- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Semiannual Report
Emerging Markets Stock Fund
- --------------------------------------------------------------------------------
April 30, 1999
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
EMERGING MARKETS STOCK FUND
* The past six months witnessed a sharp rebound in emerging markets despite
turmoil in Brazil, and the fund benefited from improving investor
sentiment.
* The fund posted a strong double-digit gain for the six months ended April
30, but 12-month results reflected heavy selling in these markets last
year.
* Performance trailed that of the MSCI index and the Lipper peer group
largely because of our lower exposure to rebounding Asian markets and
higher exposure to weaker markets in Emerging Europe.
* We increased our holdings in India, South Korea, and Thailand, and took
some profits in Latin America following the rallies there.
* We believe the prospects are good for further advances this year as long as
emerging market governments enact necessary structural reforms.
================================================================================
FELLOW SHAREHOLDERS
================================================================================
The six months ended April 30, 1999, witnessed a dramatic improvement in
the performance of emerging markets and your fund following a difficult period.
The rally was somewhat surprising, since it came after a major currency
devaluation in Brazil early in 1999. However, the tempest in Brazil was
apparently the last storm to pass in the wake of earlier turmoil in Asia and
Russia. Latin America recorded a healthy regional rally with major markets up
sharply in dollar terms. Most other emerging markets where your fund had
exposure posted solid gains.
================================================================================
PERFORMANCE COMPARISON
----------------------
Periods Ended 4/30/99 6 Months 12 Months
--------------------- -------- ---------
Emerging Markets Stock Fund 25.03% -19.12%
MSCI Emerging Markets
Free Index 34.87 -10.19
Lipper Emerging Markets
Funds Average 26.92 -16.37
================================================================================
<PAGE>
In this improving environment, your fund generated strong double-digit
gains for the six-month period, but the sharp upturn could not overcome the
savage selling in emerging markets late last year. Fund results were behind both
the MSCI Emerging Markets Free Index and the Lipper Emerging Markets Funds
Average during both periods, after surpassing them in 1998. The relative
underperformance was due primarily to our underweighting in the stronger Asian
markets and our heavier exposure to the weaker markets of Eastern Europe.
After fighting a devaluation of its currency for over six months, Brazil
sensibly decided to let the real float rather than to defend it with even more
reserves. The catalyst behind the decision was the refusal by the state of Minas
Gerias to honor interest payments on its debt to the central government. The
real moved swiftly from 1.2 to 2.2 versus the U.S. dollar but subsequently
halved this loss when Brazilian stocks rallied sharply. Brazilian equities had
been very cheap within the context of emerging markets, and the devaluation
spurred investors to move in.
Elsewhere, Asia performed strongly with early signs that economies were
starting to recover and current account balances were moving into surplus, which
fueled a liquidity boom in the region. Investors found comfort in the
accelerating pace of corporate restructuring and in the attention paid to
extensive problems in the banking systems.
The story in Emerging Europe was mixed as Russia rallied sharply from its
severely depressed level on news of higher oil prices and new loans from the
IMF, but stock performance in Eastern Europe was more muted. The economies in
Hungary and Poland have been growing too fast, which has put pressure on their
balance of payments. The situation is worse in Hungary, causing the market to
fall modestly despite the attractive characteristics of many individual stocks.
South Africa did better over the half-year period as interest rates were cut and
pressure on all emerging market currencies dwindled following the Brazilian
shock.
================================================================================
MARKET PERFORMANCE
(In U.S. Dollar Terms)
Periods Ended 4/30/99 6 Months 12 Months
--------------------- -------- ---------
Argentina 27.92% 2.57%
Brazil (Free) 14.40 -30.96
Chile 31.24 -4.82
China (Free) 4.89 -27.67
Israel (Nondomestic) 16.71 20.20
Malaysia (Emerging) 108.33 -9.95
Mexico 44.03 -0.41
Poland 16.29 -17.49
South Africa 11.16 -27.79
Thailand 46.70 10.24
Source: FAME Information Services, Inc.; based on MSCI indices.
================================================================================
<PAGE>
While markets generally rallied, it helps to remember that large parts of
the emerging world remain mired in difficult recessions. This is true of much of
Asia, Latin America (except Mexico), northern Emerging Europe, and South Africa.
However, one unifying factor supporting all emerging markets over the period was
the sharp contraction in their bond yields versus Treasuries. The risk premium
peaked at a difference of 1,600 basis points (100 basis points equal one
percentage point) and has since narrowed to just under 1,000 basis points. With
estimates for world economic growth being revised upward, and early signs of a
pickup in basic commoditi es prices, investors seem willing to increase the risk
profile of their portfolios, which bodes well for emerging market securities.
In recent months we raised our Asian weighting by eight percentage points
to 34% of net assets as progress in corporate restructuring piqued our interest
in investment opportunities in the region. India was the main beneficiary where
we added to consumer product companies. In addition, we used proceeds from the
sale of Emerging European stocks to lift our exposure to Korean and Thai stocks.
We lowered our allocation in Greece as valuations grew stretched in the pre-EMU
euphoria. We also reduced exposure to Hungary as current account and budget
deficit worries increased and earnings growth began to slow, and added to
positions in Israel since interest rates are likely to fall there. Latin
American shares were modestly trimmed following the region's sharp rallies.
================================================================================
MARKET REVIEW
================================================================================
LATIN AMERICA
- --------------------------------------------------------------------------------
Brazil was the major focus of attention in the region. All of Latin America
performed poorly through late 1998 and early 1999 as a devaluation in Brazil
became increasingly inevitable. Brazil's foreign exchange reserves dwindled from
$75 billion a year ago to $34 billion; short-term interest rates were raised
from 28% to over 45%; and industrial production continued to collapse. After
Congress rejected the social security bill in late 1998, the government
continued to receive bad news on the important fiscal budget when, as mentioned,
the state of Minas Gerias refused to pay interest on its federal debt.
[Geographic Diversification pie chart showing Latin America 30%, Far East
34%, Europe 17%, Middle East 13%, South Africa 4% and Other and Reserves 2%]
The turning point seems to have been the appointment of former George Soros
investor Arminio Fraga as president of the central bank. Fraga made it clear
that fiscal discipline would be maintained and there was no desire to return to
the days of printing money to resolve the problem. Inflation has remained
surprisingly subdued, rising only 0.5% in April and igniting a strong rally in
all Latin American markets as Brady bond yields fell sharply.
<PAGE>
================================================================================
Industry Diversification
------------------------
Percent of Net Assets
10/31/98 4/30/99
-------- -------
Services 35.2% 37.7%
Consumer Goods 16.4 20.9
Finance 19.4 17.0
Energy 15.8 11.2
Capital Equipment 6.2 9.6
Materials 3.9 2.0
Multi-industry 0.1 --
All Other 0.4 0.1
Reserves 2.6 1.5
Total 100.0% 100.0%
================================================================================
Despite the euphoria much still needs to be done in Brazil, and adherence
to privatization and a focus on domestic wage restraint will be crucial.
Complacency is the biggest danger. Restructuring of domestic debt is also
possible but would require additional IMF funding. A steeper recession seems
inevitable as GDP is likely to contract by at least 2% in 1999, which will have
a negative impact on corporate earnings. However, valuations of Brazilian stocks
are among the lowest in the emerging markets universe, corporate debt levels are
generally modest, and the banking system is sound. All this leads us to believe
that the outlook for Brazilian equities is far brighter than it was for Asia
after the start of the Asian currency crisis in mid 1997.
We were heartened by the resilience of other Latin American markets. The
Mexican economy has slowed somewhat but should still grow at more than 2% in
1999, buoyed by its strong trade links with the booming U.S. The recent strength
in oil prices also helps. One-month interest rates have fallen from 32% to 20%
over the period, and the peso has strengthened against the U.S. dollar. In Chile
the economy is also slowing sharply, but a well-supervised financial system, low
external financing requirements, and a pickup in foreign direct investment
should result in a soft landing. Telebras in Brazil, and Telefonos de Mexico and
Femsa in Mexico are among the fund's top 25 holdings.
================================================================================
FAR EAST
================================================================================
Asian economies remain weak but have shown strong signs of improvement, and
the pace of restructuring has quickened. Even the largest economy in the region,
Japan, is finally starting to talk about cutting excess labor and capacity and
focusing more on businesses that provide a healthy investment return.
<PAGE>
Stock markets rose across the region, but those that had previously done
worst led the way. In India the economy continues to grow nicely, and free
market pricing policies, state divestment of companies, and financial reform
have led to a more efficient use of capital and other resources. Much of the
attraction comes at the microeconomic level where companies seem committed to
trying to deliver returns on capital well in excess of its cost. Ranbaxy
Laboratories is our largest Indian holding.
=============================
Stock markets rose across
the region, but those that
had previously done worst
led the way.
=============================
In Taiwan the economy has weakened, with deflationary pressure causing a
credit crunch in second-tier banks. Much of the southern Chinese triangle is
suffering from a debt overhang, and this is not helping the financial system.
However, all of our holdings are in the technology area, which is linked into
the performance of Nasdaq in the U.S. and global trends in technology. Taiwan
continues to hold an enviable position in many technology sectors. Companies are
also family-owned and, therefore, focused on the bottom line. The fund held
significant positions in Taiwan Semiconductor Manufacturing and Hon Hai
Precision Industry.
Elsewhere in Asia economies remain sluggish, but there has been some
interesting progress on reform. In Thailand a controversial bankruptcy law was
finally passed, although much needs to be done with nonperforming loans now
running in excess of 50% of the total. Since recapitalization is inevitable, we
continued to avoid any exposure to financial companies in Southeast Asian
countries, despite their recent sharp rise in prices.
================================================================================
EASTERN EUROPE AND AFRICA
================================================================================
Performance was mixed in Eastern European markets. While Russia and Turkey
rallied strongly, Hungary and the Czech markets fell. Russia's situation has not
really changed, as the economic policies of Prime Minister Primakov (who was
sacked by President Boris Yeltsin in May) can best be described as benign
neglect. Inflation has been running at close to 100% a year, and industrial
production falling by over 5%. The government has no credible solution and seems
happy to resort to the printing press. However, a rally in oil prices, followed
by more money from the IMF, inspired the market to move sharply from its lows.
Nevertheless, we are not inclined to chase the rally, which appears ephemeral to
us.
<PAGE>
In Central Europe balance of trade has been the major preoccupation, with
Hungary and Poland likely to record current account deficits over 4.5% of GDP.
Poland seems to be in better shape, since imports are already contracting
quickly in the face of real interest rates that exceed 10% and healthy inflows
from foreign investors. Hungary looks more troubling in this regard with its
trade deficit pressured by heavy domestic consumption and the government's large
fiscal deficit. We cut our exposure to these markets significantly.
=============================
Further south, Greece has
been a spectacular market
for the last two years
following its convergence
to EMU interest rates.
=============================
Further south, Greece has been a spectacular market for the last two years
following its convergence to EMU interest rates. However, valuations have become
stretched with some of the banks selling for more than five times book value,
and we cut our weighting in this market. War in the Balkans does not help the
situation in Greece, to put it mildly, since some companies N most notably the
telecom monopoly N have significant investments there. Overall, however, the
war's direct impact on Eastern Europe has been minimal so far.
We reinvested some proceeds from our European sales in Israel, which now
represents nearly 7% of the portfolio. The stability of the shekel has allowed
the central bank to cut rates, and further cuts of about three percentage points
seem likely during the rest of the year. Notwithstanding the uncertainties
surrounding the May election, we found ourselves attracted to many innovative
Israeli technology companies with extensive overseas sales. Among our major
holdings in this market are tech stock Orbotech, as well as Bank Hapoalim and
Teva Pharmaceutical Industries.
The South African market recovered from earlier weakness, although some of
the strength was drained by a further depreciation of the rand. The economy is
in recession and commodity prices remain low, but valuations look increasingly
attractive. However, we have maintained our heavy underweighted position here
due to low productivity, high unemployment, and a precarious foreign exchange
reserves position.
<PAGE>
================================================================================
OUTLOOK
================================================================================
This year so far has been a rewarding period for investors in emerging
markets. Despite the recent rally, stock valuations remain low in stark contrast
to those in most developed equity markets. In addition, interest rates have room
to fall further if investor tolerance for greater risk in their portfolios
continues to improve. We remain cautiously optimistic about the rest of the
year, although we believe that confirmation of an anticipated pickup in global
growth is required before this rally can continue at its recent pace. Also, it
is vital that emerging market governments do not back away from their resolve to
implement necessary reforms now that pressure on them to do so has been eased.
If the current conditions remain in place, we believe further gains are possible
in emerging stock markets as we move through 1999.
Respectfully submitted,
/s/
Martin G. Wade
President
May 21, 1999
================================================================================
T. Rowe Price Emerging Markets Stock Fund
- -----------------------------------------
PORTFOLIO HIGHLIGHTS
TWENTY-FIVE LARGEST HOLDINGS
- ----------------------------
Percent of
Net Assets
4/30/99
- --------------------------------------------------------------------
Telebras, Brazil 4.1%
- --------------------------------------------------------------------
Telefonos de Mexico, Mexico 3.9
- --------------------------------------------------------------------
YPF Sociedad Anonima, Argentina 2.9
- --------------------------------------------------------------------
Samsung Electronics, South Korea 2.8
- --------------------------------------------------------------------
Ranbaxy Laboratories, India 1.9
- --------------------------------------------------------------------
Matav, Hungary 1.8
- --------------------------------------------------------------------
Hellenic Telecommunication, Greece 1.7
- --------------------------------------------------------------------
<PAGE>
Eesti Telekom, Italy 1.6
- --------------------------------------------------------------------
ITC, India 1.6
- --------------------------------------------------------------------
Egypt Mobile Phone, Egypt 1.6
- --------------------------------------------------------------------
Bank Hapoalim, Israel 1.6
- --------------------------------------------------------------------
Korea Electric Power, South Korea 1.5
- --------------------------------------------------------------------
Lukoil, Russia 1.5
- --------------------------------------------------------------------
China Telecom, Hong Kong 1.5
- --------------------------------------------------------------------
Ceske Radiokomunikace, Czech Republic 1.4
- --------------------------------------------------------------------
Korea Telecom, South Korea 1.3
- --------------------------------------------------------------------
Britannia Industries, India 1.3
- --------------------------------------------------------------------
Taiwan Semiconductor Manufacturing, Taiwan 1.3
- --------------------------------------------------------------------
Elektrim, Poland 1.3
- --------------------------------------------------------------------
Hon Hai Precision Industry, Taiwan 1.2
- --------------------------------------------------------------------
Hindustan Lever, India 1.2
- --------------------------------------------------------------------
Femsa, Mexico 1.2
- --------------------------------------------------------------------
Orbotech, Israel 1.2
- --------------------------------------------------------------------
Teva Pharmaceutical Industries, Israel 1.2
- --------------------------------------------------------------------
National Bank of Greece, Greece 1.2
- --------------------------------------------------------------------
Total 43.8%
Note: Table excludes reserves
================================================================================
<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.
[ SEC chart for Emerging Markets Stock Fund]
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 4/30/99 1 Year 3 Years Inception Date
- --------------------- ------ ------- --------- ----
Emerging Markets Stock Fund -19.12 -5.08% 0.91% 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
- -----------------------------------------
Unaudited
For a share outstanding throughout each period
Financial Highlights
- --------------------
6 Months Year 3/31/95
Ended Ended Through
4/30/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of period $ 7.95 $ 11.08 $ 11.59 $ 10.48 $ 10.00
- -------------------------------------------------------------------------------
Investment activities
Net investment income -* 0.05* 0.02 0.02* 0.02*
Net realized and
unrealized gain (loss) 1.98 (3.06) (0.23) 1.08 0.44
- -------------------------------------------------------------------------------
Total from
investment activities 1.98 (3.01) (0.21) 1.10 0.46
- -------------------------------------------------------------------------------
Distributions
Net investment income (0.04) - (0.04) (0.01) -
Net realized gain - (0.15) (0.30) - -
- -------------------------------------------------------------------------------
Total distributions (0.04) (0.15) (0.34) (0.01) -
- -------------------------------------------------------------------------------
Redemption fees added
to paid-in-capital - 0.03 0.04 0.02 0.02
- -------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 9.89 $ 7.95 $ 11.08 $ 11.59 $ 10.48
<PAGE>
Ratios/Supplemental=Data=======================================================
Total return# 25.03%* (27.31)%* (1.60)% 10.69%* 4.80%*
- -------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.75%*+ 1.75%* 1.75% 1.75%* 1.75%+*
- -------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 0.10%*+ 0.46%* 0.21% 0.44%* 0.54%+*
- -------------------------------------------------------------------------------
Portfolio turnover rate 62.0%+ 54.5% 84.3% 41.7% 28.8%+
- -------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 89,668 $ 69,752 $ 119,285 $ 67,896 $ 14,399
- -------------------------------------------------------------------------------
# Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment of
all distributions and payment of no redemption or account fees.
* Excludes expenses in excess of a 1.75% voluntary expense limitation in
effect through 10/31/99.
+ Annualized
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price Emerging Markets Stock Fund
- -----------------------------------------
Unaudited
April 30, 1999
Portfolio of Investments
ARGENTINA 6.1%
Common Stocks 6.1%
Banco Frances del Rio de la Plata ADR (USD) 16,060 $ 413
- ----------------------------------------------------------------------------
Banco Rio de la Plata (Class B) ADR (USD) 32,630 422
- ----------------------------------------------------------------------------
Perez Companc (Class B) 65,982 409
- ----------------------------------------------------------------------------
Telecom Argentina Stet (Class B) ADR (USD) 15,240 526
- ----------------------------------------------------------------------------
Telefonica de Argentina (Class B) ADR (USD) 19,440 727
- ----------------------------------------------------------------------------
Transportadora de Gas del Sur (Class B) ADS (USD) 38,020 364
- ----------------------------------------------------------------------------
YPF Sociedad Anonima (Class D) ADR (USD) 60,890 2,557
- ----------------------------------------------------------------------------
Total Argentina (Cost $4,825) 5,418
- ----------------------------------------------------------------------------
<PAGE>
BRAZIL==9.0%
Common Stocks 6.1%
Companhia Vale do Rio Doce ADR (USD) 32,000 614
- ----------------------------------------------------------------------------
Electricidade de Rio de Janeiro 1,235,672,000 335
- ----------------------------------------------------------------------------
Pao de Acucar GDR (USD) 48,000 837
- ----------------------------------------------------------------------------
Telebras ADR (USD) 39,922 3,640
- ----------------------------------------------------------------------------
Telerj Tel Rio 1,446,555 0
- ----------------------------------------------------------------------------
5,426
- ----------------------------------------------------------------------------
Preferred Stocks 2.9%
Banco Itau 1,382,960 733
- ----------------------------------------------------------------------------
Brahma 675,141 319
- ----------------------------------------------------------------------------
Cia Energetica Minas Gerais 33,599,123 799
- ----------------------------------------------------------------------------
Petrol Brasileiros 4,542,000 736
- ----------------------------------------------------------------------------
Telebras ADR (USD) * 39,922 3
- ----------------------------------------------------------------------------
Telecomunicacoes do Rio de Janeiro 1,287,988 31
- ----------------------------------------------------------------------------
2,621
- ----------------------------------------------------------------------------
Total Brazil (Cost $10,608) 8,047
CHILE==2.1
Common Stocks 2.1%
Banco Santiago (USD) 6,500 115
- ----------------------------------------------------------------------------
Chilectra ADR (144a) (USD) 29,241 647
- ----------------------------------------------------------------------------
Compania Cervecerias Unidas ADS (USD) 14,672 360
- ----------------------------------------------------------------------------
Compania de Telecomunicaciones de Chile (Class A)
ADR (USD) 13,955 369
- ----------------------------------------------------------------------------
Embotelladora Andina ADR (USD) 16,358 296
- ----------------------------------------------------------------------------
Enersis ADS (USD) 7,047 135
- ----------------------------------------------------------------------------
Total Chile (Cost $1,972) 1,922
<PAGE>
CHINA==2.3%
Common Stocks 2.3%
China Telecom (HKD) 597,000 $ 1,363
- ----------------------------------------------------------------------------
Huaneng Power International ADR (USD) * 34,000 457
- ----------------------------------------------------------------------------
Shenzhen Expressway (Class H) (HKD) 1,284,000 264
- ----------------------------------------------------------------------------
Total China (Cost $2,157) 2,084
CROATIA==0.9%
Common Stocks 0.9%
Pliva D D GDR (USD) 52,680 835
- ----------------------------------------------------------------------------
Total Croatia (Cost $874) 835
CZECH=REPUBLIC==2.4%
Common Stocks 2.4%
Ceske Radiokomunikace 33,228 1,209
- ----------------------------------------------------------------------------
SPT Telecom 65,700 952
- ----------------------------------------------------------------------------
Total Czech Republic (Cost $1,780) 2,161
EGYPT==4.1%
Common Stocks 4.1%
Al Ahram Beverage S A E (USD) 14,453 463
- ----------------------------------------------------------------------------
Commercial International Bank (USD) 39,270 388
- ----------------------------------------------------------------------------
Eesti Telekom GDR (USD) 69,000 1,459
- ----------------------------------------------------------------------------
Egypt Mobile Phone 105,074 1,403
- ----------------------------------------------------------------------------
Total Egypt (Cost $2,732) 3,713
GREECE==4.9%
Common Stocks and Rights 4.9%
Alpha Credit Bank 10,830 773
- ----------------------------------------------------------------------------
Antenna TV ADR (USD) 53,015 623
- ----------------------------------------------------------------------------
Hellenic Telecommunication 65,246 1,514
- ----------------------------------------------------------------------------
National Bank of Greece 15,104 1,029
- ----------------------------------------------------------------------------
National Bank of Greece, Rights, 5/28/99 * 15,104 44
- ----------------------------------------------------------------------------
Stet Hellas Telecommunications ADR (USD) * 15,730 425
- ----------------------------------------------------------------------------
Total Greece (Cost $3,551) 4,408
<PAGE>
HUNGARY==3.2%
Common Stocks 2.3%
Fotex 135,301 $ 54
- ----------------------------------------------------------------------------
Magyar Olaj Es Gazipari 9,921 221
- ----------------------------------------------------------------------------
Matav 291,419 1,623
- ----------------------------------------------------------------------------
Richter Gedeon GDS (USD) 4,910 183
- ----------------------------------------------------------------------------
2,081
- ----------------------------------------------------------------------------
Preferred Stocks 0.9%
OTP Bank 18,988 799
- ----------------------------------------------------------------------------
799
- ----------------------------------------------------------------------------
Total Hungary (Cost $2,686) 2,880
INDIA==11.5%
Common Stocks 11.5%
Britannia Industries * 34,000 1,189
- ----------------------------------------------------------------------------
Cipla 15,000 480
- ----------------------------------------------------------------------------
HCL Infosystems * 38,000 377
- ----------------------------------------------------------------------------
HDF Corporation * 12,050 574
- ----------------------------------------------------------------------------
Hindustan Lever 22,400 1,081
- ----------------------------------------------------------------------------
Hindustan Petroleum 62,500 271
- ----------------------------------------------------------------------------
Industrial Credit & Investment Corporation of India 615,450 672
- ----------------------------------------------------------------------------
ITC 63,800 1,428
- ----------------------------------------------------------------------------
ITC GDR (USD) 15,000 422
- ----------------------------------------------------------------------------
Mahanagar Telephone 279,000 1,024
- ----------------------------------------------------------------------------
Mcdowell 46,500 87
- ----------------------------------------------------------------------------
Pentafour Software 25,000 599
- ----------------------------------------------------------------------------
Ranbaxy Laboratories 124,000 1,652
- ----------------------------------------------------------------------------
Zee Telefilms * 17,000 488
- ----------------------------------------------------------------------------
Total India (Cost $11,174) 10,344
<PAGE>
ISRAEL==6.7%
Common Stocks 6.7%
Bank Hapoalim 585,680 1,398
- ----------------------------------------------------------------------------
Bank Leumi 336,260 576
- ----------------------------------------------------------------------------
Bezeq Israeli Telecommunication 111,560 433
- ----------------------------------------------------------------------------
ECI Telecom (USD) 17,440 643
- ----------------------------------------------------------------------------
Formula Systems 19,470 491
- ----------------------------------------------------------------------------
NICE-Systems ADR (USD) * 13,460 387
- ----------------------------------------------------------------------------
Orbotech (USD) * 22,007 $ 1,056
- ----------------------------------------------------------------------------
Teva Pharmaceutical Industries ADR (USD) 22,760 1,041
- ----------------------------------------------------------------------------
Total Israel (Cost $5,593) 6,025
MEXICO==11.8%
Common Stocks 11.8%
Cemex (Class B) 208,540 968
- ----------------------------------------------------------------------------
Cemex, Participating Certificates (Represents
1 Class A share) 9,736 45
- ----------------------------------------------------------------------------
Cifra (Class V) ADR (USD) * 22,113 433
- ----------------------------------------------------------------------------
Coca-Cola Femsa (Class L) ADR (USD) 25,000 517
- ----------------------------------------------------------------------------
Femsa UBD (Class L)
(Represents 1 Class B and 4 Series D shares 298,040 1,064
- ----------------------------------------------------------------------------
GPO Sanborn 94,200 187
- ----------------------------------------------------------------------------
Gruma (Class B) 63,825 122
- ----------------------------------------------------------------------------
Grupo Elektra, Participating Certificates
(Represents 1 Class L and 2 Class B shares) 706,000 497
- ----------------------------------------------------------------------------
Grupo Industrial Maseca (Class B) 541,000 375
- ----------------------------------------------------------------------------
Grupo Modelo (Class C) 252,000 664
- ----------------------------------------------------------------------------
Grupo Televisa GDR (USD) * 16,000 656
- ----------------------------------------------------------------------------
Kimberly-Clark de Mexico (Class A) 150,000 584
- ----------------------------------------------------------------------------
<PAGE>
Organizacion Soriana 70,000 315
- ----------------------------------------------------------------------------
Panamerican Beverages (Class A) (USD) 16,380 364
- ----------------------------------------------------------------------------
Telefonos de Mexico (Class L) ADR (USD) 45,995 3,484
- ----------------------------------------------------------------------------
TV Azteca ADR (USD) 37,500 263
- ----------------------------------------------------------------------------
Total Mexico (Cost $8,847) 10,538
PERU==0.6%
Common Stocks 0.6%
Credicorp (USD) 10,560 107
- ----------------------------------------------------------------------------
Telefonica del Peru (Class B) ADR (USD) 28,160 424
- ----------------------------------------------------------------------------
Total Peru (Cost $804) 531
PHILIPPINES==1.2%
Common Stocks 1.2%
La Tondena Distillers 398,000 513
- ----------------------------------------------------------------------------
San Miguel (Class B) 243,700 519
- ----------------------------------------------------------------------------
Total Philippines (Cost $1,169) 1,032
POLAND==3.8%
Common Stocks 3.8%
AT Entertainment (USD) * 109,685 $ 987
- ----------------------------------------------------------------------------
Bank Pekao 45,405 541
- ----------------------------------------------------------------------------
Computerland 15,397 240
- ----------------------------------------------------------------------------
Elektrim 96,912 1,152
- ----------------------------------------------------------------------------
Softbank S A 16,415 504
- ----------------------------------------------------------------------------
Total Poland (Cost $3,921) 3,424
RUSSIA==1.5%
Common Stocks 1.5%
Lukoil (USD) 24,351 226
- ----------------------------------------------------------------------------
Lukoil ADR (USD) 30,350 1,145
- ----------------------------------------------------------------------------
Total Russia (Cost $3,208) 1,371
<PAGE>
SINGAPORE==0.9%
Common Stocks 0.9%
Fraser & Neave 189,000 836
- ----------------------------------------------------------------------------
Total Singapore (Cost $737) 836
SOUTH=AFRICA==4.4%
Common Stocks 4.4%
ABSA Group 95,200 501
- ----------------------------------------------------------------------------
Metropolitan Life 467,800 738
- ----------------------------------------------------------------------------
Pick 'N Pay Stores 545,700 819
- ----------------------------------------------------------------------------
Pick 'N Pay Stores (Class N) 12,971 18
- ----------------------------------------------------------------------------
Sanlam 955,500 937
- ----------------------------------------------------------------------------
South African Breweries ADS (USD) * 55,491 465
- ----------------------------------------------------------------------------
Standard Bank Investment 150,300 456
- ----------------------------------------------------------------------------
Total South Africa (Cost $4,354) 3,934
SOUTH=KOREA==9.4%
Common Stocks 9.4%
Dacom 2,840 240
- ----------------------------------------------------------------------------
Hana Bank 54,502 711
- ----------------------------------------------------------------------------
Korea Electric Power (USD) 40,000 660
- ----------------------------------------------------------------------------
Korea Electric Power 25,000 719
- ----------------------------------------------------------------------------
Korea Telecom 22,800 $ 1,197
- ----------------------------------------------------------------------------
LG Information & Communications 12,000 565
- ----------------------------------------------------------------------------
Samsung 42,000 590
- ----------------------------------------------------------------------------
Samsung Display Devices 2,000 103
- ----------------------------------------------------------------------------
Samsung Electronics 32,715 2,516
- ----------------------------------------------------------------------------
Samsung Securities 19,420 752
- ----------------------------------------------------------------------------
Shinhan Bank 35,000 386
- ----------------------------------------------------------------------------
Total South Korea (Cost $6,235) 8,439
<PAGE>
TAIWAN==6.9%
Common Stocks 6.9%
Asustek Computer GDR (USD) * 46,500 629
- ----------------------------------------------------------------------------
Asustek Computer GDR (144a) (USD) 91 1
- ----------------------------------------------------------------------------
Cathay Life Insurance 79,800 285
- ----------------------------------------------------------------------------
Compal Electronics 201,402 696
- ----------------------------------------------------------------------------
D-Link Corporation * 152,300 314
- ----------------------------------------------------------------------------
Far East Textile 297,920 400
- ----------------------------------------------------------------------------
Hon Hai Precision Industry * 202,000 1,100
- ----------------------------------------------------------------------------
President Chain Store 171,792 531
- ----------------------------------------------------------------------------
Siliconware Precision Industries 133,000 238
- ----------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing 348,000 1,176
- ----------------------------------------------------------------------------
United Micro Electric 231,000 360
- ----------------------------------------------------------------------------
Winbond Electronics (USD) 13,400 138
- ----------------------------------------------------------------------------
Winbond Electronics GDR (144a) (USD) * 259,000 282
- ----------------------------------------------------------------------------
Total Taiwan (Cost $5,007) 6,150
THAILAND==2.2%
Common Stocks 2.2%
PTT Exploration & Production 84,800 782
- ----------------------------------------------------------------------------
Siam Makro 83,900 154
- ----------------------------------------------------------------------------
Telecomasia 1,177,000 1,016
- ----------------------------------------------------------------------------
Total Thailand (Cost $1,961) 1,952
TURKEY==2.0%
Common Stocks 2.0%
Haci Omer Sabanci 26,850,000 736
- ----------------------------------------------------------------------------
Yapi Kredi Bankasi 42,599,000 1,022
- ----------------------------------------------------------------------------
Total Turkey (Cost $1,597) 1,758
<PAGE>
VENEZUELA==0.6%
Common Stocks 0.6%
Compania Anonima Nacional Telefonos de Venezuela
(Class D) ADR (USD) 18,935 $ 521
- ----------------------------------------------------------------------------
Total Venezuela (Cost $690) 521
SHORT-TERM=INVESTMENTS==3.8%
Money Market Funds 3.8%
Reserve Investment Fund, 5.01% # 3,440,433 3,440
- ----------------------------------------------------------------------------
Total Short-Term Investments (Cost $3,440) 3,440
- --------------------------------------------------------------------------------
Total=Investments=in=Securities
102.3% of Net Assets (Cost $89,922) $ 91,763
Other Assets Less Liabilities (2,095)
NET ASSETS $ 89,668
- --------------------------------------------------------------------------------
* Non-income producing
# Seven-day yield
144a Security was purchased pursuant to Rule 144a under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at period-end amounts
to 1.0% of net assets.
ADR American depository receipt
ADS American depository share
GDR Global depository receipt
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
April 30, 1999
STATEMENT OF ASSETS AND LIABILITIES
In thousands
Assets
Investments in securities, at value (cost $89,922) $ 91,763
Securities lending collateral 7,714
Other assets 3,312
Total assets 102,789
Liabilities
Obligation to return securities lending collateral 7,714
Other liabilities 5,407
Total liabilities 13,121
NET ASSETS $ 89,668
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (5)
Accumulated net realized gain/loss - net of distributions (27,550)
Net unrealized gain (loss) 1,800
Paid-in-capital applicable to 9,063,923 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 115,423
NET ASSETS $ 89,668
NET ASSET VALUE PER SHARE $ 9.89
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
4/30/99
==Investment=Income=================================================
Income
Dividend (net of foreign taxes of $56) $ 603
Interest 90
- --------------------------------------------------------------------
Total income 693
- --------------------------------------------------------------------
Expenses
Investment management 356
Shareholder servicing 166
Custody and accounting 70
Prospectus and shareholder reports 29
Registration 11
Legal and audit 9
Directors 3
Miscellaneous 10
- --------------------------------------------------------------------
Total expenses 654
- --------------------------------------------------------------------
Net investment income 39
- --------------------------------------------------------------------
==Realized=and=Unrealized=Gain=(Loss)===============================
Net realized gain (loss)
Securities (4,268)
Foreign currency transactions (203)
- --------------------------------------------------------------------
Net realized gain (loss) (4,471)
- --------------------------------------------------------------------
Change in net unrealized gain or loss
Securities 21,837
Other assets and liabilities
denominated in foreign currencies (31)
- --------------------------------------------------------------------
Change in net unrealized gain or loss 21,806
- --------------------------------------------------------------------
Net realized and unrealized gain (loss) 17,335
- --------------------------------------------------------------------
INCREASE (DECREASE) IN NET
====================================================================
ASSETS FROM OPERATIONS $ 17,374
====================================================================
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
4/30/99 10/31/98
==Increase=(Decrease)=in=Net=Assets============================================
Operations
Net investment income $ 39 $ 473
Net realized gain (loss) (4,471) (23,172)
Change in net unrealized gain or loss 21,806 (6,088)
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 17,374 (28,787)
- -------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (352) -
Net realized gain - (1,562)
- -------------------------------------------------------------------------------
Decrease in net assets from distributions (352) (1,562)
- -------------------------------------------------------------------------------
Capital share transactions*
Shares sold 17,695 33,862
Distributions reinvested 332 1,518
Shares redeemed (15,148) (54,808)
Redemption fees received 15 244
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions 2,894 (19,184)
- -------------------------------------------------------------------------------
==Net=Assets===================================================================
Increase (decrease) during period 19,916 (49,533)
Beginning of period 69,752 119,285
- -------------------------------------------------------------------------------
===============================================================================
End of period $ 89,668 $ 69,752
===============================================================================
*Share information
Shares sold 2,030 3,277
Distributions reinvested 42 133
Shares redeemed (1,780) (5,401)
- -------------------------------------------------------------------------------
Increase (decrease) in shares outstanding 292 (1,991)
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Emerging Markets Stock Fund
- -----------------------------------------
Unaudited
April 30, 1999
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
================================================================================
T. Rowe Price International Funds, Inc. (the corporation) is registered
under the Investment Company Act of 1940. The Emerging Markets Stock Fund (the
fund), a diversified, open-end management investment company, is one of the
portfolios established by the corporation and commenced operations on March 31,
1995.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company industry;
these principles may require the use of estimates by fund management.
Valuation Equity securities are valued at the last quoted sales price at
the time the valuations are made. A security which is listed or traded on more
than one exchange is valued at the quotation on the exchange determined to be
the primary market for such security.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
Currency Translation Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such transactions.
The effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and losses.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles. Credits earned on daily, uninvested cash
balances at the custodian are used to reduce the fund's custody charges.
<PAGE>
================================================================================
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, 1999, the fund held investments in securities
of companies located in emerging markets. Future economic or political
developments could adversely affect the liquidity or value, or both, of such
securities.
Securities Lending The fund lends its securities to approved brokers to
earn additional income and receives cash and U.S. government securities as
collateral against the loans. Cash collateral received is invested in a money
market pooled account by the fund's lending agent. Collateral is maintained over
the life of the loan in an amount not less than 100% of the value of loaned
securities. Although risk is mitigated by the collateral, the fund could
experience a delay in recovering its securities and a possible loss of income or
value if the borrower fails to return them. At April 30, 1999, the value of
loaned securities was $7,690,000; aggregate collateral consisted of $7,714,000
in the securities lending collateral pool.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $25,498,000 and $22,644,000, respectively, for the six
months ended April 30, 1999.
================================================================================
NOTE 3 - FEDERAL INCOME TAXES
================================================================================
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income. As of October 31, 1998, the fund had capital loss carryforwards
for federal income tax purposes of $22,811,000, all of which expires in 2006.
The fund intends to retain gains realized in future periods that may be offset
by available capital loss carryforwards.
At April 30, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled $89,922,000.
Net unrealized gain aggregated $1,841,000 at period-end, of which $14,213,000
related to appreciated investments and $12,372,000 to depreciated investments.
<PAGE>
================================================================================
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 $78,000 was payable
at April 30, 1999. The fee is computed daily and paid monthly, and consists of
an individual fund fee equal to 0.75% of average daily net assets and a group
fee. The group fee is based on the combined assets of certain mutual funds
sponsored by the manager or Price Associates (the group). The group fee rate
ranges from 0.48% for the first $1 billion of assets to 0.30% for assets in
excess of $80 billion. At April 30, 1999, 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, 1999, which would cause the
fund's ratio of total expenses to average net assets to exceed 1.75%.
Thereafter, through October 31, 2001, the fund is required to reimburse the
manager for these expenses, provided that average net assets have grown or
expenses have declined sufficiently to allow reimbursement without causing the
fund's ratio of total expenses to average net assets to exceed 1.75%. Pursuant
to this agreement, $44,000 of management fees were not accrued by the fund for
the six months ended April 30, 1999. Additionally, $9,000 of unaccrued
management fees related to a previous expense limitation are subject to
reimbursement through October 31, 2000.
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 $189,000 for
the six months ended April 30, 1999, of which $43,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum)
may invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings to
it and in proportion to the average daily value of its shares owned by Spectrum,
pursuant to special servicing agreements between and among Spectrum, the
underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. Spectrum International Fund
held approximately 2.3% of the outstanding shares of the fund at April 30, 1999.
For the six months then ended, the fund was allocated $5,000 of Spectrum
expenses, $2,000 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, 1999, totaled
$58,000 and are reflected as interest income in the accompanying Statement of
Operations.
During the six months ended April 30, 1999, the fund, in the ordinary
course of business, placed security purchase and sale orders aggregating
$4,425,000 with certain affiliates of the manager and paid commissions of
$17,000 related thereto.
================================================================================
T. Rowe Price Shareholder Services
- ----------------------------------
INVESTMENT SERVICES AND INFORMATION
- -----------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
-------------------------------------
By Phone 1-800-225-5132 Available Monday through Friday from
8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
----------------
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your
distributions.
Automated 24-Hour Services Including Tele*Access(R) and the
T. Rowe Price Web site on the Internet. Address:
www.troweprice.com
BROKERAGE SERVICES*
-------------------
Individual Investments Stocks, bonds, options, precious metals,
and other securities at a savings over full-service commission
rates.**
<PAGE>
INVESTMENT INFORMATION
----------------------
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies
and results.
T. Rowe Price Report Quarterly investment newsletter discussing
markets and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund
results.
Insights Educational reports on investment strategies and
financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit,
Diversifying Overseas: A Guide to International
Investing, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning
Kit.
================================================================================
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 BROKERAGE ACCOUNT OR
OBTAIN INFORMATION, CALL:
1-800-638-5660 toll free
<PAGE>
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
appropriate to the fund or
funds covered in this report.
INVESTOR CENTERS:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
4200 West Cypress St.
10th Floor
Tampa, FL 33607
4410 ArrowsWest Drive
Colorado Springs, CO 80907
Warner Center Plaza 5
Mezzanine Level 21800 Oxnard
Street, Suite 270 Woodland
Hills, CA 91367
(OPENS MID-JUNE)
T. Rowe Price Investment Services, Inc., Distributor. F05-051 4/30/99
