sureste ADR (USD) 64,200 1,255 Grupo Financiero Banorte 388,200 1,379 Grupo Modelo, Series C 859,000 2,148 Grupo Televisa ADR (USD) 110,569 4,820 Telmex ADR (USD) 137,051 4,679 Wal-Mart de Mexico 2,002,527 5,832 Total Mexico (Cost $32,963) 37,332 POLAND 0.2% Common Stocks 0.2% Telekomunikacja Polska 313,800 1,270 Total Poland (Cost $1,216) 1,270 RUSSIA 5.6% Common Stocks 5.6% AO VimpelCom ADR (USD) * 70,000 6,283 Gazprom ADR (USD) 66,900 2,055 Lukoil (USD) 86,520 2,356 Lukoil ADR (USD) 28,560 3,084 MMC Norilsk Nickel (USD) 79,100 4,730 Mobile Telesystems ADR (USD) 43,660 4,714 YUKOS ADR (USD) 114,404 5,120 Total Russia (Cost $22,556) 28,342 SOUTH AFRICA 8.8% Common Stocks 8.8% ABSA Group 475,900 3,076 African Bank Investments 2,612,781 3,996 Anglo American 454,310 9,112 Impala Platinum Holdings 102,860 7,028 Investec 109,100 1,930 Naspers (N shares) 899,000 6,091 Pick 'N Pay Stores 678,700 1,745 SABMiller 148,700 1,616 Sanlam 3,792,750 4,789 Sappi 106,629 1,442 Standard Bank Group 598,600 3,464 Telkom South Africa 37,200 405 Total South Africa (Cost $42,258) 44,694 SOUTH KOREA 20.8% Common Stocks 18.3% Amorepacific 14,110 2,255 Cheil Industries 139,620 2,013 Daewoo Shipbuilding & Marine Engineering, GDR (USD) 9,380 202 Daewoo Shipbuilding GDR 144A (USD) 36,200 778 Hanwha Chemical 411,770 2,748 Kookmin Bank * 232,066 8,598 Kookmin Bank ADR (USD) * 19,900 738 Korean Air Lines * 139,100 1,881 Kumgang Korea Chemical 37,260 3,797 LG Chemical 58,870 2,363 LG Electronics * 59,150 3,554 LG Home Shopping 29,590 1,230 LG International 251,570 1,920 Lotte Chilsung Beverage 6,410 3,780 NCsoft 28,300 2,010 Plenus 143,800 1,923 POSCO 5,650 685 Pusan Bank 396,230 2,292 Samsung Electronics 70,215 33,068 Shinhan Financial 222,400 3,857 Shinsegae 11,280 2,537 SK Corporation * 86,310 3,599 South Korea Telecom 42,430 7,204 93,032 Preferred Stocks 2.5% Hyundai Motor 226,140 4,255 Samsung Electronics 31,520 8,624 12,879 Total South Korea (Cost $80,695) 105,911 SWITZERLAND 0.7% Common Stocks 0.7% Compagnie Financiere Richemont (ZAR) 1,452,100 3,730 Total Switzerland (Cost $3,148) 3,730 TAIWAN 11.9% Common Stocks 11.9% Acer 2,443,661 3,435 Advantech 1,199,075 2,513 Basso Industry 1,124,000 2,221 Catcher Technology 536,000 2,231 Cathay Financial Holding * 1,867,000 3,293 Cheng Shin Rubber Industry 1,458,000 1,688 China Steel 112,000 99 China Trust Finance Holdings 3,412,201 3,650 EVA Airways 3,722,699 1,507 Evergreen Marine 3,087,220 2,354 Far Eastern Textile * 2,980,000 1,778 First Financial Holdings * 2,747,000 2,000 Formosa Plastic 2,064,070 2,935 Hon Hai Precision Industry 779,259 3,054 Nan Ya Plastic 2,532,881 3,380 Phoenixtec Power 720,655 761 Polaris Securities 2,988,800 1,658 Quanta Computer 498,000 1,044 Taishin Financial Holdings 4,157,000 3,621 Taiwan Cellular 1,941,001 1,774 Taiwan Semiconductor Manufacturing 4,452,243 7,643 United Microelectronics 5,584,350 4,965 Vanguard International Semiconductor * 1,907,000 858 Via Technologies 1,904,000 2,153 Total Taiwan (Cost $57,715) 60,615 THAILAND 1.9% Common Stocks 1.9% Bangkok Bank NVDR * 987,300 2,332 C.P. 7-Eleven 1,020,900 1,442 Kasikornbank Public NVDR * 1,238,600 1,501 Shin 2,804,500 2,471 Siam Commercial Bank 1,534,600 1,765 TelecomAsia, Rights * 187,357 0 Total Thailand (Cost $8,483) 9,511 TURKEY 4.1% Common Stocks 4.1% Akbank 394,601,918 1,832 Anadolu Efes Biracilik ve Malt Sanayii 106,246,000 1,490 Dogan Yayin Holding * 687,707,690 2,289 Hurriyet Gazete * 979,380,150 2,777 Turkcell Iletisim Hizmetleri * 883,502,100 9,585 Turkcell Iletisim Hizmetleri ADR (USD) * 12,600 359 Turkiye Garanti Bankasi * 752,858,940 2,307 Total Turkey (Cost $16,032) 20,639 SHORT-TERM INVESTMENTS 3.5% Money Market Funds 3.5% T. Rowe Price Reserve Investment Fund, 1.09% # 17,746,765 17,747 Total Short-Term Investments (Cost $17,747) 17,747 SECURITIES LENDING COLLATERAL 4.9% Money Market Pooled Account 4.9% Investment in money market pooled account managed by JP Morgan Chase Bank, London, 1.06% # 24,727,196 24,727 Total Securities Lending Collateral (Cost $24,727) 24,727 Total Investments in Securities 104.0% of Net Assets (Cost $478,021) $ 529,743 -------------------- (ss.) Denominated in currency of country of incorporation unless otherwise noted ++ At April 30, 2004, a substantial number of the fund's international securities were valued by the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. See Note 1. # Seven-day yield * Non-income producing !! Security contains restrictions as to public resale pursuant to the Securities Act of 1933 and related rules - total value of such securities at period-end amounts to $127 and represents 0.02% of net assets 144A Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration only to qualified institutional buyers - total value of such securities at period-end amounts to $2,443 and represents 0.5% of net assets ADR American Depository Receipts GDR Global Depository Receipts HKD Hong Kong dollar NVDR Non Voting Depository Receipt 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 -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) April 30, 2004 Statement of Assets and Liabilities -------------------------------------------------------------------------------- (Amounts in $ 000s except shares and per share amounts) Assets Investments in securities, at value (cost $478,021) $ 529,743 Other assets 17,168 Total assets 546,911 Liabilities Total liabilities 37,719 NET ASSETS $ 509,192 ---------- Net Assets Consist of: Undistributed net investment income (loss) $ 1,738 Undistributed net realized gain (loss) 10,155 Net unrealized gain (loss) 51,691 Paid-in-capital applicable to 32,795,978 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized 445,608 NET ASSETS $ 509,192 ---------- NET ASSET VALUE PER SHARE $ 15.53 ---------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Emerging Markets Stock Fund -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) Statement of Operations -------------------------------------------------------------------------------- ($ 000s) 6 Months Ended 4/30/04 Investment Income (Loss) Income Dividend (net of foreign taxes of $682) $ 5,308 Securities lending 73 Interest 3 Total income 5,384 Expenses Investment management 2,521 Shareholder servicing 383 Custody and accounting 139 Registration 44 Legal and audit 28 Prospectus and shareholder reports 21 Directors 3 Miscellaneous 39 Total expenses 3,178 Net investment income (loss) 2,206 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities (net of foreign taxes of $2,949) 46,401 Foreign currency transactions 62 Net realized gain (loss) 46,463 Change in net unrealized gain (loss) Securities (17,886) Other assets and liabilities denominated in foreign currencies (13) Change in net unrealized gain (loss) (17,899) Net realized and unrealized gain (loss) 28,564 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 30,770 ---------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Emerging Markets Stock Fund -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) Statement of Changes in Net Assets -------------------------------------------------------------------------------- ($ 000s) 6 Months Year Ended Ended 4/30/04 10/31/03 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ 2,206 $ 2,286 Net realized gain (loss) 46,463 11,070 Change in net unrealized gain (loss) (17,899) 70,925 Increase (decrease) in net assets from operations 30,770 84,281 Distributions to shareholders Net investment income (2,522) (328) Capital share transactions * Shares sold 207,156 177,771 Distributions reinvested 2,206 294 Shares redeemed (73,952) (75,225) Redemption fees received 154 122 Increase (decrease) in net assets from capital share transactions 135,564 102,962 Net Assets Increase (decrease) during period 163,812 186,915 Beginning of period 345,380 158,465 End of period $ 509,192 $ 345,380 --------- --------- (Including undistributed net investment income of $1,738 at 4/30/04 and $2,054 at 10/31/03) *Share information Shares sold 13,142 14,856 Distributions reinvested 150 28 Shares redeemed (4,657) (6,778) Increase (decrease) in shares outstanding 8,635 8,106 The accompanying notes are an integral part of these financial statements. T. Rowe Price Emerging Markets Stock Fund -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) April 30, 2004 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 1940 Act). The Emerging Markets Stock Fund (the fund), a diversified, open-end management investment company, is one portfolio 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 accounting principles generally accepted in the United States of America, which require the use of estimates made by fund management. Valuation The fund values its investments and computes its net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made, except for OTC Bulletin Board securities, which are valued at the mean of the latest bid and asked prices. 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. Listed securities not traded on a particular day are valued at the mean of the latest bid and asked prices for domestic securities and the last quoted sale price for international securities. Investments in mutual funds are valued at the mutual fund's closing net asset value per share on the day of valuation. Other investments and those 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 the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. Most foreign markets close before the close of trading on the NYSE. If the fund determines that developments between the close of a foreign market and the close of the NYSE will, in its judgment, materially affect the value of some or all of its portfolio securities, which in turn will affect the fund's share price, the fund will adjust the previous closing prices to reflect the fair value of the securities as of the close of the NYSE, as determined in good faith by the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. A fund may also fair value securities in other situations, such as when a particular foreign market is closed but the fund is open. In deciding whether to make fair value adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U. S. markets that represent foreign securities and baskets of foreign securities. The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day's opening prices in the same markets, and adjusted prices. Currency Translation Assets, including investments, 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 asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses. Redemption Fees A 2% fee is assessed on redemptions of fund shares held less than 1 year to deter short-term trading and protect the interests of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund, and have the primary effect of increasing paid-in capital. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared and paid on an annual basis. Capital gain distributions, if any, are declared and paid by the fund, typically on an annual basis. Other In the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is dependent on claims that may be made against the fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote. 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, 2004, approximately 94% of the fund's net assets were invested in securities of companies located in emerging markets or denominated in or linked to the currencies of emerging market countries. 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% to 105% of the value of the securities on loan. Cash collateral is invested in a money market pooled account managed by the fund's lending agent in accordance with investment guidelines approved by fund management. 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. Securities lending revenue recognized by the fund consists of earnings on invested collateral and borrowing fees, net of any rebates to the borrower and compensation to the lending agent. At April 30, 2004, the value of loaned securities was $25,192,000; aggregate collateral consisted of $24,727,000 in the money market pooled account and U.S. government securities valued at $3,658,000. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $290,181,000 and $163,464,000, respectively, for the six months ended April 30, 2004. 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 under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year-end; accordingly, tax-basis balances have not been determined as of April 30, 2004. The fund intends to retain realized gains to the extent of available capital loss carryforwards. As of October 31, 2003, the fund had $36,306,000 of unused capital loss carryforwards, of which $17,765,000 expire in fiscal 2009, and $18,541,000 that expire in fiscal 2010. At April 30, 2004, the cost of investments for federal income tax purposes was $478,021,000. Net unrealized gain aggregated $51,691,000 at period-end, of which $65,666,000 related to appreciated investments and $13,975,000 related 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 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 sale proceeds. The tax is computed on net realized gains, and realized losses in excess of gains may be carried forward eight years to offset future gains. In addition, the fund accrues a deferred tax liability for net unrealized gains on Indian securities. At April 30, 2004, the fund had no deferred tax liability and $20,785,000 of capital loss carryforwards that expire in 2011. 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, Inc. The investment management agreement between the fund and the manager provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.75% of the fund's average daily net assets, and the fund's pro-rata share of a group fee. The group fee is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in excess of $120 billion. The fund's portion of the group fee is determined by the ratio of its average daily net assets to those of the group. At April 30, 2004, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $485,000. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc., provides shareholder and administrative services in its capacity as the fund's transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. Expenses incurred pursuant to these service agreements totaled $244,000 for the six months ended April 30, 2004, of which $52,000 was payable at period-end. The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum Funds) may invest. The Spectrum Funds do not invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to a special servicing agreement, expenses associated with the operation of the Spectrum Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum Funds. Expenses allocated under this agreement are reflected as shareholder servicing expense in the accompanying financial statements. For the six months ended April 30, 2004, the fund was allocated $86,000 of Spectrum Funds' expenses, of which $60,000 related to services provided by Price and $24,000 was payable at period-end. At April 30, 2004, approximately 11.1% of the outstanding shares of the fund were held by the Spectrum Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and the 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 to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates, and are not available for direct purchase by members of the public. The Reserve Funds pay no investment management fees. During the six months ended April 30, 2004, dividend income from the Reserve Funds totaled $80,000. T. Rowe Price Emerging Markets Stock Fund -------------------------------------------------------------------------------- Certified Semiannual Report Information on Proxy Voting A description of the policies and procedures that the T. Rowe Price Emerging Markets Stock Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, upon request by calling 1-800-225-5132. It also appears in the fund's Statement of Additional Information (Form 485B), which can be found on the SEC's Web site, www.sec.gov. Item 2. Code of Ethics. A code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions is filed as an exhibit to the registrant's annual Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the registrant's most recent fiscal half-year. Item 3. Audit Committee Financial Expert. Disclosure required in registrant's annual Form N-CSR. Item 4. Principal Accountant Fees and Services. Disclosure required in registrant's annual Form N-CSR. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedule of Investments. Not applicable. The complete schedule of investments is included in Item 1 of this Form N-CSR. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 9. Submission of Matters to a Vote of Security Holders. Not applicable. Item 10. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. Exhibits. (a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is filed with the registrant's annual Form N-CSR. (2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (3) Written solicitation to repurchase securities issued by closed-end companies: not applicable. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. T. Rowe Price International Funds, Inc. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date June 15, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date June 15, 2004 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date June 15, 2004