-----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, NCI5vfNIdmCPGMloVSDfd2Iljd3XxGNyaNWXqGznUqH+q/YZm/SxjvgEIjuo4BQI iT3DOWAmd9+ok3Smy32OGw== 0000313212-99-000120.txt : 19991217 0000313212-99-000120.hdr.sgml : 19991217 ACCESSION NUMBER: 0000313212-99-000120 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 19991216 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: 99775904 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 EMERGING MARKETS STOCK FUND - -------------------------------------------------------------------------------- T. Rowe Price - -------------------------------------------------------------------------------- Annual Report Emerging Markets Stock Fund - -------------------------------------------------------------------------------- October 31, 1999 - -------------------------------------------------------------------------------- REPORT HIGHLIGHTS ================================================================================ EMERGING MARKETS STOCK FUND - --------------------------- * Emerging market stocks continued to rally and posted solid results for the fund's fiscal year. * The fund's six-month return of 12.03% far surpassed the benchmarks, while its 40.08% 12-month return was strong in absolute terms and mixed versus the competition. * Fund results benefited from stock selection, an underweighting in the slu ggish Latin American markets, and heavy exposure to the powerful Indian market. * The fund remained diversified across a broad spectrum of industries. * We are optimistic about prospects for 2000 because of broadening global economic and corporate earnings growth. UPDATES AVAILABLE - ----------------- For updates on each fund following the end of every calendar quarter, please see our Web site at www.troweprice.com. ================================================================================ FELLOW SHAREHOLDERS - -------------------------------------------------------------------------------- Emerging markets continued to rally during the six months ended October 31, 1999, and recorded outstanding gains for the full year as the global economic environment improved substantially. Stronger GDP numbers out of Japan and Germany helped considerably. Commodity prices rose following the rally in oil, erasing worries about global deflation, and current account deficits turned to surpluses throughout many emerging economies. ================================================================================ PERFORMANCE COMPARISON ---------------------- Periods Ended 10/31/99 6 Months 12 Months ---------------------- -------- --------- Emerging Markets Stock Fund 12.03% 40.08% MSCI Emerging Markets Free Index 7.23 44.63 Lipper Emerging Markets Funds Average 6.87 35.76 ================================================================================ For the six months ended October 31, your fund posted a return of 12.03%, comfortably ahead of the MSCI Emerging Markets Free Index's 7.23% and the Lipper Emerging Markets Funds Average of 6.87%. For the fiscal year, results were strong but mixed versus the benchmarks -- surpassing the Lipper average but lagging the index. A combination of market allocation and stock selection was responsible for the favorable six-month result. At the country level, the portfolio benefited from an underweighting in the relatively dull Latin American markets, and an overweighting in India in particular, which performed strongly. Regarding stock selection, our focus on technology and telecom shares worked well, since these sectors advanced powerfully as they did in the developed markets. PC demand remained strong, benefiting our holdings in South Korea, Taiwan, India, and Israel, while the growing use of mobile phones exceeded expectations. ================================================================================ THE SECTOR FACTOR IN INTERNATIONAL INVESTING - -------------------------------------------- Computer chips made in Ireland. Hollywood animation--from India. Internet venture capitalists from Japan. Companies today have growth opportunities, labor pools, competitive threats, acquisition targets, and potential suitors all over the world. International investing is no longer just a matter of having local expertise in global markets. Today's investor needs to be aware of global industry trends in addition to local realities. For the past 20 years, T. Rowe Price and its international investing arm, Rowe Price-Fleming International, have participated in the evolution of this new global marketplace and have evolved with it. Rowe Price-Fleming's international sector team works in concert with our regional portfolio managers, looking at cross-border trends that can create opportunities and risks in industries such as technology, pharmaceuticals, and financial services. Nowhere is this global sector imperative more evident than in telecommunications. Telecom firms need global scale to compete, and their fortunes are no longer exclusively tied to local or even regional factors. Hence Deutsche Telekom's unsuccessful bid for Telecom Italia, and the bid by Germany's Mannesmann for U.K. wireless phone company Orange. The chart below shows that global sector factors are growing increasingly important to the direction of stock prices. In the case of Telecom Italia, the chart shows that the correlation of its stock price to the global telecom sector (blue bar) rose significantly in 1997-98. (Data from the two years is averaged together.) The gray bar shows that during this period the stock's correlation to the Italian market declined. The examples of ING Groep and Societe Generale show that while their stock prices became modestly more correlated to their local markets, they became even more correlated to other global financial concerns. "We have sharpened our understanding of global trends that drive stock prices in the longer term, because we've got to be totally on top of the competitive forces affecting returns at different companies," said John Ford, chief investment officer at Rowe Price-Fleming. "For example, what is the relative attractiveness of a Denso in Japan compared with another auto components company such as Valeo in France? We've got to be aware of cross-border valuations and industry trends." Of course, local factors still dominate the outlook for some companies. The task for the informed international investor is to appreciate both the global and the local influences. Rowe Price-Fleming International, with its experienced team of investment professionals worldwide, is as well positioned as ever to find the best investment opportunities for you. Influence of Globalaztion on Stocks Chart is shown here. ================================================================================ ================================================================================ MARKET PERFORMANCE ------------------ (In U.S. Dollar Terms) Periods Ended 10/31/99 6 Months 12 Months ---------------------- -------- --------- Argentina -5.95% 20.31% Brazil -3.34 14.50 Chile -6.87 22.23 China (Free) 12.76 18.28 Israel (Nondomestic) -1.87 14.53 Malaysia (Free) 35.53 189.92 Mexico -3.86 38.47 Poland -7.67 7.37 South Africa 4.08 15.70 Thailand -12.76 27.98 Source: RIMES Online, using MSCI indices. ================================================================================ At the end of October, 43% of portfolio assets were invested in Asia (up from 34% at the end of April). A good percentage of this amount was in India where we continued to find many well-managed software and technology companies with high returns on equity and strong comparative advantages against their competitors in the West. Latin America represented 22% of assets, down from 30% in April, but the sharp decline was largely a result of our accepting a cash offer from the Spanish company Repsol for our significant holding in oil major YPF Sociedad Anonima in Argentina. In Emerging Europe, where we had a 16% allocation (down from 17%), we boosted our exposure to Turkey since the election of a majority coalition government led to optimism about curing the twin curses of hyperinflation and high fiscal deficits. We cut back significantly on our holdings in Greece after investors pushed stocks to excessive valuation levels compared with their Eastern European counterparts. We increased the fund's exposure to the Middle East and South Africa, as the latter's economy is finally recovering from a deep recession and stock valuations are at multiyear lows. ================================================================================ MARKET REVIEW - -------------------------------------------------------------------------------- Asia - ---- Asia started the period strongly, but many markets faded during the past three months with some notable exceptions, including INDIA and Malaysia. In general, economies continued to recover far faster than expected, interest rates declined, and liquidity became ever more abundant as trade balances moved sharply into surplus. News on structural reforms was also positive, with South Korea allowing greater foreign involvement in corporate restructuring and Thailand taking steps to recapitalize its weak banking system. SAMSUNG ELECTRONICS in SOUTH KOREA was the portfolio's single largest holding at 3.8% of assets, and KOREA TELECOM was another large position at 1.4%. In THAILAND, poor demand for a new rights offering from Thai Farmers Bank cast a pall on many Asian financial stocks during the past six months. However, Indian stocks powered ahead, sparked by the results of the general elections, which resulted in optimism about the rapid implementation of market-friendly measures. Our technology and pharmaceutical stocks performed particularly well, and not even the news of the military coup in neighboring Pakistan slowed the advance. Major fund positions in the Indian market include ZEE TELEFILMS and INDUSTRIAL CREDIT & INVESTMENT OF INDIA. In TAIWAN, GDP growth accelerated to 4.3%. Despite a severe earthquake near Taipei, damage to key technology industries was minimal. We continue to favor this market, given the large number of firms earning returns on capital well in excess of cost and benefiting from the trend toward outsourcing in the personal computer industry. TAIWAN SEMICONDUCTOR MANUFACTURING and HON HAI PRECISION were two of our top holdings there. Our weightings in Thailand, INDONESIA, and the PHILIPPINES have remained low because of continuing trouble in the financial sectors and the highly leveraged balance sheets that characterize many companies in these countries. Latin America - ------------- [Pie chart shown here; Latin America 22%, Asia 29%, Europe 12%, Africa and Middle East 31%, Other and Reserves 6%] Latin America was the most disappointing region over the past six months, with most markets down from 3% to 7% in U.S. dollar terms. After the strong rally in BRAZIL following the January devaluation of the real, confidence faded amid signs of backsliding on much needed fiscal retrenchment. The government remains committed to spending cuts, but some of its recent moves to reduce social security expenditures were deemed unconstitutional in court. Cardoso's low standing in the polls is also restricting his options, and gridlock in these critical areas has sent the real sliding back to its low point of the year, around two to the dollar. Brazilian stock prices remain very low, but until real interest rates can fall from their punitive 15% level, the stock market is unlikely to rally. Our primary holding in this key regional market is TELECOMUNICACOES BRASILEIRAS (TELEBRAS). In contrast, the MEXICAN economy is in far better shape, benefiting from Mexico's close trade ties with the U.S. Mexican GDP grew by 2.8% in the June quarter, and exports continue to post double-digit gains. Despite this good news, we remain underweighted in Mexican shares as valuations look full, particularly in the retail and beverage sectors. Our largest position in Mexico remains TELEFONOS DE MEXICO (TELMEX), which at 3.6% of portfolio assets is just ahead of Telebras at 2.7%. As mentioned, we accepted an attractive offer for our shares of YPF SOCIEDAD ANONIMA in ARGENTINA, which had represented about 3% of portfolio assets at the end of April. Europe - ------ ================================================================================ INDUSTRY DIVERSIFICATION ------------------------ Percent of Net Assets 4/30/99 10/31/99 ------- -------- Services 37.7% 36.8% Finance 17.0 17.6 Consumer Goods 20.9 17.2 Capital Equipment 9.6 15.0 Energy 11.2 5.2 Materials 2.0 3.1 Multi-industry - 1.3 All Other 0.1 0.5 Reserves 1.5 3.3 Total 100.0% 100.0% ================================================================================ In Emerging Europe, the most significant action occurred in the Mediterranean markets of TURKEY and GREECE, where stocks posted substantial gains. The Greek market moved into "bubble" territory as investors drove stock valuations to extraordinary heights, fueled mostly by falling interest rates in anticipation of Greece's entry into the European Monetary Union. In Turkey, the market pushed higher as parliamentary elections produced the first majority government in many years, which quickly established a reformist agenda and passed a new social security law to try to limit the size of the fiscal deficit. An agreement with the IMF in November that could begin to attack the country's nearly 100% inflation rate seems possible. YAPI KREDI BANKASI, HURRIYET GAZETTE, and HACI OMER SABANCI are our largest positions in this market and among the fund's top 25 holdings. Elsewhere in the region, the markets were rather more subdued. The big picture improved for many of these economies as growth picked up in Western Europe, which buys most of their exports. However, trade deficits remained a concern in HUNGARY and POLAND. We maintain substantial positions in MATAV in Hungary and ELEKTRIM in Poland and are optimistic about the potential for these stocks. The RUSSIAN market continued to be volatile. While resurgent oil prices helped the trade balance, political uncertainty is high with parliamentary elections coming at the end of the year. The conflict in Chechnya is also a source of great concern. Africa and Middle East - ---------------------- Stock markets in the Middle East were relatively unexciting overall, but some of our telecom and technology stocks performed well, notably EGYPT MOBILE PHONE, which has rallied over fourfold this year. The stock was a major portfolio holding, accounting for 2.4% of assets at the end of our fiscal year. SOUTH AFRICAN stocks rose 4% during the past six months and nearly 16% for the year, as signs of economic improvement grew visible. Retail sales finally turned positive, and the recent rise in the price of gold should also help the economy, which appears to be undergoing a cyclical upswing. ABSA GROUP and SANLAM in this market were among our largest portfolio holdings. ISRAEL is another important market in the region, where we maintained several significant holdings. ORBOTECH and TEVA PHARMACEUTICAL INDUSTRIES were our primary Israeli positions and were also among the portfolio's largest holdings. ================================================================================ OUTLOOK - -------------------------------------------------------------------------------- Global growth is broadening, commodity prices are firmer, stock valuations are generally low, and the difference between emerging market bond yields and U.S. Treasury bond yields is above average -- increasing the appeal of emerging market securities. While several emerging stock markets may take a breather near year-end, we maintain a positive outlook for their prospects in 2000. We are encouraged that, despite the strong performance of many of these markets during the past 12 months, stock valuations are still not excessive by historical standards, and earnings growth should continue to recover briskly during the year ahead. Respectfully submitted, /s/ Martin G. Wade President November 19, 1999 ================================================================================ T. Rowe Price Emerging Markets Stock Fund - ----------------------------------------- PORTFOLIO HIGHLIGHTS -------------------- TWENTY-FIVE LARGEST HOLDINGS ---------------------------- Percent of Net Assets 10/31/99 -------- TWENTY-FIVE LARGEST HOLDINGS Percent of Net Assets 10/31/99 - ------------------------------------------------------------------------------ Samsung Electronics, South Korea 3.8% - ------------------------------------------------------------------------------ Telefonos de Mexico (Telmex), Mexico 3.6 - ------------------------------------------------------------------------------ Telecomunicacoes Brasileiras (Telebras), Brazil 2.7 - ------------------------------------------------------------------------------ Zee Telefilms, India 2.5 - ------------------------------------------------------------------------------ Egypt Mobile Phone, Egypt 2.4 - ------------------------------------------------------------------------------ China Telecom, China 2.4 - ------------------------------------------------------------------------------ Taiwan Semiconductor Manufacturing, Taiwan 2.4 - ------------------------------------------------------------------------------ Korea Telecom, South Korea 1.9 - ------------------------------------------------------------------------------ Matav, Hungary 1.8 - ------------------------------------------------------------------------------ Hon Hai Precision, Taiwan 1.6 - ------------------------------------------------------------------------------ Orbotech, Israel 1.6 - ------------------------------------------------------------------------------ Yapi Kredi Bankasi, Turkey 1.5 - ------------------------------------------------------------------------------ Teva Pharmaceutical Industries, Israel 1.5 - ------------------------------------------------------------------------------ United Micro Electric, Taiwan 1.3 - ------------------------------------------------------------------------------ Industrial Credit & Investment Corp. of India, India 1.2 - ------------------------------------------------------------------------------ Cipla, India 1.2 - ------------------------------------------------------------------------------ Elektrim, Poland 1.2 - ------------------------------------------------------------------------------ ABSA Group, South Africa 1.2 - ------------------------------------------------------------------------------ Ranbaxy Laboratories, India 1.2 - ------------------------------------------------------------------------------ OTPBank, Hungary 1.1 - ------------------------------------------------------------------------------ Hurriyet Gazette, Turkey 1.1 - ------------------------------------------------------------------------------ Haci Omer Sabanci, Turkey 1.0 - ------------------------------------------------------------------------------ Mahanagar Telephone, India 1.0 - ------------------------------------------------------------------------------ Sanlam, South Africa 1.0 - ------------------------------------------------------------------------------ Ceske Radiokomunikace, Czech Republic 1.0 - ------------------------------------------------------------------------------ Total 43.2% 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. [SEC chart shown here] 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 10/31/99 1 Year 3 Years Inception Date - ---------------------- ------ ------- --------- ---- Emerging Markets Stock Fund 40.08% 0.06% 3.33% 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 - ----------------------------------------- For a share outstanding throughout each period Financial Highlights - -------------------- Year 3/31/95 Ended Through 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95 -------- -------- -------- -------- -------- NET ASSET VALUE Beginning of period $ 7.95 $ 11.08 $ 11.59 $ 10.48 $ 10.00 - -------------------------------------------------------------------------------- Investment activities Net investment income (0.01) 0.05* 0.02* 0.02* 0.02* Net realized and unrealized gain (loss) 3.18 (3.06) (0.23) 1.08 0.44 - -------------------------------------------------------------------------------- Total from investment activities 3.17 (3.01) (0.21) 1.10 0.46 - -------------------------------------------------------------------------------- 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 - 0.03 0.04 0.02 0.02 - -------------------------------------------------------------------------------- NET ASSET VALUE End of period $ 11.08 $ 7.95 $ 11.08 $ 11.59 $ 10.48 Ratios/Supplemental Data Total return** 40.08%* (27.31)%* (1.60)%* 10.69%* 4.80%* - -------------------------------------------------------------------------------- Ratio of total expenses to average net assets 1.75%* 1.75%* 1.75%* 1.75%* 1.75%+* - -------------------------------------------------------------------------------- Ratio of net investment income to average net assets (0.14)%* 0.46%* 0.21%* 0.44%* 0.54%+* - -------------------------------------------------------------------------------- Portfolio turnover rate 59.0% 54.5% 84.3% 41.7% 28.8%+ - -------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 108,418 $ 69,752 $119,285 $ 67,896 $ 14,399 - ------------------------------------------------------------------------------- ** 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 10/31/99. + Annualized The accompanying notes are an integral part of these financial statements. ================================================================================ T. Rowe Price Emerging Markets Stock Fund - ----------------------------------------- October 31, 1999 PORTFOLIO OF INVESTMENTS ------------------------ Shares Value In thousands ARGENTINA 1.8% Common Stocks 1.8% Banco Frances del Rio de la Plata ADR (USD) 16,060 $ 351 - ---------------------------------------------------------------------------- Banco Rio de la Plata (Class B) ADR (USD) 32,630 420 - ---------------------------------------------------------------------------- Perez Companc (Class B) 65,982 397 - ---------------------------------------------------------------------------- Telecom Argentina (Class B) ADR (USD) 15,240 419 - ---------------------------------------------------------------------------- Telefonica de Argentina (Class B) ADR (USD) 15,860 407 - ---------------------------------------------------------------------------- Total Argentina (Cost $2,493) 1,994 - ---------------------------------------------------------------------------- BRAZIL==7.6% Common Stocks 5.0% Companhia Vale do Rio Doce ADR (USD) 32,000 637 - ---------------------------------------------------------------------------- Electricidade de Rio de Janeiro 1,235,672,000 247 - ---------------------------------------------------------------------------- Pao de Acucar GDR (USD) 41,418 906 - ---------------------------------------------------------------------------- Tele Centro Sul Participacoes ADR (USD) 2,302 138 - ---------------------------------------------------------------------------- Tele Norte Leste Participacoes ADR (USD) 7,700 130 - ---------------------------------------------------------------------------- Telecomunicacoes Brasileiras ADR (USD) * 38,080 2,965 - ---------------------------------------------------------------------------- Telesp Participacpoes ADR (USD) 7,379 119 - ---------------------------------------------------------------------------- Unibanco GDR (USD) 12,000 278 - ---------------------------------------------------------------------------- 5,420 - ---------------------------------------------------------------------------- Preferred Stocks 2.6% Banco Itau 13,829,600 793 - ---------------------------------------------------------------------------- Brahma 675,141 431 - ---------------------------------------------------------------------------- Cia Energetica Minas Gerais 35,116,123 500 - ---------------------------------------------------------------------------- Petrol Brasileiros 6,662,000 1,060 - ---------------------------------------------------------------------------- Telecomunicacoes Brasileiras ADR (USD) * 39,922 2 - ---------------------------------------------------------------------------- Telecomunicacoes de Minas Gerais (Class B) 54,464 1 - ---------------------------------------------------------------------------- Telecomunicacoes do Rio de Janeiro * 1,287,988 18 - ---------------------------------------------------------------------------- 2,805 - ---------------------------------------------------------------------------- Total Brazil (Cost $11,253) 8,225 - ---------------------------------------------------------------------------- CHILE==1.5% Common Stocks 1.5% Banco Santiago ADR (USD) 6,500 130 - ---------------------------------------------------------------------------- Chilectra ADR (144a) (USD) 24,241 424 - ---------------------------------------------------------------------------- Compania Cervecerias Unidas ADS (USD) 7,277 159 - ---------------------------------------------------------------------------- Compania de Telecomunicaciones de Chile (Class A) ADR (USD) 13,955 $ 233 - ---------------------------------------------------------------------------- Embotelladora Andina ADR (USD) 16,358 266 - ---------------------------------------------------------------------------- Enersis ADS (USD) 19,847 446 - ---------------------------------------------------------------------------- Total Chile (Cost $1,959) 1,658 - ---------------------------------------------------------------------------- CHINA==2.4% Common Stocks 2.4% China Telecom (HKD) 759,000 2,594 - ---------------------------------------------------------------------------- Total China (Cost $1,543) 2,594 - ---------------------------------------------------------------------------- CROATIA==0.5% Common Stocks 0.5% Pliva D D GDR (USD) 52,680 574 - ---------------------------------------------------------------------------- Total Croatia (Cost $875) 574 - ---------------------------------------------------------------------------- CZECH=REPUBLIC==1.4% Common Stocks 1.4% Ceske Radiokomunikace 33,228 1,073 - ---------------------------------------------------------------------------- SPT Telecom 31,841 481 - ---------------------------------------------------------------------------- Total Czech Republic (Cost $1,390) 1,554 - ---------------------------------------------------------------------------- EGYPT==3.8% Common Stocks 3.8% Al Ahram Beverage S A E (USD) * 14,453 426 - ---------------------------------------------------------------------------- Commercial International Bank (USD) * 39,270 485 - ---------------------------------------------------------------------------- Eesti Telekom GDR (USD) 34,200 542 - ---------------------------------------------------------------------------- Egypt Mobile Phone * 102,572 2,646 - ---------------------------------------------------------------------------- Total Egypt (Cost $2,497) 4,099 - ---------------------------------------------------------------------------- GREECE==2.7% Common Stocks 2.7% Alpha Credit Bank 6,323 484 - ---------------------------------------------------------------------------- Antenna TV ADR (USD) * 53,015 477 - ---------------------------------------------------------------------------- Hellenic Telecommunication 49,746 1,054 - ---------------------------------------------------------------------------- National Bank of Greece 8,024 575 - ---------------------------------------------------------------------------- Stet Hellas Telecommunications ADR (USD) * 15,730 $ 338 - ---------------------------------------------------------------------------- Total Greece (Cost $2,979) 2,928 - ---------------------------------------------------------------------------- HONG=KONG==1.0% Common Stocks 1.0% Legend Holdings 164,000 176 - ---------------------------------------------------------------------------- New World China Land 618,400 287 - ---------------------------------------------------------------------------- Yanzhou Coal Mining 1,792,000 594 - ---------------------------------------------------------------------------- Total Hong Kong (Cost $1,417) 1,057 - ---------------------------------------------------------------------------- HUNGARY==3.2% Common Stocks 2.1% Fotex 135,301 46 - ---------------------------------------------------------------------------- Matav 333,333 1,940 - ---------------------------------------------------------------------------- Richter Gedeon GDS (USD) * 4,910 220 - ---------------------------------------------------------------------------- 2,206 - ---------------------------------------------------------------------------- Preferred Stocks 1.1% OTP Bank 26,969 1,225 - ---------------------------------------------------------------------------- 1,225 - ---------------------------------------------------------------------------- Total Hungary (Cost $3,025) 3,431 - ---------------------------------------------------------------------------- INDIA==13.3% Common Stocks 13.3% Britannia Industries 51,000 976 - ---------------------------------------------------------------------------- Cipla 45,000 1,341 - ---------------------------------------------------------------------------- Global Telephone Systems 69,000 852 - ---------------------------------------------------------------------------- HCL Infosystems 38,000 381 - ---------------------------------------------------------------------------- Hindustan Lever 18,400 985 - ---------------------------------------------------------------------------- Housing Development Finance * 120,500 733 - ---------------------------------------------------------------------------- ICICI Limited ADR (USD) * 7,428 82 - ---------------------------------------------------------------------------- Industrial Credit & Investment Corp. of India 738,550 1,344 - ---------------------------------------------------------------------------- ITC 63,800 1,036 - ---------------------------------------------------------------------------- Mahanagar Telephone 279,000 1,102 - ---------------------------------------------------------------------------- McDowell 259,000 859 - ---------------------------------------------------------------------------- Pentafour Software 50,000 699 - ---------------------------------------------------------------------------- Ranbaxy Laboratories 62,000 1,251 - ---------------------------------------------------------------------------- Zee Telefilms 26,600 $ 2,722 - ---------------------------------------------------------------------------- Total India (Cost $11,083) 14,363 - ---------------------------------------------------------------------------- ISRAEL==5.2% Common Stocks 5.2% ECI Telecom (USD) 17,440 508 - ---------------------------------------------------------------------------- Elbit * 19,082 250 - ---------------------------------------------------------------------------- Formula Systems * 12,130 304 - ---------------------------------------------------------------------------- Matav Cable System 32,640 753 - ---------------------------------------------------------------------------- Orbotech (USD) * 22,007 1,719 - ---------------------------------------------------------------------------- Partner Communication ADR (USD) * 33,650 530 - ---------------------------------------------------------------------------- Teva Pharmaceutical Industries ADR (USD) 32,890 1,591 - ---------------------------------------------------------------------------- Total Israel (Cost $4,600) 5,655 - ---------------------------------------------------------------------------- MEXICO==10.2% Common Stocks 10.2% Cemex (Represents 2 Class A and 1 Class B shares) * 208,540 944 - ---------------------------------------------------------------------------- Cifra (Class V) ADR (USD) * 22,113 348 - ---------------------------------------------------------------------------- Coca-Cola Femsa (Class L) ADR (USD) * 25,000 347 - ---------------------------------------------------------------------------- Femsa UBD (Represents 1 Class B and 4 Series D shares) 298,040 967 - ---------------------------------------------------------------------------- Grupo Financiero Banamex * 313,000 783 - ---------------------------------------------------------------------------- Grupo Sanborns * 94,200 137 - ---------------------------------------------------------------------------- Gruma (Class B) * 64,888 85 - ---------------------------------------------------------------------------- Grupo Elektra, Participating Certificates (Represents 1 Class L and 2 Class B shares) 706,000 338 - ---------------------------------------------------------------------------- Grupo Industrial Maseca (Class B) 311,000 155 - ---------------------------------------------------------------------------- Grupo Iusacell ADR (USD) * 42,000 499 - ---------------------------------------------------------------------------- Grupo Modelo (Class C) 252,000 616 - ---------------------------------------------------------------------------- Grupo Televisa GDR (USD) * 17,000 723 - ---------------------------------------------------------------------------- Kimberly-Clark de Mexico (Class A) 150,000 481 - ---------------------------------------------------------------------------- Organizacion Soriana 70,000 259 - ---------------------------------------------------------------------------- Panamerican Beverages (Class A) (USD) 15,822 254 - ---------------------------------------------------------------------------- Telefonos de Mexico (Class L) ADR (USD) 45,995 3,933 - ---------------------------------------------------------------------------- TV Azteca ADR (USD) 37,500 152 - ---------------------------------------------------------------------------- Total Mexico (Cost $9,651) 11,021 - ---------------------------------------------------------------------------- PERU==0.4% Common Stocks 0.4% Credicorp (USD) 10,560 $ 112 - ---------------------------------------------------------------------------- Telefonica del Peru (Class B) ADR (USD) 28,160 326 - ---------------------------------------------------------------------------- Total Peru (Cost $804) 438 - ---------------------------------------------------------------------------- PHILIPPINES==0.6% Common Stocks 0.6% La Tondena Distillers 318,000 293 - ---------------------------------------------------------------------------- San Miguel (Class B) 268,070 388 - ---------------------------------------------------------------------------- Total Philippines (Cost $955) 681 - ---------------------------------------------------------------------------- POLAND==2.6% Common Stocks 2.6% Bank Rozwoju Eksportu 30,871 841 - ---------------------------------------------------------------------------- Computerland 15,397 205 - ---------------------------------------------------------------------------- Elektrim 154,685 1,338 - ---------------------------------------------------------------------------- Softbank 16,415 463 - ---------------------------------------------------------------------------- Total Poland (Cost $3,484) 2,847 - --------------------------------------------------------------------------- RUSSIA==1.0% Common Stocks 1.0% LUKoil (USD) 24,351 193 - ---------------------------------------------------------------------------- LUKoil ADR (USD) 30,350 941 - ---------------------------------------------------------------------------- Total Russia (Cost $3,208) 1,134 - ---------------------------------------------------------------------------- SOUTH=AFRICA==6.9% Common Stocks 6.9% ABSA Group 309,200 1,261 - ---------------------------------------------------------------------------- De Beers Centenary 29,600 808 - ---------------------------------------------------------------------------- JD Group 50,300 319 - ---------------------------------------------------------------------------- M Cell 555,300 1,062 - ---------------------------------------------------------------------------- Metropolitan Life 467,800 571 - ---------------------------------------------------------------------------- Rembrandt Group 37,000 277 - ---------------------------------------------------------------------------- Richemont Securities 27,800 $ 537 - ---------------------------------------------------------------------------- Sanlam 955,500 1,097 - ---------------------------------------------------------------------------- South African Breweries ADS (USD) * 55,491 488 - ---------------------------------------------------------------------------- Standard Bank Investment 308,600 1,055 - ---------------------------------------------------------------------------- Total South Africa (Cost $7,860) 7,475 - ---------------------------------------------------------------------------- SOUTH=KOREA==11.6% Common Stocks 11.6% Hana Bank 54,502 500 - ---------------------------------------------------------------------------- Housing & Commercial Bank 32,000 846 - ---------------------------------------------------------------------------- Korea Electric Power 33,000 966 - ---------------------------------------------------------------------------- Korea Electric Power ADR (USD) 40,000 630 - ---------------------------------------------------------------------------- Korea Telecom 22,800 1,534 - ---------------------------------------------------------------------------- Korea Telecom ADR (USD) * 16,000 564 - ---------------------------------------------------------------------------- Korean Air Lines 21,000 275 - ---------------------------------------------------------------------------- LG Chemicals 25,000 756 - ---------------------------------------------------------------------------- LG Information & Communications 14,035 1,030 - ---------------------------------------------------------------------------- Samsung 25,000 396 - ---------------------------------------------------------------------------- Samsung Electronics 24,885 4,149 - ---------------------------------------------------------------------------- Shinhan Bank 47,000 498 - ---------------------------------------------------------------------------- South Korea Telecom 385 444 - ---------------------------------------------------------------------------- Total South Korea (Cost $7,810) 12,588 - ---------------------------------------------------------------------------- TAIWAN==12.9% Common Stocks 12.9% Acer Peripherals * 101,000 269 - ---------------------------------------------------------------------------- Asustek Computer GDR (USD) * 65,167 920 - ---------------------------------------------------------------------------- Asustek Computer GDR (144a) (USD) 127 2 - ---------------------------------------------------------------------------- Compal Electronics 219,892 738 - ---------------------------------------------------------------------------- D-Link 15,230 25 - ---------------------------------------------------------------------------- Far East Textile 318,774 436 - ---------------------------------------------------------------------------- Hon Hai Precision Industry * 210,800 1,442 - ---------------------------------------------------------------------------- Hon Hai Precision Industry GDR, (144a) (USD) * 19,936 324 - ---------------------------------------------------------------------------- Mosel Vitelic GDR (USD) * 68,000 736 - ---------------------------------------------------------------------------- Pacific Electric Wire * 413,000 199 - ---------------------------------------------------------------------------- Powerchip semiconductors GDR (USD) * 59,000 705 - ---------------------------------------------------------------------------- Powerchip semiconductors * 237,000 344 - ---------------------------------------------------------------------------- President Chain Stores 273,514 772 - ---------------------------------------------------------------------------- Ritek GDR (USD) * 36,000 $ 482 - ---------------------------------------------------------------------------- Siliconware Precision Industries 372,590 670 - ---------------------------------------------------------------------------- Systex * 142,000 450 - ---------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing * 579,540 2,576 - ---------------------------------------------------------------------------- United Micro Electric * 553,650 1,440 - ---------------------------------------------------------------------------- Winbond Electronics * 161,000 294 - ---------------------------------------------------------------------------- Winbond Electronics GDR (144a) (USD) * 37,400 682 - ---------------------------------------------------------------------------- Yageo 243,000 261 - ---------------------------------------------------------------------------- Yageo GDS (USD) * 38,000 204 - ---------------------------------------------------------------------------- Total Taiwan (Cost $9,831) 13,971 - ---------------------------------------------------------------------------- THAILAND==1.5% Common Stocks 1.5% Bangkok Bank * 291,500 680 - ---------------------------------------------------------------------------- Telecomasia 1,177,000 907 - ---------------------------------------------------------------------------- Total Thailand (Cost $1,644) 1,587 - ---------------------------------------------------------------------------- TURKEY==4.1% Common Stocks 4.1% Akbank 32,700,000 510 - ---------------------------------------------------------------------------- Haci Omer Sabanci 37,605,000 1,115 - ---------------------------------------------------------------------------- Hurriyet Gazete 155,921,278 1,184 - ---------------------------------------------------------------------------- Yapi Kredi Bankasi 114,386,200 1,665 - ---------------------------------------------------------------------------- Total Turkey (Cost $4,272) 4,474 - ---------------------------------------------------------------------------- VENEZUELA==0.5% Common Stocks 0.5% Compania Anonima Nacional Telefonos de Venezuela (Class D) ADR (USD) 18,935 489 - ---------------------------------------------------------------------------- Total Venezuela (Cost $690) 489 - ---------------------------------------------------------------------------- SHORT-TERMINVESTMENTS==2.5% Money Market Funds 2.5% Reserve Investment Fund, 5.51% # 2,698,092 2,698 - ---------------------------------------------------------------------------- Total Short-Term Investments (Cost $2,698) 2,698 - ---------------------------------------------------------------------------- =Total=Investments=in=Securities 99.2% of Net Assets (Cost $98,021) $ 107,535 Other Assets Less Liabilities 883 NET ASSETS $ 108,418 * Non-income producing # Seven-day yield 144a Security was purchased pursuant to Rule 144a under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers - total of such securities at period-end amounts to 1.32% of net assets. ADR American depository receipt ADS American depository share GDR Global depository receipt GDS Global depository share HKD Hong Kong dollar USD U.S. dollar The accompanying notes are an integral part of these financial statements. ================================================================================ T. Rowe Price Emerging Markets Stock Fund - ----------------------------------------- October 31, 1999 STATEMENT OF ASSETS AND LIABILITIES ----------------------------------- In thousands Assets Investments in securities, at value (cost $98,021) $ 107,535 Other assets 9,600 Total assets 117,135 Liabilities Total liabilities 8,717 NET ASSETS $ 108,418 Net Assets Consist of: Accumulated net realized gain/loss - net of distributions $ (23,240) Net unrealized gain (loss) 9,042 Paid-in-capital applicable to 9,784,954 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized 122,616 NET ASSETS $ 108,418 NET ASSET VALUE PER SHARE $ 11.08 The accompanying notes are an integral part of these financial statements. ================================================================================ T. Rowe Price Emerging Markets Stock Fund - ----------------------------------------- STATEMENT OF OPERATIONS ----------------------- In thousands Year Ended 10/31/99 ==Investment=Income Dividend (net of foreign taxes of $117) $ 1,245 Interest 186 - ---------------------------------------------------------------------------- Total income 1,431 - ---------------------------------------------------------------------------- Expenses Investment management 962 Shareholder servicing 341 Custody and accounting 146 Prospectus and shareholder reports 47 Legal and audit 24 Registration 18 Directors 5 Miscellaneous 12 - ---------------------------------------------------------------------------- Total expenses 1,555 - ---------------------------------------------------------------------------- Net investment income (124) - ---------------------------------------------------------------------------- Realized=and=Unrealized=Gain=(Loss) Net realized gain (loss) Securities (net of foreign taxes of $34) (348) Foreign currency transactions (244) Net realized gain (loss) (592) Change in net unrealized gain or loss on securities (net of deferred foreign taxes of $462) 29,048 Net realized and unrealized gain (loss) 28,456 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 28,332 The accompanying notes are an integral part of these financial statements. ================================================================================ T. Rowe Price Emerging Markets Stock Fund - ----------------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- In thousands Year Ended 10/31/99 10/31/98 Increase (Decrease) in Net Assets Operations Net investment income $ (124) $ 473 Net realized gain (loss) (592) (23,172) Change in net unrealized gain or loss 29,048 (6,088) - -------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 28,332 (28,787) - -------------------------------------------------------------------------------- Distributions to shareholders Net investment income (352) - Net realized gain - (1,562) - -------------------------------------------------------------------------------- Decrease in net assets from distributions (352) (1,562) - -------------------------------------------------------------------------------- Capital share transactions * Shares sold 44,491 33,862 Distributions reinvested 332 1,518 Shares redeemed (34,186) (54,808) Redemption fees received 49 244 - -------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 10,686 (19,184) - -------------------------------------------------------------------------------- Net Assets Increase (decrease) during period 38,666 (49,533) Beginning of period 69,752 119,285 End of period $ 108,418 $ 69,752 ================================================================================ *Share information Shares sold 4,500 3,277 Distributions reinvested 42 133 Shares redeemed (3,529) (5,401) - -------------------------------------------------------------------------------- Increase (decrease) in shares outstanding 1,013 (1,991) The accompanying notes are an integral part of these financial statements. ================================================================================ T. Rowe Price Emerging Markets Stock Fund - ----------------------------------------- October 31, 1999 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 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. 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. 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. 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 October 31, 1999, the fund held investments in securities of companies located in emerging markets. Future economic or political developments could adversely affect the liquidity or value, or both, of such securities. Securities Lending The fund lends its securities to approved brokers to earn additional income and receives cash and U.S. government 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, 1999, the value of loaned securities was $4,596,000; aggregate collateral consisted of $4,621,000 in the securities lending collateral pool. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $58,078,000 and $50,352,000, respectively, for the year ended October 31, 1999. ================================================================================ 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, 1999, the fund has capital loss carryforwards for federal income tax purposes of $23,125,000, of which $22,811,000 expires in 2006 and $314,000 expires in 2007. The fund intends to retain gains realized in future periods that may be offset by available capital loss carryforwards. 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, 1999. The results of operations and net assets were not affected by the increases/(decreases) to these accounts. ================================================================================ Undistributed net investment income $ 168,000 Undistributed net realized gain 431,000 Paid-in-capital (599,000) ================================================================================ At October 31, 1999, the cost of investments for federal income tax purposes was substantially the same as for financial reporting and totaled $98,021,000. Net unrealized gain aggregated $9,514,000 at period-end, of which $23,290,000 related to appreciated investments and $13,776,000 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 accured by the fund and withheld from dividend and interest income. Gains realized upon disposition of Indian securities held by the fund are subject to capital gains tax in India. The tax on realized gains is paid prior to repratriation of sales proceeds. A deferred tax liability is accrued on net unrealized gains, which totaled $462,000 at October 31, 1999. ================================================================================ NOTE 5 - 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 $107,000 was payable at October 31, 1999. 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 0.295% for assets in excess of $120 billion. At October 31, 1999, and for the year 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 was required to bear any expenses through October 31, 1999, which would cause the fund's ratio of total expenses to average net assets to exceed 1.75%. Thereafter, through October 31, 2001, 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%. Pursuant to this agreement, $57,000 of unaccrued 1998-1999 fees were repaid during the year ended October 31, 1999. 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 $385,000 for the year ended October 31, 1999, of which $42,000 was payable at period-end. Additionally, the fund is one of several T. Rowe Price-sponsored mutual funds (underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum) may invest. Spectrum does not invest in the underlying funds for the purpose of exercising management or control. Expenses associated with the operation of Spectrum are borne by each underlying fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by Spectrum, pursuant to special servicing agreements between and among Spectrum, the underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum International, Rowe Price-Fleming International. Spectrum International Fund held approximately 2.6% of the outstanding shares of the fund at October 31, 1999. For the year then ended, the fund was allocated $12,000 of Spectrum expenses, $2,000 of which 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 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, 1999, totaled $123,000 and are reflected as interest income in the accompanying Statement of Operations. During the year ended October 31, 1999, the fund, in the ordinary course of business, placed security purchase and sale orders aggregating $10,023,000 with certain affiliates of the manager and paid commissions of $37,000 related thereto. ================================================================================ T. Rowe Price Emerging Markets Stock Fund - ----------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- TO THE BOARD OF DIRECTORS T. ROWE PRICE INTERNATIONAL FUNDS, INC. AND SHAREHOLDERS OF EMERGING MARKETS STOCK 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 Emerging Markets Stock Fund (one of the portfolios comprising T. Rowe Price International Funds, Inc., hereafter referred to as the "Fund") at October 31, 1999, 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, 1999 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Baltimore, Maryland November 17, 1999 ================================================================================ T. Rowe Price Emerging Markets Stock Fund - ----------------------------------------- Tax Information (Unaudited) for the Tax Year Ended 10/31/99 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 will pass through foreign source income of $153,000 and foreign taxes paid of $153,000. ================================================================================ 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*AccessRegistration Mark 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, Retirees Financial 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 September 1999 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 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 Total Equity Market Index Value INTERNATIONAL/GLOBAL - -------------------- Emerging Markets Stock European Stock Global Stock International Discovery International Growth & Income 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 * 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. 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 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. WALK-IN INVESTOR CENTERS: For directions, call 1-800-225-5132 or visit our Web site BALTIMORE AREA Downtown 101 East Lombard Street Owings Mills Three Financial Center 4515 Painters Mill Road BOSTON AREA 386 Washington Street Wellesley COLORADO SPRINGS 4410 ArrowsWest Drive LOS ANGELES AREA Warner Center 21800 Oxnard Street, Suite 270 Woodland Hills TAMPA 4200 West Cypress Street 10th Floor WASHINGTON, D.C. 900 17th Street N.W. Farragut Square T. Rowe Price Investment Services, Inc., Distributor. F05-050 10/31/99 -----END PRIVACY-ENHANCED MESSAGE-----