<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
In the last quarter, your fund gave up some of its earlier gains as the economic
rebound in Latin America proved to be more elusive than expected. Latin American
stocks sustained heavy losses and many Asian stock markets also lost ground
after their strong performance in the previous quarter.
Fund performance was in negative territory in the quarter ended October 31,
but surpassed the benchmark shown below during its seven months of operation.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 10/31/95
Since
Inception
3 Months (3/31/95)
-------- ---------
<S> <C> <C>
Emerging Markets Stock Fund -8.55% 4.80%
MSCI Emerging Markets
Free Index -6.90 4.26
</TABLE>
- --------------------------------------------------------------------------------
Market Review
In Brazil, the dramatic success of the real (the local currency) restructuring
plan in early 1995 forced the government to restrain the overheating economy by
restricting credit and imports while raising interest rates, a policy that
slowed retail sales. The ongoing implementation of state, fiscal, and social
security reforms, vital for long-term sustainable growth, is causing inevitable
short-term pain.
This is also the case in Argentina, where a sharp drop in economic activity
(industrial production fell 7.9% in August) and high rates of unemployment have
put pressure on Finance Minister Cavallo. Stock valuations in Argentina are low,
and prospects seem favorable for the telephone and energy sectors, and major
banks. Quilmes Industrial was among the fund's largest holdings on October 31.
In Mexico, the program of economic rehabilitation was fitful during the
quarter. While
- --------------------------------------------------------------------------------
Market Performance
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 10/31/95
(in U.S. Dollar Terms)
3 Months 12 Months
-------- ---------
<S> <C> <C>
Argentina -10.2% -26.3%
Brazil 0.4 -25.5
Chile -11.6 -9.9
China (Free)* -15.7 n/a
Israel (Nondomestic) 2.9 2.5
Malaysia -12.6 -13.8
Mexico -16.2 -54.5
Poland -7.7 -6.3
South Africa 5.6 14.0
Thailand -7.4 -14.5
</TABLE>
- --------------------------------------------------------------------------------
*China (Free) is shown excluding dividends
Source: MSCI EMF and Emerging Markets Perspective, with gross dividends
reinvested.
the trade balance showed a surplus and monthly inflation fell back to 1.7% in
September from an April peak of 8%, the peso fell to new lows versus the dollar
and interest rates spiked to more than 50%. We believe that the foundations for
growth and stability are now in place and should start to benefit the stock
market. Grupo Televisa and Telefonos de Mexico were included among our major
Latin American positions.
In Southeast Asia, the positive impact of lower U.S. interest rates was
less pronounced than in previous quarters. The strength of the economies in
Malaysia and Thailand actually required a slight rise in rates, with credit
growth an unsustainable 25% in Malaysia. In China, all macroeconomic evidence
plus our own visits to mainland companies reveal a successful soft landing in
progress for this formerly overheated mega-economy, as inflation fell to 12%
from 25% at the end of 1994. The government has been easing credit gradually,
and foreign reserves look extremely healthy.
<PAGE>
- --------------------------------------------------------------------------------
Geographic Diversification
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Geographical diversification pie chart showing Latin America 38%, Southeast
Asia 45%, U.S. Short-Term 13%, All Other 4%.
Based on net assets as of 10/31/95.
- --------------------------------------------------------------------------------
Our long-term confidence in the growth potential of Southeast Asia remains
unshaken, as foreign direct investment (a key feature of the late 1980s economic
boom) continued to pick up and could accelerate when the Japanese economy
recovers. The region was represented in your fund's portfolio by United
Communications of Thailand, Semen Gresik of Indonesia, Asas Dunia of Malaysia,
and other stocks.
Elsewhere, we have added a holding in the Czech telephone company SPT
Telecom, which will benefit from a rapid expansion in domestic demand. Our
confidence is supported by the company's strategic foreign alliance with KPN of
the Netherlands and the Swiss telephone monopoly, which together purchased a 27%
stake in the Czech firm. After the close of the reporting period, we added a
position in the Israeli pharmaceutical firm Teva, which has a promising multiple
sclerosis drug. Thanks to the company's research and development programs, the
Israeli drug maker is well positioned to develop additional products.
In South Africa, the improved current account situation and ongoing high-
quality management by the central bank governor prompted us to reconsider our
underweighting here. Barlow Limited is our largest holding in this country.
However, our enthusiasm is tempered by dull economic performance (expected
growth of 3% in 1995), which is insufficient to absorb the growth of the
population. A continuing rise in crime is also a cause of concern, so we will be
monitoring developments carefully in this potentially rewarding country.
Outlook
Essential economic reforms have been put in place in Latin America, the effects
of which should begin to take hold in 1996. Recent volatility in stock markets
reflect the pain of structural adjustments. In Southeast Asia, the emphasis has
not been on reform, but rather on the maintenance of long-term, low-inflationary
growth, a goal that has been achieved in the majority of countries in the
region, but will require renewed commitment in Malaysia.
Low stock valuations and steady rather than sharp earnings growth through
1996 in emerging markets should provide a good environment for stocks. We
believe that after a disappointing year these markets will resume their trend of
strong long-term performance.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
November 17, 1995
2
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
Periods Ended October 31, 1995
<TABLE>
<CAPTION>
Change in Price Per Share
- ---------------------------------
<S> <C>
3 Months (From $11.46 to $10.48) $-0.98
7 Months (From $10.00 to $10.48) 0.48
- -------------------------------------------------------------------------------
Total Net Assets $14.4 million
===============================================================================
</TABLE>
- --------------------------------------------------------------------------------
Twenty-Five Largest Holdings
- --------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
Percent of
Net Assets
----------
<S> <C>
Backus y Johnston Cerveceria, Peru 2.5%
Telecomunicacoes Brasilias
ADR (USD), Brazil 2.5
Banco Bradesco, Brazil 2.3
Brahma, Brazil 2.3
Cia Tecidos Norte de Minas, Brazil 2.1
Centrais Electrobras ADR (USD), Brazil 2.0
Grupo Televisa GDR (USD), Mexico 1.7
Samsung Electronics, South Korea 1.7
Panamerican Beverages
ADR (USD), Mexico 1.7
Cemex, Mexico 1.6
Compania Telecomunicaciones
ADR (USD), Chile 1.6
Seoul Bank, South Korea 1.6
Usiminas, Brazil 1.6
BHI (USD), Belize 1.5
United Communications, Thailand 1.5
Telefonos de Mexico ADS (USD), Mexico 1.5
Semen Gresik, Indonesia 1.5
Asas Dunia, Malaysia 1.5
Barlow Limited, South Africa 1.5
Quilmes Industrial (USD), Argentina 1.4
Malaysian Assurance Alliance, Malaysia 1.4
Arab Malaysian Finance, Malaysia 1.4
Enersis ADS (USD), Chile 1.4
Cia Energetica Minas Gerais, Brazil 1.4
MTD Capital, Malaysia 1.3
- -------------------------------------------------------------------------------
Total 42.5%
===============================================================================
</TABLE>
- --------------------------------------------------------------------------------
Industry Diversification
- --------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
Percent of
Net Assets
----------
<S> <C>
Finance 21.5%
Materials 17.1
Consumer Goods 16.4
Services 15.8
Capital Equipment 8.9
Energy 8.6
Multi-Industry 0.9
Miscellaneous 1.6
Reserves 9.2
- -------------------------------------------------------------------------------
Total 100.0%
===============================================================================
</TABLE>
- --------------------------------------------------------------------------------
Security Classification
- --------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
Percent Market
of Net Cost Value
Assets (000) (000)
------ ----- ------
<S> <C> <C> <C>
Common Stocks,
Warrants, and
Rights 77.9% $12,011 $11,212
Preferred Stocks
and Rights 12.3 1,702 1,773
Bonds 0.6 83 92
Short-Term
Investments 12.5 1,803 1,803
----- ------- -------
Total Investments 103.3 15,599 14,880
Other Assets Less
Liabilities -3.3 -479 -481
- -------------------------------------------------------------------------------
Total Net Assets 100.0% $15,120 $14,399
===============================================================================
</TABLE>
3
<PAGE>
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Fund: Emerging Market Stock Fund Benchmark: MSCI Emerging Market Free Index
Date $ Amount ($10,000 intial Date $ Amount ($10,000 initial
investment) investment)
<S> <C> <C> <C>
03/31/95 10,000 03/31/95 10,000
10/31/95 10,480 10/31/95 10,426
</TABLE>
Note: The index return does not reflect expenses, which have been deducted from
the fund's return.
*Commencement of operations.
- --------------------------------------------------------------------------------
Total Return
- --------------------------------------------------------------------------------
Period Ended October 31, 1995
Since
Inception
(3/31/95)
---------
4.80%
- --------------------------------------------------------------------------------
Note: For the above period ended 9/30/95, the fund's return was 11.30%.
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
4
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
T. Rowe Price Emerging Markets Stock Fund / October 31, 1995
- --------------------------------------------------------------------------------
(values in thousands)
<TABLE>
<CAPTION>
Value
-----------
<C> <S> <C>
ARGENTINA -- 3.9%
COMMON STOCKS
11,853 shs Quilmes Industrial (USD)....................... $ 208
8,080 Telefonica de Argentina 'B'
ADR (USD).................................... 168
10,700 YPF Sociedad Anonima 'D'
ADR (USD).................................... 183
Total Argentina 559
BELIZE -- 1.5%
COMMON STOCK
14,250 BHI (USD)...................................... 223
BRAZIL -- 14.0%
COMMON STOCK
17,410 *Centrais Electrobras
ADR (USD).................................... 248
PREFERRED STOCKS AND RIGHTS
36,404,481 Banco Bradesco................................. 333
853,491 Brahma......................................... 326
2,300 Centrais Electrobras
ADR (USD).................................... 33
9,305,000 Cia Energetica Minas Gerais.................... 199
444,311 rts *Cia Energetica Minas Gerais.................... 0
960,000 shs Cia Tecidos Norte de Minas..................... 300
8,790 Telecomunicacoes Brasilias
ADR (USD).................................... 357
240,740,000 Usiminas....................................... 225
1,773
Total Brazil 2,021
CHILE -- 5.3%
COMMON STOCKS
6,420 Compania Cervecerias Unidas
ADS (USD).................................... 148
3,230 Compania
Telecomunicaciones
ADR (USD).................................... 233
8,080 Enersis ADS (USD).............................. 203
4,140 Sociedad Quimica Minera
de Chile 'B' ADR (USD)....................... 180
Total Chile 764
CHINA -- 4.5%
COMMON STOCKS
8,300 shs *Huaneng Power International
'N' ADR (USD)................................ 134
536,000 Maanshan Iron & Steel
(HKD)........................................ 98
180,000 Shanghai Diesel Engine
'B' (USD).................................... 80
240,000 *Shanghai New Asia 'B'
(USD)........................................ 115
456,000 Shanghai Petrochemical
'H' (HKD).................................... 131
300,000 Yizheng Chemical Fibre
'H' (HKD).................................... 87
Total China 645
COLOMBIA -- 0.8%
COMMON STOCK
6,110 Maderas y Sinteticos Sociedad
Anoma ADR (USD).............................. 109
CZECH REPUBLIC -- 1.7%
COMMON STOCKS
1,110 IPS Praha...................................... 92
1,600 *SPT Telecom.................................... 158
Total Czech Republic 250
HONG KONG -- 2.1%
COMMON STOCKS AND WARRANTS
168,000 Guangdong Investment........................... 99
642,000 Hualing Holdings............................... 100
6,700 Pacific Basin Bulk Shipping
(USD)........................................ 94
4,300 wts *Pacific Basin Bulk Shipping,
9/30/99 (USD)................................ 3
Total Hong Kong 296
INDIA -- 2.3%
COMMON STOCKS
6,000 shs Ashok Leyland GDR (USD)........................ 63
1,700 Grasim Industries GDS
(USD)........................................ 35
1,200 Hindalco GDR (USD)............................. 38
6,000 *Indian Hotels GDS (USD)........................ 110
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
-----------
<C> <S> <C>
2,160 shs Reliance Industries
GDS (USD).................................... $ 33
19,000 Videocon International
GDR (USD).................................... 48
Total India 327
INDONESIA -- 6.6%
COMMON STOCKS
55,500 Bank Dagang Nasional........................... 50
13,500 Hanjaya Mandala Sampoerna...................... 125
27,000 Indofoods Sukses Makmur........................ 125
1,500 Indosat 'B' ADR (USD).......................... 50
55,000 Jaya Real Property............................. 157
132,000 Mayora Indah................................... 94
36,480 Pabrik Kertas Tjiwi Kimia...................... 67
59,250 Panin Bank..................................... 65
82,000 Semen Gresik................................... 213
Total Indonesia 946
ISRAEL -- 2.8%
COMMON STOCKS
85,500 Bank Hapoalim.................................. 136
22,000 *Blue Square.................................... 144
3,100 Elco Holdings.................................. 130
Total Israel 410
MALAYSIA -- 14.8%
COMMON STOCKS AND WARRANTS
59,000 Arab Malaysian Finance......................... 207
67,000 Asas Dunia..................................... 211
50,000 Berjaya Sports Toto............................ 104
45,000 Chemical Company of Malaysia................... 90
32,000 wts *Commerce Asset Holdings, 6/27/98............... 87
28,000 shs Hock Hua Bank.................................. 83
3,000 Hock Hua Bank (L).............................. 9
58,000 LB Aluminum.................................... 123
53,000 Lityan Holdings................................ 141
51,000 Malaysian Assurance Alliance................... 207
33,000 MTD Capital.................................... 184
71,250 Muda Holdings.................................. 79
62,000 Renong......................................... 95
66,000 Shah Alam Properties........................... 162
38,000 *Technology Resources Industries................ 96
16,000 United Engineers............................... 100
46,000 Westmont....................................... 159
Total Malaysia 2,137
MEXICO -- 10.3%
COMMON STOCKS
76,770 shs Cemex 'B'...................................... 237
168,780 Cifra 'B' ADR (USD)............................ 180
41,300 Fomentos Economico Mexicano 'B'................ 86
32,300 *Gruma 'B'...................................... 95
14,630 Grupo Televisa GDR (USD)....................... 250
8,970 Panamerican Beverages 'A' ADR (USD)............ 246
7,775 Telefonos de Mexico 'L' ADS (USD).............. 214
45,100 Tolmex 'B'..................................... 169
Total Mexico 1,477
PERU -- 2.5%
COMMON STOCK
202,361 Backus y Johnston Cerveceria 'T'............... 362
PHILIPPINES -- 1.4%
COMMON STOCKS
7,000 Philippine Commerce International Bank......... 57
340 Philippine Long Distance Telephone............. 19
700 Philippine Long Distance Telephone ADR (USD)... 39
243,500 *SM Prime....................................... 66
148,000 *Southeast Asia Cement.......................... 19
Total Philippines 200
POLAND -- 0.1%
COMMON STOCK
6,600 Mostostal Export.............................. 15
SOUTH AFRICA -- 2.5%
COMMON STOCKS
16,300 Barlow Limited................................ 210
2,100 *Polifin....................................... 4
17,000 Sasol......................................... 147
Total South Africa 361
SOUTH KOREA -- 6.3%
COMMON STOCKS
1,500 Cho Hung Bank................................. 21
5,600 Hanil Securities.............................. 86
2,710 Korea Electric Power.......................... 122
975 Pohang Iron & Steel........................... 97
</TABLE>
6
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
-----------
<C> <S> <C>
1,100 shs *Samsung Electronics........................... $ 250
24,000 Seoul Bank.................................... 231
2,500 Yukong........................................ 94
Total South Korea 901
TAIWAN -- 1.1%
COMMON STOCK
7,048 *Yageo GDR (USD)............................... 69
CONVERTIBLE BOND
30,000 USD Acer, 4.00%, 6/10/01.......................... 92
Total Taiwan 161
THAILAND -- 6.3%
COMMON STOCKS
17,800 shs Bangkok Bank Public........................... 184
4,800 Land & House.................................. 78
2,700 Siam Cement................................... 147
10,000 Siam Commercial Bank.......................... 117
20,000 Thai Farmers Bank............................. 165
17,700 United Communications......................... 222
Total Thailand 913
SHORT-TERM INVESTMENTS -- 12.5%
COMMERCIAL PAPER
$400,000 Delaware Funding, 5.74%, 11/3/95.............. 398
350,000 Falcon Asset Securitization, 5.75%, 11/16/95.. 348
500,000 General Electric, 5.73%, 11/16/95............. 497
560,044 Investments in Commercial Paper through a
joint account, 5.87 - 5.88%, 11/1/95........ 560
Total Short-Term Investments 1,803
- -------------------------------------------------------------------------------
Total Investments in Securities -- 103.3%
of Net Assets (Cost $15,599) $14,880
- -------------------------------------------------------------------------------
Other Assets Less Liabilities...................................... $ (481)
------
<CAPTION>
Value
--------
<S> <C>
Net Assets Consist of:
Accumulated net investment
income - net of distributions........................... $ 35
Accumulated net realized
gain/loss - net of distributions........................ (45)
Net unrealized gain (loss)................................ (721)
Paid-in-capital applicable to
1,373,323 shares of $0.01
par value capital stock outstanding;
2,000,000,000 shares of the
Corporation authorized.................................. 15,130
------
NET ASSETS................................................ $14,399
=======
NET ASSET VALUE PER SHARE................................. $10.48
======
- -------------------------------------------------------------------------------
</TABLE>
* Non-income producing
HKD Hong Kong dollar
USD U.S. dollar
(L) Local registered shares
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price Emerging Markets Stock Fund / From March 31, 1995* to October
31, 1995
(in thousands)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Income
Dividend (net of foreign taxes of $11)................................ $ 81
Interest.............................................................. 50
----
Total income.......................................................... 131
----
Expenses
Custody and accounting................................................ 72
Shareholder servicing................................................. 40
Legal and audit....................................................... 13
Prospectus and shareholder reports.................................... 4
Organization.......................................................... 4
Directors............................................................. 3
Registration.......................................................... 2
Miscellaneous......................................................... 2
Reimbursed by Manager................................................. (40)
----
Total expenses........................................................ 100
----
Net investment income.................................................. 31
----
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities............................................................ (27)
Foreign currency transactions......................................... (18)
----
Net realized gain (loss).............................................. (45)
----
Change in net unrealized gain or loss on:
Securities............................................................ (719)
Other assets and liabilities denominated in foreign currencies........ (2)
----
Change in net unrealized gain or loss................................. (721)
----
Net realized and unrealized gain (loss)................................ (766)
----
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS...................... $(735)
=====
- --------------------------------------------------------------------------------
</TABLE>
*Commencement of Operations
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price Emerging Markets Stock Fund
(in thousands)
<TABLE>
<CAPTION>
From March 31, 1995* to
October 31, 1995
-----------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income......................................................... $ 31
Net realized gain (loss)...................................................... (45)
Change in net unrealized gain or loss......................................... (721)
--------
Increase (decrease) in net assets from operations............................. (735)
--------
Capital share transactions+
Shares sold................................................................... 16,733
Shares redeemed............................................................... (1,627)
Redemption fees received...................................................... 28
--------
Increase (decrease) in net assets from capital share transactions............. 15,134
--------
Increase (decrease) in net assets.............................................. 14,399
--------
NET ASSETS
Beginning of period............................................................ --
--------
End of period.................................................................. $ 14,399
========
- -----------------------------------------------------------------------------------------------------
+Share information
Shares sold.................................................................. 1,518
Shares redeemed.............................................................. (145)
--------
Increase (decrease) in shares outstanding.................................... 1,373
========
- -----------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Notes To Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price Emerging Markets Stock Fund / October 31, 1995
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.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including Nasdaq) 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. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price within
the limits of the latest bid and asked prices deemed by the Board of Directors,
or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service. Short-
term debt securities are valued at their cost which, when combined with accrued
interest, approximates fair value.
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.
B) 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.
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
Note 2 - Organization
The fund was organized on January 25, 1995, and had no operations prior to March
31, 1995, other than those related to organizational matters.
Note 3 - 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.
A) Emerging Markets - At October 31, 1995, 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.
10
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B) Commercial Paper Joint Account - The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
C) Other - Purchases and sales of portfolio securities, other than short-term
securities, aggregated $14,712,000 and $897,000, respectively, for the period
ended October 31, 1995.
Note 4 - Federal Income Taxes
No provision for federal income taxes is required since the fund intends to
qualify as a regulated investment company and distribute all of its taxable
income. The fund has unused realized capital loss carryforwards for federal
income tax purposes of $27,000 which expire in 2003. 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, $4,000 of undistributed net
investment income was reclassified as a decrease to paid-in-capital during the
year ended October 31, 1995. The results of operations and net assets were not
affected by the reclassification.
At October 31, 1995, the aggregate cost of investments for federal income tax
and financial reporting purposes was $15,599,000 and net unrealized loss
aggregated $719,000, of which $410,000 related to appreciated investments and
$1,129,000 to depreciated investments.
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. 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 0.31%
for assets in excess of $34 billion. At October 31, 1995, and for the period
then ended, the effective annual Group Fee rate was 0.34%. The fund pays a pro
rata share of the Group Fee based on the ratio of its net assets to those of the
Group.
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through October 31, 1996 which would cause the
fund's ratio of expenses to average net assets to exceed 1.75%. Thereafter
through October 31, 1998, 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
expenses to average net assets to exceed 1.75%. Pursuant to this agreement,
$62,000 of management fees were not accrued by the fund for the period ended
October 31, 1995, and $40,000 of other expenses were borne by the Manager.
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.
11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 $85,000 for the period ended October 31, 1995, of which $11,000
was payable at period-end.
During the period ended October 31, 1995, the fund, in the ordinary course of
business, paid commissions of $31,000 to, and placed security purchase and sale
orders aggregating $5,262,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions.
12
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price Emerging Markets Stock Fund
<TABLE>
<CAPTION>
For a share outstanding
throughout the period
-----------------------
From March 31,
1995* to
October 31,
1995
-----------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......................... $10.00
------
Investment activities
Net investment income........................................ 0.02**
Net realized and unrealized gain (loss)...................... 0.44++
------
Total from investment activities............................. 0.46
------
Redemption fees added to paid-in-capital...................... 0.02
------
NET ASSET VALUE, END OF PERIOD................................ $10.48
======
- -----------------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
Total return.................................................. 4.8%**
Ratio of expenses to average net assets....................... 1.75%+**
Ratio of net investment income to average net assets.......... 0.54%+**
Portfolio turnover rate....................................... 28.8%+
Net assets, end of period (in thousands)...................... $14,399
- -----------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* Commencement of operations.
** Excludes expenses in excess of a 1.75% voluntary expense limitation in
effect through October 31, 1996.
++ The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout
the period. This amount is inconsistent with the fund's aggregate gains and
losses because of the timing of sales and redemptions of the fund's shares
in relation to fluctuating market values for the investment portfolio.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
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Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
T. Rowe Price Emerging Markets Stock Fund
In our opinion, the accompanying statement of net assets 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
T. Rowe Price Emerging Markets Stock Fund (one of the portfolios constituting
T. Rowe Price International Funds, Inc.) at October 31, 1995, and the results of
its operations, the changes in its net assets and the financial highlights for
the fiscal period 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 audit. We conducted our audit 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 audit, which included
confirmation of securities at October 31, 1995 by correspondence with custodians
and brokers and, where appropriate, the application of alternative auditing
procedures for unsettled security transactions, provides a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
November 17, 1995
14
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Services
- --------------------------------------------------------------------------------
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information and services--at no extra cost.
Knowledgeable Service Representatives
By Phone--Shareholder service representatives are available from 8:00 a.m. to
10:00 p.m., Monday-Friday, and weekends from 9:00 a.m. to 5:00 p.m. ET. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
In Person--Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While there,
you can drop off applications or obtain prospectuses and other literature.
Automated 24-Hour Services
Tele*Access(R) (1-800-638-2587) provides information such as account balance,
date and amount of your last transaction, latest dividend payment, and fund
prices and yields. Additionally, you have the ability to request prospectuses,
statements, account and tax forms; reorder checks; and initiate purchase,
redemption, and exchange orders for identically registered accounts.
PC*Access(R) provides the same information as Tele*Access, but on a personal
computer via dial-up modem.
Account Services
Checking--Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield Fund and Emerging Markets Bond Fund).
Automatic Investing--Build your account over time by investing directly from
your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A low, $50
minimum makes it easy to get started.
Automatic Withdrawal--If you need money from your fund account on a regular
basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options--Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
Investment Information
Combined Statement--A comprehensive overview of your T. Rowe Price accounts.
The summary page gives your earnings by tax category, provides total portfolio
value, and lists your investments by type--stock, bond, and money market. Detail
page itemize account transactions by fund.
Shareholder Reports--Portfolio managers review the performance of the funds
in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report--A quarterly newsletter with relevant articles on
market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Performance Update--A quarterly report reviewing recent market developments
and providing comprehensive performance information for every T. Rowe Price
fund.
Insights--A library of information that includes reports on mutual fund tax
issues, investment strategies, and financial markets.
Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet, College
Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also available
on disk for PC use), and Guide to Risk-Adjusted Performance can help you
determine and reach your investment goals.
Discount Brokerage
You can trade stocks, bonds, options, precious metals, and other securities at a
substantial savings over regular commission rates. Call a shareholder service
representative for more information.
15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For yield, price, last transaction,
and current balance, 24 hours,
7 days a week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distri-
bution only to shareholders and to
others who have received a copy of
the prospectus of the T. Rowe Price
Emerging Markets Stock Fund.
[LOGO OF T. ROWE PRICE APPEARS HERE]
EMF
Annual Report
T. Rowe Price
- -------------
Emerging Markets
Stock Fund
October 31, 1995
