<PAGE>
Annual Report
EMERGING
MARKETS
STOCK FUND
OCTOBER 31, 2000
[LOGO]
T. ROWE PRICE
<PAGE>
REPORT HIGHLIGHTS
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Emerging Markets Stock Fund
. Emerging market stocks posted negative returns over the last year,
particularly during the last six months as global technology issues
declined.
. The fund's six-month return, although negative, was better than that of its
benchmarks. Twelve-month performance was positive, far exceeding fund
benchmarks.
. Favorable 12-month returns reflected successful high-growth investments
early in the fund's fiscal year.
. We continued shifting assets away from high-growth issues into stocks with
steadier growth prospects. We also reduced exposure to Far East markets.
. Emerging market prospects are promising, but given international
uncertainties, we have increased exposure to companies that depend on
domestic economies more than on global factors.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
<PAGE>
FELLOW SHAREHOLDERS
Emerging markets began your fund's fiscal year on a strong note but succumbed to
a global downturn in technology and telecommunications stocks that began in the
spring and accelerated as the year drew to a close. Slowing growth in developed
countries due to rising interest rates and oil prices contributed to the
negative sentiment. As a result, emerging market performance was generally weak
for the 12-month period ended October 31, 2000, and very disappointing for the
last six months.
PERFORMANCE COMPARISON
Periods Ended 10/31/00 6 Months 12 Months
--------------------------------------------------------------------------------
Emerging Markets Stock Fund -16.19% 12.09%
MSCI Emerging Markets
Free Index -19.92 -8.81
Lipper Emerging Markets
Funds Average -19.47 -2.65
As you can see in the table, your fund performed better than its benchmarks-the
Morgan Stanley Capital International (MSCI) Emerging Markets Free Index and the
Lipper Emerging Markets Funds Average--for both the 6- and 12-month periods
ended October 31. Six-month performance, while sharply negative, was mitigated
by our underweighting in technology-heavy Asian markets, which fared worst, and
by overweighting Latin America, where gains in Mexican and Brazilian financial
stocks offset much of the tech sector's decline. Our holdings in Israel, despite
increased political violence in the region, added the most value during the
period. The fund's double-digit 12-month performance reflected our favorable
selection of high-growth stocks in the first half of the fiscal year, before
technology and telecom issues fell from favor.
At the end of October, the fund's largest regional allocation was the Far East,
at 33% of assets versus 37% at the end of April. We reduced exposure to this
region in favor of Africa and the Middle East and, to a lesser extent, Emerging
Europe and Latin America. In addition, we have been gradually shifting assets
from high-growth areas to sectors with steadier growth prospects, such as
pharmaceuticals, which have held up better in recent months. We continued to
overweight telecom stocks but generally underweighted the technology sector,
particularly software and Internet names.
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MARKET REVIEW
Far East
As mentioned, Asian markets were the worst performers in the last six months.
Taiwan and South Korea, each a major oil importer, fell 37% and 35%,
respectively. India held up better but still declined 26%. These three
countries, which represent the bulk of our Asian exposure, have the most open
and export-oriented economies in the developing world and, therefore, are very
sensitive to a slowdown in global growth.
MARKET PERFORMANCE
(In U.S. Dollar Terms)
Periods Ended 10/31/00 6 Months 12 Months
--------------------------------------------------------------------------------
Argentina -17.44% -15.89%
Brazil 0.77 39.05
Chile -9.66 1.19
China (Free) -9.07 -27.90
Israel (Nondomestic) 46.69 177.57
Malaysia (Free) -17.95 1.78
Mexico -2.53 17.98
Poland -27.88 -10.41
South Africa -2.92 -5.06
Thailand -42.00 -42.66
Source: RIMES Online, using MSCI indices.
Taiwan stocks were hurt not only by global factors, but also by domestic
political problems. The new government of President Chen upset the business
community with bungled policy proposals on tax reforms, and attempts at exposing
the crony behavior of the previous administration merely exacerbated the gloom
among investors. Given the negative sentiment, stocks of leading companies such
as Taiwan Semiconductor Manufacturing and United Microelectronics now look
particularly cheap.
South Korea was also hammered by both external and domestic matters. Profit
warnings from U.S. technology bellwethers slammed the semiconductor sector, and
Samsung Electronics, the world's largest producer, swiftly declined 50%.
Fortunately, we had been trimming our position, but it is still a major holding.
On the domestic front, the financial sector was pressured by news that
investment trusts remained mired in bad debts and by the failure of heavily
indebted Daewoo Motor, which was declared bankrupt in early November, to find a
buyer.
India is our second-largest country exposure, with 11.6% of assets as of October
31. Although some of the highest-flying software and information technology
(IT) consulting shares fell back to earth, domestic
2
<PAGE>
consumption stocks such as biscuit manufacturer Britannia Industries held up
relatively well. Our broad exposure to the Indian economy helped us avoid the
brunt of the tech sector's retreat.
The smaller markets of Thailand, Indonesia, and the Philippines each dropped 35%
or more, with currency weakness contributing heavily to the declines in dollar
terms. We have low exposure to Thailand and no holdings in the other two
countries because their leaders do not seem to have learned the lessons of the
1997-98 Asian financial crisis. Banking systems remain fragile, and legislation
to facilitate the cleanup of bad loans is greatly needed.
Latin America
Latin American markets declined in the last six months but generally held up
better than emerging markets in other regions. Brazil and Mexico were flat,
while Chile and Argentina fell 10% and 17%, respectively.
GEOGRAPHIC DIVERSIFICATION
--------------------------------------------------------------------------------
Emerging Markets Stock Fund
[GRAPH]
Other and Reserves 5%
Africa and Middle East 17%
Far East 33%
Europe 17%
Latin America 28%
Based on net assets as of 10/31/00.
In Brazil, strong bank stocks helped counteract poor performance from the
telecommunications sector. Banks have adapted well to the lower interest rate
environment and remain among the most profitable in the region, despite their
high cost structure. Telecom stocks fell in tandem with their global coun-
terparts and were hurt by a change in the com- petitive landscape. Wireless
spectrum auctions for three licenses per region are now scheduled for the
first quarter of 2001, and, as a result, returns to all operators will probably
fall. We cut our position in Telebras accordingly and used the proceeds to
participate in the privatization of oil and gas company Petroleo Brasileiro
(Petrobras). On the economic front, Brazil's recovery remains on track.
Second-quarter GDP was up 3.9% over last year, and inflation is expected to be
only 7% in 2000.
3
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In Mexico, the economy remains robust. Second-quarter GDP increased by 7.6%, and
retail sales have been strong. The monetary authorities are uncomfortable with
such rapid growth and are likely to make further attempts to cool the economy.
As with Brazil, Mexico's financial sector performed best; two of the fund's
largest holdings, Grupo Financiero Banamex and Grupo Financiero BBVA Bancomer,
were beneficiaries. Following strong merger activity, the Mexican banking system
is now comfortably capitalized and fully provisioned against past due loans, but
increased loan activity thus far has proved elusive.
News from Argentina was again discouraging. The embryonic recovery in the second
half of 1999 was cut short by tax increases introduced in the first half of
2000, which hit the middle class hard and reversed the previous improvement in
consumer confidence. Our exposure to Argentina remains low at around 1% of the
portfolio.
Europe
The markets of Emerging Europe fell sharply in the last six months. The Czech
Republic, Hungary, and Poland were down 17%, 23%, and 28%, respectively,
partially because their currencies were dragged lower by the weakening euro.
Economic recovery remains strong in Hungary and the Czech Republic, but Poland
still has a large trade deficit. During the period, we added to our positions in
Hungarian pharmaceutical stocks EGIS and Gedeon Richter. Their valuations are
reasonable, in our opinion, and their growth is accelerating because of the
global trend toward greater use of generic drugs as well as increased sales in
Russia.
In Russia, the good news is that the economy is recovering strongly thanks to
high oil prices. In addition, the country's trade surplus has increased to 14%
of GDP, and foreign exchange reserves are once again at 1998 levels, before the
economy collapsed. The Putin government, with the majority support of the
legislature, has also made progress with structural reforms regarding tax
collection and the budget. The bad news, however, is that Russian stocks
declined nearly 20% in the last six months, as investors were rattled by a
couple of corporate governance scandals, notably one at Norilsk Nickel. Despite
this, we continued to increase our Russian exposure by purchasing additional
shares of oil exploration and production company Surgutneftegaz.
4
<PAGE>
Africa and the Middle East
Markets in these regions were mixed, but Israel fared best with a 47% gain. All
of our Israeli holdings are in the technology or biotechnology areas; so far,
they have been unaffected by the increased political violence because their
sales and production are almost entirely outside of Israel. History tells us
that it is best to ignore the political situation and focus on company
fundamentals. We have been steadily reducing our large position in Teva
Pharmaceutical, which at one point was up 80% year-to-date on the prospect that
generic drugs would get more favorable treatment after the U.S. elections.
INDUSTRY DIVERSIFICATION
--------------------------------------------------------------------------------
Percent of Net Assets
4/30/00 10/31/00
--------------------------------------------------------------------------------
Services 37.3% 38.5%
Financial 16.6 19.9
Consumer Goods 11.9 12.8
Capital Equipment 17.7 9.8
Energy 5.1 8.5
Materials - 3.3
Miscellaneous - 2.1
All Other 5.6 1.4
Reserves 5.8 3.7
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Total 100.0% 100.0%
Stocks in Turkey and Egypt fell 36% and 37%, respectively. In Turkey, we
purchased Turkiye Garanti Bankasi and added to our positions in Yapi ve Kredi
Bankasi and Dogan Yayin Holding. The IMF stabilization program remains on track,
and inflation should fall to around 25% by early next year. The country's fiscal
position is also greatly improved following some successful privatizations. In
Egypt, the market has been undermined by macroeconomic uncertainty surrounding
the decision of the monetary authorities to let the country's overvalued
currency depreciate. Stocks are very cheap but unlikely to rebound until
investor confidence in the economy is restored.
5
<PAGE>
OUTLOOK
This has been a difficult year for emerging markets, but almost exclusively
due to external factors. Based on their fundamentals, we find their outlook to
be promising. Latin American economies are rebounding, fiscal positions have
improved, and valuations look attractive. Much of the same applies to Emerging
Europe, especially Russia, which has been greatly helped by rising oil prices.
Asia looks less positive from a macroeconomic standpoint, but stock valuations
are again at attractive levels.
If developed economies can achieve a soft landing (i.e., slower growth without
slipping into a recession) and if technology stocks worldwide stop falling, the
year could end on a positive note. However, if the situation in the Middle East
worsens and major tech companies continue to report disappointing earnings, all
bets are off. Given the international uncertainty, we have increased exposure to
steady growth stocks that depend more on their domestic economies than on global
factors.
Respectfully submitted,
/s/John R. Ford
John R. Ford
President, T. Rowe Price International Funds, Inc.
November 24, 2000
6
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
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PORTFOLIO HIGHLIGHTS
--------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
10/31/00
--------------------------------------------------------------------------------
Telefonos de Mexico (Telmex), Mexico 4.6%
Petroleo Brasileiro (Petrobras), Brazil 3.8
China Mobile, Hong Kong 3.7
Antenna TV, Greece 2.3
Reliance Industries, India 2.1
--------------------------------------------------------------------------------
Dogan Yayin Holding, Turkey 2.1
South Korea Telecom, South Korea 2.0
Taiwan Semiconductor Manufacturing, Taiwan 1.9
ICICI, India 1.9
Grupo Financiero BBVA Bancomer, Mexico 1.9
--------------------------------------------------------------------------------
Yapi ve Kredi Bankasi, Turkey 1.8
Orbotech, Israel 1.8
Samsung Electronics, South Korea 1.7
Telebras, Brazil 1.6
Housing Development Finance, India 1.5
--------------------------------------------------------------------------------
Grupo Financiero Banamex, Mexico 1.5
Mobile Telesystems, Russia 1.4
Grupo Televisa, Mexico 1.4
Ambev, Brazil 1.3
LUKoil, Russia 1.3
--------------------------------------------------------------------------------
Korea Telecom, South Korea 1.3
Teva Pharmaceutical, Israel 1.2
Egyptian Company for Mobile Services, Egypt 1.2
United Microelectronics, Taiwan 1.2
Femsa, Mexico 1.1
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Total 47.6%
Note: Table excludes reserves.
7
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
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PERFORMANCE COMPARISON
This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
[GRAPH]
[PLOT POINTS TO COME]
AVERAGE ANNUAL COMPOUND TOTAL RETURN
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Since Inception
Periods Ended 10/31/00 1 Year 3 Years 5 Years Inception Date
--------------------------------------------------------------------------------
Emerging Markets Stock Fund 12.09% 4.51% 4.45% 4.85% 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.
8
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
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FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year
Ended
10/31/00 10/31/99 10/31/98 10/31/97 10/31/96
NET ASSET VALUE
<S> <C> <C> <C> <C> <C>
Beginning of period $ 11.08 $ 7.95 $ 11.08 $ 11.59 $ 10.48
Investment activities
Net investment income (loss) (0.02) (0.01)* 0.05* 0.02* 0.02*
Net realized and
unrealized gain (loss) 1.34 3.18 (3.06) (0.23) 1.08
Total from
investment activities 1.32 3.17 (3.01) (0.21) 1.10
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 0.02 - 0.03 0.04 0.02
NET ASSET VALUE
End of period $ 12.42 $ 11.08 $ 7.95 $ 11.08 $ 11.59
====================================================
Ratios/Supplemental Data
Total return/\ 12.09% 40.08%* (27.31)%* (1.60)% 10.69%*
Ratio of total expenses to
average net assets 1.50% 1.75%* 1.75%* 1.75%* 1.75%*
Ratio of net investment
income (loss) to average
net assets (0.12)% (0.14)%* 0.46%* 0.21%* 0.44%*
Portfolio turnover rate 56.1% 59.0% 54.5% 84.3% 41.7%
Net assets, end of period
(in thousands) $ 152,990 $108,418 $ 69,752 $119,285 $ 67,896
</TABLE>
/\ 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 10/31/01.
The accompanying notes are an integral part of these financial statements.
9
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
October 31, 2000
PORTFOLIO OF INVESTMENTS Shares Value
--------------------------------------------------------------------------------
In thousands
ARGENTINA 1.1%
Common Stocks 1.1%
Banco Frances del Rio de la Plata ADR (USD) 22,960 $ 502
Perez Companc 490,065 706
Telecom Argentina ADR (USD) 27,240 468
----------
Total Argentina (Cost $2,531) 1,676
----------
BRAZIL 11.4%
Common Stocks 6.8%
Brasil Telecom Participacoes ADR (USD) 2,302 125
Companhia Vale do Rio Doce ADR (USD) 40,000 935
Embratel Participacoes ADR (USD) 40,700 659
Pao de Acucar ADR (USD) 45,418 1,618
Petroleo Brasileiro (Petrobras) ADR (USD) * 95,000 2,761
Tele Norte Leste Participacoes ADR (USD) 15,084 334
Telebras ADR (USD) 33,580 2,460
Telesp Celular ADR (USD) 15,000 474
Unibanco GDR (USD) 42,000 1,060
----------
10,426
----------
Preferred Stocks 4.6%
Ambev * 9,160,705 2,044
Banco Itau 19,254,600 1,498
Cia Energetica Minas Gerais 21,116,123 320
Petroleo Brasileiro (Petrobras) 116,090 3,078
----------
6,940
----------
Total Brazil (Cost $16,170) 17,366
----------
CHILE 1.0%
Common Stocks 1.0%
Banco Santiago ADR (USD) 24,400 482
Compania de Telecomunicaciones de Chile
(Class A) ADR (USD) * 13,955 213
Embotelladora Andina ADR (USD) 16,358 196
Enersis ADR (USD) * 34,147 606
----------
Total Chile (Cost $1,927) 1,497
----------
10
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
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Shares Value
In thousands
CHINA 2.1%
Common Stocks 2.1%
China Petroleum & Chemical (Class H) (HKD) * 5,144,000 $ 1,009
Huaneng Power International (HKD) 918,000 359
PetroChina (HKD) 5,610,000 1,180
Shanghai Industrial Holdings (HKD) 370,000 697
----------
Total China (Cost $3,190) 3,245
----------
CROATIA 0.6%
Common Stocks 0.6%
Pliva d.d. GDR (USD) 81,441 859
----------
Total Croatia (Cost $1,329) 859
----------
CZECH REPUBLIC 0.7%
Common Stocks 0.7%
Komercni Banka * 53,072 1,124
----------
Total Czech Republic (Cost $1,065) 1,124
----------
EGYPT 2.3%
Common Stocks 2.3%
Al Ahram Beverages GDR (USD) * 108,796 1,382
Egyptian Company for Mobile Services * 89,545 1,771
Lakah Group GDR (USD) * 163,678 397
----------
Total Egypt (Cost $5,077) 3,550
----------
ESTONIA 0.7%
Common Stocks 0.7%
Eesti Telekom GDR (USD) 69,455 1,077
----------
Total Estonia (Cost $1,539) 1,077
----------
GREECE 4.0%
Common Stocks 4.0%
Antenna TV ADR (USD) * 177,265 3,496
11
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
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Shares Value
--------------------------------------------------------------------------------
In thousands
Cosmote Mobile Communication * 124,300 $ 932
Hellenic Telecommunications Organization 97,846 1,709
-----------
Total Greece (Cost $6,383) 6,137
-----------
HONG KONG 5.4%
Common Stocks 5.4%
Brilliance China Automotive Holdings 54,000 18
China Mobile (Hong Kong) * 889,000 5,699
China Resources Beijing 2,228,000 451
China Unicom * 694,000 1,393
Phoenix Satellite Television Holdings * 2,944,000 687
-----------
Total Hong Kong (Cost $5,364) 8,248
-----------
HUNGARY 3.8%
Common Stocks 2.9%
EGIS 40,510 1,710
Gedeon Richter 18,802 915
Matav ADR (USD) 24,467 575
Matav 262,200 1,166
-----------
4,366
-----------
Preferred Stocks 0.9%
OTP Bank 30,874 1,432
-----------
1,432
-----------
Total Hungary (Cost $5,846) 5,798
-----------
INDIA 11.6%
Common Stocks 11.6%
Apollo Hospitals 99,450 446
Britannia Industries 61,000 992
Cipla 64,600 1,219
Global E-Com * 87,000 439
Global Tele-Systems * 76,000 1,710
HDFC Bank 237,000 1,270
Hindustan Lever 341,000 1,298
Housing Development Finance 227,500 2,278
ICICI Bank 224,520 530
12
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
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Shares Value
--------------------------------------------------------------------------------
In thousands
ICICI 913,515 $ 1,460
ICICI ADR (USD) 100,635 950
McDowell & Company 292,000 388
Pentamedia Graphics 50,000 372
Ranbaxy Laboratories 88,000 1,310
Reliance Industries * 488,000 3,158
-----------
Total India (Cost $18,761) 17,820
-----------
ISRAEL 6.4%
Common Stocks 6.4%
Check Point Software Technologies (USD) * 5,200 824
Commtouch Software (USD) * 40,920 492
Gilat Satellite Networks (USD) * 33,630 1,727
NICE Systems ADR (USD) * 17,670 823
Orbotech (USD) * 51,651 2,733
Partner Communication ADR (USD) * 216,940 1,309
Teva Pharmaceutical ADR (USD) 31,430 1,859
-----------
Total Israel (Cost $9,342) 9,767
-----------
MEXICO 14.3%
Common Stocks 14.3%
Cemex, Participating Certificates (Represents
2 Series A and 1 Series B shares) 227,838 958
Coca-Cola Femsa (Class L) ADR (USD) 62,000 1,190
Corporacion Interamericana de Entretenimiento * 111,800 505
Femsa, UBD Units (Represents 1 Series B and 4
Series D shares) 461,040 1,755
Grupo Elektra, Participating Certificates
(Represents 1 Series L share and
2 Series B shares) 382,000 395
Grupo Financiero Banamex * 1,452,000 2,256
Grupo Financiero BBVA Bancomer * 4,684,000 2,900
Grupo Iusacell ADR (USD) * 63,400 824
Grupo Modelo (Class C) 191,000 509
Grupo Sanborns * 94,200 157
Grupo Televisa GDR (USD) * 39,500 2,138
Kimberly-Clark de Mexico (Class A) 150,000 384
13
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
Telefonos de Mexico (Telmex) (Class L) ADR (USD) 131,690 $ 7,103
Wal-Mart de Mexico ADR (USD) * 30,113 732
-----------
Total Mexico (Cost $16,213) 21,806
-----------
PERU 0.0%
Common Stocks 0.0%
Credicorp (USD) 10,560 77
-----------
Total Peru (Cost $192) 77
-----------
POLAND 2.3%
Common Stocks 2.3%
Bank Polska Kasa Opieki GDR (USD) * 66,964 675
Browary Zywiec 8,306 393
Computerland * 32,288 778
Elektrim * 209,674 1,688
-----------
Total Poland (Cost $4,760) 3,534
-----------
RUSSIA 4.0%
Common Stocks 4.0%
LUKoil (USD) * 24,351 325
LUKoil ADR (USD) 30,350 1,692
Mobile Telesystems ADR (USD) * 78,214 2,161
Surgutneftegaz ADR (USD) 96,795 1,258
Vimpel Communications ADR (USD) * 30,603 597
-----------
Total Russia (Cost $7,217) 6,033
-----------
SOUTH AFRICA 2.8%
Common Stocks 2.8%
ABSA Group 345,100 1,173
JD Group 50,300 253
M-Cell 253,400 938
Metropolitan Life 1,003,300 1,022
Sanlam 933,400 969
-----------
Total South Africa (Cost $5,137) 4,355
-----------
14
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
SOUTH KOREA 6.7%
Common Stocks 6.7%
Housing & Commercial Bank 42,380 $ 1,019
Hyundai Electric Industries * 35,000 215
Korea Electric Power 16,000 357
Korea Telecom 23,800 1,402
Korea Telecom ADR (USD) 16,000 590
Korean Air Lines 55,154 288
Opicom * 11,900 61
Samsung Electronics 20,405 2,556
Shinhan Bank 69,000 692
South Korea Telecom 14,490 3,089
-----------
Total South Korea (Cost $8,806) 10,269
-----------
SPAIN 0.3%
Common Stocks 0.3%
Telefonica ADR (USD) * 7,844 455
-----------
Total Spain (Cost $507) 455
-----------
SWITZERLAND 0.7%
Common Stocks 0.7%
Compagnie Financiere Richemont (ZAR) 37,530 1,050
-----------
Total Switzerland (Cost $738) 1,050
-----------
TAIWAN 6.4%
Common Stocks 6.4%
Acer Communication & Multimedia 20,200 24
Ambit Microsystems 31,000 144
Asustek Computer 103,120 514
Elan Microelectronics * 130,000 384
Far Eastern Textile 58,772 49
Hon Hai Precision 244,640 1,280
Powerchip Semiconductors GDR (USD) * 24,263 160
President Chain Store 370,856 1,056
Siliconware Precision Industries * 672,132 512
15
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
Taiwan Cellular * 410,000 $ 857
Taiwan Semiconductor Manufacturing * 972,531 2,951
United Microelectronics * 1,002,980 1,770
WYSE Technology Taiwan 32,000 17
-----------
Total Taiwan (Cost $10,177) 9,718
-----------
THAILAND 1.1%
Common Stocks 1.1%
TelecomAsia * 1,561,300 940
TelecomAsia, Rights * 187,357 43
Total Access Communications (USD) * 241,900 769
-----------
Total Thailand (Cost $2,000) 1,752
-----------
TURKEY 5.3%
Common Stocks 5.3%
Anadolu Efes * 2,178,789 128
Dogan Yayin Holding * 241,138,787 3,144
Hurriyet * 59,894,338 720
Turkiye Garanti Bankasi * 128,784,844 1,321
Yapi ve Kredi Bankasi * 324,153,780 2,802
-----------
Total Turkey (Cost $7,620) 8,115
-----------
VENEZUELA 0.5%
Common Stocks 0.5%
Compania Anonima Nacional Telefonos de Venezuela
(Class D) ADR (USD) 40,935 778
-----------
Total Venezuela (Cost $1,393) 778
-----------
UNITED STATES 0.8%
Common Stocks 0.8%
Comverse Technology * 10,443 1,167
StarMedia Network (Class B) ADR * 14,000 85
-----------
Total United States (Cost $1,324) 1,252
-----------
16
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
Value
--------------------------------------------------------------------------------
In thousands
SHORT-TERM INVESTMENTS 3.9%
Money Market Funds 3.9%
Reserve Investment Fund, 6.68% # 5,920,300 $ 5,920
-----------
Total Short-Term Investments (Cost $5,920) 5,920
-----------
Total Investments in Securities
100.2% of Net Assets (Cost $150,528) $ 153,278
Other Assets Less Liabilities (288)
-----------
NET ASSETS $ 152,990
-----------
* Non-income producing
# Seven-day yield
ADR American Depository Receipt
GDR Global depository receipt
HKD Hong Kong dollar
USD U.S. dollar
ZAR South African rand
The accompanying notes are an integral part of these financial statements.
17
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T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
October 31, 2000
-------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value (cost $150,528) $ 153,278
Securities lending collateral 9,839
Other assets 3,571
-----------
Total assets 166,688
-----------
Liabilities
Obligation to return securities lending collateral 9,839
Other liabilities 3,859
-----------
Total liabilities 13,698
-----------
NET ASSETS $ 152,990
-----------
Net Assets Consist of:
Accumulated net realized gain/loss - net of distributions $ (10,952)
Net unrealized gain (loss) 2,616
Paid-in-capital applicable to 12,319,543 shares of $0.01 par
value capital stock outstanding; 2,000,000,000 shares of
the Corporation authorized 161,326
-----------
NET ASSETS $ 152,990
-----------
NET ASSET VALUE PER SHARE $ 12.42
-----------
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/00
Investment Income (Loss)
Income
Dividend (net of foreign taxes of $170) $ 1,724
Interest (net of foreign taxes of $3) 571
Securities lending 118
-----------
Total Income 2,413
-----------
Expenses
Investment management 1,859
Shareholder servicing 467
Custody and accounting 187
Legal and audit 38
Prospectus and shareholder reports 33
Registration 25
Directors 7
Miscellaneous 4
-----------
Total expenses 2,620
-----------
Net investment income (loss) (207)
-----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (net of foreign taxes of $1,126) 11,095
Foreign currency transactions (274)
-----------
Net realized gain (loss) 10,821
-----------
Change in net unrealized gain or loss
Securities (net of deferred foreign taxes of $346) (6,418)
Other assets and liabilities
denominated in foreign currencies (8)
-----------
Change in net unrealized gain or loss (6,426)
-----------
Net realized and unrealized gain (loss) 4,395
-----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 4,188
-----------
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/00 10/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ (207) $ (124)
Net realized gain (loss) 10,821 (592)
Change in net unrealized gain or loss (6,426) 29,048
----------------------------
Increase (decrease) in net assets from 4,188 28,332
----------------------------
operations
Distributions to shareholders
Net investment income - (352)
----------------------------
Capital share transactions *
Shares sold 128,378 44,491
Distributions reinvested - 332
Shares redeemed (88,277) (34,186)
Redemption fees received 283 49
----------------------------
Increase (decrease) in net assets from capital
share transactions 40,384 10,686
----------------------------
Net Assets
Increase (decrease) during period 44,572 38,666
Beginning of period 108,418 69,752
----------------------------
End of period $ 152,990 $ 108,418
----------------------------
*Share information
Shares sold 8,450 4,500
Distributions reinvested - 42
Shares redeemed (5,915) (3,529)
----------------------------
Increase (decrease) in shares outstanding 2,535 1,013
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
October 31, 2000
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
fund seeks long-term growth of capital through investments primarily in the
common stocks of companies located, or with primary operations, in emerging
markets.
The accompanying financial statements were prepared in accordance with gen-
erally accepted accounting principles, which require the use of estimates made
by fund management.
Valuation Equity securities are valued at the last quoted sales price at the
time the valuations are made. A security that 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.
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 denominated in foreign currencies
are translated into U.S. dollar values each day at the prevailing exchange rate,
using the mean of the bid and offer prices of such currencies against U.S.
dollars quoted by a major bank. 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
21
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
regulations and may differ from net investment income and realized gains
determined in accordance with generally accepted accounting principles. Credits
earned on daily uninvested cash balances at the custodian are used to reduce the
fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Emerging Markets At October 31, 2000, approximately 86% of the fund's net assets
were invested 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 bor-
rower fails to return them. At October 31, 2000, the value of loaned securities
was $9,704,000; aggregate collateral consisted of $9,839,000 in the securities
lending collateral pool and U.S. government securities valued at $207,000.
Other Purchases and sales of portfolio securities, other than short-term securi-
ties, aggregated $127,611,000 and $90,579,000, respectively, for the year ended
October 31, 2000.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to con-
tinue to qualify as a regulated investment company and distribute all of its
taxable income. In 2000, the fund utilized $12,221,000 of capital loss
carryforwards for federal income tax purposes. As of October 31, 2000, the
22
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
fund has $10,904,000 of capital loss carryforwards, $10,590,000 of which expires
in 2006 and $314,000 in 2007. The fund intends to retain gains realized in
future periods that may be offset by available capital loss carryforwards.
In order for the fund's capital accounts and distributions to shareholders to
reflect the tax character of certain transactions, the following
reclassifications were made during the year ended October 31, 2000. The results
of operations and net assets were not affected by the increases/(decreases) to
these accounts.
--------------------------------------------------------------------------------
Undistributed net investment income $ 207,000
Undistributed net realized gain 1,467,000
Paid-in-capital (1,674,000)
At October 31, 2000, the cost of investments for federal income tax purposes was
substantially the same as for financial reporting and totaled $150,528,000. Net
unrealized gain aggregated $2,750,000 at period-end, of which $24,127,000
related to appreciated investments and $ 21,377,000 to depreciated investments.
NOTE 4 - FOREIGN TAXES
The fund is subject to foreign income taxes imposed by certain countries in
which it invests. Foreign income taxes are accrued by the fund as a reduction of
dividend and interest income.
Gains realized upon disposition of Indian securities held by the fund are
subject to capital gains tax in India, payable prior to repatriation of sales
proceeds. The fund accrues a deferred tax liability for net unrealized gains,
which totaled $116,000 at October 31, 2000.
NOTE 5 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price International, Inc. (the manager), a wholly
owned subsidiary of T. Rowe Price Associates, Inc. (Price Associates). The
investment management agreement between the fund and the manager provides for an
annual investment management fee, of which $140,000 was payable at October 31,
2000. The fee is computed daily and paid monthly, and
23
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
consists of an individual fund fee equal to 0.75% of average daily net assets
and a group fee. The group fee is based on the combined assets of certain mutual
funds sponsored by the manager or Price Associates (the group). The group fee
rate ranges from 0.48% for the first $1 billion of assets to 0.295% for assets
in excess of $120 billion. At October 31, 2000, and for the year then ended, the
effective annual group fee rate was 0.32%. The fund pays a pro-rata share of the
group fee based on the ratio of its net assets to those of the group.
Under the terms of the investment management agreement, the manager is required
to bear any expenses through October 31, 2001, which would cause the fund's
ratio of total expenses to average net assets to exceed 1.75%. Thereafter,
through October 31, 2003, 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%.
In addition, the fund has entered into agreements with Price Associates and two
wholly owned subsidiaries of Price Associates, pursuant to which the fund
receives certain other services. Price Associates computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services, Inc. is
the fund's transfer and dividend disbursing agent and provides shareholder and
administrative services to the fund. T. Rowe Price Retirement Plan Services,
Inc. provides subaccounting and recordkeeping services for certain retirement
accounts invested in the fund. The fund incurred expenses pursuant to these
related party agreements totaling approximately $506,000 for the year ended
October 31, 2000, of which $48,000 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, Price Associates, and, in the case of T. Rowe Price Spectrum
International, T. Rowe Price International. Spectrum International Fund held
approximately 3.0% of the outstanding shares of the Emerging Markets Stock Fund
at October 31, 2000. For the year then ended, the fund was allocated $14,000 of
Spectrum expenses, $1,000 of which was payable at period-end.
24
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
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 Price Associates. The Reserve Funds are offered
as cash management options only to mutual funds and other accounts managed by
Price Associates or T. Rowe Price International, and are not available to the
public. The Reserve Funds pay no investment management fees. Distributions from
the Reserve Funds to the fund for the year ended October 31, 2000, totaled
$551,000 and are reflected as interest income in the accompanying Statement of
Operations.
During the year ended October 31, 2000, the fund, in the ordinary course of
business, placed security purchase and sale orders aggregating $8,115,000 with
certain affiliates of the manager and paid commissions of $25,000 related
thereto.
25
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of T. Rowe Price International Funds, Inc. and
Shareholders of Emerging Markets Stock Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Emerging Markets Stock Fund (one of
the portfolios comprising T. Rowe Price International Funds, Inc., hereafter
referred to as the "Fund") at October 31, 2000, and the results of its opera-
tions, the changes in its net assets and the financial highlights for each of
the fiscal periods presented, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and finan-
cial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at October 31, 2000, by correspondence with the custodian, provide
a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 17, 2000
26
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 10/31/00
--------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements. The fund will pass
through foreign source income of $173,000 and foreign taxes paid of $1,299,000.
27
<PAGE>
T. ROWE PRICE EMERGING MARKETS STOCK FUND
--------------------------------------------------------------------------------
ANNUAL MEETING RESULTS
--------------------------------------------------------------------------------
The T. Rowe Price Emerging Markets Stock Fund held an annual meeting on October
25, 2000, to approve a new investment management agreement, elect directors to
the fund, and ratify the Board of Directors' selection of PricewaterhouseCoopers
LLP as the fund's independent accountants.
The results of voting were as follows (by number of shares):
For approval of a new investment management agreement:
Affirmative: 6,851,390.236
Against: 75,969.927
Abstain: 88,195.901
Total: 7,015,556.064
For nominees to the Board of Directors of the Emerging Markets Stock Fund:
M. David Testa
Affirmative: 6,892,341.352
Withhold: 123,214.712
Total: 7,015,556.064
Martin G. Wade
Affirmative: 6,890,267.075
Withhold: 125,288.989
Total: 7,015,556.064
Anthony W. Deering
Affirmative: 6,897,874.979
Withhold: 117,681.085
Total: 7,015,556.064
Donald W. Dick, Jr.
Affirmative: 6,897,948.477
Withhold: 117,607.587
Total: 7,015,556.064
Paul M. Wythes
Affirmative: 6,888,827.172
Withhold: 126,728.892
Total: 7,015,556.064
To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants:
Affirmative: 6,880,590.156
Against: 63,962.064
Abstain: 71,003.844
Total: 7,015,556.064
28
<PAGE>
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. **
INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services,
Inc., Member NASD/SIPC.
** Based on a July 2000 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary depending on size of order.
29
<PAGE>
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1- 800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
For the hearing impaired, call:
1-800-367-0763
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution
only to shareholders and to others who
have received a copy of the prospectus
appropriate to the fund or funds covered
in this report.
Invest With Confidence
[LOGO OF T. ROWE PRICE]
T. Rowe Price Investment Services, Inc., Distributor.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site.
Baltimore Area
Downtown - new address
105 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
2260 Briargate Parkway
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
San Francisco Area
1990 North California Boulevard
Suite 100
Walnut Creek
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
