Semiannual Report
Emerging Markets Stock Fund
April 30, 1996
T. Rowe Price
Report Highlights
o During the past six months, your fund generated strong returns as
emerging markets came to life throughout most regions.
o Largely because of the fund's country allocation and stock selections,
it outperformed its benchmark in both the 6- and 12-month periods ended
April 30.
o Southeast Asia was our major weighting, followed by Latin America.
o Asian markets advanced between 10% and 30% from their lows of November
1995. In Latin America, Argentine and Mexican stocks rose more than 30%.
o Attractive valuations and good cash flows into many emerging markets
should support strong performances throughout 1996.
Fellow Shareholders
During the past six months, emerging markets came to life throughout most
regions after weak returns in 1995. Results were especially strong in major
Latin American and Asian markets, with good contributions from Eastern Europe
as well. Argentina and Mexico were standouts in Latin America while Poland was
up over 30% during the past six months. Laggards included South Africa, China,
and Chile.
PERFORMANCE REVIEW
Performance Comparison
Periods Ended 4/30/96 6 Months 12 Months
_____________________________________________________________________________
Emerging Markets Stock Fund 15.76% 15.98%
MSCI Emerging Markets Free Index 13.32 14.38
Your fund generated strong returns during the last six months, primarily
because of country weighting in the portfolio and individual stock selection.
It also outperformed its benchmark in both the 6- and 12-month periods ended
April 30. The major portions of the past year's returns were achieved during
the last six months.
MARKET REVIEW
Your fund had its heaviest exposure in Southeast Asia during the past six
months (39%) and its second-largest in Latin America (35%). A five percent
weighting in Eastern Europe also benefited performance. Economic recoveries in
both Southeast Asia and Latin America boosted investor confidence throughout
these regions.
Southeast Asia
Markets in the region advanced between 10% and 30% from their lows of last
November. Malaysia was one of the stars in the area, rising almost 28%.
Investors were encouraged by a surprisingly good trade surplus report for
December 1995. Malaysian stock Westmont Industries was one of the largest
holdings in the portfolio during the past six months.
The major story in the region was Taiwan, because of its first fully
democratic presidential election and its confrontation with mainland China
over the issue of independence. We took advantage of weakness in Taiwanese
stocks to add to our existing holdings. We also added to positions in South
Korea, where interest rates have fallen to a five-year low. Stocks here
included Cho Hung Bank, Hanil Bank, Hanil Securities, and Kook Min Bank.
Market Performance
In U.S. Dollar Terms
Periods Ended 4/30/96 6 Months 12 Months
_____________________________________________________________________________
Argentina 37.7% 31.5%
Brazil 11.5 13.4
Chile -0.9 -7.1
China (Free); excludes dividends -5.0 -3.9
Israel (Nondomestic) 30.9 33.5
Malaysia 28.0 25.3
Mexico 30.1 28.2
Poland 32.9 14.8
South Africa 1.2 6.1
Thailand 4.7 9.8
Source: Randall Helms Database; gross dividends reinvested.
Indonesia accounted for 5% of portfolio holdings. Our positions in this market
included Hanjaya Mandala Sampoerna, Jaya Real Property, and Mayora Indah.
Latin America
Two of the main markets in this region, Brazil and Mexico, generated solid
returns over the last six months. Mexico was up more than 30% and Brazil
almost 12%. Investors in Brazilian stocks were encouraged by the rapid fall in
the rate of inflation coupled with strong economic growth. Both factors
combined to significantly boost the earnings of many companies in the private
sector, such as white goods manufacturers, steel producers, and retailers.
Stocks of these companies benefited from increased demand, which drove up
share prices. Telecomunicacoes Brasileiras was the fund's largest holding.
Also, Mexico has seen the first signs of economic recovery; automobile and
other retail sales have been rising, the peso has been steady, and interest
rates have begun to ease. Our holdings here included Grupo Televisa and Cemex.
The smaller markets of Argentina and Chile traveled in different directions.
Argentina generated a robust 37.7% return while Chile was in slightly negative
territory. The Argentine economy is taking some time to claw its way out of a
recession, but there were signs of progress, which encouraged investors.
Argentine holdings Telefonica de Argentina and YPF Sociedad Anonima were among
your fund's 25 largest positions.
Eastern Europe
Markets here have also been booming, with Hungary and Poland among the
best-performing markets worldwide. Their advances reflected strong
fundamentals. Economic growth was exceptionally strong in Poland and the Czech
Republic, up 7% and 6%, respectively, in 1995. Good management of many
economies in the region has increased investor confidence. For example, the
Hungarian finance minister moved aggressively last year to cut the current
account deficit, a necessary move but one that reduced personal income by a
whopping 8%.
Chart 1 - Geographic Diversification
We have added to our holdings in the region, buying additional shares of
Lukoil, the Russian oil producer and distributor, which has the second-highest
reserves in the world and is rapidly improving its management system. After
the close of the reporting period we also purchased Graboplast, the Hungarian
manufacturer of home products, which is successfully reorienting its sales
market from Western to Eastern Europe.
Other Regions
One major emerging market that has performed poorly is South Africa.
Valuations remain relatively high and political concerns have also restrained
investors. The latter issue was reflected in the country's collapsing
currency. The economic growth required to sustain per capita income has so far
been elusive, and, as a result, we remain underweighted in this market at 2.5%
of the portfolio.
OUTLOOK
In our last report, we stated that low stock valuations and steady rather than
sharp earnings growth through 1996 in emerging markets should provide a good
environment for stocks. After a disappointing start to the past 12-month
period, these markets now appear to have resumed their trend of strong
long-term performance.
The attractive valuations and strong cash flows into emerging markets should
continue to support strong performance through 1996, in our view. Encouraging
economic data from China and the steady recovery in Japan suggest that
Southeast Asian economies will continue to benefit from rising regional
trading activity. This could translate into positive stock market results. In
addition, we remain sanguine about the prospects for growth in other emerging
markets as well.
Respectfully submitted,
Martin G. Wade
President
May 24, 1996
Revisiting the Case for International Equity Investing
Chart 2 - Correlation of Returns
Over the past 15 years, a growing number of U.S. investors have added
international stocks to their portfolios, mixing domestic and foreign stocks
in the pursuit of higher overall returns with lower volatility. In recent
months, however, some naysayers have questioned the benefits of international
diversification. Some claim that the era of higher international returns is
over, citing the recent superior performance of U.S. stocks. Others point to
short periods when U.S. and international markets moved in tandem, so-called
"high correlation," as proof that foreign stocks no longer offer adequate
diversification.
On the contrary, performance and correlation, when viewed over the long term,
reinforce the case for international diversification. For instance, although
U.S. stocks have recently outperformed, foreign stocks have outpaced them in
seven of the last 12 years. (We used the MSCI Europe, Australia, and Far East
Index - EAFE - to measure foreign stocks and the Standard & Poor's 500 Stock
Index for domestic equities.)
Furthermore, correlations have remained low over the long term. The chart
shows the correlation of various foreign markets to the U.S. over two 10-year
periods. A measurement of 100% would indicate that foreign stocks moved in the
same direction as U.S. stocks all of the time. The overall correlation of
foreign stocks has actually declined: from 1981 through 1990, the EAFE and the
S&P 500 moved in the same direction 41% of the time, but from 1986 through
1995, the correlation dropped to 34%. Correlations declined in the
Netherlands, Germany, and Japan and rose only modestly in the U.K. and Hong
Kong.
Inevitably, there are short periods when foreign markets move with the U.S.
market, usually when the latter is experiencing significant volatility. In
general, however, foreign markets follow their own path depending mostly on
the unique fundamentals of each country. In our opinion, the case for
international diversification remains solid. Foreign stocks may be poised to
regain leadership because many international economies are at earlier stages
of expansion than the U.S. economy. If correlations remain low over the long
term, as we expect, diversifying into foreign stocks could continue to be an
effective way to limit risk and enhance returns.
T. Rowe Price Emerging Markets Stock Fund
Portfolio Highlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/96
_____________________________________________________________________________
Telecomunicacoes Brasileiras, Brazil 2.6%
Grupo Televisa, Mexico 2.5
Cemex, Mexico 2.3
Brahma, Brazil 2.3
Panamerican Beverages, Mexico 2.2
_____________________________________________________________________________
Cia Tecidos Norte de Minas, Brazil 1.9
Banco Bradesco, Brazil 1.7
Westmont Industries, Malaysia 1.7
Cia de Telecomunicaciones de Chile, Chile 1.6
Usiminas, Brazil 1.5
_____________________________________________________________________________
Backus y Johnston Cerveceria, Peru 1.4
Cia Energetica Minas Gerais, Brazil 1.4
Enersis, Chile 1.3
Telefonos de Mexico, Mexico 1.3
Telefonica de Argentina, Argentina 1.3
_____________________________________________________________________________
YPF Sociedad Anonima, Argentina 1.3
Eletrobras, Brazil 1.3
Cifra, Mexico 1.3
Sociedad Quimica Minera de Chile, Chile 1.2
BHI, Belize 1.1
_____________________________________________________________________________
Quilmes Industrial, Argentina 1.1
First Philippine Holdings, Philippines 1.1
SPT Telecom, Czech Republic 1.1
Thai Farmers Bank, Thailand 1.1
Telekom Indonesia, Indonesia 1.1
_____________________________________________________________________________
Total 38.7%
Average Annual Compound Total Return
1 Since Inception
Periods Ended 4/30/96 Year Inception Date
_____________________________________________________________________________
Emerging Markets Stock Fund 15.98% 19.55% 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
Portfolio Highlights
Industry Diversification
Percent of Percent of
Net Assets Net Assets
10/31/95 4/30/96
_____________________________________________________________________________
Finance 21.5% 20.3%
Services 15.8 19.2
Materials 17.1 14.8
Consumer Goods 16.4 13.7
Capital Equipment 8.9 8.2
Energy 8.6 8.0
Multi-Industry 0.9 2.1
Miscellaneous 1.6 1.3
Reserves 9.2 12.4
_____________________________________________________________________________
Total 100.0% 100.0%
Performance Comparison
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal-year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
Chart 2: SEC Graph
T. Rowe Price Emerging Markets Stock Fund
Unaudited
Financial Highlights
For a share outstanding throughout each period
6 Months 3/31/95
Ended to
4/30/96 10/31/95
NET ASSET VALUE
Beginning of period $ 10.48 $ 10.00
Investment activities
Net investment income 0.03* 0.02*
Net realized and unrealized gain (loss) 1.59 0.44+
Total from investment activities 1.62 0.46
Distributions
Net investment income (0.01) -
Redemption fees added to paid-in-capital 0.03 0.02
NET ASSET VALUE
End of period $ 12.12 $ 10.48
Ratio/Supplemental Data
Total return 15.8%* 4.8%*
Ratio of expenses to average net assets 1.75%!* 1.75%!*
Ratio of net investment income to average
net assets 1.07%!* 0.54%!*
Portfolio turnover rate 31.8%! 28.8%!
Average commission rate paid $ .0003 -
Net assets, end of period
(in thousands) $ 51,284 $ 14,399
* Excludes expenses in excess of a 1.75% voluntary expense limitation in
effect through 10/31/96.
! Annualized.
+ 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.
T. Rowe Price Emerging Markets Stock Fund
Unaudited April 30, 1996
Statement of Net Assets Shares/Par Value
In thousands
ARGENTINA 3.7%
Common Stocks 3.3%
Quilmes Industrial (USD) 32,733 $ 393
Telefonica de Argentina (Class B) ADR (USD) 23,000 673
YPF Sociedad Anonima (Class D) ADR (USD) 30,450 666
_____________________________________________________________________________
1,732
Preferred Stocks 0.4%
Quilmes Industrial ADR, new (USD) 16,366 194
_____________________________________________________________________________
194
_____________________________________________________________________________
Total Argentina (Cost $1,949) 1,926
BELIZE 1.1%
Common Stocks 1.1%
BHI (USD) 40,540 588
_____________________________________________________________________________
Total Belize (Cost $641) 588
BRAZIL 12.7%
Common Stocks 1.2%
Eletrobras ADR (USD) 50,176 605
_____________________________________________________________________________
605
Preferred Stocks 11.5%
Banco Bradesco 77,727,460 877
Brahma 2,406,094 1,157
Cia Energetica Minas Gerais 27,730,821 699
Cia Tecidos Norte de Minas 2,301,238 965
Eletrobras ADR (USD) 4,370 54
Telecomunicacoes Brasileiras ADR 25,010 1,354
Usiminas 684,953,510 780
_____________________________________________________________________________
5,886
_____________________________________________________________________________
Total Brazil (Cost $5,955) 6,491
CHILE 4.9%
Common Stocks 4.9%
Cia de Telecomunicaciones de Chile ADR (USD) 9,190 839
Compania Cervecerias Unidas ADS (USD) 18,270 388
Enersis ADS (USD) 23,000 684
Sociedad Quimica Minera de Chile ADR (USD) 11,780 $ 630
_____________________________________________________________________________
Total Chile (Cost $2,373) 2,541
CHINA 4.0%
Common Stocks 4.0%
Huaneng Power International
(Class N) ADR (USD) * 21,200 307
Shanghai Diesel Engine (Class B) (USD) 853,000 486
Shanghai New Asia (Class B) (USD) * 811,000 479
Shanghai Petrochemical (Class H) (HKD) 1,288,000 383
Yizheng Chemical Fibre (Class H) (HKD) 1,416,000 380
_____________________________________________________________________________
Total China (Cost $2,047) 2,035
COLOMBIA 0.5%
Common Stocks 0.5%
Maderas y Sinteticos Sociedad Anoma ADR (USD) 17,390 276
_____________________________________________________________________________
Total Colombia (Cost $337) 276
CZECH REPUBLIC 1.8%
Common Stocks 1.8%
IPS Praha 3,120 351
SPT Telecom * 4,580 561
_____________________________________________________________________________
Total Czech Republic (Cost $730) 912
HONG KONG 1.1%
Common Stocks and Warrants 1.1%
China Hong Kong Photo Products 778,000 385
Pacific Basin Bulk Shipping (USD) 17,700 194
Pacific Basin Bulk Shipping, warrants,
exp. 9/30/99 (USD) * 4,300 2
_____________________________________________________________________________
Total Hong Kong (Cost $632) 581
HUNGARY 0.4%
Common Stocks 0.4%
Richter Gedeon (USD) * 5,700 201
_____________________________________________________________________________
Total Hungary (Cost $198) 201
INDIA 3.3%
Common Stocks 3.3%
Ashok Leyland GDR (USD) 24,000 $ 321
Grasim Industries GDS (USD) 15,400 300
Hindalco GDR (USD) 9,100 402
Indian Hotels GDR (USD) * 8,000 236
Reliance Industries GDS (USD) 22,760 381
Videocon International GDR (USD) 19,000 52
_____________________________________________________________________________
Total India (Cost $1,540) 1,692
INDONESIA 5.0%
Common Stocks 5.0%
Hanjaya Mandala Sampoerna 25,500 281
Indofoods Sukses Makmur 51,000 235
Indosat (Class B) 77,000 267
Indosat (Class B) ADR (USD) 1,500 52
Jaya Real Property 102,000 354
Mayora Indah 235,000 161
Pabrik Kertas Tjiwi Kimia 235,569 247
Panin Bank 192,250 196
Semen Gresik 65,000 225
Telekom Indonesia * 332,000 551
_____________________________________________________________________________
Total Indonesia (Cost $2,494) 2,569
ISRAEL 3.2%
Common Stocks 3.2%
Bank Hapoalim 246,480 369
Blue Square * 63,530 461
Elco Holdings 8,560 357
Teva Pharmaceutical ADR (USD) 9,990 457
_____________________________________________________________________________
Total Israel (Cost $1,612) 1,644
MALAYSIA 11.4%
Common Stocks, Rights and Warrants 11.4%
Arab Malaysian Finance 112,000 517
Berjaya Sports Toto 136,000 436
Commerce Asset Holdings, warrants,
exp. 6/27/98 * 65,000 $ 261
Intiplus 431,000 472
LB Aluminum 108,000 318
Malaysian Assurance Alliance 63,375 379
MTD Capital 85,000 494
Phileo Allied 78,000 466
Renong 279,000 486
Renong, rights cv. into loan stock * 37,400 -
Renong, rights cv. into warrants * 23,375 7
TA Enterprise, warrants, exp. 11/22/98 * 428,000 439
Technology Resources Industries 128,000 436
United Engineers 39,000 268
Westmont Industries 87,000 188
Westmont Industries (Class A) * 319,800 667
_____________________________________________________________________________
Total Malaysia (Cost $5,376) 5,834
MEXICO 10.9%
Common Stocks 10.9%
Cemex (Class B) 217,540 922
Cemex ADS, (144a) (USD) * 33,738 266
Cifra (Class B) ADR (USD) * 480,220 646
Fomentos Economico Mexicano (Class B) 116,252 350
Gruma (Class B) * 74,437 301
Grupo Televisa GDR (USD) * 41,590 1,289
Panamerican Beverages (Class A) ADR (USD) 25,540 1,121
Telefonos de Mexico (Class L) ADS (USD) 19,995 680
_____________________________________________________________________________
Total Mexico (Cost $4,848) 5,575
PERU 1.4%
Common Stocks 1.4%
Backus y Johnston Cerveceria (Class T) 521,081 699
_____________________________________________________________________________
Total Peru (Cost $891) 699
PHILIPPINES 5.3%
Common Stocks 5.3%
Ayala Land (Class B) 198,000 306
C & P Homes 145,000 125
EEI 5,756,000 $ 449
First Philippine Holdings (Class B) 249,600 568
Philippine Commercial International Bank 9,000 120
Philippine National Bank 30,000 447
Pilipino Telephone 154,000 227
Southeast Asia Cement * 3,286,000 483
_____________________________________________________________________________
Total Philippines (Cost $2,547) 2,725
POLAND 1.6%
Common Stocks 1.6%
Bank Slaski 6,020 450
Mostostal Export * 122,290 359
_____________________________________________________________________________
Total Poland (Cost $822) 809
RUSSIA 0.9%
Common Stocks 0.9%
Lukoil ADR (USD) 19,000 451
_____________________________________________________________________________
Total Russia (Cost $398) 451
SOUTH AFRICA 2.5%
Common Stocks 2.5%
Barlow Limited 46,400 534
Murray & Roberts Holdings 53,000 242
Sasol 48,600 506
Speciality Stores 1,200 2
Speciality Stores (Class N) 12,900 16
_____________________________________________________________________________
Total South Africa (Cost $1,408) 1,300
SOUTH KOREA 4.4%
Common Stocks 4.4%
Cho Hung Bank 13,800 215
Hanil Bank 8,400 116
Hanil Securities 15,700 256
Kook Min Bank 5,009 125
Korea Electric Power 3,710 177
Pohang Iron & Steel 2,405 227
Samsung Electronic 1,833 $ 250
Samsung Electronic, new 340 45
Seoul Bank * 50,000 458
Yukong 10,920 407
_____________________________________________________________________________
Total South Korea (Cost $2,156) 2,276
TAIWAN 2.0%
Common Stocks 1.8%
China Trust 141,000 288
ICBC * 86,000 286
Test Rite International 370,000 334
_____________________________________________________________________________
908
Convertible Bonds 0.2%
Acer, 4.00%, 6/10/01 USD 40,000 105
_____________________________________________________________________________
105
_____________________________________________________________________________
Total Taiwan (Cost $938) 1,013
THAILAND 5.5%
Common Stocks 5.5%
Advanced Information Service 18,800 319
Bangkok Bank 37,100 538
Land & Houses 8,900 137
Siam Cement 6,900 355
Siam Commercial Bank 30,900 455
Thai Farmers Bank 48,800 561
Total Access Communications (USD) 50,100 441
_____________________________________________________________________________
Total Thailand (Cost $2,688) 2,806
SHORT-TERM INVESTMENTS 10.0%
Commercial Paper 10.0%
Barnett Banks, 5.32%, 5/15/96 $ 1,000,000 997
Daimler-Benz North America,
5.00%, 6/26/96 1,000,000 983
Den Danske, 5.305%, 5/28/96 1,000,000 995
Preferred Receivables Funding,
5.30%, 6/6/96 1,000,000 994
Investments in Commercial Paper
through a joint account,
5.36 - 5.37%, 5/1/96 1,142,070 1,142
_____________________________________________________________________________
Total Short-Term Investments
(Cost $5,111) 5,111
Total Investments in Securities
97.6% of Net Assets (Cost $47,691) $ 50,055
Other Assets Less Liabilities 1,229
NET ASSETS $ 51,284
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 180
Accumulated net realized gain/loss - net of distributions 405
Net unrealized gain (loss) 2,363
Paid-in-capital applicable to 4,229,647 shares
of $0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 48,336
NET ASSETS $ 51,284
NET ASSET VALUE PER SHARE $ 12.12
* Non-income producing
HKD Hong Kong dollar
USD U.S. dollar
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 year-end amounts to
0.5% of net assets.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Emerging Markets Stock Fund
Unaudited
Statement of Operations
In thousands
6 Months
Ended
4/30/96
Investment Income
Income
Dividend (net of foreign taxes of $ 39) $ 320
Interest 102
Total income 422
Expenses
Investment management 80
Shareholder servicing 77
Custody and accounting 62
Registration 17
Legal and audit 9
Prospectus and shareholder reports 6
Directors 3
Miscellaneous 8
Total expenses 262
Net investment income 160
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 468
Foreign currency transactions (18)
Net realized gain (loss) 450
Change in net unrealized gain or loss
Securities 3,082
Other assets and liabilities
denominated in foreign currencies 2
Change in net unrealized gain or loss 3,084
Net realized and unrealized gain (loss) 3,534
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 3,694
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
In thousands
6 Months 3/31/95
Ended to
4/30/96 10/31/95
Increase (Decrease) in Net Assets
Operations
Net investment income $ 160 $ 31
Net realized gain (loss) 450 (45)
Change in net unrealized gain or loss 3,084 (721)
Increase (decrease) in net assets
from operations 3,694 (735)
Distributions to shareholders
Net investment income (15) -
Capital share transactions*
Shares sold 37,204 16,733
Distributions reinvested 15 -
Shares redeemed (4,076) (1,627)
Redemption fees received 63 28
Increase (decrease) in net assets from capital
share transactions 33,206 15,134
Net Assets
Increase (decrease) during period 36,885 14,399
Beginning of period 14,399 -
End of period $ 51,284 $ 14,399
*Share information
Shares sold 3,216 1,518
Distributions reinvested 1 -
Shares redeemed (360) (145)
Increase (decrease) in shares outstanding 2,857 1,373
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Emerging Markets Stock Fund
Unaudited April 30, 1996
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.
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.
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.
Note 2 - Investment Transactions
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Emerging Markets
At April 30, 1996, 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.
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.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $32,714,000 and $4,361,000, respectively, for the six months ended
April 30, 1996.
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. 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.
At April 30, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $47,691,000 and net unrealized gain
aggregated $2,364,000, of which $3,664,000 related to appreciated investments
and $1,300,000 to depreciated investments.
Note 4 - Related Party Transactions
The fund is managed by Rowe Price-Fleming International, Inc. (the Manager),
which is owned by T. Rowe Price Associates, Inc. (Price Associates), Robert
Fleming Holdings Limited, and Jardine Fleming Holdings Limited under a joint
venture agreement.
The investment management agreement between the fund and the Manager provides
for an annual investment management fee, of which $22,000 was payable at April
30, 1996. 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 April 30, 1996, and for the six months then ended,
the effective annual Group Fee rate was 0.33%. 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,
$81,000 of management fees were not accrued by the fund for the six months
ended April 30, 1996. Additionally, $101,000 of unaccrued fees and expenses
from prior periods are subject to reimbursement through October 31, 1998.
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 $104,000 for
the six months ended April 30, 1996, of which $12,000 was payable at
period-end.
During the six months ended April 30, 1996, the fund, in the ordinary course
of business, paid commissions of $65,000 to, and placed security purchase and
sale orders aggregating $11,099,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions.
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 distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Emerging
Markets Stock Fund.
Investment With Confidence(registered trademark)
T. Rowe Price
T. Rowe Price Investment Services, Inc., Distributor REPTEMS 4/30/96
Chart 1 - Geographic Diversification - pie chart showing Latin America 35%,
Southeast Asia 39%, Eastern Europe 5%, Reserves 12%, All Other 9% Based on net
assets as of 4/30/96.
Chart 2 - Correlation of Returns - a bar chart showing the correlation of
total returns of various international countries with the U.S. stock market
from 1981-1990 and from 1986-1995.
Footnote: Percentage of time that foreign markets moved in the same direction
as the U.S. market. Sources: Morgan Stanley Capital International indexes,
Standard & Poor's 500 Stock Index, and Frank Russell Company.
Chart 3 - SEC Graph - line graph showing growth of $10,000 in the fund and in
MSCI Emerging Markets Free Index from 3/31/95 through 4/30/96.
