- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Semiannual Report
Emerging Markets Stock Fund
- --------------------------------------------------------------------------------
April 30, 1998
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
Emerging Markets Stock Fund
* It was a rough period for emerging markets. Fortunately, stocks rebounded
in some parts of Eastern Europe and Latin America, helping fund results
over the last six months.
* Despite the turmoil, your fund had an excellent six-month return, far
surpassing its benchmark index and Lipper peer group. Performance was
slightly negative for the 12 months, but superior to the benchmark.
* Superior relative results reflected fund exposure to stronger markets and
good stock selection.
* The worst may be nearly over for most Asian markets, but problems could
linger for a couple of years longer.
* Emerging market shares are selling at low valuations and look attractive
compared with the stocks of developed markets.
<PAGE>
Fellow Shareholders
The past six months were tough for emerging market stocks, although your
fund managed an excellent return. The declines of last autumn in Asia
accelerated as the end of the year approached. Indonesia, Malaysia, Thailand,
and South Korea fared the worst, but all emerging markets were caught in the
contagion. Toward the end of 1997 some logic returned, and countries with low
debt, improving economies, and sound management were able to regain some of the
lost ground.
Rebounds took place in some markets of emerging Europe and Latin America,
followed by a general improvement in early February as Asia became more serious
about addressing its problems. Cooperation with the IMF improved, with Thailand
and South Korea the most energetic in accepting the necessary medicine.
Short-term debt liabilities were successfully renegotiated in a number of
markets, and the trade picture started to improve after the savage devaluations.
Asian markets rallied sharply, although they remain well down from their peak
levels in U.S. dollar terms. It will take some time to exorcise the economic
excesses, but stock markets should now be close to bottoming.
================================================================================
Market Performance
- --------------------------------------------------------------------------------
In U.S. Dollar Terms
Periods Ended 4/30/98 6 Months 12 Months
Argentina 13.72% 10.22%
Brazil 16.61 0.08
Chile -14.15 -15.80
China Free -29.84 -40.37
Israel (nondomestic) 6.70 41.35
Malaysia Emerging -14.40 -60.69
Mexico 14.12 33.72
Poland 19.81 0.34
South Africa 18.46 1.79
Thailand -4.14 -59.25
Source: FAMEInformation Services, Inc.; based on MSCI indices.
================================================================================
Elsewhere, Brazil performed well as the pace of reform and privatizations
was maintained, and the trade picture continued to improve. Stocks there appear
to carry some of the most appealing valuations among all emerging markets. The
economic picture in emerging Europe continued to improve steadily, buoyed by
healthier economies in developed Europe. However, Russia saw some profit-taking
with a weaker oil price and political uncertainty not helping. South Africa did
relatively well on a combination of declining interest rates and a gently
improving economy.
<PAGE>
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 4/30/98 6 Months 12 Months
- --------------------------------------------------------------------------------
Emerging Markets Stock Fund 12.38% -0.47%
MSCI Emerging Markets
Free Index 3.64 -14.53
Lipper Emerging Markets
Funds Average 3.49 -6.18
================================================================================
Despite the market turmoil, your fund provided a solid return,
significantly outperforming the MSCI Emerging Markets Free Index and the average
return of competitive funds during both the 6- and 12-month periods ended April
30, 1998. Much of the superior result was attributed to positive country
weightings, since we had relatively low exposure to the hard-hit Asian markets,
and to a high focus on the better-performing bourses of Brazil, Argentina,
Mexico, Russia, and Hungary. Our stock selection was also beneficial, with
steady telecommunications and utilities shares outperforming cyclicals in an
environment of generally slowing economies. However, strong returns during the
past six months could not overcome the poor results of the first half of our
fiscal year, and the fund's return for the 12-month period ended slightly
negative.
We added back to positions in Asia and Africa over the past half year at
the expense of Latin America and emerging Europe. However, we added only
slightly to Asia; while confidence is improving and currencies have rallied,
corporate balance sheets generally remain in poor shape. The negative impact of
excessive debt and high real estate prices will not disappear overnight. We
increased our exposure a bit to South Africa because falling interest rates and
inflation, coupled with a bottoming of corporate earnings growth, provide a good
investment backdrop. We took some profits in Brazil, Hungary, and Israel, where
markets performed well in 1997 and some stocks appear fully priced.
MARKET REVIEW
LATIN AMERICA
The picture in Latin America was mixed during the last six months, but the
major markets where we were heavily exposed led the advance. While BRAZIL gained
more than 16% and MEXICO 14%, PERU lost 2% and COLOMBIA over 20%. Brazil seems
to have weathered the Asian storm particularly well on the economic front.
Inflation has fallen to under 4%, GDP growth remained steady at 2.5%, and the
trade balance turned around. Exports grew in the high teens for the last three
months, while import growth turned sharply down with Brazil's high interest rate
policy. Brazil continued to push forward with privatization, and the recent
budget revealed serious fiscal fortitude. We found good value in stocks, with
many trading at less than six times cash flow. Of importance for the market will
be the forthcoming privatization of TELECOMUNICACOES BRASILEIRAS (TELEBRAS), the
telecommunications monopoly that is the largest portfolio holding.
<PAGE>
[Geographic Diversification pie chart showing Latin America 37%, Asia 21%,
Europe 27%, Africa and the Middle East 12%, Other and Reserves 3%]
By contrast, Mexico slipped as the economy is growing too fast and is
sucking in imports. Exports stagnated due to sharp peso appreciation, while
imports grew more than 20% over the past 12 months. At the corporate level,
TELEFONOS DE MEXICO (TELMEX) suffered from an increase in domestic competition
and a threat to its long distance rates. CHILE was lackluster as slumping copper
prices continued to weigh on exports.
EASTERN EUROPE
Most emerging European countries held up extremely well through this tough
period. Stock markets in POLAND, the CZECH REPUBLIC, and HUNGARY rose 20%, 3%,
and 30% in dollar terms, respectively, during the six-month period, but RUSSIAN
shares fell 19%. In Russia the slumping price of oil, a key export, was
aggravated by political uncertainty. President Yeltsin decided to sack his whole
cabinet in a completely unexpected move. Uncertainty remains, although it looks
like a more reform-oriented government has emerged, which should be a positive
development. Tax reform and debt repayment remain the key policy initiatives for
the administration to tackle. Despite these concerns, stocks look extremely
cheap relative to their international peers.
Hungary is still a key market for us at almost 7% of portfolio assets, and
corporate earnings again produced pleasant surprises. The country has the most
advanced legal and institutional framework in the region and some of the best
growth stocks. The Czech Republic looks relatively unexciting with the anti-free
market Social Democrats likely to emerge victorious in the forthcoming election.
By contrast, Mediterranean markets experienced most of the fireworks in
terms of performance. Late in the period, Greece announced a 13% devaluation of
the drachma coupled with firm plans to enter the European Monetary Union. Bond
prices soared as they did in Spain, Portugal, and Italy once convergence of
local bond yields with German yields seemed likely. The Greek stock market took
this very well and gained more than 50% in dollar terms in two months. We were
already overweight in that market but added further to the banking sector where
bond portfolio profits should be significant.
FAR EAST
Asia started the year poorly with collapsing currencies and markets.
However, the mood turned as the IMF agreed to a rescue package for THAILAND
(where we had 1.8% of assets invested) involving widespread restructuring, and
SOUTH KOREA (1.2%) successfully renegotiated its short-term debts. The stock
markets turned around sharply, with all rising more than 10% during the Chinese
New Year holiday. Despite this rebound, Thailand still fell over 4% and South
Korea over 20% in dollar terms during the six-month period. We believe the worst
is nearly over for Asian stock markets, but the recovery will not be rapid since
their economic problems are likely to linger for at least a couple of years.
<PAGE>
The problem is largely one of debt, which has risen rapidly over the last
few years to upwards of 140% of GDP in Thailand, South Korea, and INDONESIA
(where your fund had an exposure of only 0.5%). Unlike Latin America in the
early 1990s, the debt problem is largely corporate, which makes coordination
harder. Debt-to-equity ratios in Thailand, Indonesia, and South Korea are over
100% and servicing the debt in U.S. dollars has become increasingly difficult.
Coupled with this, stock markets here typically have large property and banking
sectors that are likely to remain in difficult straits for some time. Certainly
there are good companies in Asia, but stock selection has become ever more
critical given questionable financial structures.
==============================
. . . stock selection has
become ever more critical
given questionable financial
structures.
- ------------------------------
Thailand appears set to emerge from the crisis fastest as Prime Minister
Chuan has become something of a cult hero in the West for his strict adherence
to IMF guidelines. South Korea is saying the right things at the government
level, but the dominant chaebol industrial groups seem reluctant to restructure
and still carry alarming levels of debt. Indonesia refuses to acknowledge that
there is a problem, and MALAYSIA is currently in a state of political turmoil.
We increased exposure to Thailand through the luxury DUSIT THANI hotel chain
where tourism has risen because of the devalued currency. We have some exposure
to INDIA and are monitoring the situation closely in the aftermath of its
nuclear tests. However, overall we still find better stock value with far
healthier balance sheets in other parts of the emerging world than in Asia.
AFRICA
SOUTH AFRICAN stocks rose 18% in U.S dollar terms over six months. Falling
interest rates, declining inflation to under 5% for the past 12 months, and a
pickup in consumer credit growth helped. There were several large financial
sector mergers among banks and insurance companies, and increasing focus on
shareholder value. Industrial shares strongly outperformed mining stocks. We
gently raised our exposure here to about 7% of the portfolio in the belief that
the country is now in the sweet spot of its economic cycle. However, the
longer-term constraints of high unemployment and low productivity still remain.
<PAGE>
OUTLOOK
As a result of fallout from the storm clouds of Asia, emerging market
stocks have fallen from favor since 1993, which was a robust year for these
markets. However, we believe the long-term case is still intact and emerging
markets currently look attractive. Bond yield premiums above U.S Treasury yields
are well above normal, inflation is generally under control, earnings growth
remains reasonable, and stock valuations are as cheap as they have been for at
least five years. Brazilian shares sell for six times cash flow and one times
book value, and the Russian market sports similar valuations. These measures of
equity value stand in sharp contrast to the developed world, where markets are
generally in uncharted territory.
We remain cautiously optimistic about prospects for emerging market
investors. The events of the past year illustrate the risks of investing in
these markets, but we believe that over the long term the potential rewards will
be commensurate with those risks.
Respectfully submitted,
/s/
Martin G. Wade
President
May 22, 1998
<PAGE>
T. Rowe Price Emerging Markets Stock Fund
================================================================================
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/98
Telecomunicacoes Brasileiras (Telebras), Brazil ..................... 5.9%
Richter Gedeon, Hungary ............................................. 3.1
Lukoil, Russia ...................................................... 2.9
Unified Energy Systems, Russia ...................................... 2.8
Telefonos de Mexico (Telmex), Mexico ................................ 2.5
Vimpel Communications, Russia ....................................... 2.4
Hellenic Telecommunication, Greece .................................. 2.3
YPF Sociedad Anonima, Argentina ..................................... 2.2
National Bank of Greece, Greece ..................................... 2.1
Alpha Credit Bank, Greece ........................................... 2.1
Matav, Hungary ...................................................... 1.7
Petrol Brasileiros (Petrobras), Brazil .............................. 1.7
Cemex, Mexico ....................................................... 1.6
Bank Hapoalim, Israel ............................................... 1.5
Mahanagar Telephone, India .......................................... 1.4
Magyar Olaj Es Gazipari, Hungary .................................... 1.4
South African Breweries, South Africa ............................... 1.4
Standard Bank Investment Corporation, South Africa .................. 1.3
ITC, India .......................................................... 1.3
Industrial Credit & Investment Corporation of India, India .......... 1.3
Telefonica de Argentina, Argentina .................................. 1.3
Huaneng Power International, China .................................. 1.3
Cia Energetica Minas Gerais, Brazil ................................. 1.2
First National Bank, South Africa ................................... 1.2
Intracom, Greece .................................................... 1.2
- --------------------------------------------------------------------------------
Total 49.0%
================================================================================
<PAGE>
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 a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
[Emerging Markets Stock Fund SEC graph 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 4/30/98 1 Year 3 Years Inception Date
Emerging Markets Stock Fund -0.47% 7.04% 8.41% 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.
================================================================================
<PAGE>
<TABLE>
T. Rowe Price Emerging Markets Stock Fund
====================================================================================================================================
Unaudited
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
<CAPTION>
6 Months Year 3/31/95
Ended Ended Through
4/30/98 10/31/97 10/31/96 10/31/95
<S> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ....................... $ 11.08 $ 11.59 $ 10.48 $ 10.00
Investment activities
Net investment income ............. 0.01* 0.02* 0.02* 0.02*
Net realized and
unrealized gain (loss) ............ 1.33 (0.23) 1.08 0.44
Total from
investment activities ............. 1.34 (0.21) 1.10 0.46
Distributions
Net investment income ............. -- (0.04) (0.01) --
Net realized gain ................. (0.15) (0.30) -- --
Total distributions ............... (0.15) (0.34) (0.01) --
Redemption fees added
to paid-in-capital ................ 0.02 0.04 0.02 0.02
NET ASSET VALUE
End of period ............................. $ 12.29 $ 11.08 $ 11.59 $ 10.48
Ratios/Supplemental Data
Total return .............................. 12.38%* (1.60)%* 10.69%* 4.80%*
Ratio of expenses to
average net assets ........................ 1.75%+* 1.75%* 1.75%* 1.75%+*
Ratio of net investment
income to average
net assets ................................ 0.15%+* 0.21%* 0.44%* 0.54%+*
Portfolio turnover rate ................... 27.5% 84.3% 41.7% 28.8%+
Average commission
rate paid ................................. $ 0.0008 $ 0.0003 $ 0.0004 $ --
Net assets, end of period
(in thousands) ............................ $ 122,813 $ 119,285 $ 67,896 $ 14,399
<FN>
* Excludes expenses in excess of a 1.75% voluntary expense limitation in effect through 10/31/98.
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Emerging Markets Stock Fund
================================================================================
Unaudited April 30, 1998
================================================================================
Statement of Net Assets Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
ARGENTINA 5.5%
Common Stocks 5.5%
Banco Frances del Rio de la Plata ADR (USD) ........... 19,300 $ 561
Banco Rio de la Plata ADR (USD) * ..................... 45,970 632
Perez Companc (Class B) ............................... 143,812 864
Telecom Argentina Stet (Class B) ADR (USD) ............ 10,070 363
Telefonica de Argentina (Class B) ADR (USD) ........... 40,300 1,554
YPF Sociedad Anonima (Class D) ADR (USD) .............. 78,050 2,722
Total Argentina (Cost $6,096) ......................... 6,696
BRAZIL 16.8%
Common Stocks 5.0%
Cia Paranaense de Energia Copel ....................... 38,306,000 442
Electricidade de Rio de Janeiro ....................... 1,721,921,000 1,250
Eletrobras ............................................ 31,575,000 1,298
Light Servicos de Electricidade ....................... 346,000 139
Pao de Acucar GDS (USD) ............................... 43,000 1,145
Telecomunicacoes Brasileiras .......................... 8,468,000 840
Unibanco GDR (USD) .................................... 26,522 1,054
6,168
Preferred Stocks 11.8%
Banco Bradesco ........................................ 70,928,455 651
Banco Itau ............................................ 996,960 671
Brahma ................................................ 1,062,141 692
Cia Energetica Minas Gerais ........................... 25,478,745 1,237
Cia Energetica Minas Gerais ADR,
Sponsored, Nonvoting (USD) .................... 4,890 235
Ericsson Telecomunicacoes ............................. 11,474,000 351
Petrol Brasileiros .................................... 8,019,000 2,033
Telecomunicacoes Brasileiras ADR (USD) ................ 52,839 6,436
Telecomunicacoes de Minas Gerais (Class B) ............ 3,810,000 588
Telecomunicacoes de Sao Paulo ......................... 3,490,803 1,187
Telecomunicacoes do Parana ............................ 325,036 186
Telecomunicacoes do Rio de Janeiro .................... 1,287,988 203
14,470
Total Brazil (Cost $19,593) ........................... 20,638
<PAGE>
CHILE 2.4%
Common Stocks 2.4%
Chilectra ADR (144a) (USD) ............................ 39,157 $1,091
Compania Cervecerias Unidas ADS (USD) ................. 12,472 344
Compania de Telecomunicaciones de Chile ADR (USD) ..... 13,955 350
Embotelladora Andina ADR (USD) ........................ 18,748 423
Empresa Nacional de Electricidad Chile ADR (USD) ...... 17,830 311
Enersis ADS (USD) ..................................... 11,654 343
Santa Isabel ADR (USD) * .............................. 1,793 30
Total Chile (Cost $2,573) ............................. 2,892
CHINA 2.5%
Common Stocks 2.5%
Guangdong Electric Power (Class B) (HKD) .............. 1,427,981 791
Huaneng Power International (Class N) ADR (USD) * ..... 67,000 1,474
Shenzhen Expressway (Class H) (HKD) * ................. 2,870,000 787
Total China (Cost $3,415) ............................. 3,052
CZECH REPUBLIC 1.2%
Common Stocks 1.2%
Cokoladovny ........................................... 1,415 226
SPT Telecom * ......................................... 8,376 1,218
Total Czech Republic (Cost $1,084) .................... 1,444
EGYPT 0.7%
Common Stocks 0.7%
MISR International Bank ............................... 35,000 898
Total Egypt (Cost $1,204) ............................. 898
GREECE 7.6%
Common Stocks 7.6%
Alpha Credit Bank ..................................... 24,080 2,540
Hellenic Telecommunication ............................ 97,037 2,778
Intracom .............................................. 22,560 1,406
National Bank of Greece ............................... 14,990 2,637
Total Greece (Cost $6,212) ............................ 9,361
HONG KONG 0.8%
Common Stocks 0.8%
China Telecom * ....................................... 440,000 $835
Legend Holdings * ..................................... 464,000 199
Total Hong Kong (Cost $916) ........................... 1,034
HUNGARY 6.8%
Common Stocks 6.8%
EGIS .................................................. 14,090 735
Fotex * ............................................... 135,301 133
Magyar Olaj Es Gazipari ............................... 55,184 1,677
Matav * ............................................... 354,887 2,072
Richter Gedeon GDS (USD)* ............................. 35,195 3,748
Total Hungary (Cost $7,009) ........................... 8,365
<PAGE>
INDIA 6.9%
Common Stocks 6.9%
HDF Corporation* ...................................... 7,050 573
Hindustan Lever ....................................... 29,500 1,171
Hindustan Petroleum ................................... 67,000 683
Industrial Credit & Investment Corporation of India * . 615,450 1,604
ITC ................................................... 63,800 1,272
ITC GDR (USD) ......................................... 15,000 345
Mahanagar Telephone * ................................. 279,000 1,770
Ranbaxy Laboratories .................................. 49,000 819
State Bank of India ................................... 36,600 266
Total India (Cost $8,232) ............................. 8,503
INDONESIA 0.5%
Common Stocks 0.5%
Gulf Indonesia Resources (USD) * ...................... 42,000 646
Total Indonesia (Cost $784) ........................... 646
ISRAEL 4.3%
Common Stocks 4.3%
Agis .................................................. 49,320 336
Bank Hapoalim ......................................... 681,630 $1,827
ECI Telecom (USD) ..................................... 25,200 769
Koor Industries ....................................... 5,730 724
Super Sol ............................................. 292,777 921
Teva Pharmaceutical ADR (USD) ......................... 15,050 643
Total Israel (Cost $5,469) ............................ 5,220
MALAYSIA 0.9%
Common Stocks 0.9%
Resorts World * ....................................... 366,000 707
Tenaga Nasional ....................................... 222,000 443
Total Malaysia (Cost $2,885) .......................... 1,150
MEXICO 10.6%
Common Stocks 10.6%
Cemex (Class B) * ..................................... 324,540 1,948
Cifra (Class V) ADR (USD) ............................. 22,113 387
Coca-Cola Femsa ADR (USD) ............................. 42,000 714
Fomentos Economico Mexicano (Class B) * ............... 149,024 1,104
Gruma (Class B) * ..................................... 62,779 144
Grupo Elektra ......................................... 629,000 899
Grupo Financiero Bancomer (Class B) ................... 1,282,000 886
Grupo Industrial Maseca (Class B) ..................... 486,000 351
Grupo Modelo (Class C) ................................ 97,000 917
Kimberly-Clark Mexico (Class A) ....................... 176,000 864
Panamerican Beverages (Class A) (USD) ................. 29,380 1,171
Telefonos de Mexico (Class L) ADR (USD) ............... 54,995 3,114
TV Azteca ADR (USD) ................................... 26,500 494
Total Mexico (Cost $10,048) ........................... 12,993
<PAGE>
PERU 0.9%
Common Stocks 0.9%
Credicorp (USD) ....................................... 10,560 177
Telefonica del Peru (Class B) ADR (USD) ............... 42,490 940
Total Peru (Cost $1,138) .............................. 1,117
PHILIPPINES 1.1%
Common Stocks 1.1%
Ayala Land ............................................ 1,080,600 $424
Bank of the Philippine Islands ........................ 139,000 346
La Tondena Distillers ................................. 134,500 104
San Miguel (Class B) .................................. 243,700 401
Universal Robina ...................................... 423,000 80
Total Philippines (Cost $2,464) ....................... 1,355
RUSSIA 11.7%
Common Stocks 11.7%
AO Mosenergo ADR (USD) ................................ 21,325 768
Irkutskenergo ADR (USD) ............................... 35,807 362
Lukoil (USD)* ......................................... 24,351 403
Lukoil ADR (USD) ...................................... 46,104 3,146
Rao Gazprom ADS (USD) ................................. 29,057 536
Rostelecom ADR (USD) * ................................ 41,754 895
Sun Brewing GDR (USD) * ............................... 22,324 402
Surgutneftegaz ADR (USD) .............................. 43,313 325
Tatneft ADS (USD) ..................................... 60,550 1,173
Unified Energy Systems GDR (USD) * .................... 103,239 3,399
Vimpel Communications ADR (USD) * ..................... 54,163 2,925
Total Russia (Cost $15,168) ........................... 14,334
SOUTH AFRICA 7.0%
Common Stocks 7.0%
ABSA Group ............................................ 67,100 581
Edgars Stores ......................................... 36,600 641
First National Bank ................................... 110,700 1,446
Metropolitan Life ..................................... 184,500 657
Pick 'N Pay Stores .................................... 545,700 1,037
Sasol ................................................. 97,800 987
South African Breweries ADS (USD) ..................... 49,500 1,667
Standard Bank Investment Corporation .................. 27,200 1,609
Total South Africa (Cost $7,505) ...................... 8,625
SOUTH KOREA 1.2%
Common Stocks and Rights 1.2%
Korea Electric Power .................................. 24,000 $ 327
Samsung Electronic .................................... 20,000 1,107
Samsung Electronic, Rights, 6/2/98* ................... 1,591 31
Total South Korea (Cost $1,414) ....................... 1,465
<PAGE>
TAIWAN 5.0%
Common Stocks 5.0%
Acer .................................................. 119,000 198
Acer GDR (USD) ........................................ 21,000 186
Asustek Computer GDR (USD) ............................ 31,000 636
Bank Sino Pacific ..................................... 693,393 505
Cathay Construction ................................... 369,000 342
Cathay Life Insurance ................................. 164,000 657
Chuntex Electronics ................................... 133,000 244
Compal Electronics .................................... 190,000 827
Compeq Manufacturing .................................. 56,000 431
Delta Electronics ..................................... 63,000 231
Far East Textile ...................................... 266,000 242
Hon Hai Precision Industry ............................ 128,000 745
Taishin International Bank ............................ 239,150 168
Taiwan Semiconductor Manufacturing .................... 105,000 454
Tatung ................................................ 295,000 273
6,139
Preferred Stocks 0.0%
Taishin International Bank * .......................... 33,481 22
22
Total Taiwan (Cost $6,614) ............................ 6,161
THAILAND 1.8%
Common Stocks 1.8%
Dusit Thani ........................................... 196,700 252
PTT Exploration & Production .......................... 84,800 895
Siam Cement ........................................... 41,100 581
Siam Makro ............................................ 269,000 442
Total Thailand (Cost $2,402) .......................... 2,170
VENEZUELA 0.5%
Common Stocks 0.5%
Compania Anonima Nacional Telefonos
de Venezuela (Class D) ADR (USD) * ............ 18,935 $634
Total Venezuela (Cost $690) ........................... 634
SHORT-TERM INVESTMENTS 3.0%
Money Market Funds 3.0%
Reserve Investment Fund, 5.65% ........................ 3,710,612 3,711
Total Short-Term Investments (Cost $3,711) ............ 3,711
Total Investments in Securities
99.7% of Net Assets (Cost $116,626) ................... $122,464
Other Assets Less Liabilities ......................... 349
<PAGE>
NET ASSETS ............................................ $122,813
Net Assets Consist of:
Accumulated net investment income -
net of distributions .................................. $ 89
Accumulated net realized gain/loss -
net of distributions .................................. (6,337)
Net unrealized gain (loss) ............................ 5,741
Paid-in-capital applicable to
9,994,039 shares of $0.01 par
value capital stock outstanding;
2,000,000,000 shares of the
Corporation authorized ................................ 123,320
NET ASSETS ............................................ $ 122,813
NET ASSET VALUE PER SHARE ............................. $ 12.29
* Non-income producing
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 0.9%
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.
<PAGE>
T. Rowe Price Emerging Markets Stock Fund
================================================================================
Unaudited
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
4/30/98
Investment Income
Income
Dividend (net of foreign taxes of $47) .................... $ 1,018
Interest .................................................. 96
Total income .............................................. 1,114
Expenses
Investment management ..................................... 675
Shareholder servicing ..................................... 202
Custody and accounting .................................... 77
Prospectus and shareholder reports ........................ 33
Registration .............................................. 16
Legal and audit ........................................... 13
Directors ................................................. 3
Miscellaneous ............................................. 6
Total expenses ............................................ 1,025
Net investment income ........................................ 89
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ................................................ (6,047)
Foreign currency transactions ............................. (229)
Net realized gain (loss) .................................. (6,276)
Change in net unrealized gain or loss
Securities ................................................ 19,659
Other assets and liabilities
denominated in foreign currencies ......................... --
Change in net unrealized gain or loss ..................... 19,659
Net realized and unrealized gain (loss) ...................... 13,383
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ....................................... $ 13,472
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Emerging Markets Stock Fund
================================================================================
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
4/30/98 10/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income ............................. $ 89 $ 251
Net realized gain (loss) .......................... (6,276) 1,407
Change in net unrealized gain or loss ............. 19,659 (12,011)
Increase (decrease) in net assets from operations . 13,472 (10,353)
Distributions to shareholders
Net investment income ............................. -- (243)
Net realized gain ................................. (1,562) (1,829)
Decrease in net assets from distributions ......... (1,562) (2,072)
Capital share transactions *
Shares sold ....................................... 18,529 102,370
Distributions reinvested .......................... 1,518 2,007
Shares redeemed ................................... (28,583) (40,915)
Redemption fees received .......................... 154 352
Increase (decrease) in net assets from capital
share transactions ................................ (8,382) 63,814
Net Assets
Increase (decrease) during period .................... 3,528 51,389
Beginning of period .................................. 119,285 67,896
End of period ........................................ $ 122,813 $ 119,285
*Share information
Shares sold ....................................... 1,623 7,922
Distributions reinvested .......................... 133 173
Shares redeemed ................................... (2,525) (3,192)
Increase (decrease) in shares outstanding ......... (769) 4,903
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Emerging Markets Stock Fund
================================================================================
Unaudited April 30, 1998
================================================================================
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.
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.
Investments in open-end 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.
<PAGE>
PREMIUMS AND DISCOUNTS Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
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, 1998, 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.
OTHER Purchases and sales of portfolio securities, other than short-term
securities, aggregated $31,522,000 and $39,810,000, respectively, for the six
months ended April 30, 1998.
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.
At April 30, 1998, the aggregate cost of investments for federal income tax
and financial reporting purposes was $116,626,000, and net unrealized gain
aggregated $5,838,000, of which $15,537,000 related to appreciated investments
and $9,699,000 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.
<PAGE>
The investment management agreement between the fund and the manager
provides for an annual investment management fee, of which $119,000 was payable
at April 30, 1998. 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 0.30% for assets in
excess of $80 billion. At April 30, 1998, and for the six months then ended, the
effective annual group fee rate was 0.32%. The fund pays a pro-rata share of the
group fee based on the ratio of its net assets to those of the group.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through October 31, 1998, which would cause the
fund's ratio of expenses to average net assets to exceed 1.75%. Thereafter,
through October 31, 2000, 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 a previous
agreement, $47,000 of unaccrued 1995-1996 fees were repaid during the six months
ended April 30, 1998, and $34,000 remains 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.
(TRPS) 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 $209,000 for
the six months ended April 30, 1998, of which $41,000 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 1.4% of the outstanding shares of the Emerging Markets Stock
Fund at April 30, 1998. For the six months then ended, the fund was allocated
$6,000 of Spectrum expenses, $1,000 of which was payable at period-end.
<PAGE>
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 six months ended April 30, 1998, totaled
$73,000 and are reflected as interest income in the accompanying Statement of
Operations.
During the six months ended April 30, 1998, the fund, in the ordinary
course of business, placed security purchase and sale orders aggregating
$14,466,000 with certain affiliates of the manager and paid commissions of
$57,000 related thereto.
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access [Registration Mark]:
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information, call:
1-800-638-5660 toll free
Internet address:
www.troweprice.com
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 of the
T. Rowe Price Emerging Markets Stock Fund.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
<PAGE>
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor. F05-051 4/30/98
